GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS

JUNE 30, 2007

(UNAUDITED)

Company (1)	Industry	Investment (2)	Cost		Fair Value

NON-CONTROL/NON-AFFILIATE INVESTMENTS

*Syndicated Loans:*

ACS Media, LLC	Service - directory advertising	Senior Term Debt (7.9%, Due 11/2013) (3)	$	4,818,185	$	4,795,192

Activant	Service - enterprise software and services	Senior Term Debt (7.4%, Due 5/2013) (3)	3,744,596		3,709,627

American Safety Razor Company Inc.	Manufacturing - razors and blades	Senior Term Debt (7.9%, Due 7/2013) (3)	1,487,309		1,486,856

Aspect Software, Inc.	Service - call center software	Senior Term Debt (8.4%, Due 7/2011) (3)	2,980,932		2,992,388

Brock Holdings II, Inc.	Service - industrial specialty maintenance	Senior Term Debt (7.4%, Due 8/2013) (3) (5)	2,994,702		2,992,500

Compsych Investments Corp.	Service - independent employee assistance programs	Senior Term Debt (8.1%, Due 2/2012) (3) (5)	3,624,445		3,628,050

CRC Health Group, Inc.	Service - substance abuse treatment	Senior Term Debt (7.6%, Due 2/2012) (3)	9,955,202		9,950,818

Critical Homecare Solutions, Inc.	Service - home therapy and respiratory treatment	Senior Term Debt (8.6%, Due 1/2012) (3) (5)	3,947,139		3,950,000

CST Industries Acquisition, Inc.	Manufacturing - metal storage units	Senior Term Debt (8.1%, Due 8/2013) (3)	994,369		997,463

Dealer Computer Services, Inc.	Manufacturing & ervice - systems for automotive retailers	Senior Term Debt (7.4%, Due 9/2013) (3)	1,954,865		1,953,286

Generac Acquisition Corp.	Manufacturing - standby power products	Senior Term Debt (7.9%, Due 11/2013) (5)	4,967,404		4,851,000

Graham Packaging Holdings Company	Manufacturing - plastic containers	Senior Term Debt (7.6%, Due 11/2013)	10,473,750		10,486,842

HMTBP Acquisition II Corp.	Service - aboveground storage tanks	Senior Term Debt (7.6%, Due 11/2013)	3,990,000		3,990,000

Hudson Products Holdings, Inc.	Manufacturing - heat transfer solutions	Senior Term Debt (8.4%, Due 12/2013) (3)	6,065,392		6,063,684

Huish Detergents, Inc.	Manufacturing - household cleaning products	Senior Term Debt (7.3%, Due 4/2014) (3)	2,000,000		1,985,000

J. Crew Operating Corp.	Retail - apparel	Senior Term Debt (7.1%, Due 5/2013) (3)	1,230,450		1,228,070

KIK Custom Products, Inc.	Manufacturing - consumer products	Senior Term Debt (7.6%, Due 5/2014) (3)	1,000,000		985,000

Kronos, Inc.	Service - workforce management solutions	Senior Term Debt (7.6%, Due 6/14) (3)	2,000,000		1,992,500

Lexicon Marketing USA, Inc.	Service - marketing to Hispanic community	Senior Term Debt (7.8%, Due 5/2012) (3) (5)	2,947,745		2,941,844

Local TV Finance, LLC	Service - television station operator	Senior Term Debt (7.4%, Due 5/2013) (3)	1,000,000		996,250

LVI Services, Inc.	Service - asbestos and mold remediation	Senior Term Debt (10.4%, Due 11/2010) (3) (5)	6,422,593		6,362,484

MedAssets, Inc.	Service - pharmaceuticals and healthcare GPO	Senior Term Debt (7.8%, Due 10/2013) (3) (5)	3,484,788		3,478,147

MediMedia USA, LLC	Service - healthcare and pharmeceutical marketing	Senior Term Debt (7.6%, Due 10/2013) (3)	2,248,019		2,241,499

Mitchell International, Inc.	Service - automobile insurance claims processing	Senior Term Debt (7.4%, Due 3/2014) (3) (5)	1,000,250		997,500

National Mentor Holdings, Inc.	Service - home health care	Senior Term Debt (7.2%, Due 6/2013) (3)	1,986,979		1,990,790

Network Solutions, LLC	Service - internet domain solutions	Senior Term Debt (7.9%, Due 3/2014) (3)	10,000,000		9,950,000

NPC International Inc.	Service - Pizza Hut franchisee	Senior Term Debt (7.1%, Due 5/2013) (3)	3,016,872		2,995,367

Open Solutions, Inc.	Service - software outsourcing for financial institutions	Senior Term Debt (7.5%, Due 1/2014) (3)	2,511,814		2,484,836

Ozburn-Hessey Holding Co. LLC	Service - third party logistics	Senior Term Debt (8.6%, Due 8/2012) (3)	7,718,949		7,678,040

Pinnacle Foods Finance, LLC	Manufacturing - branded food products	Senior Term Debt (8.1%, Due 4/2014) (3)	4,001,318		4,000,000

PTS Acquisition Corp.	Manufacturing - drug delivery and packaging technologies	Senior Term Debt (7.6%, Due 4/2014) (3)	7,000,000		6,991,250

QTC Acquisition, Inc.	Service - outsourced disability evaluations	Senior Term Debt (7.6%, Due 11/2012) (3)	2,001,820		2,000,000

Radio Systems Corporation	Service - design electronic pet containment products	Senior Term Debt (8.1%, Due 9/2013) (3)	1,984,482		1,999,888

Rally Parts, Inc.	Manufacturing - aftermarket motorcycle parts and accessories	Senior Term Debt (7.9%, Due 11/2013) (3)	2,503,516		2,487,500

RPG Holdings, Inc.	Manufacturing and design - greeting cards	Senior Term Debt (9.1%, Due 12/2011) (3)	4,553,126		4,278,958

SafeNet, Inc.	Service - chip encryption products	Senior Term Debt (7.9%, Due 4/2014) (3)	3,001,528		2,970,000

SGS International, Inc.	Service - digital imaging and graphics	Senior Term Debt (7.9%, Due 12/2011) (3)	1,607,478		1,600,627

Stolle Machinery Company	Manufacturing - can-making equipment and parts	Senior Term Debt (7.9%, Due 9/2012) (3)	498,760		501,231

Company (1)	Industry	Investment (2)	Cost		Fair Value

NON-CONTROL/NON-AFFILIATE INVESTMENTS (Continued)

Survey Sampling, LLC	Service - telecommunications-based sampling	Senior Term Debt (7.9%, Due 5/2011) (3) (5)	$	3,245,858	$	3,212,324

Synagro Technologies, Inc.	Service - waste treatment and recycling	Senior Term Debt (7.4%, Due 3/2014) (3)	502,349		500,000

Triad Laboratory Alliance, LLC	Service - regional medical laboratories	Senior Term Debt (8.6%, Due 12/2011) (3) (5)	4,940,191		4,875,750

US Investigative Services, Inc.	Service - background investigations	Senior Term Debt (8.1%, Due 9/2012) (3)	10,892,705		10,828,384

United Surgical Partners International, Inc.	Service - outpatient surgical provider	Senior Term Debt (7.4%, Due 4/2014) (3)	1,326,290		1,319,659

Wastequip, Inc.	Service - process and transport waste materials	Senior Term Debt (7.6%, Due 2/2013) (3)	2,936,555		2,947,567

WaveDivision Holdings, LLC	Service - cable	Senior Term Debt (7.9%, Due 6/2014) (3) (5)	1,925,274		1,920,000

West Corporation	Service - business process outsourcing	Senior Term Debt (7.8%, Due 10/2013) (3)	11,458,046		11,430,100

Subtotal - Syndicated Loans			$	174,946,045	$	174,018,271

*Non-syndicated loans*

B-Dry, LLC	Service - basement waterproofer	Senior Term Debt (10.2%, Due 11/2007) (6)	250,000		250,000
		Senior Term Debt (10.2%, Due 5/2014) (6)	10,800,000		10,800,000
		Common Stock Warrants (4) (6)	300,000		300,000
			11,350,000		11,350,000

Total Non-Control/Non-Affiliate Investments			$	186,296,045	$	185,368,271

CONTROL INVESTMENTS

A. Stucki Company	Manufacturing - railroad cars and accessories	Senior Term Debt (9.8% Due 3/2012)	$	15,000,000	$	15,000,000
		Senior Term Debt (12.1% Due 3/2012)	11,000,000		11,000,000
		Senior Subordinated Term Debt (13% Due 3/2014)	5,485,760		5,485,760
		Preferred Stock (4)	4,386,686		4,483,794
		Common Stock (4)	129,956		3,989,352
			36,002,402		39,958,906

Acme Cryogenics Corporation	Manufacturing - manifolds and pipes for industrial gasses	Senior Subordinated Term Debt (11.5% Due 3/2013)	14,500,000		14,500,000
		Redeemable Preferred Stock	6,983,785		7,254,898
		Common Stock	1,045,181		3,821,983
		Common Stock Warrants (4)	24,686		141,420
			22,553,652		25,718,301

Chase II Holdings Corp.	Manufacturing - traffic doors	Revolving Credit Facility (9.8% Due 3/2008) (7)	2,380,000		2,380,000
		Senior Term Debt (9.8%, Due 3/2011)	10,725,000		10,725,000
		Senior Term Debt (12.0% Due 3/2011)	7,960,000		7,960,000
		Subordinated Term Debt (13% Due 3/2013)	6,167,810		6,167,810
		Redeemable Preferred Stock (4)	6,960,806		4,245,986
		Common Stock Warrants (4)	61,384		—
			34,255,000		31,478,796

Hailey Transport Corporation	Retail and Service - school buses and parts	Senior Subordinated Term Debt (12.0%, Due 1/2012)	4,000,000		4,000,000
		Preferred Stock (4)	2,500,000		133,154
			6,500,000		4,133,154

Quench Holdings Corp.	Service - sales, installation and service	Revolving Credit Facility (9.3%, Due 3/2009) (8)	1,050,000		1,050,000
	of water coolers	Senior Term Debt (9.3%, Due 3/2011)	4,750,000		4,750,000
		Subordinated Term Debt (11.5%, Due 3/2011)	7,955,000		7,955,000
		Common Stock (4)	3,256,318		3,266,203
			17,011,318		17,021,203

Total Control Investments			$	116,322,372	$	118,310,360

AFFILIATE INVESTMENTS

Noble Logistics, Inc.	Service - aftermarket auto parts delivery	Revolving Credit Facility (9.3%, Due 12/2009) (9)	$	—	$	—
		Senior Term Debt (9.3%, Due 12/2011)	7,000,000		7,000,000
		Senior Term Debt (11.3% Due 3/2011)	7,000,000		7,000,000
		Preferred Stock (4)	1,750,000		1,897,431
		Common Stock (4)	1,500,000		2,050,014
			17,250,000		17,947,445

Total Affiliate Investments			$	17,250,000	$	17,947,445

Total Investments			$	319,868,417	$	321,626,076

(1) Certain of the listed securities are issued by affiliate(s) of the indicated portfolio company.

(2) Percentage represents the weighted average interest rates in effect at June 30, 2007 and due date represents the contractual maturity date.

(3) Marketable securities are valued based on the indicative bid price, as of June 30, 2007, from the respective originating syndication agent’s trading desk.

(4) Security is non-income producing.

(5) Valued using Standard & Poor’s Securities Evaluations, Inc. opinions of value at June 30, 2007.

(6) Fair value is equal to cost due to recent acquisition.

(7) Total available under the revolving credit facility is $3,500,000, of which $1,120,000 remains undrawn at June 30, 2007.

(8) Total available under the revolving credit facility is $1,500,000, of which $450,000 remains undrawn at June 30, 2007.

(9) Total available under the revolving credit facility is $2,000,000.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2007
(UNAUDITED)

Company (1)	Industry	Investment (2)	Cost		Fair Value

NON-CONTROL/NON-AFFILIATE INVESTMENTS

ACS Media, LLC	Service - directory advertising	Senior Term Debt (7.9%, Due 11/2013) (3)	$	4,857,421	$	4,857,822

Activant	Service - enterprise software and services	Senior Term Debt (7.4%, Due 5/2013) (3)	3,745,496		3,714,281

American Safety Razor Company Inc.	Manufacturing - razors and blades	Senior Term Debt (7.9%, Due 7/2013) (3)	1,491,154		1,492,472

Aramark Corp.	Service - vending services	Senior Term Debt (7.5%, Due 1/2014) (10)	921,289		925,895
		Letter of Credit (5.3%, Due 1/2014) (10)	65,841		66,170

Aspect Software, Inc.	Service - call center software	Senior Term Debt (8.4%, Due 7/2011) (3)	2,988,647		2,999,925

Brock Holdings II, Inc.	Service - industrial specialty maintenance	Senior Term Debt (7.3%, Due 8/2013) (3) (5)	3,000,000		3,003,750

Compsych Investments Corp.	Service - independent employee assistance programs	Senior Term Debt (8.1%, Due 2/2012) (3) (5)	3,875,254		3,879,300

CRC Health Group, Inc.	Service - substance abuse treatment	Senior Term Debt (7.9%, Due 2/2012) (3)	9,993,754		10,010,307

Critical Homecare Solutions, Inc.	Service - home therapy and respiratory treatment	Senior Term Debt (8.6%, Due 1/2012) (3) (5)	2,000,000		2,000,000

CST Industries Acquisition, Inc.	Manufacturing - metal storage units	Senior Term Debt (8.5%, Due 8/2013) (3)	996,946		999,975

Dealer Computer Services, Inc.	Manufacturing & Service - systems for automotive retailers	Senior Term Debt (7.4%, Due 9/2013) (3)	1,042,760		1,044,063

Dresser Holdings, Inc.	Manufacturing - oilfield & energy products	Senior Term Debt (8.1%, Due 10/2013) (3)	3,868,905		3,851,943

Generac Acquisition Corp.	Manufacturing - standby power products	Senior Term Debt (7.9%, Due 11/2013) (5)	2,593,800		2,611,957

Hudson Products Holdings, Inc.	Manufacturing - heat transfer solutions	Senior Term Debt (8.1%, Due 12/2013) (3)	2,358,550		2,363,866

IPC Information Systems, LLC	Manufacturing - specialized telephony systems	Senior Term Debt (7.9%, Due 9/2013) (3)	263,045		262,319

J. Crew Operating Corp.	Retail - apparel	Senior Term Debt (7.2%, Due 5/2013) (3)	1,405,990		1,407,018

Latham Manufacturing Corp.	Manufacturing - swimming pool components accessories	Senior Term Debt (8.5%, Due 6/2012) (3)	2,427,162		2,375,520

Lexicon Marketing USA, Inc.	Service - marketing to Hispanic community	Senior Term Debt (7.8%, Due 5/2012) (3) (5)	2,971,543		3,006,325

LVI Services, Inc.	Service - asbestos and mold remediation	Senior Term Debt (10.3%, Due 11/2010) (3) (5)	6,440,352		6,330,492

Madison River Capital LLC	Service - communications and information	Senior Term Debt (7.6%, Due 7/2012) (3)	5,727,708		5,702,357

Maidenform, Inc.	Manufacturing - intimate apparel	Senior Term Debt (7.1%, Due 5/2010) (3)	2,569,252		2,573,084

MedAssets, Inc.	Service - pharmaceuticals and healthcare GPO	Senior Term Debt (7.8%, Due 10/2013) (3) (5)	3,493,734		3,504,342

MediMedia USA, LLC	Service - healthcare and pharmeceutical marketing	Senior Term Debt (7.9%, Due 10/2013) (3)	1,185,613		1,180,462

National Mentor Holdings, Inc.	Service - home health care	Senior Term Debt (7.4%, Due 6/2013) (3)	1,987,027		1,985,825

NPC International Inc.	Service - Pizza Hut franchisee	Senior Term Debt (7.1%, Due 5/2013) (3)	3,017,479		2,995,367

Nutro Products, Inc.	Manufacturing - pet food	Senior Term Debt (7.4%, Due 4/2012) (3)	2,442,961		2,421,809

Open Solutions, Inc.	Service - software outsourcing for financial institutions	Senior Term Debt (7.5%, Due 1/2014) (3)	2,518,294		2,506,250

Ozburn-Hessey Holding Co. LLC	Service - third party logistics	Senior Term Debt (8.6%, Due 8/2012) (3)	7,764,943		7,711,178

Patriot Media & Communications CNJ, LLC	Service - telecommunications	Senior Term Debt (7.4%, Due 3/2013) (3)	4,147,228		4,105,476

QTC Acquisition, Inc.	Service - outsourced disability evaluations	Senior Term Debt (8.1%, Due 11/2012) (3)	1,996,592		1,997,199

Radio Systems Corporation	Service - design electronic pet containment products	Senior Term Debt (8.1%, Due 9/2013) (3)	1,989,421		1,999,950

Rally Parts, Inc.	Manufacturing - aftermarket motorcycle parts and accessories	Senior Term Debt (7.9%, Due 11/2013) (3)	1,313,285		1,319,792

RPG Holdings, Inc.	Manufacturing and design - greeting cards	Senior Term Debt (8.9%, Due 12/2011) (3)	5,001,100		4,900,000

SGS International, Inc.	Service - digital imaging and graphics	Senior Term Debt (7.9%, Due 12/2011) (3)	1,611,921		1,616,724

Stolle Machinery Company	Manufacturing - can-making equipment and parts	Senior Term Debt (7.9%, Due 9/2012) (3)	500,100		502,491

Company (1)	Industry	Investment (2)	Cost		Fair Value

NON-CONTROL/NON-AFFILIATE INVESTMENTS (Continued)

Survey Sampling, LLC	Service - telecommunications-based sampling	Senior Term Debt (7.9%, Due 5/2011) (3)	3,309,714		3,282,178

Triad Laboratory Alliance, LLC	Service - regional medical laboratories	Senior Term Debt (8.6%, Due 12/2011) (3) (5)	4,953,549		4,912,813

US Investigative Services, Inc.	Service - background investigations	Senior Term Debt (7.9%, Due 9/2012) (3)	10,923,253		10,910,191

Wastequip, Inc.	Service - process and transport waste materials	Senior Term Debt (7.6%, Due 2/2013) (3)	2,066,465		2,081,963

WaveDivision Holdings, LLC	Service - cable	Senior Term Debt (7.8%, Due 6/2014) (3)	1,925,440		1,929,600

West Corporation	Service - business process outsourcing	Senior Term Debt (7.8%, Due 10/2013) (3)	10,814,753		10,826,161

Total Non-Control/Non-Affiliate Investments			$	138,567,741	$	138,168,612

CONTROL INVESTMENTS

A. Stucki Company	Manufacturing - railroad cars and accessories	Senior Term Debt (9.8% Due 3/2012) (6)	15,000,000		15,000,000
		Senior Term Debt (12.1% Due 3/2012) (6)	11,000,000		11,000,000
		Senior Subordinated Term Debt (13% Due 3/2014) (6)	5,485,760		5,485,760
		Preferred Stock (4) (6)	4,386,686		4,386,686
		Common Stock (4) (6)	129,956		129,956
			36,002,402		36,002,402

Acme Cryogenics Corporation	Manufacturing - manifolds and pipes for industrial gasses	Senior Subordinated Term Debt (11.5% Due 3/2013) (5) (6)	$	14,500,000	$	14,481,875
		Redeemable Preferred Stock (4) (6)	6,983,785		6,983,785
		Common Stock (4) (6)	1,045,181		1,045,181
		Common Stock Warrants (4) (6)	24,686		24,686
			22,553,652		22,535,527

Chase II Holdings Corp.	Manufacturing - traffic doors	Revolving Credit Facility (9.8% Due 3/2008) (7)	1,900,000		1,900,000
		Senior Term Debt (9.8%, Due 3/2011) (5)	11,000,000		11,000,000
		Senior Term Debt (12.0% Due 3/2011) (5)	8,000,000		8,000,000
		Subordinated Term Debt (13% Due 3/2013) (5)	6,167,810		6,167,810
		Redeemable Preferred Stock (4)	6,960,806		3,120,070
		Common Stock Warrants (4)	61,384		—
			34,090,000		30,187,880

Hailey Transport Corporation	Retail and Service - school buses and parts	Senior Subordinated Term Debt (12.0%, Due 1/2012) (5)	4,000,000		4,000,000
		Preferred Stock (4)	2,500,000		3,184,874
			6,500,000		7,184,874

Quench Holdings Corp.	Service - sales, installation and service	Revolving Credit Facility (9.3%, Due 3/2009) (5) (8)	1,900,000		1,900,000
	of water coolers	Senior Term Debt (9.3%, Due 3/2011) (5)	4,000,000		4,000,000
		Subordinated Term Debt (11.5%, Due 3/2011) (5)	8,000,000		8,000,000
		Common Stock (4)	3,256,318		3,205,808
			17,156,318		17,105,808

Total Control Investments			$	116,302,372	$	113,016,491

AFFILIATE INVESTMENTS

Noble Logistics, Inc.	Service - aftermarket auto parts delivery	Revolving Credit Facility (9.3%, Due 12/2009) (5) (9)	$	2,000,000	$	1,995,000
		Senior Term Debt (9.3%, Due 12/2011) (5) (6)	7,000,000		7,008,750
		Senior Term Debt (11.3% Due 3/2011) (5) (6)	7,000,000		7,008,750
		Senior Subordinated Term Debt (12.3% Due 8/2007) (5) (6)	500,000		500,000
		Preferred Stock (4) (6)	1,750,000		1,750,000
		Common Stock (4) (6)	1,500,000		1,500,000
			19,750,000		19,762,500

Total Affiliate Investments			$	19,750,000	$	19,762,500

Total Investments			$	274,620,113	$	270,947,603

(1) Certain of the listed securities are issued by affiliate(s) of the indicated portfolio company.

(2) Percentage represents the weighted average interest rates in effect at March 31, 2007 and due date represents the contractual maturity date.

(3) Marketable securities are valued based on the indicative bid price, as of March 31, 2007, from the respective originating syndication agent’s trading desk.

(4) Security is non-income producing.

(5) Valued using Standard & Poor’s Securities Evaluations, Inc. opinions of value at March 31, 2007.

(6) Fair value is equal to cost due to recent acquisition.

(7) Total available under the revolving credit facility is $3,500,000 of which $1,600,000 remains undrawn as of March 31, 2007.

(8) Total available under the revolving credit facility is $2,000,000, of which $100,000 remains undrawn at March 31, 2007.

(9) Total available under the revolving credit facility is $2,000,000, which was fully drawn at March 31, 2007.

(10) Subsequent to March 31, 2007, the investment in the portfolio company was sold at the fair value reflected herein.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three months ended			Three months ended
	June 30, 2007			June 30, 2006

INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate investments	$	3,248,555		$	1,964,480
Control investments	2,564,992			1,190,302
Affiliate investments	426,563			—
Cash and cash equivalents	53,692			708,340
Total interest income	6,293,802			3,863,122
Other income	6,127			316
Total investment income	6,299,929			3,863,438

EXPENSES
Base management fee	359,689			801,309
Loan servicing fee	1,194,418			—
Administration fee	207,814			115,389
Interest expense	1,414,262			—
Amortization of deferred finance costs	209,840			—
Professional fees	155,666			79,748
Stockholder related costs	37,889			93,766
Insurance expense	62,941			72,611
Directors fees	54,800			43,250
Taxes and licenses	41,807			57,107
General and administrative expenses	56,134			19,094
Expenses before credit from Adviser	3,795,260			1,282,274
Credits to base management fee (Refer to Note 4)	(383,875		)	—
Total expenses net of credit to management fee	3,411,385			1,282,274
NET INVESTMENT INCOME	2,888,544			2,581,164

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized (loss) gain on sale of Non-Control/Non-Affiliate investments	(48,247		)	3,273
Net unrealized depreciation of Non-Control/Non-Affiliate investments	(528,645		)	(1,139,711		)
Net unrealized appreciation (depreciation) of Control Investments	5,273,869			(167,678		)
Net unrealized appreciation of Affiliate Investments	684,945			—
Net gain (loss) on investments	5,381,922			(1,304,116		)


NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	8,270,466		$	1,277,048

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE:
Basic and Diluted	$	0.50		$	0.08

SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted weighted average shares	16,560,100			16,560,100

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(UNAUDITED)

	Three months ended			Three months ended
	June 30, 2007			June 30, 2006
Operations:
Net investment income	$	2,888,544		$	2,581,164
Realized (loss) gain on sale of investments	(48,247		)	3,273
Unrealized appreciation (depreciation) of portfolio	5,430,169			(1,307,389		)
Increase in net assets from operations	8,270,466			1,277,048

Capital transactions:
Issuance of common stock	—			—
Shelf offering costs	(28,761		)	—
Dividends from net investment income	(3,726,022		)	(3,477,621		)
Total decrease in net assets from capital transactions	(3,754,783		)	(3,477,621		)

Total increase (decrease) in net assets	4,515,683			(2,200,573		)

Net Assets
Beginning of period	222,818,509			229,841,697
End of period	$	227,334,192		$	227,641,124

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three months ended			Three months ended
	June 30, 2007			June 30, 2006

CASH FLOWS FROM OPERATING ACTIVITIES

Net increase in net assets resulting from operations	$	8,270,466		$	1,277,048
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:

Purchase of investments	(72,601,227		)	(33,665,549		)
Principal repayments of investments	21,358,187			874,222
Proceeds from the sale of investments	5,809,471			15,551,727
Net unrealized (appreciation) depreciation of investment portfolio	(5,430,169		)	1,307,389
Net realized loss (gain) on sales of investments	48,247			(3,273		)
Net amortization of premiums and discounts	137,018			37,656
Amortization of deferred finance costs	209,840			—
Increase in interest receivable	(533,106		)	(150,429		)
Increase in due from custodian	8,303,827			—
Increase in prepaid assets	(38,616		)	(36,138		)
Decrease in other assets	39,286			85,611
Increase (decrease) in other liabilities	12,642			(314		)
Increase in administration fee payable to Administrator	45,570			5,387
Increase in base management fee payable to Adviser	279,493			1,035,860
Increase in loan servicing fee payable to Adviser	27,451			—
Increase in accounts payable	—			11,583
Increase (decrease) in accrued expenses	228,904			(242,155		)
Net cash used in operating activities	(33,832,716		)	(13,911,375		)

CASH FLOWS FROM FINANCING ACTIVITIES

Borrowings from line of credit	89,100,000			—
Repayments of line of credit	(54,700,000		)	—
Deferred finance costs	(5,000		)	—
Shelf offering registration costs	(28,761		)	—
Distributions paid	(3,726,022		)	(3,477,621		)
Net cash provided by (used in) financing activities	30,640,217			(3,477,621		)

NET DECREASE IN CASH AND CASH EQUIVALENTS (1)	(3,192,499		)	(17,388,996		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	37,788,941			75,672,605
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	34,596,442		$	58,283,609

(1) Cash and cash equivalents consist of demand deposits and highly liquid investments with original maturities of three months or less when purchased.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE INVESTMENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007
(UNAUDITED)

NOTE 1. ORGANIZATION

Gladstone Investment Corporation (the “Company”) was incorporated under the General Corporation Laws of the State of Delaware on February 18, 2005 and completed an initial public offering on June 22, 2005. The Company is a closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, the Company has elected to be treated for tax purposes as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”). The Company’s investment objectives are to achieve a high level of current income and capital gains by investing in debt and equity securities of established private businesses.

Gladstone Business Investment, LLC (“Business Investment”), a wholly-owned subsidiary of the Company, was established on August 11, 2006 for the sole purpose of owning the Company’s portfolio of investments in connection with the establishment of its line of credit facility with Deutsche Bank AG. The financial statements of Business Investment are consolidated with those of the Company.

The Company is externally managed by Gladstone Management Corporation (“GMC” or the “Adviser”), an unconsolidated affiliate of the Company.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Statements

Interim financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring accruals, necessary for the fair statement of financial statements for the interim periods have been included. The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the year. The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended March 31, 2007, as filed with the Securities and Exchange Commission (“SEC”) on May 31, 2007.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

Consolidation

Under Article 6 of Regulation S-X under the Securities Act of 1933, as amended, and the authoritative accounting guidance provided by the AICPA Audit and Accounting Guide for Investment Companies, the Company is not permitted to consolidate any subsidiary or other entity that is not an investment company.

Use of Estimates

The consolidated financial statements have been prepared in accordance with GAAP that require management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

Cash and Cash Equivalents

The Company considers all short-term, highly liquid investments that are both readily convertible to cash and have a maturity of three months or less at the time of purchase to be cash equivalents. Items classified as cash equivalents include temporary investments in U.S. Treasury bills and can also include commercial paper and money-market funds. All of the Company’s cash at June 30, 2007 was deposited with two financial institutions, and the Company’s balances exceed federally insurable limits. The Company seeks to mitigate this risk by depositing funds with major financial institutions.

Classification of Investments

The 1940 Act requires classification of the Company’s investments by its respective level of control. As defined in the 1940 Act, “Control Investments” are investments in those portfolio companies that the Company is deemed to “Control”. “Affiliate Investments” are investments in those portfolio companies that are “Affiliated Companies” of the Company, as defined in the 1940 Act, other than Control Investments. “Non-Control/Non-Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments. In general, the 1940 Act prescribes that the Company has control over a portfolio company if it owns greater than 25% of the voting securities of the portfolio company. The Company is deemed to be an affiliate of a portfolio company if it owns between 5% and 25% of the voting securities of such portfolio company or has one or more seats on the affiliated company’s board of directors. However, if the Company holds 50% or more contractual representation on a portfolio company’s board of directors, the Company will be deemed to have control over the portfolio company.

Investment Valuation

The Company carries its investments at fair value, as determined by its Board of Directors. Securities that are publicly traded are valued at the closing price on the valuation date. Securities for which a limited market exists, such as certain participations in syndicated loans, are valued at the indicative bid price on or near the valuation date from the respective originating syndication agent’s trading desk. Debt and equity securities that are not publicly traded, or for which a limited market does not exist, are valued at fair value. The Company’s Board of Directors has established a valuation policy and consistently applied valuation procedures used to determine the fair value of these securities quarterly.

The procedures for the determination of value of the Company’s debt securities that that are not publicly traded and that are issued to portfolio companies where the Company has no equity, or equity-like securities, rely on the opinions of value submitted to us by Standard & Poor’s Securities Evaluations, Inc. (“SPSE”). The Company may also submit paid in kind (“PIK”) interest to SPSE for valuation when it is determined the PIK interest is likely to be received. SPSE will only evaluate the debt portion of the Company’s investments for which the Company specifically requests evaluation, and may decline to make requested evaluations for any reason at its sole discretion. SPSE opinions of value are submitted to the Board of Directors along with the Adviser’s supplemental assessment and recommendation regarding valuation of each of these investments. Lastly, the Company adds any amortized original issue discount (“OID”) interest to the fair value, unless adverse factors lead to a determination of a lesser valuation.

The fair value of convertible debt, equity, success or exit fees or other equity-like securities is determined based on the collateral, the enterprise value of the issuer, the issuer’s ability to make payments, the earnings of the issuer, recent sales to third parties of similar securities, the comparison to publicly traded securities, discounted cash flow or other pertinent factors. In gathering the sales to third parties of similar securities, the Company may reference industry statistics and use outside experts.

Debt securities that are issued to portfolio companies where the Company has equity, or equity-like securities are valued at cost, if there is adequate total enterprise value determined when valuing the Company’s equity securities of the portfolio company. Fair values are discounted for any shortfall of total enterprise value over the total debt outstanding for the borrower.

The Board of Directors then reviews whether the Adviser has followed its established procedures for determinations of fair value, and votes whether or not to accept the recommended valuation of the Company’s investment portfolio.

Due to the uncertainty inherent in the valuation process, such estimates of fair value may differ significantly from the values that would have resulted had a ready market for the securities existed, and the differences could be material. Additionally, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuation currently assigned. Because there is a delay between when the Company closes an investment and when the investment can be evaluated by SPSE, new investments are not valued immediately by SPSE; rather, the Adviser makes its own determination about the recommended value of these investments in accordance with the Company’s valuation policy without the input of SPSE during the specific quarter in which the investment is made. Because SPSE does not currently perform independent valuations of mortgage loans or equity

securities for the Company, the Adviser also determines a recommendation for the fair value of these investments, if any, without the input of SPSE. The Adviser considers a number of qualitative and quantitative factors in current market conditions when performing valuations. The Board of Directors then determines whether or not to accept the Adviser’s recommendations for the aggregate valuation of the Company’s portfolio of investments. The Board of Directors is ultimately responsible for setting the fair value and disclosure of investments in the financial statements.

Interest and Dividend Income Recognition

Interest income, adjusted for amortization of premiums and acquisition costs and for the accretion of discounts, is recorded on the accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on its investments when it is determined that interest is no longer collectible. There were no uncollectible accounts at June 30, 2007. Conditional interest or a success fee is recorded upon full repayment of a loan investment. Dividend income on preferred equity securities is accrued to the extent that such amounts are expected to be collected and that the Company has the option to collect such amounts in cash. To date, the Company has not accrued any dividend income.

Services Provided to Portfolio Companies

The 1940 Act requires that a business development company make available managerial assistance to its portfolio companies by providing significant guidance and counsel concerning the management, operations, or business objectives and policies of the respective portfolio company. The Company provides these and other services to portfolio companies through its Adviser. Currently, neither the Company nor the Adviser receives fees in connection with managerial assistance.

The Adviser receives fees for other services it provides to portfolio companies. These other fees are typically non-recurring, are recognized as revenue when earned and are generally paid directly to the Adviser by the borrower or potential borrower upon closing of the investment. The services the Adviser provides to portfolio companies vary by investment, but generally include a broad array of services, such as investment banking services, arranging bank and equity financing, structuring financing from multiple lenders and investors, reviewing existing credit facilities, restructuring existing investments, raising equity and debt capital, turnaround management, merger and acquisition services and recruiting new management personnel. When the Adviser receives fees for these services, 50% of certain of those fees are credited against the base management fee due to the Adviser from the Company. Any services of this nature subsequent to the closing would typically generate a separate fee at the time of completion.

The Adviser also receives fees for monitoring and reviewing portfolio company investments. These fees are recurring and are generally paid annually or quarterly in advance to the Adviser throughout the life of the investment. Fees of this nature are recorded as revenue by the Adviser when earned and are not credited against the base management fees.

The Company may receive fees for the origination and closing services it provides to portfolio companies through its Adviser. These fees are paid directly to the Company and are recognized as revenue upon closing of the originated investment and are reported as fee income in the consolidated statements of operations.

Realized Gain or Loss and Unrealized Appreciation or Depreciation of Portfolio Investments

Realized gain or loss is recognized when an investment is disposed of and is computed as the difference between the Company’s cost basis in the investment at the disposition date and the net proceeds received from such disposition. Unrealized appreciation or depreciation displays the difference between the fair market value of the investment and the cost basis of such investment.

Federal Income Taxes

The Company intends to continue to qualify for treatment as a RIC under subchapter M of the Code. As a RIC, the Company will not be subject to federal income tax on the portion of its taxable income and gains distributed to stockholders. To qualify as a RIC, the Company is required to distribute at least 90% of its investment company taxable income, as defined by the Code. The Company intends to distribute at least 90% of its ordinary income, and as a result, no income tax provisions have been recorded. The Company may, but does not intend to, pay out a return of capital.

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109,” (“FIN 48”), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” FIN 48 is effective as of the beginning of an entity’s first fiscal year that begins after December 15, 2006. The Company adopted this Interpretation on April 1, 2007. The adoption of FIN 48 did not have an impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). SFAS 159 allows entities to measure at fair value many financial instruments and certain other assets and liabilities that are not otherwise required to be measured at fair value. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is required to adopt the provisions of SFAS 157 beginning with the fiscal year ended March 31, 2009. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (“SAB 108”). SAB 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements and requires registrants to consider the effect of all carry over and reversing effects of prior year misstatements when quantifying errors in current year financial statements. SAB 108 does not change the SEC’s previous guidance in SAB No. 99, “Materiality,” on evaluating the materiality of misstatements. A registrant applying the new guidance for the first time that identifies material errors in existence at the beginning of the first fiscal year ending after November 15, 2006, may correct those errors through a one-time cumulative effect adjustment to beginning-of-year retained earnings. The cumulative effect alternative is available only if the application of the new guidance results in a conclusion that a material error exists as of the beginning of the first fiscal year ending after November 15, 2006, and those misstatements were determined to be immaterial based on a proper application of the registrant’s previous method for quantifying misstatements. The adoption of SAB 108 did not have an impact on the Company’s consolidated financial statements.

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instrume

DELAWARE		83-0423116
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

PART I.		FINANCIAL INFORMATION
		FINANCIAL INFORMATION
Item 1.		Financial Statements (Unaudited)

		Consolidated Statements of Assets and Liabilities as of June 30, 2007 and March 31, 2007
		Consolidated Schedule of Investments as of June 30, 2007
		Consolidated Schedule of Investments as of March 31, 2007
		Consolidated Statements of Operations for the three months ended June 30, 2007 and 2006
		Consolidated Statements of Changes in Net Assets for three months ended June 30, 2007 and 2006
		Consolidated Statements of Cash Flows for the three months ended June 30, 2007 and 2006
		Financial Highlights for the three months ended June 30, 2007 and 2006
		Notes to Consolidated Financial Statements

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations
		Overview
		Results of Operations
		Liquidity and Capital Resources

Item 3.		Quantitative and Qualitative Disclosures About Market Risk

Item 4.		Controls and Procedures

PART II.		OTHER INFORMATION

Item 1.		Legal Proceedings

Item 1A.		Risk Factors

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.		Defaults Upon Senior Securities

Item 4.		Submission of Matters to a Vote of Security Holders

Item 5.		Other Information

Item 6.		Exhibits

SIGNATURES

	June 30,			March 31,
	2007			2007

ASSETS
Non-Control/Non-Affiliate investments (Cost 6/30/07:$186,296,045; 3/31/07:$138,567,741)	$	185,368,271		$	138,168,612
Control investments (Cost 6/30/07: $116,322,372; 3/31/07: $116,302,372)	118,310,360			113,016,491
Affiliate investments (Cost 6/30/07: $17,250,000; 3/31/07: $19,750,000)	17,947,445			19,762,500
Total investments at fair value (Cost 6/30/07: $319,868,417; 3/31/07: $274,620,113)	321,626,076			270,947,603
Cash and cash equivalents	34,596,442			37,788,941
Interest receivable	1,839,196			1,306,090
Prepaid insurance	24,553			83,819
Deferred finance costs	423,120			627,960
Due from Custodian	4,391,158			12,694,985
Due from Adviser	—			20,383
Other assets	179,030			120,434
TOTAL ASSETS	$	363,079,575		$	323,590,215

LIABILITIES
Due to Administrator	$	207,814		$	162,244
Due to Adviser	286,561			—
Borrowings under line of credit	134,400,000			100,000,000
Accrued expenses	752,602			523,698
Other liabilities	98,406			85,764
Total Liabilities	135,745,383			100,771,706
NET ASSETS	$	227,334,192		$	222,818,509

ANALYSIS OF NET ASSETS:
Common stock, $0.001 par value, 100,000,000 shares authorized and 16,560,100 shares issued and outstanding	$	16,560		$	16,560
Capital in excess of par value	230,067,811			230,096,572
Net unrealized appreciation (depreciation) of investment portfolio	1,757,659			(3,672,510		)
Distributions in excess of net investment income	(4,507,838		)	(3,622,113		)
Total Net Assets	$	227,334,192		$	222,818,509
Net assets per share	$	13.73		$	13.46

	Three months ended			Three months ended
	June 30, 2007			June 30, 2006
Per Share Data (1)
Balance at beginning of period	$	13.46		$	13.88

Income from investment operations:
Net investment income (2)	0.17			0.16
Realized (loss) gain on sale of investments (2)	—			—
Net unrealized appreciation (depreciation) of investments (2)	0.33			(0.08		)
Total from investment operations	0.50			0.08
Distributions	(0.23		)	(0.21		)
Net asset value at end of period	$	13.73		$	13.75

Per share market value at beginning of period	$	14.87		$	14.90
Per share market value at end of period	14.21			15.00
Total Return (3)	-2.93		%	2.13		%
Shares outstanding at end of period	16,560,100			16,560,100

Ratios/Supplemental Data
Net assets at end of period	$	227,334,192		$	227,641,124
Average net assets (4)	$	222,928,553		$	227,718,666
Ratio of expenses to average net assets (5) (6)	6.81		%	2.25		%
Ratio of net expenses to average net assets (5) (7)	6.12		%	2.25		%
Ratio of net investment income to average net assets (5)	5.18		%	4.53		%

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		FOR THE QUARTER ENDED JUNE 30, 2007

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934