UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

FOR THE QUARTER ENDED DECEMBER 31, 2007

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

COMMISSION FILE NUMBER: 000-51233

GLADSTONE INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE

(State or other jurisdiction of incorporation or organization)

83-0423116

(I.R.S. Employer Identification No.)

1521 WESTBRANCH DRIVE, SUITE 200

MCLEAN, VIRGINIA 22102

(Address of principal executive office)

(703) 287-5800

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer x Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12 b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares of the issuer’s Common Stock, $0.001 par value, outstanding as of January 30, 2008 was 16,560,100.

GLADSTONE INVESTMENT CORPORATION

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(UNAUDITED)

	December 31,			March 31,
	2007			2007

ASSETS
Non-Control/Non-Affiliate investments (Cost 12/31/07:$185,137,185; 3/31/07:$138,567,741)	$	174,066,264		$	138,168,612
Control investments (Cost 12/31/07: $136,536,484; 3/31/07: $116,302,372)	143,192,123			113,016,491
Affiliate investments (Cost 12/31/07: $34,454,244; 3/31/07: $19,750,000)	34,772,730			19,762,500
Total investments at fair value (Cost 12/31/07: $356,127,913; 3/31/07: $274,620,113)	352,031,117			270,947,603
Cash and cash equivalents	13,288,669			37,788,941
Interest receivable	1,965,776			1,306,090
Prepaid insurance	123,943			83,819
Deferred finance costs	462,210			627,960
Due from Custodian	3,412,644			12,694,985
Due from Adviser (Refer to Note 4)	253,684			20,383
Other assets	490,463			120,434
TOTAL ASSETS	$	372,028,506		$	323,590,215

LIABILITIES
Due to Administrator (Refer to Note 4)	$	211,159		$	162,244
Borrowings under line of credit	150,462,500			100,000,000
Accrued expenses	910,800			523,698
Other liabilities	71,205			85,764
Total Liabilities	151,655,664			100,771,706
NET ASSETS	$	220,372,842		$	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	230,065,064			230,096,572
Net unrealized depreciation of investment portfolio	(4,096,797		)	(3,672,510		)
Net unrealized appreciation of derivative	5,000			—
Distributions in excess of net investment income	(5,616,985		)	(3,622,113		)
Total Net Assets	$	220,372,842		$	222,818,509
Net assets per share	$	13.31		$	13.46

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

DECEMBER 31, 2007

(UNAUDITED)

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

NON-CONTROL/NON-AFFILIATE INVESTMENTS

*Syndicated Loans:*

Activant Solutions, Inc.	Service - enterprise software and services	Senior Term Debt (7.0%, Due 5/2013) (3)	$	3,742,795	$	3,490,866

Advanced Homecare Holdings, Inc.	Service - home health nursing services	Senior Term Debt (8.6%, Due 8/2014) (3)	2,985,000		2,895,450

Aeroflex, Inc.	Service - provider of highly specialized electronic equipment	Senior Term Debt (8.1%, Due 8/2014) (3)	1,904,784		1,920,000

American Safety Razor Company Inc.	Manufacturing - razors and blades	Senior Term Debt (7.4%, Due 7/2013) (3)	1,479,619		1,433,175

Aspect Software, Inc.	Service - call center software	Senior Term Debt (7.9%, Due 7/2011) (3)	2,655,159		2,559,330

Brock Holdings II, Inc.	Service - industrial specialty maintenance	Senior Term Debt (7.1%, Due 8/2013) (3) (5)	2,979,524		2,880,731

Compsych Investments Corp.	Service - employee assistance programs	Senior Term Debt (7.6%, Due 2/2012) (3) (5)	3,505,231		3,343,939

CRC Health Group, Inc.	Service - substance abuse treatment	Senior Term Debt (7.4%, Due 2/2012) (3)	9,906,751		9,369,254

Critical Homecare Solutions, Inc.	Service - home therapy and respiratory treatment	Senior Term Debt (8.2%, Due 1/2012) (3) (5)	4,534,045		4,486,680

CST Industries Acquisition, Inc.	Manufacturing - metal storage units	Senior Term Debt (7.9%, Due 8/2013) (3)	989,216		957,875

Dealer Computer Services, Inc.	Manufacturing & Service - systems for automotive retailers	Senior Term Debt (6.8%, Due 9/2013) (3)	1,860,095		1,783,560

Generac Acquisition Corp.	Manufacturing - standby power products	Senior Term Debt (7.7%, Due 11/2013) (3) (5)	6,944,412		6,185,500

Graham Packaging Holdings Company	Manufacturing - plastic containers	Senior Term Debt (7.5%, Due 10/2011) (3)	5,433,813		5,216,460

Hargray Communications Group, Inc.	Service - triple-play (cable, phone, internet) provider	Senior Term Debt (7.1%, Due 6/2014) (3)	963,258		932,542

HMTBP Acquisition II Corp.	Service - aboveground storage tanks	Senior Term Debt (7.1%, Due 5/2014) (3) (5)	3,905,000		3,748,120

Hudson Products Holdings, Inc.	Manufacturing - heat transfer solutions	Senior Term Debt (7.9%, Due 12/2013) (3)	6,036,234		5,837,641

Huish Detergents, Inc.	Manufacturing - household cleaning products	Senior Term Debt (6.8%, Due 4/2014) (3)	1,991,129		1,721,350

Hyland Software, Inc.	Service - provider of enterprise content management software	Senior Term Debt (7.7%, Due 7/2013) (3)	3,953,747		3,870,300

Interstate Fibernet, Inc.	Service - provider of voice and data telecommunications services	Senior Term Debt (8.8%, Due 7/2013) (3)	9,954,851		9,700,000

J. Crew Operating Corp.	Retail - apparel	Senior Term Debt (6.8%, Due 5/2013) (3)	879,372		850,877

KIK Custom Products, Inc.	Manufacturing - consumer products	Senior Term Debt (7.1%, Due 5/2014) (3)	3,990,934		3,481,275

Kronos, Inc.	Service - workforce management solutions	Senior Term Debt (7.1%, Due 6/2014) (3)	1,975,714		1,847,293

Lexicon Marketing USA, Inc.	Service - marketing to Hispanic community	Senior Term Debt (non accrual) (3) (5)	2,947,515		1,384,397

Local TV Finance, LLC	Service - television station operator	Senior Term Debt (7.3%, Due 5/2013) (3)	997,651		927,838

LVI Services, Inc.	Service - asbestos and mold remediation	Senior Term Debt (9.6%, Due 11/2010) (3) (5)	6,387,074		5,987,800

MedAssets, Inc.	Service - pharmaceuticals and healthcare GPO	Senior Term Debt (7.4%, Due 10/2013) (3) (5)	4,014,447		3,872,112

MediMedia USA, LLC	Service - healthcare and pharmaceutical marketing	Senior Term Debt (7.2%, Due 10/2013) (3)	2,235,580		2,133,000

Mitchell International, Inc.	Service - automobile insurance claims processing	Senior Term Debt (6.8%, Due 3/2014) (3) (5)	995,046		913,100

National Mentor Holdings, Inc.	Service - home health care	Senior Term Debt (6.7%, Due 6/2013) (3)	1,972,709		1,848,422

Network Solutions, LLC	Service - internet domain solutions	Senior Term Debt (7.3%, Due 3/2014) (3)	9,195,640		8,619,417

NPC International Inc.	Service - Pizza Hut franchisee	Senior Term Debt (6.6%, Due 5/2013) (3)	2,895,543		2,695,380

Open Solutions, Inc.	Service - software outsourcing for financial institutions	Senior Term Debt (7.3%, Due 1/2014) (3)	2,691,994		2,488,408

Ozburn-Hessey Holding Co. LLC	Service - third party logistics	Senior Term Debt (8.4%, Due 8/2012) (3)	7,655,938		6,909,764

Pinnacle Foods Finance, LLC	Manufacturing - branded food products	Senior Term Debt (7.9%, Due 4/2014) (3)	3,981,220		3,790,950

PTS Acquisition Corp.	Manufacturing - drug delivery and packaging technologies	Senior Term Debt (7.1%, Due 4/2014) (3)	6,965,000		6,477,450

QTC Acquisition, Inc.	Service - outsourced disability evaluations	Senior Term Debt (7.1%, Due 11/2012) (3)	1,992,830		1,835,775

Radio Systems Corporation	Service - design electronic pet containment products	Senior Term Debt (7.7%, Due 9/2013) (3)	1,974,524		1,935,500

Rally Parts, Inc.	Manufacturing - aftermarket motorcycle parts and accessories	Senior Term Debt (7.3%, Due 11/2013) (3)	2,492,563		2,277,000

RPG Holdings, Inc.	Manufacturing and design - greeting cards	Senior Term Debt (8.7%, Due 12/2011) (3)	4,553,010		4,051,354

SafeNet, Inc.	Service - chip encryption products	Senior Term Debt (7.7%, Due 4/2014) (3)	2,987,284		2,716,350

SGS International, Inc.	Service - digital imaging and graphics	Senior Term Debt (7.2%, Due 12/2011) (3)	1,598,592		1,552,689

Specialized Technology Resources, Inc.	Service & Manufacturing - consumer product quality assurance	Senior Term Debt (7.3%, Due 6/2014) (3)	1,493,535		1,436,530

Stolle Machinery Company	Manufacturing - can-making equipment and parts	Senior Term Debt (7.9%, Due 9/2012) (3)	496,693		485,100

Survey Sampling, LLC	Service - telecommunications-based sampling	Senior Term Debt (7.3%, Due 5/2011) (3) (5)	3,036,046		2,856,541

Synagro Technologies, Inc.	Service - waste treatment and recycling	Senior Term Debt (6.9%, Due 3/2014) (3)	499,675		478,844

Triad Laboratory Alliance, LLC	Service - regional medical laboratories	Senior Term Debt (8.1%, Due 12/2011) (3) (5)	4,913,475		4,655,000

United Surgical Partners International, Inc.	Service - outpatient surgical provider	Senior Term Debt (7.3%, Due 4/2014) (3)	1,320,000		1,240,800

Wastequip, Inc.	Service - process and transport waste materials	Senior Term Debt (7.4%, Due 2/2013) (3)	2,929,215		2,753,462

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



WaveDivision Holdings, LLC	Service - cable	Senior Term Debt (7.6%, Due 6/2014) (3) (5)	1,924,897		1,896,000

West Corporation	Service - business process outsourcing	Senior Term Debt (6.9%, Due 10/2013) (3)	6,372,806		6,054,168

Subtotal - Syndicated Loans			$	174,091,185	$	162,785,369

*Non-syndicated Loans*

B-Dry, LLC	Service - basement waterproofer	Revolving Credit Facility (9.5%, Due 10/2008) (12)	—		—
		Senior Term Debt (10.1%, Due 5/2014)	10,746,000		10,746,000
		Common Stock Warrants (4)	300,000		534,895
			11,046,000		11,280,895

Total Non-Control/Non-Affiliate Investments			$	185,137,185	$	174,066,264

CONTROL INVESTMENTS

A. Stucki Holding Corp.	Manufacturing - railroad freight car products	Senior Term Debt (9.7% Due 3/2012)	$	13,927,500	$	13,927,500
		Senior Term Debt (12.0% Due 3/2012) (6)	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		4,660,704
		Common Stock (4)	129,956		9,573,296
			34,929,902		44,647,260

Acme Cryogenics, Inc.	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 (4)	6,983,785		7,619,468
		Common Stock (4)	1,045,181		2,122,761
		Common Stock Warrants (4)	24,686		142,179
			22,553,652		24,384,408

ASH Holdings Corp.	Retail and Service - school buses and parts	Senior Subordinated Term Debt (12.0%, Due 1/2012)	4,768,936		—
		Preferred Stock (4)	2,500,000		—
		Common Stock Warrants (4)	3,680		—
			7,272,616		—

Cavert II Holding Corp.	Manufacturing - bailing wire	Revolving Credit Facility (9.2%, Due 10/2010) (10) (14)	2,100,000		2,100,000
		Senior Term Debt (9.5%, Due 10/2012) (14)	6,500,000		6,500,000
		Senior Term Debt (11.2%, Due 10/2012) (6) (14)	3,000,000		3,000,000
		Senior Subordinated Term Debt (13%, Due 10/2014) (14)	4,670,678		4,670,678
		Preferred Stock (4) (14)	4,110,196		4,110,196
		Common Stock (4) (14)	69,126		69,126
			20,450,000		20,450,000

Chase II Holdings Corp.	Manufacturing - traffic doors	Revolving Credit Facility (9.2% Due 3/2008) (7)	2,280,000		2,280,000
		Senior Term Debt (9.7%, Due 3/2011)	10,175,000		10,175,000
		Senior Term Debt (12.0% Due 3/2011) (6)	7,880,000		7,880,000
		Subordinated Term Debt (13.0% Due 3/2013)	6,167,810		6,167,810
		Redeemable Preferred Stock (4)	6,960,806		8,263,144
		Common Stock (4)	61,384		1,719,603
			33,525,000		36,485,557

Quench Holdings Corp.	Service - sales, installation and service of water coolers	Revolving Credit Facility (9.2%, Due 3/2009) (8)	1,500,000		1,500,000
		Senior Term Debt (9.2%, Due 3/2011)	4,500,000		4,500,000
		Senior Subordinated Term Debt (11.5%, Due 3/2011)	7,865,000		7,865,000
		Equipment Line Note (13)	493,421		493,421
		Common Stock (4)	3,446,893		2,866,477
			17,805,314		17,224,898

Total Control Investments			$	136,536,484	$	143,192,123

AFFILIATE INVESTMENTS

Danco Acquisition Corp.	Manufacturing - machining and sheet metal work	Revolving Credit Facility (9.2%, Due 10/2010) (14)	$	—	$	—
		Senior Term Debt (9.3%, Due 10/2012) (14)	5,775,000		5,775,000
		Senior Term Debt (11.5%, Due 4/2013) (14)	8,599,687		8,599,687
		Redeemable Preferred Stock (4) (14)	2,500,000		2,500,000
		Common Stock Warrants (4) (14)	2,500		2,500
			16,877,187		16,877,187

Noble Logistics, Inc.	Service - aftermarket auto parts delivery	Revolving Credit Facility (9.2%, Due 12/2009) (9)	900,000		900,000
		Senior Term Debt (9.2%, Due 12/2011)	6,427,058		6,427,057
		Senior Term Debt (11.2% Due 3/2011) (6)	7,000,000		7,000,000
		Preferred Stock (4)	1,750,000		2,012,500
		Common Stock (4)	1,500,000		1,555,986
			17,577,058		17,895,543

Total Affiliate Investments			$	34,454,244	$	34,772,730

Total Investments			$	356,127,913	$	352,031,117

(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 December 31, 2007 and due date represents the contractual maturity date.

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

(4) Security is non-income producing.

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

(6) Last out tranche of senior debt, meaning if the portfolio company is liquidated then the holder of the last out tranche is paid after the senior debt.

(7) Total available under the revolving credit facility is $3,500,000, of which $1,220,000 remains undrawn at December 31, 2007.

(8) Total available under the revolving credit facility is $1,500,000 which was fully drawn at December 31, 2007.

(9) Total available under the revolving credit facility is $2,000,000, of which $1,100,000 remains undrawn at December 31, 2007.

(10) Total available under the revolving credit facility is $3,000,000, of which $900,000 remains undrawn at December 31, 2007.

(11) Total available under the revolving credit facility is $3,000,000, which remains undrawn at December 31, 2007.

(12) Total available under the revolving credit facility is $750,000, which remains undrawn at December 31, 2007.

(13) Total available for future borrowing for the purposes of purchasing equipment is $1,500,000. The undrawn amount of $1,006,579 may be drawn to purchase additional equipment through 10/24/2010. The interest rate on all amounts drawn on the equipment line note is 12% except for one draw of $188,181 whose interest rate is 15%. Each draw on the equipment line note is subject to its own amortization and maturity, typically over a period of 20-24 months. At December 31, 2007, the last amortization payment due under current amounts drawn under the equipment line note is 11/2009.

(14) Valued at cost due to recent acquisition.

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 pharmaceutical 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
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)	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, Inc.	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)(11)	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(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 of water coolers	Revolving Credit Facility (9.3%, Due 3/2009)(5)(8)	1,900,000		1,900,000
		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)(11)	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.
(11)		Last out tranche of senior debt, meaning if the portfolio company is liquidated then the holder of the last out tranche is paid after the senior debt.

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
	December 31, 2007			December 31, 2006

INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate investments	$	3,891,918		$	2,586,171
Control investments	2,865,843			1,264,451
Affiliate investments	700,494			114,668
Cash and cash equivalents	79,502			332,586
Total interest income	7,537,757			4,297,876
Other income	6,244			1,492
Total investment income	7,544,001			4,299,368

EXPENSES
Base management fee (Refer to Note 4)	497,632			551,235
Loan servicing fee (Refer to Note 4)	1,287,013			508,691
Administration fee (Refer to Note 4)	211,159			124,101
Interest expense	2,381,227			68,748
Amortization of deferred finance costs	169,329			91,392
Professional fees	90,255			186,537
Stockholder related costs	25,083			28,643
Insurance expense	46,719			60,696
Directors fees	54,709			54,800
Taxes and licenses	41,886			41,550
General and administrative expenses	38,644			60,132
Expenses before credit from Adviser	4,843,656			1,776,525
Credits to base management fee (Refer to Note 4)	(1,045,881		)	(375,225		)
Total expenses net of credit to base management fee	3,797,775			1,401,300
NET INVESTMENT INCOME	3,746,226			2,898,068

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized loss on sale of Non-Control/Non-Affiliate investments	(146,034		)	(2,283		)
Net unrealized depreciation of Non-Control/Non-Affiliate investments	(2,835,448		)	(52,814		)
Net unrealized appreciation (depreciation) of Control investments	4,487,562			(158,428		)
Net unrealized depreciation of Affiliate investments	(148,387		)	—
Net unrealized appreciation derivative	5,000			—
Net gain (loss) on investments	1,362,693			(213,525		)

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	5,108,919		$	2,684,543

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE:
Basic and Diluted	$	0.31		$	0.16

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 OPERATIONS

(UNAUDITED)

	Nine months ended			Nine months ended
	December 31, 2007			December 31, 2006

INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate investments	$	11,220,467		$	6,938,026
Control investments	8,043,247			3,711,056
Affiliate investments	1,501,944			114,668
Cash and cash equivalents	193,613			1,610,506
Total interest income	20,959,271			12,374,256
Other income	40,828			2,478
Total investment income	21,000,099			12,376,734

EXPENSES
Base management fee (Refer to Note 4)	1,309,951			2,214,437
Loan servicing fee (Refer to Note 4)	3,741,082			508,691
Administration fee (Refer to Note 4)	646,740			364,351
Interest expense	5,818,564			68,748
Amortization of deferred finance costs	595,532			91,392
Professional fees	356,176			354,325
Stockholder related costs	220,312			187,509
Insurance expense	182,789			200,933
Directors fees	176,981			154,300
Taxes and licenses	125,018			139,994
General and administrative expenses	130,121			104,161
Expenses before credit from Adviser	13,303,266			4,388,841
Credits to base management fee (Refer to Note 4)	(1,932,475		)	(375,225		)
Total expenses net of credit to base management fee	11,370,791			4,013,616
NET INVESTMENT INCOME	9,629,308			8,363,118

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized loss on sale of Non-Control/Non-Affiliate investments	(197,712		)	(944		)
Net unrealized depreciation of Non-Control/Non-Affiliate investments	(10,671,793		)	(1,189,598		)
Net unrealized appreciation (depreciation) of Control investments	9,941,521			(362,941		)
Net unrealized appreciation of Affiliate investments	305,986			—
Net unrealized appreciation derivative	5,000			—
Net loss on investments	(616,998		)	(1,553,483		)

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	9,012,310		$	6,809,635

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE:
Basic and Diluted	$	0.54		$	0.41

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)

	Nine months ended			Nine months ended
	December 31, 2007			December 31, 2006
Operations:
Net investment income	$	9,629,308		$	8,363,118
Realized loss on sale of investments	(197,712		)	(944		)
Net unrealized depreciation of portfolio	(424,286		)	(1,552,539		)
Unrealized appreciation of derivative	5,000			—
Net increase in net assets from operations	9,012,310			6,809,635

Capital transactions:
Shelf offering registration costs	(31,508		)	(132,707		)
Dividends	(11,426,469		)	(10,432,869		)
Total decrease in net assets from capital transactions	(11,457,977		)	(10,565,576		)

Total decrease in net assets	(2,445,667		)	(3,755,941		)

Net Assets
Beginning of period	222,818,509			229,841,697
End of period	$	220,372,842		$	226,085,756

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine months ended			Nine months ended
	December 31, 2007			December 31, 2006

CASH FLOWS FROM OPERATING ACTIVITIES

Net increase in net assets resulting from operations	$	9,012,310		$	6,809,635
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Purchase of investments	(157,334,750		)	(118,850,626		)
Principal repayments of investments	59,723,249			10,448,688
Proceeds from the sale of investments	15,696,641			19,589,945
Net unrealized depreciation of investment portfolio	424,286			1,552,539
Net unrealized appreciation of derivative	(5,000		)	—
Net realized loss on sales of investments	197,712			944
Net amortization of premiums and discounts	209,348			124,748
Amortization of deferred finance costs	595,532			91,392
Increase in interest receivable	(659,686		)	(683,317		)
Decrease (increase) in due from custodian	9,282,341			(2,798,620		)
Increase in prepaid assets	(255,307		)	(67,993		)
Increase in other assets	(149,846		)	(22,429		)
(Decrease) increase in other liabilities	(14,559		)	38,042
Increase in administration fee payable to Administrator (See Note 4)	48,915