Exhibit 99.1 Gladstone Investment Reports Financial Results for the First Quarter Ended June 30, 2006 MCLEAN, Va.--(BUSINESS WIRE)--Aug. 2, 2006--Gladstone Investment Corp. (NASDAQ:GAIN): -- Net Investment Income was $2.6 million or $0.16 per common share -- Net Increase in Net Assets From Operations was $1.3 million or $0.08 per common share Gladstone Investment Corp. (NASDAQ:GAIN) (the "Company") today announced earnings for the first quarter ended June 30, 2006. All per share references are per basic and diluted weighted average common share outstanding, unless otherwise noted. Net Investment Income for the first quarter ended June 30, 2006 was $2,581,164 or $0.16 per share as compared $19,800 or $0.00 for the period June 22, 2005 (commencement of operations) to June 30, 2005. Net Increase in Net Assets Resulting from Operations for the first quarter ended June 30, 2006 was $1,277,048 or $0.08 per share as compared $19,800 or $0.00 for the period June 22, 2005 (commencement of operations) to June 30, 2005. Total assets were $228,699,044 at June 30, 2006 as compared to $230,323,807 or on March 31, 2006. Net asset value was $13.75 per actual common share outstanding at June 30, 2006 as compared to $13.88 per actual common share at March 31, 2006. The weighted average yield on our portfolio of investments, excluding cash and cash equivalents, was 8.77% for the first quarter ended June 30, 2006. During the first quarter ended June 30, 2006 the Company recorded the following activity: -- Acquired interests in eight new syndicated loans for approximately $30 million; -- Sold three syndicated loans for approximately $15.5 million; -- Recorded net unrealized depreciation on its investments of approximately $1.3 million; and -- Recognized an aggregate of $3,273 of realized gains related to the sale of four loan participations. At June 30, 2006, the Company held 24 non-control/non-affiliate investments, three control investments and cash investments, totaling an aggregate cost basis of $210 million and fair value of nearly $209 million. Condensed Schedule of Investments June 30, 2006 Investment Type Cost Fair Value - ---------------------------------------------------------------------- Total Non-Control/Non-Affiliate Investments 114,228,222 113,251,478 Total Control Investments 56,246,318 56,028,640 Total cash equivalents 39,558,107 39,558,107 ------------- ------------- Total investments and cash equivalents $210,032,647 $208,838,225 ------------- ------------- "Since the inception of our fund on June 22, 2005, we have invested over $170 million, bringing our total portfolio investments to 80% at quarter end. We are reviewing many buyout opportunities and anticipate reporting additional buyout activity for the second quarter," said Chip Stelljes, President and Chief Investment Officer. Subsequent to June 30, 2006, the Company: -- Purchased additional loan participations of two portfolio companies of approximately $0.5 million; -- Purchased two new loan participations of approximately $5.0 million; -- Sold one loan participation for $1.0 million; and -- Declared monthly cash dividends of $0.07 per common share for each of the months of July, August and September of 2006. The Company will hold a conference call Thursday, August 3, 2006 at 9:30 am EDT to discuss first quarter earnings. Please call (877) 407-0782 to enter the conference. An operator will monitor the call and set a queue for the questions. A replay of the conference call will be available through September 3, 2006. To hear the replay, please dial (877) 660-6853, access playback account 286 and use ID code 210002. The online replay will be available approximately two hours after the call concludes. The live audio broadcast of Gladstone Investment's quarterly conference call will be available online at www.GladstoneInvestment.com and www.investorcalendar.com. The online replay will follow shortly after the call. Gladstone Investment Corporation is an investment company that seeks to make debt and equity investments in small and mid-sized private businesses in the U.S. in connection with acquisitions, changes in control and recapitalizations. For more information please visit our website at http://www.GladstoneInvestment.com. For further information contact our Investor Relations Manager, Kelly Sargent at 703-287-5835. This press release may include statements that may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements with regard to the future performance of the Company. Words such as "believes," "expects," "anticipates," "estimated," "approximately" "projects" and "future" or similar expressions are intended to identify forward-looking statements. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on the Company's current plans that are believed to be reasonable as of the date of this press release. Factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements include, among others, those factors listed under the caption "Risk factors" of the Company's Form 10-K dated March 31, 2006, as filed with the Securities and Exchange Commission on June 14, 2006. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. GLADSTONE INVESTMENT CORPORATION STATEMENT OF OPERATIONS (UNAUDITED) For the period June 22, 2005 For the three (Commencement of months ended Operations) to June 30, 2006 June 30, 2005 ---------------- ---------------- INVESTMENT INCOME Interest income Non-Control/Non-Affiliate investments $ 1,964,480 $ - Control investments 1,190,302 - Cash and cash equivalents 708,340 48,198 ---------------- ---------------- Total interest income 3,863,122 48,198 Other income 316 - ---------------- ---------------- Total investment income 3,863,438 48,198 ---------------- ---------------- EXPENSES Administration fee 115,389 27,083 Base management fee 801,309 - Directors fees 43,250 - Insurance expense 72,611 - Professional fees 79,748 - Stockholder related costs 93,766 635 Interest expense - 378 Taxes and licenses 57,107 - Other expenses 19,094 302 ---------------- ---------------- Total expenses 1,282,274 28,398 ---------------- ---------------- NET INVESTMENT INCOME 2,581,164 19,800 ---------------- ---------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain on sale of Non- Control/Non-Affiliate investments 3,273 - Net unrealized depreciation of investment portfolio (1,307,389) - ---------------- ---------------- Net loss on investments (1,304,116) - ---------------- ---------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,277,048 $ 19,800 ================ ================ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE: Basic and Diluted $ 0.08 $ 0.00 ================ ================ SHARES OF COMMON STOCK OUTSTANDING: Basic and diluted weighted average shares 16,560,100 14,400,100 GLADSTONE INVESTMENT CORPORATION STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) June 30, March 31, 2006 2006 ------------- ------------- ASSETS Non-Control/Non-Affiliate investments (Cost 6/30/06: $114,228,222; 3/31/06: $97,423,004) $113,251,478 $ 97,585,972 Control investments (Cost 6/30/06: $56,246,318; 3/31/06: $55,846,318) 56,028,640 55,796,318 ------------- ------------- Total investments at fair value (Cost 6/30/06: $170,474,540; 3/31/06: $153,269,322) 169,280,118 153,382,290 Cash and cash equivalents 58,283,609 75,672,605 Interest receivable 911,817 761,388 Prepaid directors fees 108,750 - Prepaid insurance 27,262 99,874 Due from Adviser - 234,551 Other assets 87,488 173,099 ------------- ------------- TOTAL ASSETS $228,699,044 $230,323,807 ============= ============= LIABILITIES Accounts payable $ 11,583 $ - Administration fee payable to Gladstone Administration 115,389 110,002 Base management fee payable to Gladstone Management 801,309 - Accrued expenses 124,876 367,031 Other liabilities 4,763 5,077 ------------- ------------- Total Liabilities 1,057,920 482,110 ------------- ------------- NET ASSETS $227,641,124 $229,841,697 ============= ============= ANALYSIS OF NET ASSETS: Common stock, $0.001 par value, 100,000,000 shares authorized and 16,560,100 issued and outstanding, respectively $ 16,560 $ 16,560 Capital in excess of par value 230,229,279 230,229,279 Net unrealized (depreciation) appreciation of investment portfolio (1,194,421) 112,968 Distributions in excess of net investment income (1,410,294) (517,110) ------------- ------------- Total Net Assets $227,641,124 $229,841,697 ============= ============= Net assets per share $ 13.75 $ 13.88 ============= ============= GLADSTONE INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS (UNAUDITED) For the period June 22, 2005 For the three (Commencement of months ended Operations) to June 30, 2006 June 30, 2005 --------------------------------- Per Share Data (1) - ------------------ Balance at beginning of period $ 13.88 $ - Net proceeds from initial public offering (2) - 13.95 --------------------------------- Offering costs - (0.05) Income from investment operations: Net investment income (3) 0.16 - Realized gain on sale of investments (3) 0.00 - Net unrealized appreciation of investments (3) (0.08) - --------------------------------- Total from investment operations 0.08 - --------------------------------- Distributions (0.21) - --------------------------------- Net asset value at end of period $ 13.75 $ 13.90 ================================= Per share market value at beginning of period $ 14.90 $ 15.00 Per share market value at end of period 15.00 15.05 Total Return (4) 2.13% 0.33% Shares outstanding at end of period 16,560,100 14,400,100 Ratios/Supplemental Data ------------------------ Net assets at end of period $ 227,641,124 $ 200,137,980 Average net assets (5) $ 227,718,666 $ 200,137,980 Ratio of expenses to average net assets (annualized) 2.25% 0.06% Ratio of net investment income to average net assets (annualized) 4.53% 0.04% (1) Based on actual shares outstanding. (2) Net of initial underwriting discount of $1.05 per share. (3) Based on weighted average basic per share data. (4) Total return equals the change in the market value of the Company's common stock from the beginning of the period taking into account dividends reinvested in accordance with the terms of our dividend reinvestment plan. (5) Calculated using the average of the ending monthly net assets for the respective periods. CONTACT: Gladstone Investment Corp. Kelly Sargent, 703-287-5835