Exhibit 99.1 Gladstone Investment Reports Results for the Second Quarter ended September 30, 2006 -- Net Investment Income was $2.9 million or $0.17 per common share -- Net Increase in Net Assets From Operations was $2.8 million or $0.17 per common share MCLEAN, Va.--(BUSINESS WIRE)--Nov. 1, 2006--Gladstone Investment Corp. (NASDAQ:GAIN) (the "Company") today announced earnings for the second quarter ended September 30, 2006. All per share references are per basic and diluted weighted average common share outstanding, unless otherwise noted. Net Investment Income for the second quarter ended September 30, 2006 was $2,883,886 or $0.17 per share, as compared to $1,412,906 or $0.09 per share for the second quarter ended September 30, 2005. Net Investment Income for the six months ended September 30, 2006 was $5,465,050 or $0.33 per share, as compared to $1,432,706 or $0.09 per share for the period June 22, 2005 (commencement of operations) to September 30, 2005. Net Increase in Net Assets Resulting from Operations for the second quarter ended September 30, 2006 was $2,848,044, or $0.17 per share, as compared to $1,476,732 or $0.09 per share for the same period a year ago. Net Increase in Net Assets Resulting from Operations for the six months ended September 30, 2006 was $4,125,092, or $0.25 per share compared to $1,496,532 or $0.09 per share for the period June 22, 2005 (commencement of operations) to September 30, 2005. Total assets were $228,136,147 at September 30, 2006 as compared to $230,323,807 at March 31, 2006. Net asset value was $13.71 per actual common share outstanding at September 30, 2006 as compared to $13.88 per actual common share at March 31, 2006. The annualized weighted average yield on the Company's portfolio for the three months ended September 30, 2006 was 8.72%. The annualized weighted average yield on the Company's portfolio for the three months ended September 30, 2005 was 6.38%. The annualized weighted average yield on the Company's portfolio for the six months ended September 30, 2006 was 8.44% compared to 6.38% for the period June 22, 2005 (commencement of operations) to September 30, 2005. During the second quarter ended September 30, 2006, the Company acquired interests in seven new syndicated loans for approximately $13.5 million and acquired interests in four existing syndicated loans of approximately $1.8 million. At September 30, 2006, the Company held 28 non-control/non-affiliate investments, three control investments and cash investments, totaling an aggregate cost basis of $209 million and fair value of approximately $208 million. Condensed Schedule of Investments September 30, 2006 Investment Type Cost Fair Value - ---------------------------------------------------------------------- Total Non-control/Non-Affiliate Investments $122,529,078 $121,555,262 Total Control Investments 56,746,318 56,491,805 Total cash equivalents 30,007,690 30,007,690 --------------------------- Total investments and cash equivalents $209,283,086 $208,054,757 =========================== "Since the inception of our fund on June 22, 2005, we have invested over $170 million, bringing our total portfolio investments to 78% of our initial public offering proceeds at quarter end. We are reviewing many buyout and mezzanine opportunities and anticipate reporting additional buyout and mezzanine activity for the third quarter," said Chip Stelljes, President and Chief Investment Officer. Subsequent to September 30, 2006, the Company: -- Purchased three new loan participations of approximately $4.0 million; -- Sold one loan participation for $2.0 million and received principle repayments of approximately $2.4 million on two loan participations; -- Declared monthly cash dividends of $0.07 per common share for each of the months of October, November and December of 2006; and -- Entered into a $100 million revolving credit facility. The Company will hold a conference call Thursday, November 2, 2006 at 8:30 am EST to discuss first quarter earnings. Please call (877) 407-8031 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 December 2, 2006. To hear the replay, please dial (877) 660-6853, access playback account 286 and use ID code 217126. 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 Investor Relations 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 and the Company's Form 10-Q as filed with the Securities and Exchange Commission today. 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 three For the three months ended months ended September 30, 2006 September 30, 2005 ------------------ ------------------ INVESTMENT INCOME Interest income Non-Control/Non-Affiliate investments $ 2,387,375 $ 193,578 Control investments 1,256,303 - Cash and cash equivalents 569,580 1,613,012 ------------------ ------------------ Total interest income 4,213,258 1,806,590 Other income 670 - ------------------ ------------------ Total investment income 4,213,928 1,806,590 ------------------ ------------------ EXPENSES Administration fee 124,861 77,962 Base management fee 861,893 92,108 Directors fees 56,250 52,000 Insurance expense 67,626 42,478 Professional fees 88,040 66,302 Stockholder related costs 65,100 42,903 Taxes and licenses 41,337 - Other expenses 24,935 19,931 ------------------ ------------------ Total expenses 1,330,042 393,684 ------------------ ------------------ NET INVESTMENT INCOME 2,883,886 1,412,906 ------------------ ------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized loss on sale of Non-Control/Non-Affiliate investments (1,934) - Net unrealized (depreciation) appreciation of investment portfolio (33,908) 63,826 ------------------ ------------------ Net loss on investments (35,842) 63,826 ------------------ ------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,848,044 $ 1,476,732 ================== ================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE: Basic and Diluted $ 0.17 $ 0.09 ================== ================== SHARES OF COMMON STOCK OUTSTANDING: Basic and diluted weighted average shares 16,560,100 16,231,404 GLADSTONE INVESTMENT CORPORATION STATEMENT OF OPERATIONS (UNAUDITED) For the period June 22, 2005 For the six (Commencement of months ended Operations) to September 30, 2006 September 30, 2005 ------------------ ------------------ INVESTMENT INCOME Interest income Non-Control/Non-Affiliate investments $ 4,351,855 $ 193,578 Control investments 2,446,605 - Cash and cash equivalents 1,277,920 1,661,210 ------------------ ------------------ Total interest income 8,076,380 1,854,788 Other income 986 - ------------------ ------------------ Total investment income 8,077,366 1,854,788 ------------------ ------------------ EXPENSES Administration fee 240,250 105,045 Base management fee 1,663,202 92,108 Directors fees 99,500 52,000 Insurance expense 140,237 42,478 Professional fees 167,788 66,302 Stockholder related costs 158,866 43,538 Interest expense - 378 Taxes and licenses 98,444 - Other expenses 44,029 20,233 ------------------ ------------------ Total expenses 2,612,316 422,082 ------------------ ------------------ NET INVESTMENT INCOME 5,465,050 1,432,706 ------------------ ------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on sale of Non-Control/Non-Affiliate investments 1,339 - Net unrealized (depreciation) appreciation of investment portfolio (1,341,297) 63,826 ------------------ ------------------ Net gain on investments (1,339,958) 63,826 ------------------ ------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,125,092 $ 1,496,532 ================== ================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE: Basic and Diluted $ 0.25 $ 0.09 ================== ================== SHARES OF COMMON STOCK OUTSTANDING: Basic and diluted weighted average shares 16,560,100 16,084,900 GLADSTONE INVESTMENT CORPORATION STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) September 30, 2006 March 31, 2006 ------------------ ------------------ ASSETS Non-Control/Non-Affiliate investments (Cost 9/30/06: $122,529,078; 3/31/06: $97,423,004) $ 121,555,262 $ 97,585,972 Control investments (Cost 9/30/06: $56,746,318; 3/31/06: $55,846,318) 56,491,805 55,796,318 ------------------ ------------------ Total investments at fair value (Cost 9/30/06: $179,275,396; 3/31/06: $153,269,322) 178,047,067 153,382,290 Cash and cash equivalents 48,446,618 75,672,605 Interest receivable 1,294,355 761,388 Prepaid directors fees 72,500 - Prepaid insurance 200,875 99,874 Due from Adviser - 234,551 Other assets 74,732 173,099 ------------------ ------------------ TOTAL ASSETS $ 228,136,147 $ 230,323,807 ================== ================== LIABILITIES Administration fee payable to Gladstone Administration $ 124,861 $ 110,002 Base management fee payable to Gladstone Management 861,893 - Accrued expenses 154,285 367,031 Other liabilities 16,692 5,077 ------------------ ------------------ Total Liabilities 1,157,731 482,110 ------------------ ------------------ NET ASSETS $ 226,978,416 $ 229,841,697 ================== ================== 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 230,196,151 230,229,279 Net unrealized (depreciation) appreciation of investment portfolio (1,228,329) 112,968 Distributions in excess of net investment income (2,005,966) (517,110) ------------------ ------------------ Total Net Assets $ 226,978,416 $ 229,841,697 ================== ================== Net assets per share $ 13.71 $ 13.88 ================== ================== GLADSTONE INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS (UNAUDITED) For the three For the three months ended months ended September 30, 2006 September 30, 2005 ------------------------------------- Per Share Data (1) - -------------------------------- Balance at beginning of period $ 13.75 $ 13.90 Income from investment operations: Net investment income (2) 0.17 0.09 Realized gain on sale of investments (2) - - Net unrealized appreciation of investments (2) - - ------------------------------------- Total from investment operations 0.17 0.09 ------------------------------------- Distributions (0.21) (0.06) ------------------------------------- Net asset value at end of period $ 13.71 $ 13.93 ===================================== Per share market value at beginning of period $ 14.82 $ 15.05 Per share market value at end of period 14.60 14.68 Total return (3) -0.04% -2.07% Shares outstanding at end of period 16,560,100 16,560,100 Ratios/Supplemental Data - -------------------------------- Net assets at end of period $ 226,978,416 $ 230,753,412 Average net assets (4) $ 226,140,557 $ 230,242,643 Ratio of expenses to average net assets (annualized) 2.35% 0.68% Ratio of net investment income to average net assets (annualized) 5.10% 2.45% (1) Based on actual shares outstanding. (2) Based on weighted average basic per share data. (3) 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. (4) Calculated using the average of the ending monthly net assets for the respective periods. GLADSTONE INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS (UNAUDITED) For the period June 22, 2005 For the six (Commencement of months ended Operations) to September 30, 2006 September 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) 0.33 0.09 Realized gain on sale of investments (3) - - Net unrealized appreciation of investments (3) (0.08) - ------------------------------------- Total from investment operations 0.25 0.09 ------------------------------------- Distributions (0.42) (0.06) ------------------------------------- Net asset value at end of period $ 13.71 $ 13.93 ===================================== Per share market value at beginning of period $ 14.90 $ 15.00 Per share market value at end of period 14.60 14.68 Total return (4) 0.87% -1.74% Shares outstanding at end of period 16,560,100 16,560,100 Ratios/Supplemental Data - -------------------------------- Net assets at end of period $ 226,978,416 $ 230,753,412 Average net assets (5) $ 226,929,612 $ 222,716,478 Ratio of expenses to average net assets (annualized) 2.30% -0.57% Ratio of net investment income to average net assets (annualized) 4.82% 1.93% (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. Investor Relations Robert Johnson, 703-287-5835