Exhibit 99.1 Gladstone Investment Corporation Reports Financial Results for the Fiscal Year and Quarter Ended March 31, 2007 -- Net Investment Income for the year was $11.2 million, or $0.67 per common share and for the quarter ended March 31, 2007 was $2.8 million, or $0.17 per common share -- Net Increase in Net Assets From Operations for the year was $7.3 million, or $0.44 per common share and for the quarter ended March 31, 2007 was $0.5 million, or $0.03 per common share Business Editors MCLEAN, Va.--(BUSINESS WIRE)--May 31, 2007--Gladstone Investment Corp. (NASDAQ: GAIN) (the "Company") today announced earnings for the fourth quarter and fiscal year ended March 31, 2007. All per share references are per basic and diluted weighted average common share outstanding, unless otherwise noted. Net Investment Income for the year ended March 31, 2007 was $11,147,732, or $0.67 per share compared to Net Investment Income for the period June 22, 2005 (commencement of operations) to March 31, 2006 of $5,883,898, or $0.36 per share. For the three months ended March 31, 2007 Net Investment Income was $2,784,614, or $0.17 per share compared to $2,698,622, or $0.16 per share for the same period a year ago. Net Increase in Net Assets Resulting from Operations for the year ended March 31, 2007 was $7,268,404, or $0.44 per share compared to $6,054,297, or $0.37 per share for the period ended June 22, 2005 (commencement of operations) to March 31, 2006. The Net Increase in Net Assets Resulting from Operations for the three months ended March 31, 2007 was $458,769, or $0.03 per share compared to $2,943,018, or $0.18 per share for the three months ended March 31, 2006. Total assets were $323,590,215 at March 31, 2007 as compared to $230,323,807 at March 31, 2006. Net asset value was $13.46 per actual common share outstanding at March 31, 2007 as compared to $13.88 per actual common share outstanding at March 31, 2006. The weighted average yield on our portfolio of investments, excluding cash and cash equivalents, was 8.72% for the year ended March 31, 2007 compared to 7.02% for the period from June 22, 2005 (commencement of operations) to March 31, 2006. The annualized weighted average yield on the Company's portfolio for the three months ended March 31, 2007 was 8.72% compared to 7.41% for the three months ended March 31, 2006. During the fourth quarter ended March 31, 2007, the Company recorded the following activity: -- Invested approximately $36.0 million in senior debt, subordinated debt and preferred and common equity with A. Stucki Company; -- Acquired interests in five new syndicated loans for approximately $9.4 million; -- Acquired interests in nine existing syndicated loan participations for approximately $18.2 million; -- Sold or received full repayment for $26.9 million of four syndicated loan participations; and -- Increased its borrowing capacity under its revolving credit facility with Deutsche Bank A.G. from $100 million to $200 million. At March 31, 2007, the Company held 41 non-control/non-affiliate investments, 5 control investments and 1 affiliate investment, totaling an aggregate cost basis of approximately $275 million and a fair value of approximately $271 million. Condensed Schedule of Investments March 31, 2007 Investment Type Cost Fair Value - ---------------------------------------------------------------------- Total Non-control/Non-Affiliate Investments $138,567,741 $138,168,612 Total Control Investments 116,302,372 113,016,491 Total Affiliate Investments 19,750,000 19,762,500 ------------- ------------- Total Investments $274,620,113 $270,947,603 ============= ============= "Since the inception of our fund in June 2005, we have invested over $390 million, resulting in the full investment of our IPO proceeds and an additional $200 million in debt financing. We continue to add proprietary investments to our portfolio using leverage, thereby increasing returns to stockholders. We continue to see good opportunities for our company and expect to close more investments as the year progresses," said Chip Stelljes, President and Chief Investment Officer. Subsequent to March 31, 2007, the Company: -- Purchased additional syndicated loan participations of 8 new and 9 existing portfolio companies of approximately $48.6 million; -- Received the full repayment on 3 of its syndicated loan participations for approximately $13.6 million and sold 2 of its syndicated loan participations totaling approximately $3.4 million, realizing an aggregate net loss of approximately $30,000 on the transactions; -- Invested approximately $7.2 million in one buyout investment; and -- Declared monthly cash dividends of $0.075 per common share for each of the months of April, May and June of 2007. The Company will hold a conference call on Friday, June 1, 2007 at 8:30 am EDT to discuss fourth quarter and fiscal year 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 August 2, 2007. To hear the replay, please dial (877) 660-6853, access playback account 286 and use ID code 243279. The 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 and will be available through August 2, 2007. 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. 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 for the fiscal year ended March 31, 2007, as filed with the Securities and Exchange Commission on May 31, 2007. 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 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the three For the three months ended months ended March 31, 2007 March 31, 2006 --------------- ---------------- INVESTMENT INCOME Interest income Non-Control/Non-Affiliate investments $ 2,634,567 $ 1,466,449 Control investments 1,775,004 255,059 Affiliate investments 420,961 - Cash and cash equivalents 51,141 1,242,687 --------------- ---------------- Total interest income 4,881,673 2,964,195 Fee Income - Control Investments - 230,000 Other income 3,229 185 --------------- ---------------- Total investment income 4,884,902 3,194,380 --------------- ---------------- EXPENSES Base management fee 198,679 557,730 Loan servicing fee 1,060,163 - Administration fee 162,244 110,002 Directors fees 53,800 57,000 Professional fees 231,703 27,497 Insurance expense 61,406 72,612 Stockholder related costs 85,974 21,662 Interest expense 538,913 - Amortization of deferred finance costs 142,387 - Taxes and licenses 28,879 188,684 Other expenses 38,498 15,160 --------------- ---------------- Expenses before credit from Adviser 2,602,646 1,050,347 --------------- ---------------- Credit to base management fee for fees collected by Adviser (502,358) (554,589) --------------- ---------------- Total expenses net of credit to management fee 2,100,288 495,758 --------------- ---------------- NET INVESTMENT INCOME 2,784,614 2,698,622 --------------- ---------------- REALIZED AND UNREALIZED LOSS ON INVESTMENTS Realized (loss) gain on sale of Non-Control/Non-Affiliate investments (92,906) 19,375 Net unrealized appreciation of Non-Control/Non-Affiliate investments 627,501 275,021 Net unrealized depreciation of Control Investments (2,872,940) (50,000) Net unrealized appreciation of Affiliate Investments 12,500 - --------------- ---------------- Net loss on investments (2,325,845) 244,396 --------------- ---------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 458,769 $ 2,943,018 =============== ================ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE: Basic and Diluted $ 0.03 $ 0.18 =============== ================ SHARES OF COMMON STOCK OUTSTANDING: Basic and diluted weighted average shares 16,560,100 16,560,100 GLADSTONE INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS For the period June 22, 2005 (Commencement of Year Ended Operations) to March 31, 2007 March 31, 2006 ---------------- ----------------- INVESTMENT INCOME Interest income Non-Control/Non-Affiliate investments $ 9,572,593 $ 2,450,906 Control investments 5,486,060 255,059 Affiliate investments 535,629 - Cash and cash equivalents 1,661,647 4,434,706 ---------------- ----------------- Total interest income 17,255,929 7,140,671 Fee income - Control investments - 230,000 Other income 5,707 185 ---------------- ----------------- Total investment income 17,261,636 7,370,856 ---------------- ----------------- EXPENSES Base management fee 2,413,116 915,360 Loan servicing fee 1,568,854 - Administration fee 526,595 288,471 Interest expense 607,661 378 Amortization of deferred finance costs 233,779 - Professional fees 586,028 163,369 Stockholder related costs 273,483 89,563 Insurance expense 262,339 184,642 Directors fees 208,100 160,000 Taxes and licenses 168,873 195,270 Organizational costs - 7,002 General and administrative expenses 142,659 37,492 ---------------- ----------------- Expenses before credit from Adviser 6,991,487 2,041,547 ---------------- ----------------- Credit to management fee for fees collected by Adviser (877,583) (554,589) ---------------- ----------------- Total expenses net of credit to management fee 6,113,904 1,486,958 ---------------- ----------------- NET INVESTMENT INCOME 11,147,732 5,883,898 ---------------- ----------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized (loss) gain on sale of Non-Control/Non-Affiliate investments (93,850) 57,431 Net unrealized (depreciation) appreciation of Non- Control/Non-Affiliate investments (562,097) 162,968 Net unrealized depreciation of Control Investments (3,235,881) (50,000) Net unrealized appreciation of Affiliate Investments 12,500 - ---------------- ----------------- Net (loss) gain on investments (3,879,328) 170,399 ---------------- ----------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 7,268,404 $ 6,054,297 ================ ================= NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE: Basic and Diluted $ 0.44 $ 0.37 ================ ================= SHARES OF COMMON STOCK OUTSTANDING: Basic and diluted weighted average shares 16,560,100 16,391,589 GLADSTONE INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES March 31, 2007 March 31, 2006 ASSETS Non-Control/Non-Affiliate investments (Cost 3/31/07:$138,567,741; 3/31/06: $97,423,004) $138,168,612 $ 97,585,972 Control investments (Cost 3/31/07: $116,302,372; 3/31/06: $55,846,318) 113,016,491 55,796,318 Affiliate investments (Cost 3/31/07: $19,750,000) 19,762,500 - -------------- -------------- Total investments at fair value (Cost 3/31/07: $274,620,113; 3/31/06: $153,269,322) 270,947,603 153,382,290 Cash and cash equivalents 37,788,941 75,672,605 Interest receivable 1,306,090 761,388 Prepaid insurance 83,819 99,874 Deferred finance costs 627,960 - Due from Custodian 12,694,985 - Due from Adviser 20,383 234,551 Other assets 120,434 173,099 -------------- -------------- TOTAL ASSETS $323,590,215 $230,323,807 ============== ============== LIABILITIES Due to Administrator $ 162,244 $ 110,002 Borrowings under line of credit 100,000,000 - Accrued expenses 523,698 367,031 Other liabilities 85,764 5,077 -------------- -------------- Total Liabilities 100,771,706 482,110 -------------- -------------- NET ASSETS $222,818,509 $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 230,096,572 230,229,279 Net unrealized (depreciation) appreciation of investment portfolio (3,672,510) 112,968 Distributions in excess of net investment income (3,622,113) (517,110) -------------- -------------- Total Net Assets $222,818,509 $229,841,697 ============== ============== Net assets per share $ 13.46 $ 13.88 ============== ============== GLADSTONE INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS (UNAUDITED) For the three For the three months ended months ended March 31, 2007 March 31, 2006 --------------- --------------- Per Share Data (1) - -------------------------------------- Balance at beginning of period $ 13.65 $ 13.91 Income from investment operations: Net investment income (2) 0.17 0.17 Realized loss on sale of investments (2) (0.01) - Net unrealized (depreciation) appreciation of investments (2) (0.13) 0.01 --------------- --------------- Total from investment operations 0.03 0.18 --------------- --------------- Distributions (0.22) (0.21) --------------- --------------- Net asset value at end of period $ 13.46 $ 13.88 =============== =============== Per share market value at beginning of period $ 15.31 $ 13.59 Per share market value at end of period 14.87 15.10 Total return (3) -1.41% 12.68% Shares outstanding at end of period 16,560,100 16,560,100 Ratios/Supplemental Data - -------------------------------------- Net assets at end of period $222,818,509 $229,841,697 Average net assets (4) $223,372,272 $229,400,219 Ratio of expenses to average net assets (annualized) (5) 4.66% 1.83% Ratio of net expenses to average net assets (annualized) (6) 3.76% 0.86% Ratio of net investment income to average net assets (annualized) 4.99% 4.71% (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. (5) Ratio of expenses to average net assets is computed using expenses before credit from the Adviser. (6) Ratio of net expenses to average net assets is computed using total expenses net of credits to management fee. GLADSTONE INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS For the period June 22, 2005 (Commencement of For the year ended Operations) to March 31, 2007 March 31, 2006 ------------------ ----------------- 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) 0.67 0.36 Realized loss on sale of investments (3) (0.01) - Net unrealized (depreciation) appreciation of investments (3) (0.23) 0.01 ------------------ ----------------- Total from investment operations 0.44 0.37 ------------------ ----------------- Distributions (0.85) (0.39) Shelf registration offering costs (0.01) - ------------------ ----------------- Net asset value at end of period $ 13.46 $ 13.88 ================== ================= Per share market value at beginning of period $ 15.10 $ 15.00 Per share market value at end of period 14.87 15.10 Total Return (4) 4.36% 3.39% Shares outstanding at end of period 16,560,100 16,560,100 Ratios/Supplemental Data - --------------------------------- Net assets at end of period $222,818,509 $229,841,697 Average net assets $225,642,593 $226,875,738 Ratio of expenses to average net assets (5) (6) 3.10% 1.08% Ratio of net expenses to average net assets (5) (7) 2.71% 0.79% Ratio of net investment income to average net assets (5) 4.94% 3.11% (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 the Company's dividend reinvestment plan. (5) Amounts are annualized for the period June 22, 2005 (commencement of operations) to March 31, 2006. (6) Ratio of expenses to average net assets is computed using expenses before credit from the Adviser. (7) Ratio of net expenses to average net assets is computed using total expenses net of credits to management fee. CONTACT: Gladstone Investment Corp. Investor Relations: Robert Johnson, 703-287-5835