Exhibit 99.1 Gladstone Investment Corporation Reports Financial Results for the First Quarter Ended June 30, 2007 -- Net Investment Income for the quarter was $2.9 million, or $0.17 per common share -- Net Increase in Net Assets from Operations for the quarter was $8.3 million, or $0.50 per common share MCLEAN, Va.--(BUSINESS WIRE)--Aug. 1, 2007--Gladstone Investment Corp. (NASDAQ:GAIN) (the "Company") today announced earnings for the first quarter ended June 30, 2007. All per share references are per basic and diluted weighted average common share outstanding, unless otherwise noted. Net Investment Income for the quarter ended June 30, 2007 was $2,888,544, or $0.17 per share, compared to Net Investment Income for the quarter ended June 30, 2006 of $2,581,164, or $0.16 per share. Net Increase in Net Assets Resulting from Operations for the quarter ended June 30, 2007 was $8,270,466, or $0.50 per share, compared to $1,277,048, or $0.08 per share for the quarter ended June 30, 2006. Total assets were $363,079,575 at June 30, 2007 as compared to $323,590,215 at March 31, 2007. Net asset value was $13.73 per actual common share outstanding at June 30, 2007, as compared to $13.46 per actual common share outstanding at March 31, 2007. The annualized weighted average yield on the Company's portfolio of investments, excluding cash and cash equivalents, was 9.10% for the quarter ended June 30, 2007 compared to 8.77% for the quarter ended June 30, 2006. During the first quarter ended June 30, 2007, the Company recorded the following activity: -- Invested approximately $11.4 million in senior debt and warrants to purchase membership interest in B-Dry, LLC; -- Acquired interests in thirteen new syndicated loans for approximately $36.8 million; -- Acquired interests in nine existing syndicated loan participations for approximately $23.4 million; and -- Sold or received full repayment for $21.4 million of nine syndicated loan participations. At June 30, 2007, the Company held 47 Non-control/Non-Affiliate investments, 5 Control investments and 1 Affiliate investment, totaling an aggregate cost basis of approximately $320 million and a fair value of approximately $322 million. Condensed Schedule of Investments June 30, 2007 Investment Type Cost Fair Value - ---------------------------------------------------------------------- Total Non-control/Non-Affiliate Investments $186,296,045 $185,368,271 Total Control Investments 116,322,372 118,310,360 Total Affiliate Investments 17,250,000 17,947,445 ------------------------- Total Investments $319,868,417 $321,626,076 ========================= "Since the inception of our fund in June 2005, we have invested over $416 million, resulting in the full investment of our IPO proceeds as well as borrowings under our $200 million credit facility. 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 June 30, 2007, the Company: -- Purchased additional loan participations of 2 new and 5 existing portfolio companies of approximately $11.3 million; and -- Declared monthly cash dividends of $0.075 per common share for each of the months of July, August and September of 2007. The Company will hold a conference call on Thursday, August 2, 2007 at 8:30 am EDT to discuss fiscal 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 September 2, 2007. To hear the replay, please dial (877) 660-6853, access playback account 286 and use ID code 249132. 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 November 3, 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. For further information, contact Investor Relations at 703-287-5835. This press release may include statements that may constitute "forward-looking statements" 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) 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 (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 GLADSTONE INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) 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 ============= ============= GLADSTONE INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS (UNAUDITED) 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% (1) Based on actual shares outstanding at the end of the corresponding period. (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) Amounts are annualized. (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 the management fee. CONTACT: Gladstone Investment Corp. Rob Johnson, 703-287-5835