McLean, VA: Gladstone Capital Corp. (NASDAQ: GLAD) announced today that its Net Operating Income for the third quarter was $2,224,574 or $0.22 per diluted share for the quarter and $4,830,036 or $0.47 per diluted share for the nine months ending June 30, 2002. Total assets were $137,724,982 at the end of June 2002. Due to limited activities after the formation of the company in May 2001, the company believes that the data from the prior year does not provide meaningful information. The dividend for the June ending quarter was $0.21 per share.

"Net Operating Income for the quarter ending June 30, 2002 was in line with our revised estimates for the year," said a spokesperson for the company. "The company is now earning more than we paid out in dividends for the quarter and we are hopeful that future quarters will show continued strength. However, we are still very cautious due to our less than optimistic view on the economy where we see little strength in the current operations of middle market businesses. Although we continue to see a good number of opportunities, the short-term outlook for some of these companies is not strong so we are continuing to move forward at a slow pace."

"Despite our cautious mood, we strongly disagree with the negative press and short selling in our industry. We believe the short sellers are providing erroneous information to the national newspapers and magazines and those publications are choosing to use the negative 'news' in stories to attract attention to sell more copies of their publications. We are saddened to see some well-known names in journalism soil their names with stories inspired by the short sellers. Members of our management team went through this kind of short-selling raid in 1991-2 in which the short sellers fueled the downward spiral with negative false information planted in publications. As it turned out, that period was a great buying opportunity for shareholders and we believe we are seeing that opportunity again."

"Our Income includes managerial assistance fees, which are paid to us by our portfolio companies. These managerial assistance fees are an integral part of the relationships we have with our portfolio companies. As discussed in previous releases, we expect these managerial assistance fees to offset a large portion of the operating expenses of the company, but they are nonrecurring and usually are charged when we are working on new financing arrangements."

"The attached financial statements are without footnotes. We are filing a Form 10-Q for the quarter ending June 30, 2002 with the Securities and Exchange Commission ('SEC') which can be retrieved at the SEC website at www.SEC.gov or to the company's web site at www.GladstoneCapital.com. A paper copy can be obtained by writing to us at 1616 Anderson Road, McLean, VA 22102."

For further information please contact Harry Brill or David Gladstone at (703) 286-7000. The company will have a conference call at 11:30 am EST, Thursday, August 15, 2002. Please call 1-800-521-5439 and use the ID# 219-93-65 and you will be placed on hold until the conference starts. An operator will monitor the call and set a queue for the questions.

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" 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 prospectus dated August 23, 2001, as filed with the Securities and Exchange Commission on August 24, 2001. 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.