Exhibit 99.1 Gladstone Capital Reports Results for the Third Quarter Ended June 30, 2007 -- Net Investment Income was $5.7 million, or $0.42 per diluted common share -- Net Increase in Net Assets was $6.0 million, or $0.44 per diluted common share Business Editors MCLEAN, Va.--(BUSINESS WIRE)--Aug. 6, 2007--Gladstone Capital Corp. (NASDAQ:GLAD) (the "Company") today announced earnings for the third quarter and nine months ended June 30, 2007. All per share references are based on fully diluted weighted average common shares outstanding, unless otherwise noted. Net Investment Income for the third quarter ended June 30, 2007 was $5,704,867, or $0.42 per share, as compared to $4,788,082, or $0.41 per share, for the third quarter ended June 30, 2006, an increase of 2.4% per share. Net Investment Income for the nine months ended June 30, 2007 was $16,592,150, or $1.31 per share, as compared to $14,434,312, or $1.25 per share, for the nine months ended June 30, 2006, an increase of 4.8%. Net Increase in Net Assets Resulting from Operations for the quarter ended June 30, 2007 was $5,964,600, or $0.44 per share, as compared to $5,543,076, or $0.48 per share, for the quarter ended June 30, 2006, a decrease of 8.3% per share. Net Increase in Net Assets Resulting from Operations for the nine months ended June 30, 2007 was $14,213,054, or $1.12 per share, as compared to $19,366,806, or $1.68 per share, for the nine months ended June 30, 2006, a decrease of 33.3% per share. The primary difference between the current and prior year periods is the result of net unrealized appreciation and depreciation on the Company's investment portfolio. The Company recorded net unrealized appreciation on its investments of $256,613 for the quarter ended June 30, 2007, and net unrealized depreciation of $2,465,915 for the nine months ended June 30, 2007, as compared to net unrealized appreciation on its investments of $812,991 and $5,769,820 for the quarter and nine months ended June 30, 2006, respectively. Total assets were $378,610,750 at June 30, 2007, as compared to $225,783,215 at September 30, 2006. Net asset value was $15.11 per actual common share outstanding at June 30, 2007, as compared to $14.02 per actual common share outstanding at September 30, 2006. The annualized weighted average yield on the Company's portfolio for the quarter ended June 30, 2007 was 11.8% as compared to 11.7% for the quarter ended June 30, 2006. For the third quarter ended June 30, 2007, the Company reported the following activity: -- Purchased a portfolio of media and communication loans for approximately $63.3 million; -- Funded approximately $62.8 million of additional new investments; -- Received principal repayments of approximately $37.6 million, which included scheduled principal repayments, full repayments, and syndicate sales; -- Received approximately $515,000 of success fees; -- Completed a public offering of 2,000,000 shares of common stock at a price of $24.25 per share for net proceeds, after underwriting discounts and offering expenses, of approximately $45.7 million, all of which were used to repay outstanding borrowings on the Company's line of credit; and -- Paid monthly cash dividends of $0.14 per common share for each of the months of April, May and June. At June 30, 2007, the Company had investments in debt and equity securities and syndicated loan participations in 59 private companies with an aggregate cost basis of approximately $370.0 million and a fair value of approximately $368.9 million. "We were successful in building our assets during the third quarter and nine months ended June 30, 2007. We are excited about our purchase of loans to media and broadcasting companies and the results of our direct origination business," said Chip Stelljes, President and Chief Investment Officer. "We expect the increase in assets to yield positive results for the remainder of fiscal year 2007." Subsequent to June 30, 2007, the Company: -- Declared monthly cash dividends of $0.14 per common share for each of the months of July, August and September 2007; and -- Completed an offering of 400,000 shares of common stock at a price of $20.41 per share for proceeds of approximately $8.2 million, all of which were used to repay outstanding borrowings on the Company's line of credit. The financial statements below are without footnotes. We have filed a Form 10-Q today for the third quarter ended June 30, 2007 with the Securities and Exchange Commission (the "SEC"), which can be retrieved from the SEC's website at www.sec.gov or from the Company's web site at www.GladstoneCapital.com. A paper copy can be obtained free of charge by writing to us at 1521 Westbranch Drive, Suite 200, McLean, VA 22102. The Company will hold a conference call Tuesday, August 7, 2007 at 8:30 am EDT to discuss third quarter earnings. Please call (877) 407-8031 to enter the conference. An operator will monitor the call and set a queue for the questions. The conference call replay will be available two hours after the call for approximately 30 days. To hear the replay, please dial (877) 660-6853, access playback account 286 and use conference ID code 249395. The live audio broadcast of Gladstone Capital's quarterly conference call will be available online at www.GladstoneCapital.com and www.investorcalendar.com. The event will be archived and available for replay on the Company's website until November 8, 2007. For further information contact Rob Johnson 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 "should," "believes," "feel," "expects," "projects," "strive," "goals," 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 July 5, 2007, as filed with the Securities and Exchange Commission on July 5, 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 CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF ASSETS & LIABILITIES (Unaudited) June 30, September 30, 2007 2006 ------------- ------------- ASSETS Investments at fair value (Cost 6/30/2007: $369,975,398; 9/30/2006: $216,202,986) $368,949,247 $217,642,750 Cash and cash equivalents 3,491,495 731,744 Interest receivable - investments in debt securities 2,221,606 1,394,942 Interest receivable - employees 32,739 37,396 Due from custodian 3,129,891 3,587,152 Deferred financing fees 246,333 145,691 Prepaid assets 186,643 226,747 Due from employees - 1,803,283 Other assets 352,796 213,510 ------------- ------------- TOTAL ASSETS $378,610,750 $225,783,215 ============= ============= LIABILITIES Accounts payable $ 5,160 $ 4,072 Interest payable 516,780 247,530 Administration fee due to Administrator 186,895 - Fees due to Adviser 404,240 240,363 Borrowings under line of credit 161,188,000 49,993,000 Withholding taxes payable - 1,803,283 Accrued expenses and deferred liabilities 854,322 721,287 Funds held in escrow 202,433 203,193 ------------- ------------- TOTAL LIABILITIES 163,357,830 53,212,728 ------------- ------------- NET ASSETS $215,252,920 $172,570,487 ============= ============= ANALYSIS OF NET ASSETS Common stock, $0.001 par value, 50,000,000 shares authorized and 14,249,683 and 12,305,008 shares issued and outstanding, respectively $ 14,250 $ 12,305 Capital in excess of par value 225,449,718 181,270,565 Notes receivable - employees (9,947,366) (10,248,308) Net unrealized appreciation on investments (1,026,151) 1,439,764 Unrealized depreciation on derivative (279,593) (253,716) Realized loss on sale of investments (780,197) (861,695) Realized gain on settlement of derivative 46,212 15,014 Accumulated undistributed net investment income 1,776,047 1,196,558 ------------- ------------- TOTAL NET ASSETS $215,252,920 $172,570,487 ============= ============= NET ASSETS PER SHARE $ 15.11 $ 14.02 ============= ============= GLADSTONE CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, 2007 2006 ------------- ------------- INVESTMENT INCOME Interest income - investments $ 8,911,643 $ 5,775,522 Interest income - cash and cash equivalents 109,269 8,178 Interest income - notes receivable from employees 132,795 108,877 Prepayment fees and other income 47,572 630,239 ------------- ------------- Total investment income 9,201,279 6,522,816 ------------- ------------- EXPENSES Interest expense 1,762,249 702,449 Loan servicing 897,634 693,965 Base management fee 727,259 334,814 Incentive fee 1,166,529 - Administration fee 186,895 - Professional fees 148,609 166,405 Amortization of deferred financing fees 72,133 36,036 Stockholder related costs 39,434 28,371 Directors fees 56,250 27,500 Insurance expense 66,246 50,589 Stock option compensation - 202,296 Other expenses 82,062 35,083 ------------- ------------- Expenses before credit from Adviser 5,205,300 2,277,508 ------------- ------------- Credit to base management and incentive fees from Adviser (1,708,888) (542,774) ------------- ------------- Total expenses net of credits to base management and incentive fees 3,496,412 1,734,734 ------------- ------------- NET INVESTMENT INCOME 5,704,867 4,788,082 ------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Realized loss on sale of investments (5,021) (100,850) Realized gain on settlement of derivative 8,405 1,367 Unrealized (depreciation) appreciation on derivative (264) 41,486 Net unrealized appreciation on investments 256,613 812,991 ------------- ------------- Net gain on investments 259,733 754,994 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,964,600 $ 5,543,076 ============= ============= NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE: Basic $ 0.44 $ 0.49 ============= ============= Diluted $ 0.44 $ 0.48 ============= ============= WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic 13,561,511 11,337,291 Diluted 13,561,511 11,570,425 GLADSTONE CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Nine Months Ended June 30, 2007 2006 ------------ ------------- INVESTMENT INCOME Interest income - investments $25,064,702 $ 18,497,893 Interest income - cash and cash equivalents 178,183 21,714 Interest income - notes receivable from employees 403,917 323,003 Prepayment fees and other income 431,973 711,225 ------------ ------------- Total investment income 26,078,775 19,553,835 ------------ ------------- EXPENSES Interest expense 4,693,525 2,302,693 Loan servicing 2,377,409 2,144,024 Base management fee 1,806,075 955,894 Incentive fee 3,474,007 - Administration fee 481,746 - Professional fees 368,610 399,758 Amortization of deferred financing fees 198,633 94,572 Stockholder related costs 190,450 273,170 Directors fees 167,470 81,712 Insurance expense 191,338 151,956 Stock option compensation - 279,618 Other expenses 219,522 151,663 ------------ ------------- Expenses before credit from Adviser 14,168,785 6,835,060 ------------ ------------- Credit to base management and incentive fees from Adviser (4,682,160) (1,765,774) ------------ ------------- Total expenses net of credits to base management and incentive fees 9,486,625 5,069,286 ------------ ------------- NET INVESTMENT INCOME BEFORE INCOME TAXES 16,592,150 14,484,549 ------------ ------------- Income tax expense - 50,237 ------------ ------------- NET INVESTMENT INCOME 16,592,150 14,434,312 ------------ ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on sale of investments 81,498 (903,945) Realized gain on settlement of derivative 31,198 1,367 Unrealized (depreciation) appreciation on derivative (25,877) 65,252 Net unrealized (depreciation) appreciation on investments (2,465,915) 5,769,820 ------------ ------------- Net (loss) gain on investments (2,379,096) 4,932,494 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $14,213,054 $ 19,366,806 ============ ============= NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE: Basic $ 1.12 $ 1.71 ============ ============= Diluted $ 1.12 $ 1.68 ============ ============= WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic 12,701,845 11,317,437 Diluted 12,701,845 11,549,054 GLADSTONE CAPITAL CORPORATION FINANCIAL HIGHLIGHTS (Unaudited) Three Months Ended June 30, 2007 2006 ------------- ------------- Per Share Data (1) - ------------------------------------------ Net asset value at beginning of period $ 13.82 $ 13.84 ------------- ------------- Income from investment operations: Net investment income (2) 0.42 0.42 Realized gain (loss) on sale of investments (2) - (0.01) Net unrealized gain on investments (2) 0.02 0.07 Net unrealized gain on derivatives (2) - 0.01 ------------- ------------- Total from investment operations 0.44 0.49 ------------- ------------- Less distributions: Distributions from net investment income (0.42) (0.41) ------------- ------------- Total distributions (0.42) (0.41) ------------- ------------- Issuance of common stock under shelf offering 1.50 - Offering costs and underwriting discount (0.23) - Issuance of common stock under stock option plan - 0.10 Repayment of principal on notes receivable - 0.01 Dilutive effect of share issuance - (0.08) ------------- ------------- Net asset value at end of period $ 15.11 $ 13.95 ============= ============= Per share market value at beginning of period $ 23.68 $ 21.55 Per share market value at end of period 21.46 21.39 Total return (3)(4) -7.69% 1.11% Shares outstanding at end of period 14,249,683 11,384,363 Ratios/Supplemental Data - ------------------------------------------ Net assets at end of period $215,252,920 $158,785,756 Average net assets (5) $197,994,217 $156,053,816 Ratio of expenses to average net assets- annualized (6) 10.52% 5.83% Ratio of net expenses to average net assets-annualized (7) 7.06% 4.45% Ratio of net investment income to average net assets-annualized 11.53% 12.27% Nine Months Ended June 30, 2007 2006 ------------- ------------- Per Share Data (1) - ------------------------------------------ Net asset value at beginning of period $ 14.02 $ 13.41 ------------- ------------- Income from investment operations: Net investment income (2) 1.31 1.28 Realized loss on sale of investments (2) - (0.08) Net unrealized (loss) gain on investments (2) (0.19) 0.51 ------------- ------------- Total from investment operations 1.12 1.71 ------------- ------------- Less distributions: Distributions from net investment income (1.26) (1.22) ------------- ------------- Total distributions (1.26) (1.22) ------------- ------------- Issuance of common stock under shelf offering 1.50 - Offering costs and underwriting discount (0.23) - Issuance of common stock under stock option plan - 0.10 Repayment of principal on notes receivable 0.02 0.01 Stock surrendered to settle withholding tax obligation (0.06) - Dilutive effect of share issuance - (0.06) ------------- ------------- Net asset value at end of period $ 15.11 $ 13.95 ============= ============= Per share market value at beginning of period $ 22.01 $ 22.55 Per share market value at end of period 21.46 21.39 Total return (3)(4) 2.92% 0.35% Shares outstanding at end of period 14,249,683 11,384,363 Ratios/Supplemental Data - ------------------------------------------ Net assets at end of period $215,252,920 $158,785,756 Average net assets (5) $179,127,176 $153,804,303 Ratio of expenses to average net assets- annualized (6) 10.55% 5.97% Ratio of net expenses to average net assets-annualized (7) 7.06% 4.44% Ratio of net investment income to average net assets-annualized 12.35% 12.51% (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 increase of the ending market value over the beginning market value plus monthly dividends divided by the monthly beginning market value, assuming monthly dividend reinvestment. (4) Amounts were not annualized. (5) Average net assets are computed using the average of the balance of net assets at the end of each month of the reporting period. (6) Ratio of expenses to average net assets is computed using expenses before credits from Adviser to the base management and incentive fees and including income tax expense. (7) Ratio of net expenses to average net assets is computed using total expenses net of credits from Adviser to the base management and incentive fees and including income tax expense. CONTACT: Gladstone Capital Corp. Rob Johnson, 703-287-5835