Greetings, and welcome to the Gladstone Investment's year-end 2010 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow a formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. David Gladstone, Chief Executive Officer for Gladstone Investment. Thank you. Sir, you may begin.

Thank you, [Diego]. I appreciate the introduction; and hello and good morning to all of you out there. This is David Gladstone, Chairman, and this is the quarterly conference call for shareholders and analysts of Gladstone Investment, trading symbol GAIN. Again, thank you all for calling in. We are very happy to talk to shareholders. We wish there was more opportunity to do it. If you're ever in this area, the Washington DC area, we're in McLean, Virginia just outside of Washington DC, so please stop by and say hello. You'll see a great team working for you. I think they're the best in the business. Now let me read that statement I always read at the beginning. This conference call may include statements that may constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including statements with regard to the future performance of the company. These forward-looking statements inherently involve certain risks and uncertainties. Even though they are based on our current plans, we believe those plans to be reasonable. There are many factors that may cause the actual results to be materially different from any future results that may be expressed or implied by these forward-looking statements, including those factors listed under the caption, Risk Factors, in our periodic filings as filed with the Securities and Exchange Commission. Those can be found on our website at www.gladstoneinvestment.com and the SEC website as well. 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. You're going to hear from the three Davids today, David Gladstone, David Dullum and David Watson and we'll start out with our President, David Dullum. He'll cover a lot of ground; and, Dave, take it away.

Thank you, David. Good morning, all. To briefly review, GAIN is an investor in buyer transactions of lower middle market businesses. WE partner with management teams and private equity sponsors in these transactions to achieve the necessary leverage and the best financial solution for the transaction at the time. Our products are mezzanine or junior debt instruments combined with warrants to buy common stock or and equity investment in common stock or preferred stock. This approach provides the investing discipline to be focused on generating income for dividend distributions on a current basis and future capital gains to enhance the overall returns to our shareholders. We may also find from time to time opportunities to provide capital in support of business owners and management teams who are not seeking to sell their company outright but achieve partial liquidity through a recapitalization of their business or where they have a capital need to strengthen the balance sheet as in for growth. I believe right now we are in a very favorable environment for our type of financing what with the availability of asset-based and bank senior term loans being a challenge for private equity sponsors in leverage transactions to date. Therefore, these structural circumstances extend the need for the junior debt/mezzanine tranche that we provide. Moving briefly to the activity over the last quarter and year, we invested $0.9 million in A. Stucki for an add-on acquisition and $1.5 million ASH Holdings to help finance out a senior lender. Both of these are existing portfolio companies. There were no exits from our buyout portfolio though we continued to analyze opportunities for recapitalizing or exiting from select portfolio companies at the appropriate time. In this regard, we previously reported that one of our control buyout portfolio companies had signed an agreement with…

All right, that was a great report. We're excited about the future for this fund. Now let's turn it over to our CFO [inaudible]

Thank you, David, and good morning, everyone. Before I dive into the balance sheet and income statement I'd like to highlight several key points for the quarter-end. First, we believe our portfolio is performing well. This is reflected in the increase in the valuation during the quarter of $17.8 million. It is also reflected in that all of our companies are current with interest and principal payments. Second, we were able to renew our line of credit for two years. At the time of this call, we only have $11.1 million outstanding and we have the ability and the flexibility to deploy more capital for the right opportunity. Third, as we have done for the last three quarters, we purchased $85 million in short-term US treasury security through the use of borrowed funds at quarter-end to satisfy our asset [purchase] requirements. Fourth, net investment income remained stable and for the fiscal year it covered 100% of all of our dividends to stockholders. Lastly, we declared a $0.04 monthly dividend for April, May and June and in the fourth quarter continued to pay dividends to our stockholders. Now for the details and I'll start with the balance sheet. At the end of the March quarter, we had $297 million in assets consisting of $207 million in investments at fair value and $90 million in cash and other assets. Included in the cash and cash equivalents was $85 million of US treasury securities, which I have previously mentioned. Therefore, at the March quarter-end, we had $27.8 million borrowed on the line of credit, $75 million borrowed via the short-term loan and had $193 million in net asset, so we were less than one to one leverage on our senior [feature] requirements. We had a net asset value of $8.74 per share. Currently,…

All right, thank you very much for that detailed report. I hope each of our listeners out there will read the press release that came out and also obtain a copy of our annual report called the 10-K, which has been filed with the Securities and Exchange Commission. You can access that on our website at www.gladstoneinvestment.com and also on the SEC website and we'll be mailing out the annual reports in near term so that you get a hard copy if you're a shareholder. As mentioned, I think the big news this time was the recovery from the difficulty caused by Deutsche Bank. They didn't continue our line of credit. In order to pay them off we had to sell a lot of our performing loans and that caused us to have less income, reduce our dividend and on and on it went. Because of this, loans are down so far and we've had to sell the performing syndicated loans at steep discounts. This causes us to start from a new base and it was very disturbing to all of us to have to go through that but we are very happy that BB&T and Key Banc both came forward and loaned us some money to help pay off Deutsche Bank. So the sale of our syndicated loans and the money from BB&T and Key Banc helped us pay off that. We have a great relationship with folks that are lending us money now and they've stepped up and given us this two-year line of credit that we have. So all of that is behind us. We look back and this closing out this year. We look behind us one more time as we talk to you but really all of us are looking toward the future now and…

Thank you, Mr. Gladstone. We will now conduct the question-and-answer session. (Operator Instructions) Your first question comes from the line of Vernon Plack - BB&T Capital Markets. Vernon Plack - BB&T Capital Markets: David, I was hoping to get a little more color on the write-up in Stucki this past quarter. It was a pretty meaningful write-up.

Yes, that one is -- you probably identified the company that has been working on a sale but we really can't comment further than that. Vernon Plack - BB&T Capital Markets: In terms of, I believe -- I thought it was mentioned that all your companies are current from an interest and principal standpoint. I believe you have one loan still on accrual. Is that ASH or is that not the case?

Well, we put one loan on non-accrual but they're paying and we just didn't want to say that it's current and then to have it slunk. It's doing very well and the management team there has done a great job in making the company come back from a pretty dismal situation. As you know, that's our bus company out in Phoenix and Los Vegas and they're now seeing an uptick in sales of busses and that should mean continued growth and strength there. But we just haven't taken it off non-accrual. It was on non-accrual for a good long time and then they worked out a plan of making payments and they're now making payments. So it's on non-accrual but it's current.

The next question comes from the line of David West - Davenport & Company. David West - Davenport & Company: Assuming the sale does go through of your control company, would that -- I guess a two-part question -- does that, in and of itself, relieve you of the diversification test assuming redeployment of the money? Then what possible short-term impact might that sale have on net investment income?

Well, it's just too hard to speculate now. Obviously if we got a huge amount of money it would help the diversification by putting it back out. Cash is counted toward the diversification, so we'll be okay there. I don't think it wold -- we haven't done the numbers in detail but I don't think it would eliminate it. It would just reduce the need for us to borrow some money under the terms that we do it now pretty dramatically. It would also, obviously, pay off our bank loan completely if we got that much money back. So we're just looking at things now trying to figure out when and where if that goes forward. It's been a good discussion with people who are interested in it. It's just too early really, David, to make any comments about it.

Mr. Gladstone, there are no further questions at this time.

All right, you've got one last chance to punch the button and ask your question. We're at the end of the show.

(Operator Instructions) Your next question comes from the line of [Jeff Redner] - UBF. [Jeff Redner] - UBF: I actually have a two-part question. NAV was $8.74 a share. We're paying dividends at the rate of $0.48 a year, which works out to be about 5.5%. What do you think, first of all, would be a fair rate of return on $8.74 in essence? That only works out, as I said, 5.5%. Might something like 7%, 8% or 9% return be a fair estimation? Secondly, when do you anticipate getting a higher return on the assets?

Obviously in the past we've had some assets that were at a low yield. If you remember, this company is different from Gladstone Capital Lending. We have a significant amount of investment in equity. Obviously equity doesn't have a current return. We'll see as time goes on whether equity has a good strong capital gain behind it and maybe we'll test something this quarter if the stars align. But the point being that it's very hard to get NAV, which is driven by the appreciation of the equity to have a high return on it as we do in Gladstone Capital. So Gladstone Investment for the most part is not going to have as high a current return in today's marketplace as you'd see in some of the other companies out there simply because it has such a large component of its assets in the equity side. I'm not sure that'll change over time. We are hopeful that as we go forward now that the marketplace has come back a little more reasonable that we'll be able to put a lot more in mezzanine debt. So as the mezzanine debt continues to go forward, this marketplace is -- it looks like the mezzanine debt marketplace is going to be good for us, which means on a current basis we'll have much more income. But I'm not sure what the number should be. You're calculating 5.5% on something that has a large component of equity in it, market appreciation. So I wish I could help you build your model but I can't make much more comment on that. [Jeff Redner] - UBF: What about the investment to the money we have in treasury bills, which obviously is running a very low rate of return?

No, remember, that was a one-time event. What happened at the end of the quarter is we buy a lot of treasuries and then we sell them. So they go away almost immediately. Within a week of that we buy and sell. So those aren't on our balance sheet for very long and it's just to make the diversification test that, I think, David Watson was referring to.

Your next question comes from the line of Ross Demmerle - Hilliard Lyons.

I was wondering if the recent jump in LIBOR is going to have any kind of meaningful impact on your interest expense or on interest income here going forward?

Well, we have a 2% LIBOR floor and we haven't broken through that yet. But if they keep screwing up in Europe we might break through it this year. We've obviously broken through it in the past. As far as our portfolio companies, we have, as mentioned by David Watson before, we have floors and I don't think that we're anywhere close to breaking through those floors. Many of them are very high and so as a result, probably not going to do much for us in the near term. What's the percentage, David Watson, that we have in variable rates with no floor?

So 83% of our investments have either a floor or a minimal amount. So we're looking at 17% that would be impacted by an increase.

But is that 17% in debt or is that in equity?

In debt.

So 17% of the portfolio would be impacted by the increase in LIBOR, not a big change. LIBOR hasn't changed that much, although if you're looking out it's hard to know where LIBOR's going other than up at this point in time.

There are no further questions at this time, Mr. Gladstone.

All right, last chance to ask the question. All right, [Diego], that's the end of this presentation. We appreciate you all for calling in.