Good morning and welcome to the Gladstone Investment Corporation Fourth Quarter and Year-Ended March 31, 2013 Shareholders Conference Call. [Operator Instructions] Please note that this event is being recorded. And now, I’d like to turn the conference over to David Gladstone. Mr. Gladstone, please go ahead.

Thank you, Keith and hello and good morning to all of you out there. This is David Gladstone, the Chairman and this is the quarterly earnings conference call for the shareholders and analysts of Gladstone Investment. The common stocks traded on the NASDAQ under the symbol GAIN, and the preferred stock is traded on the same index, but it’s under GAIN with a P, and we’ll cover the quarter and the yearend. And thank you all for calling in. We’re always happy to talk with our shareholders about the company and I wish we could do it more often, but this is when we have to do it, and it’s good time to do it as well. We hope you all to take the opportunity to visit our website, it’s www.gladstoneinvestment.com where you can sign up for email notices, and so you can receive information about the company in a timely fashion, and please remember that you have an open invitation that if you’re in the Washington, D.C. area, and you have a few minutes, drive on out to McLean, Virginia, where we have our offices, and please come in and say hello. You will see some of the finest people in the business and now I need to read the statement about forward-looking statements. This conference call may include statements that may constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Security 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 and other factors even though they are based on our current plans, and we believe those plans to be reasonable. Many of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, and tends, will, should, may and similar expressions. There are many factors that may cause our actual results to be materially different from those future results that are expressed or implied in these forward-looking statements, including those factors listed in the caption Risk Factors, that were in our 10-K that we filed yesterday and our 10-Q filings that you will see at the Securities and Exchange Commissions’ website, as well as at GladstoneInvestment.com. Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise and after the date of this conference call. Please also note that past performance or market information is not a guarantee of future results. Well, as always we will begin first with Dave Dullum, he is President and Board member of the company, and he will cover a lot of ground. Dave, go ahead.

Thanks, David, good morning. As you know your company Gladstone Investment provides capital for businesses that are being purchased in support of our management team and other equity investors and these are usually companies with annual sales between $20 million to $100 million which is what we describe as the lower middle market. We provide subordinated debt and equity and occasionally we will actually make some senior debt investments. This combination produces a mix of assets for us, which is the basis of our strategy. Our debt investments provide income to grow the dividends while we expect the equity value to appreciate and therefore build shareholder value. I should say that this is a bit different from other public BDCs that are predominately debt focused. So it’s really important to keep in mind that the equity portion of our assets really do have meaning and are important to the overall value of our company. At March 31, 2013 on a cost basis our assets consisted of income producing debt investments of approximately $239 million or about 73% of the total portfolio and about $87 million or 27% of the total portfolio in equity securities, which we expect to produce capital gains. So there are a number of factors at any time that affect this ratio including loan payoffs, and if we have needed to convert a loan to equity or vice versa. In the most recent quarter, our total interest-bearing debt portfolio had a 12.4% cash yield, which is a little bit down from 12.7% for the prior quarter, but slightly up at 12.5% for the full fiscal year, which ended of course 3/31 this year, so interest-bearing debt is the primary source of cash to pay our dividends. Additionally, we have success fees, which is a component of our…

All right, thank you, David Dullum, that was a great report, and I just want to say how excited I am about the future for this company. I think it has great upside potential. And now, let’s hear from our CFO and Treasurer David Watson on the fund’s financial performance for this quarter.

Great. Good morning everyone. It’s been a good quarter and fiscal year, and I hope you had a chance to review our 10-K annual report that we filed last night. I’m just going to get on a couple of highlights and I’m going to start with our recent capital activity. We were able to increase the net commitment amount on our line of credit from $60 million to $70 million with our existing lenders, and extend the maturity date approximately 6 months to April 30, 2016 or 3 years out. If it is not renewed or extended by that maturity date, all principal and interest will be due and payable on or before April 30, 2017 or 4 years out. In addition, there are 2 one-year extension options to be agreed upon by all parties which if exercised could effectively push the facility out 6 years and all the other terms generally remain the same. So, we are pretty excited about that. Also, as mentioned on the prior earnings call, we completed a public offering in the third quarter of approximately $4.4 million shares of our common stock at a public offering price of $7.50 per share which is below then current NAV per share. Growth proceeds totaled $33 million and net proceeds after deducting underwriting discounts and offering extensions formed by us were $31.1 million which renews 3 paid borrowings under our credit facility. These proceeds in part will allow us to grow the portfolio by making new investments, generate additional income through these new investments and provide us additional equity capital to help ensure continued compliance with regulatory test and allow us to increase our debt capital while still complying with our applicable debt-to-equity ratios. Between the proceeds from our common offering and the extension and expansion on…

All right, thanks so much David Watson. That’s was a good report. I hope each of our listeners will read our press release, and also pen a copy of the annual report called 10-K, Form 10-K that’s been filed with the SEC and can be accessed on our website at www.GladstoneInvestment.com. And it’s also on the SEC website. With our year ending March 31, the major news, of course, is that activity investing in new portfolio companies that seems to be moving along, and we think that fiscal year for 2014 will be a very good year to invest in this company as well. We have been active in the capital marketplace as mentioned. In March, we raised $40 million of term preferred, that’s March 2012, and then $31 million of an offering in October. So the marketplaces are receptive to raising new capital should we need to do so. In addition, we have a favorable line of credit and expanded to $70 million, extended through to April 2016, so we have a room to borrow under that line as well, and we are looking for new investment opportunities and I just think this is a fabulous fund at this point in time with great opportunity for the future. As always, we manage the business and have some things external to our day-to-day operation that we worry a lot of about. The economy is not growing very fast. It is growing, thank goodness. It is a difficult time to invest because there are so many external things out there in the mix that we have to consider, and I know you all here this each time, but we ask these questions about all the things that we talk about, when we’re looking at a deal. And I’ll just mention a…

[Operator Instructions] And the first question comes from Mickey Schleien with Ladenburg.

David, I just want to go back to the Galaxy transaction and make sure I understand it. I think in your comments you said that the company’s performance has improved and that allows you to or that allows them to be able to service debt as oppose to preferred share. So could you give me a sense of what the yield was on the preferred and presumably that was higher than the coupon on the debt, which is 13.5%.

Mickey, this is David Gladstone, and unfortunately you have 3 Davids on the phone. So I’m going to turn this one over to David Dullum, the president, to answer.

Okay.

Yes. Sure Mickey and I will not pass it on, but have David Watson embellish a little bit here. Actually what we had done previously was restructure because when we did the investment, we had some subsequent problems really due to the economy and so on. We brought in new management, the company’s improved and it’s really a great company and a wonderful space currently, and as a result of that and the strength and EBITDA of the business, what we’re able to do is take that preferred, and which was we had to convert and bring it back to the subordinated debt position, which you saw the original sort of investment. So actually the return on the subordinate will be higher than it was on the preferred. So that’s really the mechanic we went through and what we did and I’ll ask David to put some more color on the actual numbers if you don’t mind or the actual transaction. David Watson?

Sure, sure. Mickey, in 2010 we had converted $12.3 million in debt to a preferred equity to give the company a little breathing room, and as Dave Dullum mentioned to be able to turn the ship and they’ve done that tremendously. So, we are really to taking the opportunity to revert back to the old revert to the capital structure that it originally was, and I think it’s advantageous for many reasons. It will increase our current cash interest going forward quarterly by $425,000 which we can -- which will be on a consistent basis and consider in our distribution rate. And ultimately, we are going to collect upon repayment of the debt security the dividend income that we recognized through this transaction. So, I think it’s a good win on a number of levels and it’s really getting back to the original investment stages.

Mickey, you have another question?

Yes, I do. If the company is performing better then why are the preferred shares still marked at 50% more or less?

Dave Dullum, you want to take that?

Yes, right, it’s in function when we value our companies, and we sort of alluded to this. We have to look at the way we do our valuation based on multiples in a trailing 12-months’ number. So, we start out with that multiple times and adjustment due to an index factor times the EBITDA, and sometimes when you do the waterfall as it comes down through to the debt layers and so on to the actual equity tranches, some cases preferred, in other cases common stock, it might cause that anomaly if you will at that point in time. And, I believe that’s what the case is here, and then more important thing, however, indeed, is that we’ve been able to take what was a preferred that we had put in a preferred, David Watson said to help the business brought it back to a current paying status as you pointed out at a very attractive rate of interest.

Okay, I understand and my last question is in relation to your cash position. I think this may have been asked in past conference calls, but you are holding about $28 million of cash and about net of the proceeds from your short-term loans, which I understand you need for the diversification test, but you also have about $32 million on the credit facility. I don’t understand why wouldn’t you pay-off the credit facility or pay down the credit facility and hold a lot less cash.

David Watson, you want to take that one.

Sure, Mickey at any given time, we might be carrying a little extra cash in anticipation of closing on a new investment and subsequent to year end. We in April closed on the before mentioned Jackrabbit investment, which was about $17.7 million or so. So and then right now we are holding $15 million of cash and so as we -- our team -- a much more favorable investing environment and our pipeline is solid and Dave Dullum can definitely speak to that. We will continue to put investments on the books and our cash is going to -- also relative to that.

Okay, you said cash is now $15 million, 1-5?

Currently it’s $15 million.

Next question comes from Daniel Furtado with Jefferies.

I just had a couple higher level questions. But first, David, just so -- or David Gladstone, I should say -- just so I understand correctly from a business environment, what you see, boots on the ground out there looks to be pretty consistent so far year-to-date compared to the prior quarter. I mean, I get the sense you are not seeing a material improvement or degradation of the business environment for the companies in your portfolio.

I think if you look at our portfolio today and even if you spread it to Gladstone capital which is similar in some respects, you’re seeing what I think the economy is seeing and there is some good, some bad and some ugly. We’ve got some good companies out there. We’ve got some bad, and we’ve got a couple of uglies in this company that need serious work to get turned around. And I think they’ll both be turned around. One of them is coming along pretty well. So I don’t think there is any -- we’re not falling off a ledge the way we did in 2009. The problem has been all along is the slowness of this recovery. Granted, everybody’s answer to that is it was a tremendously bad recession. I can buy some of that, but this recession recovery has been the worst that I’ve ever lived through, and I remember 4 of them now and quite frankly I think a lot of what was done is missteps of U.S. government. But at the end of the day, it is what it is, and we’ll live through it, and I think over time this economy can heal itself unless the government continues to make some mistake. So we’ll just have to see, Dan, right now. I’d say everything is status quo, it’s not moving one way or the other, sort of inching along.

Excellent. And then, from a competition standpoint, I know over the last quarters, one of them kind of the topics that have risen to investors’ mindset -- in the front of their mind is, especially on the bank side it’s just increased competition there. You mentioned earlier in the call that more bank engagement is obviously good for your business as they come in on the senior part, but is that competition, I mean how has that changed? Are you seeing more of it or is it just being pretty consistent? And then follow-up to that would be, if there is more competition, are you starting to get pressure from your portfolio companies from the standpoint of yields on their paper versus what’s in the market today as it feels like everything that’s fixed income has continued to tighten, or rates have continued to move lower. Is that some type of pressure that you are feeling percolating up from the portfolio or how should we think about competition and then how that related to rates in the book?

Well, think about it in 2 ways. First of all the banks; the banks have gotten a little bit better. There has not been any wholesale change and that has to do with the regulatory environment. Banks are not being encouraged, at least by the people who investigate the banks and review their loans, to make subordinated debt or second lien debt. They are still in the first lien position mostly and revolvers, and little bit of term coming in which we applaud, because that means we don’t have to provide it, and they can provide it at fairly low rates. And so, I see the banks still not being aggressive like they were in 2005 and 2006 where they were doing airball kind of deals with no collateral. The government is still very tight on the banks, so I don’t think you are going to see the banks coming into our marketplace, but I do enjoy seeing them come back and make a few term loans here, small amount, they are not going in deep in terms of rounds as we call them and we call them levels of EBITDA. If EBITDA happens to be 100, you might see them do one round of EBITDA. So, I think they will get into that position, again backed up by collateral. So, the banks are there; they are doing a reasonably good job, but they are not aggressive at all in terms of our marketplace. Then the second side of it, to your question is what’s driving rates down if the banks aren’t. And, that happens to be there is just not that many opportunities in terms of sort of nationwide of people looking for loans and so as a result there has been crowding towards the marketplace now. We sort…

Next question comes from David West from Davenport & Company.

I know your 2 non-accruals you carry at 0 fair market value, but I wonder if you could give us a quick update on both ASH and TREAD.

Why don’t you do that, Dave Dullum? I know these are private companies and we hate to talk about them, because they are private, but we’ll give you as much as Dave Dullum feels he can give.

Sure. Thanks, David Watson –- excuse me, Gladstone and David West. As we mentioned in I think the last couple of quarters, we’ve been relatively consistent in both companies. We have done the things we’ve needed to do in terms of bringing on professional appropriate quality management teams, and we’re starting to see results frankly in both cases, and I’ve really cannot give you any greater detail per se other than just to say we have a lot of good resources on the case. TREAD is beginning to stabilize. Of course, we’re in economy and mining in general had some impact on it. However, we are looking at areas and ways in we can diversify its manufacturing base so to speak. But right now they are both performing well, both actually generating positive cash flow. So we keep working it and doing what we do best.

All right.

Dave West, just to piggyback on that. I think these both are in categories, well, today the same way we were in a couple of other companies, CCE for example. And both of these cases, we brought in new management and the new management has started to focus on taking the companies in little bit different area, they have lots of expertise in these companies and I think you will see over the next year pretty good progress in both of those.

[Operator Instructions] All right, Mr. Gladstone, there is nothing else at the present time. Do you have any closing comments?

Just to say thanks again for calling in, and thanks to listening to the story and I think we’ll have some great news for you as we do the next quarter. That’s the end of this conference call. Thank you all.

Thank you.

Thank you.

The conference has concluded. Thank you for attending today’s presentation. You may now disconnect.