Good day, and welcome to the Gladstone Capital first quarter shareholder conference call and webcast. All participants will be in a listen-only mode. (Operator instructions.) I would now like to turn the conference over to David Gladstone. Mr. Gladstone, the floor is yours sir.

Well, thank you, Mike. Thanks for the nice introduction, and hello and good morning to all of you. This is David Gladstone, the Chairman, and this is the quarterly conference call for shareholders and analysts for Gladstone Capital, trading symbol GLAD. Again, we thank you all for calling in. We’re so happy to have the time with shareholders; wish there was more of these, but we only do them once a quarter. We hope all of you take the opportunity to visit our website at www.GladstoneCapital.com, where you can sign up for email notices so you can receive information about us on a timely fashion. And please remember that if you’re ever in the Washington D.C. area you have an open invitation to stop by and see us here in McLean, Virginia. We are here in the suburbs of Washington, D.C., and think if you’ll stop by you’ll see some of the finest people in the business. Now, I need to read a 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 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 that even though they are based on our current plans and we believe those plans to be reasonable. There are many factors that may cause our actual results to be materially different from any future results that are expressed, implied in these forward-looking statements, including those factors listed under the caption “risk factors” in our 10-K and 10-Q filings and in our prospectus that has been filed with the Securities & Exchange Commission. And those can be found on our website at www.GladstoneCapital.com, and also on the SEC website. The company undertakes no obligation to publically update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. As always, we start, with our President Chip Stelljes. Chip is also the Chief Investment Officer for all of the Gladstone Companies. He’ll cover a lot of ground. So Chip, why don’t you start off please.

Thank you, David, and good morning. We’re still finding the economic and small business lending climate to be difficult but it is getting better. We’re seeing some new investment opportunities and have a number of proposals out to companies. We did close five new investments during the quarter for an aggregate amount of 9 million, and we invested 2.8 million in existing portfolio companies in the form of additional investments or draws on revolver facilities. During the quarter, we received repayments of approximately 13.2 million to payoffs, normal amortization and pay downs of revolvers. This included the full payoff of Puerto Rico Cable of 7.1 million, interfilm holdings of 2.4 million. So in total, we had a net production decrease in our portfolio of about 1.4 million for the quarter. We used the net proceeds to pay down our line of credit. Since the end of the quarter, we made about 2.7 million in additional investments in existing portfolio companies. Additionally, after the quarter we received 11.4 million in repayments, which included amortization and a $9.4 million payoff from one company which was [Inaudible] Centers. At the time of this call, the amount we owe in our line of credit is 6.6 million. As for the pipeline and outlook, we continue to see new investment opportunities. We have availability in our line and are actively seeking to make new investments. At the end of the December quarter, our investment portfolio was valued at approximately 253 million versus a cost basis of 297 million. So the value based on our evaluation of the portfolio is approximately 85% of cost. At the end of the quarter we had loans with six companies on non-accrual and a number of companies experiencing problems that may prevent them from making timely payments in the future.…

All right, thank you, Chip. That was a great report. Now, let’s turn to the financials and for that we’ll hear from David Watson, our Chief Financial Officer. David Watson, go ahead.

Thank you David, and good morning everyone. Before I go through the financial statements, I’d like to highlights a few key points for this quarter. First, during the quarter we made five new investments and exited from two investments. Our goal is to continue those increased investment activity. Second, on November 22, 2010, we admitted our credit facility. In effect, the interest rate, subject to a 1.4% LIBOR floor on advances went from 6.5% to 5.25%, a decrease of over 19%. The undrawn commitment fee is between 0.5% and 1%, depending on how much is outstanding at any given time. Additionally, we are no longer obligated to pay an annual minimum earnings shortfall fee to the committed lenders, which resulted in the reversal during the current quarter of 0.6 million in estimated shortfall fees previously accrued in prior quarters. We paid a 0.5% amendment fee on the commitment. Third, at the time of this call, we have 6.6 billion borrowed on our credit facility so the availability on our line gives us the ability and the flexibility to deploy more capital for the right opportunities. Now for the detail. I’ll start with the balance sheet. As of December 31, we had 275 million in assets consisting of 253 million in investments at fair value, and 22 million in cash and other assets. We borrowed 25.3 million on our line of credit and had 247 million in net assets. Therefore, we are less than one-to-one leveraged. This is a conservative balance sheet for finance company, which are usually leveraged much higher. So we believe that our overall risk profile is low. Moving over to the income statement, for the December quarter net investment income was approximately 4.6 million versus 4.4 million for the same quarter last year, an increase of 4.7%.…

All right, thank you David Watson. That was a very good presentation. I do hope all of the listeners out there will read our press releases and also obtain copies of the quarterly reports called the 10-Q. And we just filed that yesterday with the SEC. If you can access all of that, plus press releases and the 10-Q is on our website at www.gladstonecapital.com and also on the SEC website. I think the big news for this quarter is that we continue to make progress with our portfolio companies. They are getting stronger as the economy gets better. We also added a few new investments to the portfolio of our loans and some of these were syndicated loans. You’ll note that from the presentation that one of these last syndicated loans that was purchased before the recession paid – it paid off in full and that was Puerto Rico Cable, and it was valued at about 80% of par in September 2009, and then 90% of par in September 2010, and now it’s paid off in full at par. I think this exit demonstrates the ability to pick good investments. And we all still believe that if Deutsche Bank renewed our line of credit we’d have been paid back with interest and just from our syndicated loans. And like the example above, rather than having to sell them at a loss in the spring of 2009 and payoff Deutsche Bank line. It was also reported that the U.S. Federal Reserve purchased $280 billion of poor loans at par from the Deutsche Bank to keep them a float during the recession. So while U.S. tax payers were bailing out Deutsche Bank, that bank still felt the need to liquidate our line of credit, and cause us to have a big…

Yes sir. Okay, we will now begin the question-and-answer session. (Operator instructions). The first question we have comes from Troy Ward, of Stifel Nicolaus, please go ahead. Troy Ward-Stifel Nicolaus & Co.: Great, and thank you. Good morning, David.

Good morning, Troy. Troy Ward-Stifel Nicolaus & Co.: I’m going to ask a couple of questions, and if the operator could put me on mute afterward, because I’ve got a lot of background noise at my location. Just real quick, two topics, David. On Sunshine Media, and then on syndicated loans, could you just give us an update on the Sunshine Media, you’d made the comment that you bought the equity in January of ’11, and just talk about the valuation as of December 31st. I’m assuming all of that was kind of already baked in to that valuation. Obviously, the pieces are going to change. Also, it looks like you have two pieces of senior term debt, one of them is a last-out senior, is it only behind the other piece that you hold? I guess, how much other senior debt is in front of that last out other than what I see on your balance sheet? And then secondarily, on the syndicated loans, if you could just talk about the opportunities you’re seeing, I mean, it seems a little counter intuitive based on where the high-yield market’s gone, and kind of the running of the assets that you’re finding your best opportunities in syndicated loans, versus smaller one off kind of deal. So if you could address those, I would be grateful. Thank you.

All right, Troy, thank you for the question. Chip, do you want to answer that question on Sunshine?

Sure. Sunshine Media, you had a couple of questions in there. First of all, the situation itself was one where we got a strong management team. It was a company that was already in a business model transformation. As you may recall, this company had some advertising exposure, revenue exposure, and had some real estate advertising exposure. So this business model was changing. Anyway, we’ve got a very strong management team there, and quite frankly, we just felt that the company would do better in our hands. So we bought out the existing shareholders, and now really are in partnership with management to continue that transformation. So the valuation that you mentioned is reflected of the fact that the company has had some difficulties, has got two pieces of the business; one of which is very strong, the other which is the transformative part that I discussed, and the one that has more issues to it. We’ve got good confidence in what we’re doing there. We just felt that the company would succeed better if we had control of the business, so we need to do that in January, and the valuation is reflected. To your other question about the debt, we are the sole debt holder of that company at this point, so there is – all of the securities that you see that are senior to the [inaudible] tranche, are on our balance sheet, and they are ours.

Let me just pick it up from there. On the senior syndicated loans side, you’re certainly right, the marketplace has changed. I think the senior debt side, syndicated loan debt side, now has changed and it’s more like 2006. We have not been buying much, recently, obviously because prices have come in so tight to the marketplace today. But the few that we picked up, we thought were good investments, but I’m not sure how much more you’re going to see us do in that area, mainly because the marketplace has changed so much. There’s huge demand that has gone in to that marketplace. These are the senior loan debt funds that are filling up as shareholders bail out of government securities, and go in to these variable-rate loan funds that have been set up by many of the brokerage houses. And right now the amount of money pouring in to those funds is far out stripping any kind of loans that are coming to marketplace. And as a result, you’re seeing all of the, well, I won’t say all of the crazy things, but you’re seeing a lot of the same things that you saw in 2006. So, Troy, I wouldn’t put emphasis in your projections on us doing a lot of senior syndicated loans, but we’ll keep trying and see if we can find some good ones.

I would also say, Troy, we’re not focused just on syndicated loans. I will say, for the record, while we didn’t book a lot of proprietary direct loans during the quarter, we had two that were signed up and in the due diligence phase fell apart during the quarter. So we’ll continue to focus on proprietary investments as well.

Okay, next question, please.

Yes, sir! The next question comes from Mark Hughes of Lafayette Investments.

Good morning, David.

Good morning.

Just a quick question here; I’ve heard you say several times in the last year that the period when the economy is coming out of a recession should be kind of your sweet spot for making new loans. And here we are, seems to be coming out of the recession, and we don’t seem to be making many new loans, you just mentioned two that fell apart that you thought you were going to make, but they didn’t get done. Meanwhile, your better old loans are paying off, it looks like, at a fairly decent clip. But there hasn’t been any growth in the portfolio, in fact, the opposite is happening. And I’m trying to figure out why we’re not putting more loans on the books. And nobody wants you to make loans just to make loans, but it seems like there’s a lot going on out there, but Gladstone’s not participating, and deals aren’t’ getting done. I’m very frustrated and trying to figure out why this is happening. And maybe you’re just a quarter or two away from showing some real growth, but can you tell me something about why things aren’t getting done, and maybe why you think that’ll change over the next year?

Well, I can tell you that we are perhaps much more conservative, and always have been than some of the other players in the marketplace. We also won’t extend credit to people that we feel uncomfortable with, and that’s not a reflection on perhaps them personally, but just on the business, or where they are in the economic cycle. Up until this fall, and I would say maybe this summer, but certainly this fall, I and I think many of the people here were not very convinced that the economy was as strong as others believed it to be. And I’m really not sure we’re all that strong today. So we are perhaps more cautious and going slower than others. I think we’ll see some good deals done this year. But again, that’s a projection I can’t back up with anything other than we’ve got a very nice pipeline, and we’ll work on deals, and we’re going to continue to be very conservative because who knows what the next six months will bring, or the next year will bring. And I just can’t, Mark, I can’t really put my finger on it other than to say this is a time in which the winds are blowing in both directions; one day you get a nice strong breeze from the back, and your sails fill up, and you feel like you’re going to go forward, and then the winds reverse and you get a lot of negative news and you feel uncomfortable with it. But we are working hard to put this company forward, and I can only say that that’s where we are today. I can’t really give you a projection beyond that.

Couldn’t you argue that you make your best deals when there is uncertainty in the world because when times are good, there’s too much easy money out there, and there’s other places for people to go to for their money than Gladstone? I would think some uncertainty, we seem to be past the point of systemic failure, which we might have faced in 2008 and 2009, I would think a little bit of uncertainty isn’t bad for you all for making good loans.

Well, if it were just a little bit of uncertainty I’d be on your side. I’m not as convinced as perhaps you are that that much uncertainty has been taken out of the economy. We still see very dramatic things going on with the government printing $1.5 trillion worth of paper, which has an impact on every single company that we look at. We’re watching oil prices spike one day, and come down the next. I went through a lot of things that are on our mind here, and when you bake all of those into projections for any small business, it makes the uncertainty range go much higher than perhaps you are listing in on your scale. We’re just being conservative and I can’t do any better than that Mark, on answering why we are where we are.

Okay, good luck.

Next question, please.

(Operator instructions). Mr. Gladstone, gentlemen, it appears that we have no further questions at this point.

All right, thank you very much Mike, and thank you all for calling in again. We’ll do our best to make you some profits this year, and we’ll just see where it goes. And that’s the end of this conference. Thank you, all.

We thank you, sir, for your time. We thank you all for attending today’s conference call. The conference is now concluded. At this time we may disconnect your lines. Thank you.