Good morning, and welcome to the Gladstone Capital Corporation’s, third quarter ended June 30, 2013 shareholders conference call. All participants will be in a listen-only mode. (Operator Instructions). Please note this event is being recorded. I would now like to turn the conference over to Mr. David Gladstone. Please go ahead sir.

Well, thank you Denise for that nice introduction and hello and good morning to all of you out there that have called in. This is David Gladstone, the Chairman, and this is the quarterly earnings conference call for shareholders and analysts of Gladstone Capital, with the common stocks traded under the symbol GLAD and the term preferred shares are traded under GLAD and with a P at the end for Preferred. Again, thank you all for calling in. We are always happy to talk to shareholders and give an update on our company, and please remember that if you ever happen to be in the Washington D.C. area, you have an open invitation to come by and see us here in McLean, Virginia. Please stop by and just say hello and you will see some of the finest people in the business. Please take the opportunity to visit our website, www.gladstonecapital.com and sign up for our email notification services. We don’t send out any junk mail, just news about your company and you’ll also find us on Facebook under the keyword The Gladstone Companies and you can follow us on Twitter under Gladstone Comps, that’s C-O-M-P-S after Gladstone. And now I need to read the statement regarding 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 Securities Exchange Act of 1934, including statements with regard to the future performance of the company. These forward-looking statements inherently involve certain risk and uncertainties and other factors. Even though they are based on our current plans, 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, intends, will, should, may or similar expressions.…

Thank you David and good morning everyone. Yesterday, we released our third quarter’s earnings press release and filed our Form 10-Q, which I hope you’ve had a chance to review. Starting with the income statement for our third quarter ended June 30, 2013, net investment income remained unchanged at $4.4 million or $0.21 per share as compared to the prior quarter ended March 31, 2013. Investment income increased by 1.5% in the three months ended June 30, 2013 as compared to the prior quarter, primarily due to $200,000 in prepayment fees received on the early payoff of three syndicated investments at par during the current quarter. No prepayment fees were received in the prior quarter. Operating expenses increased by 3.2% during the current quarter as compared to the prior quarter, primarily due to an increase in professional and other expenses related to receipts of reimbursable deal expenses in the prior quarter. An incentive fee was earned by our investment advisor during the nine months ended June 30, 2013. However, the incentive fee was partially waived by the advisor for the last two quarters to ensure distributions to stockholders who were covered entirely by net investment income. 100% of common and preferred stock distributions paid in the three and nine months ended June 30, 2013, and over the last two years were covered by net investment income. This highlights our commitment to predict growth and building shareholder value. The focus of the Gladstone Capital Fund continues to be making consistent monthly distributions to our stockholders that will grow over time. Next, on our income statement are realized and unrealized changes in our portfolio. Realized gains and losses come from actual sales or disposals of investments. During the three months ended June 30, 2013, we have recorded a realized loss of $2.9…

That was a great report Melissa, thank you, and I hope all our listeners read our press releases and review our quarterly reports on Form-10-Q, which is just filed with the SEC. You can access that press release and the 10-Q on our website at www.GladstoneCapital.com and also on the SEC website, www.sec.gov. I think the news for this company is that we had some production in our portfolio this quarter and the first co-investment, but still experienced a number of pre-payments. Our portfolio yields have remained about 10.6% over the quarter, and in April 2013 we exited one of our non-performing loans and enabled us to focus on our current portfolio and the new investments. Also in April we are able to extend our line of credit and now it matures in January 2016, so no danger of problems in that area. And subsequent to the quarter end, we invested $8.9 million in the new proprietary investment and $3 million in a syndicated investment. So we are moving in the right direction for our fourth quarter. The biggest challenge today, like all of the BDC’s, is finding new investments that we believe can survive and survive the next recession is a concern and possibly the fourth coming strong inflation that we are all expecting. We also need access to long-term capital market place, and we have a great line of credit, very supportive lending institutions and so the line of credit is working fine, and we believe it’s sufficient for the new term. But in order to make long term new investments we will need to raise additional long term debt, long term capital, such as we did in November with the issuance of the our preferred stock. For our portfolio of companies, we worry that they will not…

(Operator Instructions). We have a question from Greg Mason from KBW. Please go ahead. Greg Mason – KBW: Great, good morning. Thank you David. Could you talk a little bit about the two new investments you have made, one in the quarter and one post the quarter, Funko and Ashland. Can you talk about their rates and what they do and why you like those businesses?

Well, Funko has proprietary products that only they do and there’s a huge collection base of people collecting those things that they manufacture. Now, what we liked about it, the management was very strong and over a period of time they’ve been able to go though the recession and problems without any real problems in their company. So, we believed as they continue to expand their base that they will make good money and be able to pay our debt, and we are just very happy to be in that one. We also put that in Gladstone Investment, it was one that we switched and have both in, because we think the company is going to grow, and we were worried that – in one regard, we were worried that we we wouldn’t be able to satisfy them over the next few years, and so as a result, the two of us thought the equity upside was good and the debt side was strong, so we both went into that. In Ashland, Ashland is one of those companies that is very interesting. You can have them print a book for you, and they have the machinery to do that, and if you want just one copy of that, they can do it or if you want 10 copies or if you want a 100 copies they can print that on demand, and very quick turnaround for short runs. So, it’s ideal for collages and say scientific kind of publications that maybe only 100 of a certain book on a very narrow subject and they are only running at about 20% capacity. They were for sale. We helped a group buy them and I think over the next years, they will not only fill up their processing plant, but also be able to grow with some additional acquisitions. So both of them look like something that we feel like could survive, some kind of economic crash and at the same time could handle any kind of inflation, because they can pass on the cost to their customers. So, those were the basics behind both of those, and both of them were at good strong interest rates. I don’t remember what the rates were exactly. What was?

Funko was at 12% and we also had additional 1.5% pick and then Ashland is at a fixed 12%.

Okay, did that give you a flavor for that Greg? Greg Mason – KBW: Great, I appreciate the color. And then could you go into the current portfolio. I know Reliable Biopharma has that sub-debt piece, $6 million that’s valued at zero, and BAS is another one that’s had trouble, like $0.10 on the $1. Is there any income coming from those two pieces into the income statement?

What do we have there, both of those on accrual?

Yes, BAS and Reliable are both on accrual.

Let me just touch on something, just so you know it. I know you know Greg the difference, but there may be some folks out there that don’t understand the difference in how these valuations work. On the one hand, we are in deals for the long term; that is we’re making five-year debts, we are in it, and we are saying at the end of 5 years it will be worth a lot of money. On the other hand, when we do our valuations, it’s on a short term. We ought to determine what its going to be worth in the next three to six months if you had to sell it, and all the mutual funds and closed-end funds, most people are familiar with, such as the ones that might be produced by your firm or someone like Fidelity or Jeffries, generally own publicly traded securities. So determining the net assets value is relatively easy, because the stocks are priced every day, so everybody can look at that and figure it out. BDC’s are closed in funds and just like many of the mutual funds out there. But BDC’s like ours are required to buy mostly stock and debts of non-public or private companies that don’t trade on any public exchange and thus the BDC board and management has to generally just accept the valuation techniques. We used the generally accepted valuation techniques that are out there, the value of the securities that hold in order to calculate this net asset value. Because of the imprecise nature of the valuation of product securities and the BDC portfolio, the relationship between the BDC stock price and the number reported a net asset value is always going to be in precise and the volatility of the stock of BDC can…

These techniques that we have to use which are, I’ll say they are generally accepted techniques in the business, are just mandated by GAAP, and so as a result we really don’t have the ability to say. But wait a minute, this is a short-term valuation, what is this thing going to be worth over the next three to five years. And so as a result of being able to value them with short-term techniques, you end up depressing them. And so if you for example take a company that has missed a payment or they have mispayments, but has some kind of problem in its revenue, just obvious revenue techniques that comes along such as we have in reliable, where one of its customers, in fact two of its customers have some problems that they will recovery from and that you know that this company is very well integrated with those two major customers and that they are income is going to come back over time. And you look at that on today’s marketplace, you’d say well, I wouldn’t pay anything for that note. But I can tell you, I believe that if someone told me, go out and market this whole company, I think we’ll recovery, but there’s no way to sort of say that other than from experience. So you drop back to these techniques that are used today by all of the BDC’s and you come up with some pretty lousy numbers for a company like that. Greg Mason – KBW: Great. I appreciate the color. Thank you David.

Okay, next question please. Denise, it sounds like we are finished. Denise, are you still on?

I apologize sir. We have a question from Casey Alexander from Gilford Securities. Please go ahead.

Good morning. Did the CFO give the percentage of fixed rate loans versus floating rate loans in the portfolio?

I know we have it.

We did. Yes, so this is Melissa, the CFO. Yes, so we are at 89% as of June 30, of variable rate loans.

Okay, great. Okay, thank you. Secondly, I know you reduced the incentive fee to make sure that net investment income covers the dividend and I’m sure that shareholders appreciate that, but it can’t be lost on shareholders that despite your issue with valuations at NAV hit a record low. So why not cut the incentive fee completely to help support NAV until such point in time that you can get NAV back to an acceptable level, because clearly there is some relationship between the stock price at NAV and clearly NAV is at a record low.

Yes, I keep hearing this and I think it comes from the fact that most people believe NAV is an absolutely precise number, when in essence its imprecise to say at the least. I’d rather run the company the way we are doing it now, and when needed have the incentive fee give back, just to make sure. That’s kind of a way of making sure that shareholders get their dividend. And you are right, since September ’06, we’d given back in terms of incentive fees about $13.5 million. So it’s not light and I hope shareholders appreciate that and at the end of the day it’s just a way of making sure and from my perspective that shareholders get their dividend. Just saying we are never going to collect another incentive fee doesn’t seem to be the right thing to do either. It doesn’t give.

I beg to differ, because since the end of 2009 you lost $3.50 of NAV, which is by my calculation close to $70 million. So how is it justifiable to take incentive fees when you are loosing principal.

Well, you say loosing principle I think you are talking about depreciations. So lets see if depreciation turns into appreciation as time goes on.

Well, I don’t think that you have the potential in your portfolio right now for $70 million or unrealized appreciation.

And there’s no way I can convince you that without sitting down and going through every deal.

Okay, thank you.

(Operator Instructions). I show no further questions at this time, so I’d like to go ahead and turn the call back over to management for closing remarks.

Okay. Thank you all for tuning in. We appreciate the questions that have been asked and hopefully next quarter we’ll have some additional good news. That’s the end of the call.

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