Good day, ladies and gentlemen, and welcome to the Gladstone Capital Corporation Third Quarter Earnings Call and Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the call over to David Gladstone. Sir you may begin.

All right. Thank you, Destiny, for that nice introduction and hello everyone out there. This is David Gladstone, Chairman. This is the quarterly earnings conference call for shareholders and to our analysts and this is the call for Gladstone Capital common stock traded on NASDAQ under GLAD and the preferred stock is traded under the symbol GLADO at the end. Thank you all for calling in. We love to have these calls. It's happy time to talk to shareholders and wish we could do this more often. We like to give updates on our company and our portfolio of companies, the business environment and as always, you have an invitation, it's open to come by and visit us anytime here in McLean, Virginia. We're just outside of Washington D.C. Stop by and say hello. We have lot of folks here and I think you will see some of the best folks in the business. Now a word or two for my General Counsel and Secretary, Michael LiCalsi, he is also President of our Administrator and he has some important information for everyone listening to this summary presentation. Michael?

Good morning, everyone. 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 and other factors even though they are based on our current plans, which we believe to be reasonable. Many of these forward-looking statements can be identified by the use of certain words such as anticipates, believes, expects, intends, will, should, may, and similar expressions. There are many factors that may cause our actual results to be materially different from any future results that are expressed or implied by these forward-looking statements, including those factors listed under the caption, Risk Factors, in our 10-K filing and our registration statement as filed with the SEC, all of which can be found on our website at www.gladstonecapital.com or the SEC's website at www.sec.gov. 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, after the date of this conference call, except as required by law. Please note that past performance or market information is not a guarantee of future results. Please take the opportunity to visit our website www.gladstonecapital.com and sign up for our email notification service. We don't send our junk mails, just timely news on your company. You can also find us on Facebook, keyword, The Gladstone Company and follow us on Twitter at Gladstone Comps. I hope our listeners will read our press release issued yesterday and also review our Form 10-Q for our third quarter ended June 30, 2014, again filed yesterday with the SEC. You can access the press release and the 10-Q on our website www.gladstonecapital.com and also on the SEC's website at www.sec.gov. This presentation is also on our website. And now, we will begin with a hearing from Gladstone Capital's President, Bob Marcotte.

Thank you, Michael and good morning, everyone. Let's begin by reviewing Gladstone Capital's portfolio activity for the quarter, any significant changes in the portfolio of credit, portfolio income profile and then conclude with an update on the investment climate and market place that we operate. As many of you know, we provide loans to privately held U.S.-based businesses and target companies in the lower middle market with $20 million to $100 million of revenue and $3 million to $15 million of earnings before interest taxes and depreciation. Providing capital to these companies allows them to grow, make acquisitions of other companies and they will be used to refinance existing debt. We invest in companies with profitable operations, sustainable competitive positions and experience management teams using a combination of senior or subordinated loans and sometimes with small amount of equity. With respect to investment activity, during the quarter ended June 30, 2014, we made $3.4 million in either follow-on and new syndicated financings and had three early payoffs at par aggregating $5.4 million, which produced $500,000 in exit fees. In terms of our direct origination activities, three of the awarded investments targeted to close during the quarter were delayed beyond the end of the quarter. Subsequent to June 30, we closed $7.1 million follow-on subordinated debt investment in Francis Drilling Fluids, a private equity backed company to fund a strategic acquisition which enhances the core oil and gas service operations and provides you with increased scale. The two other awarded transactions which aggregate $16.3 million are late in the documentation process and are anticipated to close shortly. While we are disappointed with this production slippage, we are approaching the elevated risk levels in the market cautiously and are encouraged by the [recent] (ph) awards that have validated our investment offerings and…

Thank you, Bob and good morning, everyone. I will review GLAD's financial results and overall portfolio statistics for the quarter. Starting with the statement of operations for our third fiscal quarter of 2014 ended June 30, 2014, as compared to our second fiscal quarter at March 31, 2013, net investment income was $5.1 million or $0.24 per share, which is an increase of 12.8% when compared to the prior quarter of $4.5 million or $0.21 per share. Investment income increased quarter-over-quarter by 9.1%, primarily due to an increase in other income of $800,000, from increased success fees, dividend income and other fees received during the three months ended June 30. This quarter, we received $500,000 in success fees from the early payouts at par of [TiVo] (ph) acquisition company, $700,000 in net distributions from FedCap Partners, LLC and $400,000 from illegal settlement related to a previous fleet exited portfolio company. Interest income on debt investment remain consistent quarter-over-quarter at $8.2 million as we had two new deals funded at the end of the March quarter offset by three investments paid off in part during this quarter totaling $5.4 million. Offsetting the increase in investment income for the quarter was an increase in operating expenses of 5.7% as compared to the prior quarter, primarily due to the $300,000 increase in dividend expense on our mandatorily redeemable term preferred stock as a result of the increased number of shares of a new series 2021 term preferred stock issued at a prior issue albeit at a lower rate. Of note, no significant credit was needed during this quarter of last quarter, but we did credit the incentive fees for our first quarter ended December 31, 2013, in order to infer that distributions to stockholders were covered entirely by net investment income, which they…

All right, thank you Melisa; that was a good report and we had good reports from Bob and Michael as well. So we are off to a good start for this new quarter. For the quarter ending June 30, 2014, we improved the liquidity position by doing a public offering of $61 million in new series 2021 term preferred stock and we redeemed out our series 2016 that was going to have be redeemed out next year anyway. It also makes us very favorable to going forward and negotiating our line of credit, which we’ll doing June of this year. We maintained strong portfolio yield at about 11.5% on a quarter-over-quarter and we generated about $2 million with other income. All of these are good strong movements. We were about 116% coverage on our dividend in terms of income this quarter. So that’s a good sign for all of these loan stocks. One of our biggest challenges will be to continue to find new investments. You heard Bob present that and I think the whole industry in saying that these days. There are a lot of capital providers out there including BDCs and FDICs, which are bidding down the rate on loans to small businesses. So we have to pick our -- pick and choose very carefully. Additionally some of the banks have excess capital and looking for loans, but I think we are a much better return for those people who need us rather than the banks. Many borrowers are looking to take advantage of the capital availability out there and rates by -- and the rates and they actively shocked the financing but most are not looking for just low rates. They are looking for a partner and I think we can help them succeed. We have a…

(Operator Instructions) Our first question comes from Troy Ward of KBW. Your line is open. Troy Ward – KBW: Great. Thank you and morning David and the rest of the team. David can you just back up your ending comment there, quite also have me a little perplexed. You talk about how great everything is going and earnings are up and everything and then you recognize that book value that was down 12% quarter-over-quarter. Then you kind of give the response that you think that can rebound. What gives you the confidence that the book value is going to rebound, the buck and change that we lost this quarter?

Well I was taken down primarily because of the uncertainties around one particular portfolio company and that was a day downer. We just did not -- we do not know even today exactly what’s going to happen there but we think we have a strong position. Bob, you want to chime in on that?

Troy, I have illuminated a little bit on Reliable being the biggest swing there. I think I can make a few statements. First, we are very confident in the company’s contractual protections in the situation. The contract party, we are dealing with, the counterparty is a very reputable and creditworthy entity. The size of the market for the underlying drug is well established. The unknown at this point is the timing and structure of the contractual compensation that we feel we -- that the contract requires and we expect clarity in the current quarter. So we are in a situation that we feel protected. We feel there is a resolution and a likely strong economic outcome but as relates to pure valuation, it is impossible to determine until that has been concluded, so we have taken intact the focus on what the business is doing today and we would expect that contractual resolution to be something that we can report relatively soon and effectively address your question of the central recovery.

So Troy, our full approach [of late] (ph) has been to be much more conservative. I think in some of our brethren in the business and not to say that they’re bad and we’re good. It’s just that we take as conservative approach as we can to net asset value. I don’t want anybody to buy based on some larger net asset value. Troy Ward – KBW: How do you couch those statements with just the historical credit quality? We’ve known each other for a long time and it’s always had a conservative tone but the credit quality quite obviously hasn’t followed. If you look at your credit quality, realized losses versus peers, it isn’t more -- it isn’t better than peers. How do you compare the actual performance to that statement?

I think it depend on which peers. If you choose the peers that came into the business after the recession, you are right. They didn’t have to take the downer, so if you remember we sold off an enormous amount of our really good loan in order to stay through the recession and pay Deutsche Bank who didn’t go forward with our renewal at the time as they were. So I think we’ve done very well and this quarter shows that we continue to peak up in terms of earnings and net asset value is down but who knows next quarter it may rebound back by $18 million that we took it down by. Stay tuned. All I can say is I feel comfortable today that we’re going to earn the dividend and continue to grow the net investment income but there are no guarantees in life. Troy Ward – KBW: Okay. And then one last follow-up on for Bob probably, more color on the Midwest Metal as well. The last quarter and again this quarter, you referenced aluminum prices. If we just look at the valuation I think you made that deal in 2010. At the end of 2012, you had it marked at $0.98 and six months ago at the end of 2013, it was $0.99 on par. In the last six months aluminum prices have gone up 12% from $0.80 to $0.90 and now we see the valuation of Midwest Metal went from $0.99. I think it’s at $0.14. I am sorry it went from 99% on par down to 14% on par this quarter. Can you again correlate those statements with aluminum prices and why the valuation went down?

I think the only -- your comment with respect to aluminum prices, its only in the last -- I believe less than 60 days the aluminum has moved up. So we’re obviously dealing with a long term swing and the cumulative effects on the earnings of the company and that’s obviously going to be more reflective on the -- that 12 month performance, which we have to weigh as we think about valuations and consistencies across our portfolio. So that recent upswing in aluminum pricing quite frankly is a welcome relief and it’s beginning to impact results. But obviously we’re mindful of some of the operating and purchasing economies of scale in a business such as this and as a result of that I think we’ve been more conservative in approaching where the valuations might be and mindful of strategic third party discussions and approaches they had, I will say we’re also actively engaged in discussions to address this situation but really can’t comment beyond that. At this point I would say the cumulative effect of the downed prices, the competitive profile and the exit alternatives are baked into those numbers, but I will say it also rebounded in the last month or two and it is improving and frankly I think that helps our position and puts us in a much better stance to potentially see upside in that situation, but we’re basing it on the last 12 months performance and that’s what reflected in the valuation. Troy Ward – KBW: And I think one interesting point would be Sentry Aluminum CNN reported today it’s a Midwest aluminum manufacture distributor and the stock price has gone from 10 to 18 in the last six months, so it just continues to be a little perplexing why some of your investments seem to go opposite of the tone of management and in this case the opposite of what appears to be a pretty good comp in the marketplace.

I think you have to look at that -- that business is I believe a multibillion dollar business. It’s the largest distributor and service center in aluminum in the country. I think it speaks to the point that I have raised in terms of operating efficiencies, purchasing economies and obviously there is some -- there is a significant turn that happens in a business when the price outlook begins to shift but that’s an equity valuation. That’s not necessarily a trailing cash flow valuation and we’re focused on the trailing demonstrated cash flow valuation and we’re also dealing with a situation where we’re not senior lender. We're a junior lender in this particular situation as you can see from our scheduled investment and there is obviously debt in this investment. So until the cash flow actually is produced, we can’t look at what the outlook is likely to be in a business to determine what the value of our debt instrument is. So I agree with you. Troy Ward – KBW: That’s good color. Thanks Bob.

Okay. Can we have the next question please?

(Operator instructions) And I am showing no questions at this time. I would like to turn the call back to David Gladstone for closing remarks.

All right thank you all for calling in. We’ll see you next quarter and see if some of the things that we’re hopeful to happen in this quarter happen such as new transactions and revaluation of some of the ones that got hit this quarter. Thank you all for calling in. That's the end of this conference call.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.