Greetings, ladies and gentlemen and welcome to the Gladstone Investments second quarter 2009 financial results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the presentation. [Operator instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Mr. David Gladstone, Chairman of Gladstone Investments. Thank you, Mr. Gladstone, you may begin.

And thank you, Diego, we appreciate that nice introduction, and hello and good morning to all of you. This is David Gladstone, this is the quarterly conference call for shareholders and analysts for Gladstone Investment. Our trading symbol is GAIN. And thank you all for calling in. We are happy to talk to shareholders and certainly we would like to see some of you come by our offices here outside Washington DC, we're in McLean, Virginia, it's the suburbs, just a short stop. We'd like to see you come by and say hello. You see a great team working; I think they're just the best in the business. I do need to read this statement about forward-looking statements. This conference call includes 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, 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 or implied by forward-looking statements, including those factors listed under the caption Risk Factors that are in our periodic filings on file with the Securities Exchange Commission and those filings can be found on our website at www.gladstoneinvestment.com and they can also be found on the SECs website. The company undertakes no obligation to publicly update or revise any forward-looking statements whether it's a result of new information, future events, or otherwise. As some of you know, we've begun a new tradition here at the company regarding calls to shareholders. In the past, I did all the talking, but we have a lot of talented people here at the company, so we've invited some of them to talk to you today. I know shareholders would like to hear from some of our talented team. I'm not going anywhere, and neither is Chip Stelljes or Terry Brubaker, we just want to make sure that you hear some of the top people that are part of our great team. First we will hear from Dave Dullum, our President, and he will cover a lot of ground, including a view of the future of this fund. Dave, take it away.

Thank you, David, and good morning to the participants. Please review Gladstone Investment Corporation's gains because that is principally in the buy-out transactions where we buy small businesses with our management team and private equity sponsors. Our products to this market are primarily the mezzanine or subordinated debt investments, which we combine with an equity co-investment feature for the capital gain aspect of our investment strategy. We accommodate with this product private equity sponsors in their ability to achieve a necessary leverage for a transaction, which is of major importance in this current environment where senior leverage is very scarce. We have also invested, in the past, in senior syndicated loans of large and middle market buyouts. However, we no longer are investing here and, in fact, use this part of the portfolio of loans as a source of capital from a principal buyout investing activity. Terms of buyouts for the first half of fiscal year ending September 30, 2008, we invested in two new buyouts for a total of approximately $27.1 million and made an add-on investment of $3.8 million to one of our portfolio companies which helped facilitate a strategic acquisition on their part. We look forward to being able to participate with our portfolio companies in this regard from time to time. We had no exits, although we did recapitalize one of our buyout deals, Quench, in which a part, a large private equity firm made a significant growth equity investment in Quench allowing us to receive a debt repayment of approximately $7. And, as a result, we go forward owing only 4.5% equity in this business, which we are classifying as an affiliate investment. It is still too early to expect exits and realize gains from the buyout type investments and gains, and perhaps in a…

That was great, Dave, good report. We are all excited to have you working on the buyout side of the business. I know this fund is going to pick up steam in the second half of the year. Now let's turn it over to our CFO, Mark. You are on the funds financial reporting side, so why don't you give us your report?

Thank you, David, and good morning everyone. Let's begin with our balance sheet. Our balance sheet continues to remain strong. At the end of the September quarter, we had approximately $265 million in assets. This is an improvement of $26 million in investments at fair value and $39 million in cash and other assets. We had about $130 million borrowed on a line of credit and have about $233 million net assets. So we are at a less than 1:1 leverage. This is as very conservative balance sheet for a company such as ours and we believe our overall risk profile is low. Please note that in October, after the quarter end, we amended our credit facility to extend a maturity date to April 19 of '09 and reduce the borrowing base past the facility to $125 million. The September quarter end, total investment income was approximately $6.8 million versus $7.2 million. Our total expenses, including credits were approximately $3 million versus $4.1 million in the prior year quarter, even net investment income, which is before appreciation, depreciation standard losses, were approximately $2.8 million versus $3 million from the quarter last year, an increase of about 27%. For the six months ending September 30th, total investment income was approximately $12.9 million versus $13.5 million. Our total expenses include credits for approximately $6 million versus $7.6 million in the prior year, leaving net investment income of approximately $6.8 million versus $5.9 million for the six months ended last year, an increase of about 15%. Now let's turn to realized and unrealized gains and losses. This is a mixture of appreciation, depreciation, actual gains and losses on our investments. Said another way, net realized gains and losses, meaning actual gains versus losses, are from cash due to sale of disposable assets, mean…

Thank you, Mark, that was a great report, as well. That was a good summary, I think, of our financials, but I hope each of our listeners will read our press release and also obtain a copy of our quarterly report called the 10Q, which has been filed with the SEC and can be found on our website at www.gladstoneinvestment.com. It's also on the SEC website. Our biggest worry today, of course, is the debt marketplace for our funds and for our portfolio companies that we finance. We are worried about the banks ability to provide our line of credit and for the banks to provide the line of credit to our portfolio companies. It is a worry that we have across our own internal workings. We are working to bring in some additional lenders to help out with our line of credit, so I'm expecting certainly by some time next quarter that we'll have in place additional lenders that will join our line of credit. We do have a lot of worry about our portfolio companies that they can't find low cost bank debt and we'll have some of the future growth slowed to lack of funding. This is a very unsettling time that we have today. I continue to have a difficult time understand how we're ever going to give you shareholders a true estimate of the fair value of our securities. Of course we get, from our syndicated loans, the marketplace there is based on prices that come from a market that really can only be described as a fire sale. A fire sale market causes the mark down of our securities. Again, this quarter hedge funds and others, like some of the banks, are dumping securities on the marketplace, and that has very few buyers. And,…

(Operator Instructions). Our first question comes from Vernon Plack BB&T Capital Markets. Please state your question. Vernon Plack – BB&T Capital Markets: Thanks very much. And, this question is for Mark. Mark, could you tell me what the commercial paper rate that your lender’s currently charging you?

Commercial paper is about a little over 2.5%. Vernon Plack – BB&T Capital Markets: Okay, thanks very much.

Thank you. (Operator Instructions). Our next question comes from Wayne Silby (ph). Please state your question.

Hi David, long time. My question has to do with the fair value accounting versus mark to model versus looking at what other syndicated loans are selling for at distressed prices or market transactions. Then, you seem to indicate that you actually look at actual transactions in the marketplace to mark to those distressed sale prices. Did I hear that correctly so this is kind of a mark-to-market as opposed to a fair value kind of portfolio pricing?

Well, you did hear correctly. We come at the marketplace from two directions. One, of course, is that on the senior syndicated loans, we can call off the folks that make a market in that and get an indicative bid and use that many times in our evaluation. Also, we have Standards & Poor’s evaluation service. They also provide a review. They give us a value on some of our loans, and we use that. And I’m pretty sure, I don’t know that absolutely, that they use the transactions that are going on in the marketplace or senior syndicated loans. And for our regular loans, they have their own model that they use and give us a value on it. I’m not sure there’s a distinguishment between fair value and market price where you have bids and ads are there for securities. The SEC’s pretty adamant that you use market prices, that is bid and ask prices, when you can find them. And then if you can’t find them, you have to use something else. But I hope that answers your question.

Thank you.

Any follow-up Wayne?

So we have another question from Jon Arfstrom with RBC Capital Markets. Please state your question. Jon Arfstrom – RBC Capital Markets: Thanks. Good morning, guys.

Good morning. Jon Arfstrom – RBC Capital Markets: Question for you on a comment you made about an increased appetite potentially on the mezzanine and co-equity investments, could you talk a little bit about how you compare and contrast that against control investing and how large do you think that could get the percentage of the portfolio?

Sure, I’ll ask Dave to answer it as well, but my approach to it is really two areas out there. We do see transactions on our own. That is, there is no sponsor group coming in with them and we do those transactions, but most of those transactions do have a management team and the management team is co-investing. So, you could say that we’re acting as a prompter with the management team. In other instances, we have a prompter, and these prompters are traditional LBO funds and some of them are what we call fundless sponsors. That is, they are a group with some money but they’re not running a fund per say. They’re raising money each time they find a transaction to put that money in. And in those cases, we will co-invest in equity with them. But we’ll also provide the mezzanine financing, and in some cases, the senior debt in order to get the deal closed. All of those are in buyouts. These are proprietary deals that we find on our own or with brokers out there in the marketplace. And Dave, do you want to add anything to that?

No, David, I think that’s a good description. I think the only potentially additional piece might be we’re very sensitive when we make these investments whether they are with a fundless sponsor or as part of a fully invested private equity sponsor. We’re very sensitive to all blended rate of investment, so we don’t really consider ourselves a pure mezzanine funds per say because we are interested in the equity co-investment piece for the capital gains portion. And that’s really where we’re finding some interest principle based on, again, equity sponsors where, as I mentioned earlier, the fact that their percentage of the transaction is increasing in the capital structures except that they’re able to reduce perhaps some of their equity it gives us an opportunity. So I think in general we see that trend. It gives us the market we’re in and starting with the senior bank lending fees, most cases, at this point, owe less than two times EBITDA. That does provide us a very interesting opportunity.

Other questions John? Jon Arfstrom – RBC Capital Markets: Yes, just one more on your net renewal, can you talk a bit about discussions you might have had with other banks to expand that and given the reduced size of this, is it putting any constraints on your business in terms of the ability to grow?

At this point, it’s not putting a constraint on us growing but it will over time and we don’t find additional folks join the credit line. Deutsche Bank is our line of credit. They were very gracious to come into the line again for $125 million. We do have a commitment letter for one group and we’re negotiating that somewhere between a $35 and a 50 million transaction. We have another group, another bank that came in for $25 million. It’s gone through their credit committee, but we’re not finished yet and go up to their senior management. And we have a third bank that has indicated $25 million but it’s not gone through their credit committee. If all of those came together you’d have an additional $100 million. I don’t know that all of that will happen, but that’s where we’re going John. Jon Arfstrom – RBC Capital Markets: Okay, thanks guys.

Our next question comes from Ross Demmerle with Hilliard Lyons. Ross Demmerle – J.J.B. Hilliard W. L. Lyons: Good morning. I just wanted to follow up on the line of credit regarding a potential interest rate on that. I noticed in the Q, your borrowing cost at the end of the quarter were 3.9%. And it looks like the commercial paper rate is 2.5%. And then the line of credit is 3.5 on top of that. So are we looking at a potential increase on borrowing the 6% perhaps in the next quarter? Is that possible?

That’s right. You’ve done the math correctly. Interest rates have gone up and of course we are charging more for our money as well. So we have to pass that on to the small business concerns. Ross Demmerle – J.J.B. Hilliard W. L. Lyons: Okay, thanks.

(Operator Instructions) Our next question comes from Adrian Day with Adrian Day Asset Management. Please state your question. Adrian Day – Adrian Day Asset Management: Yes, good morning David. I have two questions about (inaudible). First, on the dividends, unless I’m misreading it, you’re not actually earning the dividend at the moment and I wondered when you’d see that changing and just give us a little bit more comfort on that please.

Alright, the dividend, we are short, but our projections, hopefully by the end of March will show us getting very close to doing that. What we do is we put together a budget for the year and we try to project out that we’re going to make our dividend for the whole year. So that means sometimes in the early part of the year you might now make it. What has hurt us most here I think is first of all, we issued more shares thinking we were going to put that money out quickly and we didn’t put that our quickly. So that hurt us. And then the second part of it is that interest rates have actually come back down very far as you know from the fed reducing rates and since our seniors syndicated loans don’t have any floors, those have gone down as well and hurt us on that part of it. So we’ve gotten hurt from both of those. I think inflation will be with us next year and interest rates will go up. So as a result we’ll have an opportunity to have more money coming in. But if you watch our P&L, what happens is while rates go up and it helps us on the top line, rates also go up as the last person indicated on our expenses from the cost of our financing. So we sort of give it back to the banks what we get on the top line. But hopefully by March, we’ll be at a break-even in terms of where we are with the dividends and the payout. (Inaudible). Adrian Day – Adrian Day Asset Management: Sorry, on the line of credit, just one more quick one on that if I may, were you a little bit surprised that they didn’t renew the line for longer periods or is it just part of the overall market environment?

Unfortunately it’s part of the market environment. If you want any of the business development companies and from that standpoint almost any of the finance companies, there’s been an absolute dramatic drop in the amount of credit that’s available to everyone. Adrian Day – Adrian Day Asset Management: Right, right, okay thank you.

Next question

Our next question comes from Lee Carter (ph). Please state your question.

Good morning David. A couple things, have you ever heard of the word exigent? Do you know what that means?

I’m afraid you got me stumped. Go ahead.

I was too, so I looked it up. Anyhow, exigent is unusual circumstances requiring immediate attention, demanding, and exacting. Now, I’m not being critical of David Gladstone or the Gladstone company, don’t get me wrong. But we are in a little bind here. And I went through the perspectives, or we did, and on page 30, on gains, it says they are available for opportunist investments, securities of public companies. And that’s on page 37 and page 30. And then on Glad, we may prospect, may purchase other book value. I didn’t plan to think I purchased somebody else. But wouldn’t GAIN at this level, half a book, be a consideration for Glad or GAIN to buyback?

Buybacks are a condition upon banks approving it. And the banks at this point in time would take a dim view of our reducing our equity base by buying back shares. Even at this price.

Okay, how about having Glad buying the stocks?

The bottom line of that of course is that we can’t buy very much of it because one business development company can’t own another because of their mutual funds. Mutual funds have, under the 1940 act, a prohibition of ownership.

Okay.

I think the maximum ownership is 3%.

You wouldn’t be able to get much more than 3% anyway the way things are working out. Anyway, what’s happened is it’s gone below the six and the five and it’s kind of killed the margin accounts. Kind of it has killed them and that’s why I was looking maybe towards something a little bit different. But anyhow, in my mind, the shorts are in our lunch, our breakfast, and our dinner with what’s going on at this price level.

Well, there’s no question there’s about a million shares short on this stock so they’re out there pounding away at us and that’s the problem with our system that a $6 billion hedge fund can come in and short the stock and win every time. And there’s not a thing we can do about it because the SEC just doesn’t have the stomach for putting out that fire.

Right, at the current time, when you say -- and one of the things -- we get 7% as an investor before the 20% kicks in. Is that based on the book value originally or is that based on the current book value David?

It’s based on the current net asset value of the current book.

Okay, what does the average company say, what’s it like for them down the pike three to six months?

You mean our average portfolio company?

Yes.

The portfolio companies are performing very well. We have very few problems in our portfolio today.

Good.

But it’s relative. You have an investment that’s autos or housing, you’re getting hammered today and of course we don’t have that. So we’re not having that problem.

Right.

But our biggest problem today is that the banks that have been financing autos and housing are in terrible situations because they’ve overextended their investments in that area and now are reaping the loses and it’s caused them not to make loans to anyone. And so as a result, many of our portfolio companies have been pinched by their own banks saying that it’s very difficult for them to get credit lines. Now, the normal credit line that they get, which is a revolving line of credit and a little bit of return debt, is actually not too hard to get from the banks. They’re still doing asset-based loans. And that part of the banking community seems to be fine. But the old days of getting a cash flow loan from a bank are gone, at least in the near term. And so that hurts a lot of small businesses, especially those that don’t have a lot of assets such as companies in the serving area. It’s good for us because it gives us the opportunity to go in and finance those businesses but at the same time, it makes it more difficult for them to make money if they’re paying higher rates rather than the low rates of the bank.

So what does that mean? What you told the other fellows that called up was basically the line of credit now is not really a pinch on the amount of business that you can do currently.

That’s right. But we need to increase it back to the 200 if we want to grow this the way we want to grow it. We have two alternatives here. First of all, we can sell our senior syndicated loans. We have about $125 million of those that we could sell off. We had some cash at the end of the quarter. So that obviously can be used. And then finally, if those who don’t work, we’ve got to find a way to raise additional followings. We’ve got to increase the 125 back up to 200. Those are the two areas which we’ll be using over the next six months to fund our growth.

Okay, alright. Thank you, David, in this incredible environment, doing great. Thank you.

We’ll come out of this. I know everybody gets worried about this kind of stuff, but this is a typical kind of down turn that everybody -- I remember it in 1990, people were, as they say, standing on a ledge worried about what was going to happen tomorrow. In six months we’ll look back. Maybe it’ll take a year, but we’ll wind our way through this situation that we’re in and we’ll start climbing back out of it and business will be fine.

You said last quarter this is your time.

This is our time. We’re just making sure that we don’t make a misstep and that there isn’t one more big downturn. We actually thought the economy turned around in March and April of this year but it turned out not to be true. Luckily, we have not weighed it in. As you know, we’ve not done that many transactions since March 31st. And luckily that’s been a good thing for us.

One last question, what is your leverage right now?

What’s the amount of loans that we have outstanding now, Mark?

Is it about three-quarters to one?

It’s about .6 to one.

It’s a good way to be. Thank you.

Next question.

Our next question comes from Ross Demmerle with Hilliard Lyons. Please state your question. Ross Demmerle – J.J.B. Hilliard W. L. Lyons: Yes, I had a follow up regarding just some miscellaneous expenses. It looked like professional fees, stockholder related costs, and general administrative expenses combined moved up about 200,000 from the previous quarter and I’m wondering if that’s an aberration or it’s likely to go down in the current quarter we’re in right now. And each line item isn’t a whole lot, but 200,000, I guess, that’s real money.

Well, Mark, why don’t you explain that?

Right, a good chunk of that really is related to the direct offering cost that came through this quarter and as well as some additional audits. We went through our year in audits but we have additional audit fees. We spent them when incurred. So those came through in the quarter as well. Ross Demmerle – J.J.B. Hilliard W. L. Lyons: So, I mean it sounds like some of those line items might come down in the current quarter.

It’s mostly a timing issue.

Well, and the right’s offering was obviously -- we’re not doing another write off. Ross Demmerle – J.J.B. Hilliard W. L. Lyons: Yes, okay.

So that’ll come off. Ross Demmerle – J.J.B. Hilliard W. L. Lyons: Alright, very good.

Okay, next question.

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

Do we have any last questions?

One just queued up here, one moment. Our next question comes from Robert Dodd with Morgan Keegan, Inc. Robert Dodd – Morgan Keegan, Inc.: Hi guys, going back to the debt equity at 0.6, I’ve got that number a little high on the actual debt outstanding. Could you give us the actual number?

I’ve got it right here on the P&L. Let me pull them out for you. (Inaudible) 130 divided by 208, 0.56. Is that close enough for you? Robert Dodd – Morgan Keegan, Inc.: Yes, that’s perfect.

Okay, who’s next? Any other questions?

There are no other questions at this time, sir.

Alright, thank you all for attending the meeting. We hope we gave you the information you need. If not, please call us here at the office and we’ll try to answer any questions we can after the call. That’s the end of this call. Thank you Diego.

Thank you, sir. Ladies and gentlemen this does conclude today’s teleconference. (Operator Instructions) Thank you all for your participation.