Good morning, and welcome to the Gladstone Investment Corporation’s third quarter ended December 31, 2012 conference call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. And I would now like to turn the conference over to David Gladstone. Please go ahead.

All right, thank you, Emily, for that nice introduction and hello and good morning to everyone out there. This is David Gladstone, the Chairman, and this is the quarterly earnings conference call for shareholders and analysts of Gladstone Investment, the common stock trading symbol GAIN. And of course the preferred stock trading symbol GAINP preferred. We thank all of you for calling in. We are always happy to talk to shareholders about the company. I often wish they were more opportunities but this is that once a quarter opportunity for us to talk to you and you can ask questions. Hope all of you will take this opportunity to visit our website. Its www.gladstoneinvestment.com, you can sign up for email notices so you receive information about us on a timely basis. And please remember that if you are ever in the Washington D.C. area you have an open invitation to come by and visit us here in McLean, Virginia. We are just outside of Washington D.C and please stop by and say hello to the folks here, you will see some of the finest people in the business. And now let’s 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 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’re 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, 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 the forward-looking statements, including those risk factors listed under the caption “risk factors” included in our 10Ks and 10Qs filings in our registration statement that are filed with the Securities & Exchange Commission, and all of those can be found on our website at www.gladstoneinvestment.com and obviously on the SEC website. 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 the conference call. So please also note that past performance or market information is not a guarantee of future results. First we always hear from our President, Dave Dullum. And so he is up, he is a Board member awhile and he’ll cover a lot of ground. So Dave Dullum, go at it.

Thank you, David, and good morning, all. Usually I try to give a quick review of what we do, and so here goes. The business of Gladstone Investment is to provide capital for businesses that are being purchased with a management team and other equity investors. These are usually companies with annual sales in the range of $20 million to $100 million, and we describe that as the lower middle market. What we do is provide subordinated debt and equity and occasionally some senior debt in these transactions, which combination produces a mix of assets which is really the key to our business strategy. In that our debt investments provide the income to grow the dividends while we expect the equity to appreciate and therefore build shareholder value over time. I should say that it is somewhat different, if you will, from other publicly traded business development companies that you’ll notice, some of them are predominantly debt focused. So, it is important to keep in mind that the equity portion of our assets are important to us and to our overall strategy. So, on December 31, 2012 last quarter, based on its costs our investments consisted of a mix of approximately $228 million or 70% in the debt investments which are the ones producing income, and about $95 million or 30% in equity securities which are the ones that we expect to produce the capital gains. This ratio of roughly 70:30 is actually a little bit higher than our goal of 80% debt and 20% equity, but we keep striving to this goal. And there are a number of factors at any time that might affect this ratio, certainly including loan payoffs that may occur at any time and whether or not we’ve converted a loan-to-equity or actually vice versa…

All right, David Dullum that was a good report and we’re excited about the future of the company. Now let’s hear from our Chief Financial Officer and Treasurer, David Watson on the fund’s financial performance for this quarter.

All right, good morning, everyone. I’ll start with our recent capital activity. As I am sure some of you are aware, during the third quarter we completed a public offering of approximately 4.4 million shares of our common stock at a public offering price of $7.50 per share, which was below NAV per share. Gross proceeds totaled $33 million and net proceeds after deducting underwriting discounts and operating expenses borne by us were $31.1 million, which was used to repay 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 tests and allow us to increase our debt capital while still complying with our applicable debt to equity ratios. Also during the quarter, we extended the maturity date on our credit facility one year with our bankers. As a result, the credit facility is now 3 years in duration again, with a scheduled maturity date in October 2015. If we do not extend it again, all principal and interest will be due in October 2016 or approximately 4 years out. There remains a one-year extension option to be agreed upon us and our bankers, which may be exercised on or before October of 2013. All other terms of our credit facilities have remained the same. So, between the proceeds from our common offering and the extension on our credit facility, we feel we are well capitalized for the remainder of the fiscal year and into the next, to continue making good investments for our shareholders. Turning to our balance sheet, at the end of the December quarter, we had $346 million in assets, consisting of $273 million in investments at…

Okay. Thank you, David Watson. I hope each of our listeners will read the press release and obtain a copy of our quarterly report called the 10-Q which has been filed with the SEC and can be accessed on our website at www.gladstoneinvestment.com and also on the SEC website. I think the big news here in this quarter is that we are actively investing and continue to go forward with new portfolio companies, and I think the rest of the fiscal year which ends on March 31 will be a good time to invest. I think we will end the year on very solid footing and hopefully for March 31, 2014 we will be even better than this year. We have been active in the capital markets and we were able to obtain some long term capital in March with a $40 million term preferred offering and with a $31 million common offering. In addition, we have favorable lines of credit through October 2015 with BB&T and KeyBank and room to borrow under that line. So, we are in good shape right now to go forward. We did something this time that I don’t like to do, it’s the first time, we’ve never done it before, and that is because we were running out of money we invested in, and the ratio of debt to equity was just too high. So, we sold some stock below net asset value and by taking some dilution of all shareholders and letting new shareholders in at a lower price, we have been able to put the company back on a good position to grow the assets and I think the dividend as well. The offering really didn’t hurt our ability to continue to pay the existing dividend and hopefully it put us in…

[Operator Instructions] And our first question will come from Daniel Furtado of Jeffries.

The first is just a competitive environment, I think I’ve got a good read here, but I mean, would you classify this as relatively stable or stable since the last earnings period?

I think it’s pretty much stable. David Dullum might be able to answer that. You are in the field everyday and I have been out for about a month.

I think it is. I think we’re at, usual supply of good opportunities that we’re looking at, and if you broker through them, yes, I wouldn’t say there’s any significant increase in the supply of good options or decrease. It’s pretty stable.

Excellent. The other question I had is just thinking about the co-investment opportunity with the other Gladstone family of companies, how are you guiding people to think about that? If we think about 100 deals that come through the pipeline, what percentage of those deals would theoretically be attractive for a co-investment from GAIN? I know it’s relatively early still since the SEC has allowed you to do this, but how should we think about that moving forward?

I think there a number of ways to think about it. First of all, there are some deals that we do now that fit within investment very nicely and would partially in capital as well. We pretty much know that they are going to need more money in the future, so those become candidates for us to do in both companies so that we much more money to use in that. We had to sell a couple of our companies and investments in the past because we’d really run out of the ability to lend them more money and invest more money, and we ended up going out and selling them. We’ve got great capital gains out of them. So that’s sort of the first category of good solid investments, and you really think about what we’re trying to do. We’re trying to make sure that we do the second part of that which is, there are some larger transactions out there that we can’t handle today. So, now with both companies investing, we should be able to do larger transactions. So, rather than stopping at a certain size, we’ll now be able to stop at the size of the 2 companies combined rather than just one of the 2 companies. But I think you get this in to A, a new category of roll ups and increased investments in different companies that we’re in, and the second part of it gets us into larger businesses on Day 1 that both companies can handle in. And that’s the way we’re looking at it. Again, you have to remember that Gladstone Capital is more of a lender, Gladstone Investments more of a buyout company. And so we have to make sure that it fits both of those categories reasonably well. Nothing ever fits any of the categories perfectly, but its fits both of them reasonably well before we would put it into either one of the companies and certainly both.

Okay, somebody just nudged me and said that I said I was out for 30 days. I was not out sick or any of those kind of problems. I was doing a road show for Gladstone Land, which we closed last night. Next question?

The next question comes from Nigish Lan [ph] of Weidenberg [ph].

Just a couple of quick questions, I wanted to get a sense of how the uncertainty regarding tax rates at the end of last year either helped or hindered deal flow in the fourth calendar quarter. And also what the state is of your spillover on distributed taxable income.

This is Dave Dullum. I’ll take a stab at the first part and then let David Watson address the second. As you probably know, there are certainly people talking hard about “Gee, we have to get a deal done by the end of the year.” You know, we looked at a few of those deals and some of those that we’re still anxious to get it done did not get done for variety of reasons and those still are deals this year. So, you know, all else being equal I’d say, to be honest, I don’t think we felt like there was a significant impact on the potential of tax increase. And once people started realizing where things were headed, I think everyone just sort of settled in and just, you know, the deal makes sense or doesn’t make sense. So, that would be how I’m seeing it anyway.

David Watson, on the spillover dividend?

Yes, so the last couple of years we’ve had a spillover dividend and the balance going into fiscal year March 31, 2013 was approximately $700,000.

And has that changed dramatically during the current fiscal year?

During the current fiscal year our, from a net investment income standpoint, we have covered our distributions. Obviously, net investment income isn’t always identical to our taxed ordinary income, so those adjustments tend to occur at the end of the year. But my expectation is that we will have covered all of our distributions from both the tax, and from the net investment income standpoint, going into the fiscal year, but again we can’t project that at this point in time.

Fair enough and just last, I want to confirm what I think I heard, but I wasn’t quite clear, did you say that post third quarter originations were $1.1 million and repayments were $400,000?

That’s correct, yes. Approximately correct.

Okay, so that is year-to-date in the -- while actually the quarter-to-date in the fourth fiscal quarter?

That is correct.

The next question comes from Ross Demmerle of Hilliard Lyons.

As we look at the total interest income that was recorded for the current quarter, I’m trying to get a sense of if that’s a clean number, and what I mean by that is if you’ve got one company going on non-accrual and one coming off and I am wondering if there was a large amount may have been caught up and then or amount that was reversed out because that one company went on non-accrual.

Hey Ross, this is David Watson. The number is a clean number. It doesn’t reflect any interest income recorded from our 2 non-accruals, Tread [ph] and Ash [ph]. It does reflect interest income from the investment, CCE, that went on accrual. Obviously, it will adjust going into the following quarter based off of the timing of payoffs of certain investments throughout the third quarter or the timing of when new investments were made during the third quarter, but it is a clean number.

[Operator Instructions] And the next question will come from J.T. Rogers, Virginia Capital Markets.

I have my first question on Tread, just sort of what is going on there and what your next steps are to moving that to back to accrual status or maybe exiting the investment.

It is up in the air right now. We are in study and it is a little early to try to project which way those are going. We’ve got a lot of things to consider before we make a judgment on that. So let me just leave that one open, I am sorry to leave you hanging.

Sure, I understand it, it is relatively recent. Is there anything in particular that changed over the last quarter obviously, that it was marked down to 0 from fairly close to par in the prior quarter? Maybe not what you always plan is, but what happened with that investment?

Yes, the underlying discovery of what is going on there is still going on. We think there were some things that shouldn’t have gone on obviously, and we are investigating those in detail, but really not something we can put out into the public right now. We just want to make sure we get it all right first.

Okay. Very understandable. On the positive side for the dividend from Acme Cryogenics, were there any other dividends during the quarter that were maybe driven by tax considerations, and do you see the current levels of other income, barring success fees, as stable going forward or maybe dropping off in the future?

Yes, the only dividend during the third quarter was from Acme that you just referenced and our other income is difficult to project. If you kind of look back in history, we had $10.3 million in other income in 2011, we had $1.7 million in 2012 and I think year-to-date we have about $1.6 million in 2013. So, we do generate other income on a very regular basis, but it is also very lumpy and difficult to project.

That is understandable and then I have, just looking at B-Dry and Noble Logistics you guys said it would depreciate during the quarter, anything there -- was that performance related or multiple related?

It is really a combination of both, but somewhat performance related. B-Dry, as you know, is a business that somewhat a function of the weather. It’s been a little, unfortunately, drier than we would like it to be, but it is basically nothing dramatic with either one of those and we’re looking -- we continue to work hard on those businesses. So nothing really to report that would surprise anybody.

All right, great, well I guess this is the last question this time. This Frontier Packaging, just generally was more interested in sort of what you guys saw on that -- in that company and so what the investment thesis is there.

Sure, it is a really interesting business. It is based in Seattle and they mainly, as I mentioned earlier, provide what I consider provisioning and logistics expertise to fisheries mainly in Alaska and they are moving into other parts of the world. They’ve been around for quite a while, 20 odd years, been doing it very successfully, a very strong management team. We actually bought the business with the management team and they’ve become significant shareholders themselves, and so what we looked at there is that when you have a fishery that is in a very odd spot, saying Alaska, very hard to get to, what these guys are able to do is, working with the packaging companies, help, develop, create, to some extent the packaging -- not that unique necessarily, but there is some specialty to it, getting it all together, getting it properly delivered at the right time because there is time sensitivity when you have a fishery that, you know, the fishing, they have their product and you need to get it to market. So, it is really - think of it as a logistics and provisioning type business where the expertise of knowing how to do that very effectively and actually with a pretty nice margin and very good management team, which is always the key, right?

And the next question comes from David West of Davenport & Company.

One follow up on Tread, have you made any management changes at Tread?

Yes, we have.

Okay, alright. And just turning to half year note, a little more color if you could. CCE is one you had on non-accrual for a good while and great to see it go back on accrual status. Could you maybe just provide a little color as to what has been going on there?

Yes, I’d say -- This is Dave Dullum -- the period of time when we saw the downturn, of course, was in that ’09 timeframe where there was significant pressure on golf courses in general in the industry, and as a result of that they, like everybody else, had to deal with that. We did the right things with the company. We did not change management, did not have to. We have a very strong team, we have a very strong board of directors with some real knowledge and experience in the industry, and we have just did all the right things, buckled down. We did do the non-accrual because it’s the right thing to do for the company, and now we are again back to the right trend and business is doing well. They are continuing to grow market share again, and of course, we are seeing the golf industry starting to pick back up. So, it’s really a combination of all of those things and working with the management team just to do the right things. So, we are happy about that one.

Did the accrual, putting it back on accrual status, was that for all 3 months of the quarter, or did it happen mid-quarter?

No, all 3 months.

All 3 months, okay, great. Then lastly, David, if you could maybe talk a little bit about Chip’s recent announcement and maybe talk a little bit about his new role for the Gladstone family of companies?

Sure. Chip was not as involved obviously in this company as he was in Gladstone Capital. He was on the investment committee and did a lot of other things, but Chip is looking at doing another transaction in the Gladstone family and we will see if that gets off the ground. But, in order to do that he needed to move out of that space he was in and into a new space, and he’s very happy to do that, it’s what he wanted to do. So, no real conflicts or problems, it’s just that fellows reach a certain age and they want to do something different than they have done before and that was Chip’s preference and we have come up with a -- I think a great concept for him, which we are not ready to announce yet, but you will hear about it, we will obviously make an announcement when the time is right.

There are no further questions at this time. So that concludes our question-and-answer session. I would like to turn the conference back over to Mr. Gladstone for any closing remarks.

All right. Thank you all again for coming to the meeting and talking to us and giving us good feedback in terms of some of the questions you have asked and we will conclude this meeting now. Thanks again.

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