Greetings, and welcome to Rand Capital Corporation's Second Quarter Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Craig Mychajluk, Investor Relations. Thank you. You may begin.

Thank you, and good afternoon, everyone. We appreciate your interest in Rand Capital and for joining us today for our second quarter 2025 financial results conference call. On the line with me are Dan Penberthy, our President and Chief Executive Officer; and Margaret Brechtel, our Executive Vice President and Chief Financial Officer. A copy of the release and slides that accompany our conversation is available at randcapital.com. If you're following along with the slide deck, please turn to Slide 2, where I'd like to point out some important information. As you are likely aware, we may make forward-looking statements during this presentation. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ from where we are today. You can find a summary of these risks and uncertainties and other factors in the earnings release, and other documents filed by the company with the Securities and Exchange Commission. These documents can be found on our website or at sec.gov. During today's call, we'll also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results in accordance with generally accepted accounting principles. We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany the earnings release. With that, please turn to Slide 3, and I'll hand the discussion over to Dan. Dan?

Thank you, Craig, and good afternoon, everyone. The overall investment environment remained muted during this quarter with limited new deal flow, stalled M&A transactions, and borrowers continuing to face higher financing costs as well as more selective underwriting by their commercial senior lenders. This dynamic has led to delays in refinancing activity and prompted a more conservative posture across much of our portfolio. That said, Rand did deliver positive second quarter results, underscoring the depth of our portfolio. We have maintained our underwriting standards and continue to prioritize measured risk-adjusted capital deployment. Net investment income was $2.5 million or $0.83 per share, driven primarily by a noncash reversal of a capital gains incentive fee tied to unrealized depreciation, most notably related to our investment in Tilson, which we will discuss later. Total investment income was $1.6 million, reflecting a continued slowdown in originations and elevated repayments, trends that have been echoed across the BDC sector for the first 6 months of 2025. Many portfolio companies remain cautious and have experienced tightened senior credit facilities amidst a volatile economic environment in which they are selling their goods and services. This has contributed to their increased reliance on PIK interest or payment-in-kind interest. Looking at the first 6 months of the year, approximately $1.2 million of interest income was PIK, representing about 1/3 of total investment income. We are actively monitoring this trend as we assess overall portfolio health and forward return expectations. Despite these headwinds, we exited the quarter with approximately $25 million in total liquidity and no outstanding bank debt, positioning us well to take advantage of new opportunities as market activity rebounds. Please now turn to Slide 4. Even as market conditions remain fluid, we remain focused on protecting and sustaining our dividend. Our ability to support consistent quarterly…

Thanks, Dan, and good afternoon, everyone. I will start on Slide 10, which provides an overview of our financial summary and operational highlights for the second quarter of 2025. Total investment income was $1.6 million, a 25% decrease compared with the prior year period. This decline was primarily driven by a reduction in interest income due to the repayment of 5 debt instruments over the past year, along with lower dividend income. During the quarter, 14 portfolio companies contributed to investment income compared to 22 companies in the same period last year. Total benefits were $864,000 compared with an expense of $2.7 million in last year's second quarter. This improvement was primarily due to a $1.5 million capital gain incentive fee reversal, which offset other expense categories. Additionally, we saw lower interest expense and a decline in our base management fees, reflecting the impact of portfolio repayments and valuation adjustments. Excluding incentive fee benefit, adjusted expenses, which is a non-GAAP financial measure, were $626,000, a 38% decrease year- over-year. Net investment income totaled $2.5 million or $0.83 per share in the second quarter of 2025 compared with a loss of $517,000 or $0.20 per share in the second quarter of 2024. Excluding the capital gains incentive fee benefit, which is a non-GAAP financial measure, adjusted net investment income per share was $0.33 compared with $0.44 per share last year, primarily due to lower investment income. On Slide 11, you will see a waterfall chart that illustrates the change in net asset value for the second quarter. At quarter end, our net asset value was $56.7 million, down from $65.3 million at March 31, 2025. This decline reflects the $9.5 million unrealized loss on Tilson that Dan spoke about as well as other valuation adjustments across the portfolio. We believe these changes reflect an appropriate valuation of our portfolio fair market value at June 30, 2025. It is important to note that our dividend declaration and distribution reduced our net asset value by approximately $861,000 during the quarter. As a result, net asset value per share at June 30, 2025, was $19.10, as highlighted on Slide 12. We ended the quarter with $4.4 million in cash, up significantly from $835,000 at year-end 2024. We had no debt outstanding on our senior secured revolving credit facility. While the borrowing base formula provided approximately $20 million of unused availability as of June 30, 2025. We have the capacity to increase this to a total of $25 million, subject to certain borrowing criteria and portfolio eligibility requirements through its 2027 maturity. With no leverage outstanding and a strong liquidity position, we are well equipped to support new investments and respond to evolving market conditions. Last week, on July 28, the board declared a regular quarterly cash dividend of $0.29 per share, payable on or about September 12, 2025, to shareholders of record as of August 29, 2025. With that, I will turn the discussion back over to Dan.

Thanks, Margaret. And moving on to Slide 13. We continue to execute our long-term strategy with a focus on income generation and capital preservation. As market conditions begin to stabilize, we are already encouraged by early signs that may lead to stronger deal activity in the second half of the year. In the meantime, we are prioritizing yield-focused debt investments and maintaining a disciplined underwriting standards. As always, we are managing through volatility with a long-term lens, and we remain committed to creating value for shareholders through proactive oversight and prudent capital allocation. While Q2 did not include meaningful new investment activity, we have the balance sheet strength, access to capital and organizational flexibility to move quickly as quality transactions emerge. The ability to maintain these patients for the right investment opportunities and maintain our dividend is key to our strategy in this environment. To close, I want to reiterate our confidence in Rand's long-term strategy. While the investment environment does remain cautious as do we, our portfolio companies are generally holding up well, and our liquidity position provides meaningful flexibility for the future. We're seeing signs of stabilization and deal flow across the BDC sector, and as that momentum builds, we are prepared to deploy capital in ways that will continue to support earnings, NAV growth and dividend stability. Thank you again for your continued interest and support. We look forward to updating you on the progress during our third quarter call in November, and have a wonderful day.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.