[Management View]
Rand Capital Corporation's management emphasized their disciplined approach to capital deployment and maintaining regular quarterly dividends despite economic volatility. Key metrics included a net investment income of $2.5 million or $0.83 per share, driven by a non-cash capital gains incentive fee reversal tied to unrealized depreciation.

[Outlook]
Management provided cautious performance guidance, highlighting readiness to deploy capital as market conditions improve. They noted early signs of stabilizing market activity and a focus on yield-focused debt investments.

[Financial Performance]
Total investment income declined by 25% year over year, primarily due to a reduction in interest income and fewer contributing portfolio companies. Net asset value (GAAP) decreased from $65.3 million at Mar. 31, 2025, to $56.7 million at June 30, 2025, mainly due to the Tilson unrealized loss and portfolio value pressures.

[Q&A Highlights]

Question 1: Can you provide more details on the impact of Tilson Technologies' bankruptcy on your portfolio?
Answer: Tilson Technologies' bankruptcy resulted in a $9.5 million reduction in the fair value of our investment. This was due to a contract dispute with a major customer, leading to ongoing litigation. However, Tilson SQS, valued at $2 million, is a separate legal entity and not part of the bankruptcy, continuing its telecommunication tower operations independently.

Question 2: How has the repayment of debt instruments affected your interest income?
Answer: The repayment of five debt instruments over the past year significantly reduced our interest income. This, combined with lower dividend income, contributed to a 25% year-over-year decline in total investment income.

Question 3: What is the current status of your liquidity and leverage?
Answer: We ended the quarter with $4.4 million in cash and no outstanding bank debt. Our senior secured revolving credit facility provides approximately $20 million of unused availability, with the potential to increase to $25 million, maturing in 2027.

Question 4: Can you elaborate on the dividend actions taken this year?
Answer: We declared three quarterly dividends of $0.29 per share in 2025. The total dollar amount paid to shareholders increased due to a higher share count resulting from a stock component in the Q4 2024 dividend.

Question 5: What are the key sectors in your portfolio, and how have they shifted?
Answer: Professional services represent the largest industry exposure at 37%, down from 45%, reflecting the Tilson valuation adjustment. Consumer products increased to 25%, with modest gains in distribution, manufacturing, and health and wellness.

[Sentiment Analysis]
The tone of the management was cautiously optimistic, emphasizing their disciplined approach and readiness to capitalize on improving market conditions. Analysts' questions focused on understanding the impact of recent portfolio adjustments and the company's liquidity position.

[Quarterly Comparison]
| Key Metrics | Q2 2025 | Q1 2025 |
|----------------------------|------------------|------------------|
| Net Investment Income | $2.5 million | $2.7 million |
| Total Investment Income | $1.6 million | $2.1 million |
| Net Asset Value (GAAP) | $56.7 million | $65.3 million |
| Cash | $4.4 million | $835,000 |
| Dividend per Share | $0.29 | $0.29 |

[Risks and Concerns]
The primary risk highlighted was the bankruptcy of Tilson Technologies, resulting in a significant reduction in portfolio value. Ongoing litigation related to this bankruptcy could impact recovery expectations. Additionally, the economic environment remains volatile, affecting portfolio companies' ability to secure financing.

[Final Takeaway]
Rand Capital Corporation navigated a challenging quarter marked by the bankruptcy of a significant portfolio company and broader economic volatility. Despite these headwinds, the company maintained its dividend and liquidity position, demonstrating resilience. Management's cautious optimism and readiness to deploy capital as market conditions improve provide a positive outlook for future performance.