Good morning, everyone, and welcome to the FITUS second quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star than one on your touchtone phone. To withdraw your question, please press star than two. Please note that this event is being recorded. I would not like to turn the conference over to Jody Burfning. Please go ahead, ma'am.

Thank you, Cole, and good morning, everyone, and thank you for joining us for FITUS Investment Corporation's second quarter 2025 earnings conference call. With me this morning are Ed Ross, FITUS Investment Corporation's Chairman and Chief Executive Officer, and Shelby Sherrod, Chief Financial Officer. FITUS Investment Corporation issued a press release yesterday afternoon with the details of the company's quarterly financial results. A copy of the press release is available on the Investor Relations page of the company's website at FDUS.com. I'd also like to call your attention to the customary Safe Harbor Disclosure regarding forward-looking information included on today's call. The conference call today will contain forward-looking statements, including statements regarding the goals, strategies, beliefs, future potential, operating results, and cash flows of Finest Investment Corporation. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, August 8, 2025, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risk, uncertainties, and other factors, including but not limited to the factors set forth in the company's filings with the Securities and Exchange Commission. Finance undertakes no obligation to update or revise any of these forward-looking statements. With that, I would now like to turn the call over to Ed. Good morning, Ed.

Good morning, Jody, and good morning, everyone.

Thank you, Ed, and good morning, everyone. I'll review our second quarter results in more detail and close with comments on our liquidity position. Please note I will be providing comparative commentary versus the prior quarter Q1-2025. Total investment income was $40 million for the three months ended June 30th, a $3.5 million increase from Q1 driven by a $2.1 million increase in interest income primarily due to an increase in assets under management driven by the net investment activity in Q1 and approximately $0.6 million of accelerated unamortized fee amortization on debt repayments, A $1.8 million increase in fee income given by a $1.3 million increase in prepayment fees in Q2 related to our debt investments in four portfolio companies offset by a $0.6 million decrease in dividend income from equity investments. Total expenses, including income tax provision, were $21.3 million for the second quarter. A $3.1 million increase over Q1 driven primarily by a $1 million increase in the capital gains in Senate fee accrual, a $1 million increase in interest expense related to higher average debt balances outstanding, including the $100 million note issuance in March 2025, a $0.4 million increase in base management and income incentive fees, and a $0.4 million increase in professional fees primarily related to proxy solicitation expenses for the 2025 annual shareholder meeting held in Q2. Net investment income, or NII, for the three months into June 30th was $0.53 per share in line with Q1. Adjusted NII, which excludes any capital gains, incentive fee accruals, or reversals attributed to realized and unrealized gains and losses on investments, was $0.57 per share in Q2 versus $0.54 per share in Q1. For the three months into June 30th, we recognized a net realized loss of $7.6 million related to a $14.4 million realized loss in our debt and equity investments in quantum IR, offset by a realized gains of $6.1 million related to the sale of Micronix Filtration Holdings. We ended Q2 with $540.3 million of debt outstanding, comprised of $202 million of SBA Ventures, $325 million of unsecured notes, and $13.3 million of secured borrowings. Our net debt to equity ratio as of June 30th was 0.7 times. Our statutory leverage excluding exempt SBA debentures was 0.5 times. The weighted average interest rate on our outstanding debt was 4.8% as of June 30th. Turning now to portfolio statistics as of June 30th. Our total investment portfolio had fair value of $1.1 billion. Our average portfolio company investment on a cost basis was $12.3 million, which excludes investments in five portfolio companies that sold their operations or in the process of winding down. We have equity investments in approximately 87.6% of our portfolio companies with average fully diluted equity ownership of 1.9%. Weighted average effective yield on debt investments was 13.1% as of June 30th versus is 13.2% at the end of Q1. The weighted average yield is computed using effective interest rates for debt investments at cost, including the accretion of original issue discount and loan origination fees, but excluding investments on non-accrual, if any. Now I'd like to briefly discuss our available liquidity. As of June 30th, our liquidity and capital resources included cash of $91.2 million, $140 million of availability on our line of credit, and $21.5 million of available SBA debentures, resulting in total liquidity of approximately $252.7 million. Now, I'll turn the call back to Ed for concluding comments.

Thank you. And, ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. And at this time, we'll pause momentarily for the first question. And our first question today will come from Robert Dodd from Rabin James. Please go ahead.

Hi, guys. On the, I mean, congrats on the quarter. Talking about the second half, I mean, you mentioned M&A activity is picking up. I mean, just to what degree do you think that that activity is picking up and going to kind of close in the fourth quarter? It's less about just portfolio growth, but also do you think, I mean, do you think that's going to result in elevated repayment? Do you think that could result in elevated equity realizations? I mean, any thoughts on how all that kind of shakes out?

Great question, Robert. Thank you.

And then on competitive environment, is anything changing there? I mean, you know, it's obviously always competitive, right? But, I mean, is anything changing on, you know, banks being willing to do some things or anybody moving down market or any real significant changes, particularly if you think they're going to have any impact, right? just any thoughts

got it

thank you and then if I can if I got it all written down right there was 1.3 million in prepayment fees beyond even accelerated organization or anything like that in Q2 sounds like if there's not a lot of repayments in Q3 we should expect essentially all of that to go away in the Q3 numbers.

I'm sure. Shelby, I'd be interested in your thoughts.

No, I would agree with that. With the 1.3 in prepayment fees and about 600 in amortization, Q2 did have the benefit of about $1.9 million in incremental income that's really more episodic that I would not necessarily expect to repeat in Q3 at those levels.

Got it. Absolutely. Good talking to you, Robert.

Our next question will come from Paul Johnson with KBW. Go ahead.

Yeah, good morning, guys. Thanks for picking my questions. I just want to ask one more of the credits in the portfolio. Quest software, it looks like it was written up on the sign there. Any color you guys could provide on that?

Good question. A full return capital, right, to Q1, we had some pretty healthy Q2. I think is also what I would market today from time to time but not recurring thank you very much

if you'd like to ask a question please press star then one and this will conclude our question and answer session I'd like to turn the conference back over to Ed Ross for any closing remarks

thank you Cole and thank you everyone for joining us this morning we look forward to speaking with you on our third quarter call in early November 2025. The conference is now

concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.