RAND

• Investment and Portfolio Activity

  • Deployed $6.9 million in new investments during the quarter: a $4.5 million term loan to Feature Healthcare (Four Seasons Home Care) with 12% cash interest plus 2% PIK, and a $2.4 million investment in Termite Guy Corporation (composed of a $2.1 million 13% term loan plus 1% PIK and a $300,000 equity stake).
  • Completed full exit of Applied Image, receiving full repayment of a $1.7 million debt investment and realizing a $959,000 gain on associated warrants; also received a $250,000 partial repayment on another existing debt investment, supporting capital recycling.
  • Recorded a full $2.5 million write-down of BMP Swanson after the company ceased operations, resulting in a $2.5 million quarter-over-quarter fair value decline.
  • Total portfolio fair value grew from $48.5 million at year-end 2025 to $56.5 million at the end of Q2 FY2026, driven by first half 2026 investment activity.
  • Newly deployed capital is underwritten to low to mid-teens yields, which management states is a more accurate reflection of current earning power than the overall portfolio yield depressed by non-accruals.

• Financial Position

  • Ended the quarter with a net asset value (NAV) of $17.33 per share, a modest increase from the start of the quarter, as operating earnings and the Applied Image gain more than offset dividend payments and remaining unrealized markdowns.
  • Total assets reached $57.7 million, with $5.1 million drawn on the senior credit facility and $12.4 million in remaining availability, giving the firm flexible liquidity for future investments and follow-on funding.
  • Core operating expenses remained stable: adjusted non-GAAP expenses were $647,000 in Q2 FY2026, compared to $626,000 in the prior year quarter.

• Dividend Strategy

  • Paid a regular quarterly cash dividend of 29 cents per share for Q2 FY2026, and declared the same 29 cent per share dividend for Q3 FY2026.
  • Management maintains its focus on supporting the regular dividend through recurring income, proactive liquidity management, and gradual portfolio rebuilding, balancing current shareholder returns with long-term portfolio growth.

• Management maintained its existing strategic guidance focused on disciplined portfolio growth, active risk management, and consistent shareholder returns for the remainder of fiscal year 2026, with no explicit upward or downward revision to prior financial or operational targets.
• The firm will continue to pursue available origination opportunities in the lower middle market with a measured approach, prioritizing credit underwriting quality, deal structure, and attractive risk-adjusted returns above rapid growth.
• Management will maintain active portfolio oversight to protect value in challenged positions, improve overall portfolio quality as it grows, and keep the balance sheet positioned to capture future attractive investment opportunities.

Rand Capital is a business development company focused on lower middle market investments, segmented by investment type rather than traditional product segments. As of June 30, 2026, the total portfolio had a fair value of $56.5 million across 21 portfolio companies: 79% ($44.635 million fair value) was invested in debt instruments, and 21% ($11.865 million fair value) was invested in equity. The annualized weighted average yield on debt investments (including PIK interest) was 8.98% in Q2 FY2026, down from 11.3% at December 31, 2025, dragged down by portfolio non-accruals. Total investment income for the quarter was $1.4 million, down from $1.6 million in the prior year Q2. Net investment income was $710,000 (24 cents per share), compared to $2.5 million (83 cents per share) in Q2 FY2025. By industry: Professional and business services is the largest segment, followed by health and wellness, distribution, manufacturing, and consumer investments. The top five investments accounted for $24.1 million in fair value, representing 43% of total portfolio value.

• Existing portfolio non-accruals continue to weigh on current interest income, reduce the reported overall portfolio yield, and negatively impact near-term earnings relative to prior periods.
• Portfolio companies operate in a challenging overall economic and business environment, where isolated disruptions such as supplier interruptions or actions by senior lenders can quickly lead to business failure and full investment write-downs, as seen with BMP Swanson.
• The broader private credit market is characterized by high competition and uneven operating conditions, creating pressure on underwriting standards and return potential for new investments.
• Individual portfolio volatility remains an ongoing risk, even as the firm pursues diversified exposure across end markets to improve overall resilience.

No question-and-answer session was held or included in the provided transcript.