Good morning, and thank you all for joining AFC's earnings call for the quarter ended June 30th, 2026. I'm joined this morning by Robyn Tannenbaum, our President and Chief Investment Officer; Daniel Neville, our Chief Executive Officer; and Brandon Hetzel, our Chief Financial Officer.

Before we begin, I would like to note that this call is being recorded. Replay information is included in our July 17th, 2026 press release and is posted on the Investor Relations portion of AFC's website at afcbdc.com, along with our second quarter 2026 earnings release and investor presentation.

Today's conference call includes forward-looking statements and projections that reflect the company's current views with respect to, among other things, market developments, anticipated portfolio yield and financial performance, and projections in 2026 and beyond. These statements are subject to inherent uncertainties in predicting future results.

Please refer to AFC's most recent periodic filings with the SEC, including our quarterly report on Form 10-Q filed earlier this morning, for certain conditions and significant factors that could cause actual results to differ materially from these forward-looking statements and projections. Today's call will begin with Robyn providing an overview of the lending environment and our results.

Dan will then provide an update on our portfolio and pipeline. Finally, Brandon will conclude with a summary of our financial results before we open the line for Q&A.

With that, I will now turn the call over to our President and Chief Investment Officer, Robyn Tannenbaum.

Thanks, Gabe, and good morning, everyone. We appreciate you joining us to discuss AFC's second quarter 2026 earnings.

Before turning to our results, I want to provide some context on the broader lending environment. As many of the private credit ecosystem is experiencing stress.

Default rates across private credit have risen notably, with Fitch reporting a 6% default rate as of July 2026, and Proskauer's Private Credit Default Index tracking a similar upward trend. Banks, while not direct lenders to much of the middle market, hold indirect exposure through leverage facilities extended to private credit funds, and that exposure is now drawing increased scrutiny.

In response to broader market stress, we are seeing a pullback in available capital, particularly in the lower middle market, where many lenders have either exited or shifted upmarket to support their existing portfolios. As a result, we continue to believe the lower middle market offers one of the most compelling risk-adjusted return investment opportunities in private credit today.

Competition remains rational in our segment. Unlike the upper middle market, where larger direct lending funds continue to compete aggressively on pricing, leverage, and documentation, the lower middle market continues to reward lenders with sponsor relationships, internal sourcing capabilities, and the ability to execute quickly.

For AFC, this environment is exciting and what we are prepared for. We believe this dislocation is creating a compelling vintage for new originations.

The loans we originate are generally supported by both enterprise value and asset coverage. We continue to negotiate comprehensive maintenance covenant packages, including leverage and fixed charge coverage tests.

Our pipeline continues to reflect that opportunity, and we are being thoughtful in how we deploy capital. In contrast, much of the upper middle market remains characterized by covenant-lite structures with fewer lender protections and more aggressive EBITDA adjustments.

Now turning to our results. For the second quarter of 2026, AFC generated net investment income of 15 cents per weighted average share of common stock.

Additionally, the Board of Directors declared a second quarter distribution of 5 cents per share, which was paid on July 15th, 2026 to shareholders of record on June 30th, 2026. Last quarter, we announced a share repurchase program.

During the quarter, we repurchased about $2.8 million, which was 17 cents accretive to net asset value. We have approximately $2.2 million remaining in our $5 million share buyback program.

Year-to-date, we have deployed approximately $102 million in new lower middle market commitments. Our pipeline remains well-diversified across industries, and we tend to avoid sectors where we believe cyclicality or disruption creates an unfavorable risk profile.

I will now turn it over to Dan to discuss our portfolio.

Thanks, Robyn, and good morning, everyone. I'll start with the portfolio and our investment activity for the quarter, then provide an update on our legacy positions and our pipeline.

As of June 30th, 2026, the fair value across our investment portfolio was $290 million across 17 portfolio companies, compared to $279 million across 15 portfolio companies at March 31st. 100% of the portfolio is in senior secured first-lien debt investments, and the weighted average yield, excluding non-accrual loans, was 13.2%.

During the quarter, we funded $17 million, including $5 million to two new portfolio companies and $12 million to two existing portfolio companies. Fundings were $8 million against $9 million of amortization and repayments.

Subsequent to quarter end, we committed $7 million to a $25 million senior secured credit facility for a leading outpatient behavioral health platform, with $3 million funded at close. The use of proceeds was to refinance existing debt and support future growth through acquisitions, and is consistent with our expanded lower middle market mandate.

Turning to non-accrual loans, which remain concentrated in the legacy cannabis book. Regarding Devi, the receiver has continued the liquidation process.

During the quarter, Devi entered into a binding term sheet to sell two additional assets of Devi for $12.5 million in cash proceeds. Subsequent to quarter end, Devi earned a $2 million non-refundable deposit on the purchase, and we expect the transaction to close this year.

Inception to date, we have received $58 million of principal repayment on the Devi loan. Regarding DMA, the receiver has continued the liquidation process and closed the sale of two of the three dispensaries subsequent to quarter end.

Moving on to Justice Grown. The Justice Grown loan matured on May 1st, 2026, and is in maturity default.

We have commenced Article 9 foreclosures and are pursuing our rights and remedies under both the credit agreement, including the parent guarantee and the shareholder guarantee. Our collateral includes vertically integrated assets in New Jersey, and three operating dispensaries in Pennsylvania, and a non-operating cultivation facility in Pennsylvania.

AFC has engaged SSC Advisors to conduct a robust marketing process for these assets, and we encourage any interested buyers to see the notices available on our website and reach out to SSC for additional information. Given the active legal proceedings, we will not comment further on the specifics outside of what is disclosed in our SEC filings.

Taking a step back, the portfolio continues to evolve as we make progress towards resolving the legacy cannabis loans on non-accrual, and the performing cannabis book amortizes and repays over time. Multiple trends signal that capital demand in the lower middle market is only accelerating as legacy lenders push upmarket.

We will look to redeploy that capital into strong risk-adjusted opportunities in the lower middle market. Our pipeline remains active with $1.3 billion across a diverse range of industries.

We remain focused on cash-flowing borrowers with $5 to $15 million of EBITDA, primarily in sponsored transactions, where we believe we can achieve risk-adjusted returns with strong structural protections. We're maintaining a disciplined approach to underwriting while actively advancing several opportunities through our pipeline.

Now I'll turn it over to Brandon to discuss our financial results in more detail.

Thank you, Dan. For the quarter ended June 30th, 2026, we generated total investment income of $8.7 million and net investment income of $3.5 million, or 15 cents per weighted average share of common stock.

This provided three times coverage of our 5-cent second quarter 2026 distribution. Total investment income was $8.7 million compared with $9.8 million in the first quarter.

The decline primarily reflects $1.8 million of other income recognized in the first quarter that did not recur in the second quarter, mainly relating to a $1.5 million exit fee from the Bloom repayment. Excluding these exit fees that are episodic, investment income increased modestly quarter-over-quarter driven by higher interest income.

Total operating and income tax expenses were $5.2 million compared to $5 million in the first quarter, and are presented net of a management fee rebate of approximately $176,000 for the quarter. We ended the second quarter with $364.5 million of principal outstanding spread across 17 loans.

As of June 30th, 2026, we had total assets of $399.7 million, total net assets of $187.3 million, and our net asset value per share was $8.25. This is an increase of 35 cents per share over the prior quarter.

The increase in net asset value per share was driven by net investment income of 15 cents per share, 17 cents per share of accretion from repurchasing shares below net asset value, and an increase in unrealized appreciation on investments of approximately 8 cents per share, and offset by the second quarter distribution of 5 cents per share. Regarding the share repurchase program, during the quarter, we repurchased and extinguished approximately 839,000 shares at a weighted average price of $3.29 per share for approximately $2.8 million in the aggregate.

Approximately $2.2 million remains available under the $5 million share repurchase program. Turning to the balance sheet, as of June 30th, 2026, we had $207 million of debt outstanding consisting of $110 million drawn under our secured revolving credit facility, $20 million drawn under our unsecured revolving credit facility, and $77 million of senior unsecured notes outstanding.

Subsequent to quarter end, the company repaid $84 million and $20 million, respectively, on the company's outstanding debt obligations under the secured revolving credit facility and the unsecured revolving credit facility. The weighted average interest rate on our debt outstanding was 6.3% for the quarter.

Debt-to-equity was 1.1 times as of June 30th compared to 1.09 times at March 31st, and net-debt-to-equity was 0.53 times compared to 0.48 times, respectively. Our asset coverage ratio was 190%, which provides meaningful cushion against the 150% requirement applicable to us.

We ended the quarter with $106.5 million of cash and cash equivalents. This provides substantial liquidity for new investments and other capital allocation opportunities.

On distributions, we paid the second quarter distribution of 5 cents per common share on July 15th, 2026 to shareholders of record as of June 30th, 2026. With that, I will now turn it back over to the operator to start the Q&A.

Thank you. As a reminder, to ask a question, please press *1-1 on your telephone and wait for your name to be announced.

To withdraw your question, please press *1-1 again. One moment as we compile our Q&A roster.

Hi, thank you very much for the questions here. I guess a first one for me just in terms of activity.

Can certainly appreciate, right, incremental funding for existing borrowers. As we think about new borrowers to date, you had this participation in July.

How best to think about the pipeline relative to your ability to execute on opportunities in the near term? It does seem like there's been a little bit maybe of a slowdown considering the fast start you got off to in January, February.

Just curious in terms of, that's partially the environment, maybe a bit longer of a process, some timing, any color there would be appreciated. Thank you.

Dan, do you want to take that one?

Sure. Thanks, Aaron.

We have a very active pipeline, $1.3 billion in the pipeline, and I think we're happy with the quality of the opportunities that we're seeing in the pipeline, the pricing that we're seeing, etc. Originations are gonna be lumpy.

You saw in Q1 we did about $80 million. We did less in Q2.

I think that we're advancing a bunch of opportunities through the pipeline and are seeing good looks and will look to continue the momentum over the course of the year. It will be lumpy and episodic just given the deals that we're hunting.

Appreciate that. That's helpful.

Then just in that line, given the potential lumpiness of this and you could have some potential larger opportunities, how comfortable do you feel regarding your liquidity position today to ensure that you're able to capitalize on potential larger opportunities that could come in the pipeline? Thanks.

Dan, do you want to do that one, or Brandon?

Sure. No, as stated in my remarks at the end of the quarter and in our investor presentation, we have over $70 million in liquidity available to deploy.

We're very comfortable with our liquidity position.

I'd say in terms of some of the larger opportunities too, as well, outside of AFC, we do operate under a co-investment relief order with the SEC, which allows us to potentially participate with other affiliates under the TCG platform. One of the opportunities that you saw in July, we participated alongside an affiliate.

If there are larger opportunities out there that we're chasing, that's also an option to deploy into larger opportunities. There's also the opportunity to syndicate deals that are above kind of our target hold threshold as well.

Great. Thanks.

A last question from me. I know you said in prepared remarks right, nothing further from some of the SEC filings regarding Justice, but just maybe to clarify things, now that you have the process in place that you talked about in prepared remarks, there's nothing outstanding or maybe that's the legacy operators are doing that could keep you from going through with a sale process and being able to retrieve as much as possible from those assets?

Just any clarification on that would be helpful. Thanks.

Gabe or Dan?

Aaron Aaron, we have pretty extensive disclosures in the SEC filings. I'd encourage you and the investors to read through that.

Outside of that, we just are not going to be able to comment given the active state of litigation there.

Fair enough. Thanks very much.

I'll jump back in the queue.

Thank you, and good morning, everyone. Dan, can you maybe go back to your comments in prior quarters about your views about lending in the cannabis industry?

Pretty much you have implied that you remain very cautious there and that pretty much all the new activity will be outside of cannabis. We do have a more favorable regulatory backdrop, right?

Do you want to expand on that, please? Thanks.

Sure. Thanks for the question, Pablo.

I think what we have said in prior quarters and in prior years is that access to equity capital in the cannabis industry was challenged, and I think unfortunately it still continues to be challenged. There have been a lot of milestones that people have been hoping for for a while that have been long overdue, like the rescheduling of medical cannabis, which happened I think quicker relative to where people thought it was going to be a few months ago, and the pending potential rescheduling of adult-use cannabis.

We've also had I think two companies now uplist to NYSE. Unfortunately, you haven't seen a lot of activity on the equity capital side of things associated with it.

I think it's still a difficult environment to raise equity capital. As a result, I think we have concerns about the industry being continued to be funded kind of on the debt side of things without having access to equity capital, and that also impacts the re-up ability of these borrowers.

These are not straightforward businesses. There can be some volatility in the industry, in the regulatory environment, and a lack of re-up ability on the equity side of things to deal with those problems is problematic to debt investors.

We applaud the progress. I think there has been good progress, but the lack of equity capital is very problematic for us.

Thank you, that's good color. Maybe just going back to Devi and DMA.

In the case of Devi, you said that you are expecting the assets to be sold for $12.5 million in the second half, and that the deposit was already taken on the transaction for $2 million, so that pretty much confirms that the transaction is in place. I just want to make sure I heard that right.

I know I can go back to the transcript, and whether you have access to the full amount or are there other parties that have access to those proceeds also? Thanks.

That you heard correct. It was a binding term sheet that was signed up subject to a $2 million cash hard deposit.

Our expectation is that that closes sometime this year, and that would be for $12.5 million of total cash proceeds. We're the lead participant in the Devi loan, but I believe we have 70 78% or somewhere around 80% of is our participation in Devi.

So 80% of the proceeds would be distributed to us on a pro rata basis.

Thank you, that's good color. The same question on DMA, and I'm sorry if I misheard.

You said that two of the three dispensaries closed the transaction or they closed operations? I'm just trying, and I don't know if you can give a number in terms of what you're expecting there.

Thanks.

No, luckily the transaction closed, the dispensaries did not close. We had two of the three dispensaries under APA previously.

Both of those sales received regulatory approval in June, and both of those transactions closed in July. I think in terms of the rest of the transaction and the wind-down of DMA, we have one more to go, and you can look at our new BDC filings to see where our mark is on that.

Right. Again, apologies if there's more people on the Q&A queue.

In terms of the new loan you made in the third quarter, can you give more color on the amount? I think you said $17 million or maybe I misheard, and more color on the company itself if you can.

Thank you.

In the second quarter, Pablo, you were asking? The loan in the second quarter?

I thought, unless I misheard, I thought that you said subsequent to the quarter, you also funded a new loan, or maybe I misheard that. Sure.

Yep, yeah, that's correct. We talked a little bit in the script, it's a behavioral health roll-up focused in the Northeast.

They have 10 locations throughout the Northeast, and do a mix of talk therapy, medication management, as well as some additional add-ons, both in an outpatient setting, as well as a partial hospitalization setting. It's an industry we had talked about previously, focusing on industries that are more predictable, recession-resilient, have good cash flow characteristics, and highlighted healthcare as one of the areas we'd be focused on.

We've done a couple transactions in and around that space, one in the insurance space in Q1 and this deal in Q3.

Pablo, the size of that deal was we committed $7 million and funded $3.1 million on closing.

Thank you. That's good color.

All right. Then look, I haven't gone through the 10-Q in full, only partially.

I think a while ago you said that Sunburn was in non-accruals. Or just a reminder of where you are with the Sunburn loan, which I think was renamed under another borrower's name, but just some color there.

Oh, sure. We had some disclosure last quarter.

We entered into a forbearance agreement with Sunburn that was conditioned on the company raising additional equity capital as well as some other conditions. The company fulfilled those obligations in Q2, and we received a paydown associated with the loan, and there was additional equity capital that went into the business for some expansion that they're looking to do.

The company fulfilled the forbearance obligations, and the loan is in good standing.

Thank you. The very last one.

Obviously, we know how much credit lines you have available, but right now you are at net debt-to-equity at 0.53. What are you comfortable with?

I understand the average on BDCs is like 1.3 times, but what are you comfortable with?

Sure. I think on our side of things, we've always said that somewhere around 1 times or potentially above that, but I think 1 times is a good intermediate target for us.

Yeah. That's good.

Thank you. That's all for me.

Great. Thanks, Pablo.

Thanks, everyone, for joining us today, and we look forward to keeping you updated on future progress.