Thank you for that nice introduction. This is David Gladstone, Chairman.

This is the earnings conference call for the first quarter ending June 30, 2026. This is for our shareholders and for any of the analysts that are on the line for Gladstone Investment is listed on NASDAQ trading symbol GAIN, easy to remember because we're always triggering capital gains.

So you keep up with us by listening to this and following us online. As for the common stock, we do have some registered notes, three of them, you can buy our notes as well.

This is a multifaceted company. And I want to thank you all for calling in.

We're happy to provide updates to our shareholders and analysts and provide our view of the current business environment. And there are 2 goals really to help you understand what just happened to us and what's happened to us over the last so many months and also give you a current view of the future.

And now we'll hear from Catherine Gerkis. She's Director of Investor Relationship as well as any ESG and provides a brief disclosure regarding the certain regulatory matters that she keeps us from violating.

So Catherine, jump online.

Thank you, David, and good morning, everyone. Today's call may include forward-looking statements, which are based on management's estimates, assumptions, and projections.

There are no guarantees of future performance, and actual results may differ materially from those expressed or implied in these statements due to various uncertainties, including the risk factors set forth in our SEC filings, which you can find on the investors page of our website, gladstoneinvestment.com. We assume no obligation to update any of these statements unless required by law.

Please visit our website for a copy of our Form 10-Q and earnings press release for more detailed information. You can also sign up for our email notification service and find information on how to contact our Investor Relations department.

We're also on X at @GladstoneComp, as well as Facebook and LinkedIn. Keyword for both is The Gladstone Companies.

Now I will turn the call over to David Dullum, CEO and President of Gladstone Investment.

Thanks, Catherine, and welcome to everyone on the phone call. I am happy to report that GAIN again produced solid quarter results this time for this first quarter ended June 30, 2026.

We generated adjusted NII of $0.26 per share, which is sufficient to cover the monthly dividend distributions for the quarter, and we also ended a total portfolio fair value of $1.3 billion. So this was a pretty busy quarter, very much so with deal-related activity.

And during the quarter, we actually entered into an agreement to acquire one new portfolio company called Extrude Hone. And we aim to close this in the coming weeks, and it's subject really to obtain some required regulatory approvals, which should not be an issue.

It's just a timing thing. And then subsequent to the quarter end, of course, a lot of this activity began during the quarter.

We entered into an agreement to sell the operating entity in our investment of SFEG Holdings. And this sale, again, subject to various regulatory approvals.

This is a multinational company, and so there are various approvals necessary in certain countries, but we hope and expect that this will close in the coming months. And when we do, we expect to receive a full repayment of our investment along with a very significant capital gain.

So in July, we also finalized the acquisition of another new portfolio company, DHE Computer Systems. And then we also made an accretive add-on acquisition to one of our existing investments called Global GRAB Technologies.

So with all this activity with the pending new deals that we've mentioned here, we will have invested an aggregate of at least $116 million within the first 6 months of this fiscal year. And that's relevant because it compares very nicely to the approximate $183 million that we have averaged over the last 3 fiscal years.

So these new investments and certainly the exit activity are consistent, as I always like to say, with our buyout strategy, which is growing the portfolio through the acquisition of operating companies at attractive valuations. And this is, again, where we are generally the majority economic owner.

We make these acquisitions through a combination of equity and debt investments. And of course, main reason given our thesis for GAIN, the equity provides a potential upside of additional dividend payouts through capital gains as we would anticipate clearly in this SFEG exit.

And then the debt securities generate operating income to support our monthly distributions to shareholders. And this is definitely one factor that differentiates us from most of the other traditional credit BDCs.

And in this regard, from our operating income, we maintained our monthly distribution to shareholders of $0.08 per share or $0.96 per share on an annual basis. So at this point, I'd like to turn it over to Erika Highland, who, as mentioned before, will take over as President on October 1.

And Erika, would you like to discuss the outlook and the current pipeline of the new investments?

Absolutely. Thank you, Dave.

There continues to be ample liquidity in the M&A market, creating a competitive environment for new acquisitions at reasonable valuations. While challenging, we have been able to compete effectively for acquisitions that fit our model.

Our model is where we provide both debt and equity to complete the transaction with a meaningful fixed charge coverage and an interest income yield on our total investment in excess of our cost of capital. As mentioned earlier, we have closed or have an agreement in place to acquire two new portfolio companies.

We continue to be in varying stages of diligence on additional possible new opportunities, including both accretive add-on acquisitions to existing portfolio companies, and we are in review and negotiation with a number of other new opportunities. As to our existing portfolio, most of the companies have experienced positive results to date, though we continue to be cautious due to macroeconomic factors such as elevated energy prices, potential supply chain disruption and tariff costs, and therefore the impact on demand and margins.

We are working with all of our companies in evaluating cost efficiencies and growth initiatives as we continue to navigate the current environment. In this regard, a couple companies to highlight here.

Galaxy Technologies, they've experienced very positive growth in the aerospace and industrial sectors. Diligent's new management team has stabilized the business and is generating very positive EBITDA, which gives us some encouragement that we will get it back to accrual status.

And finally, Pyrotek has been acquisitive and experiencing growth with existing and new artists and their entertainment schedules. And I'll turn it back to you, Dave.

Thanks, Erika. So again, in summing up the year, the current portfolio is in solid shape.

And just to touch on this what Erika said that we're working with all of our companies, and that's something that we do -- we're very proactive with our operating companies. So when we say that, it's not just in passing.

We actually do work at it. And so we feel very good about where we are.

We have a strong liquid balance sheet, a very good level of potential portfolio activity with a prospect of continued strong earnings and the distributions over the next year. So while we continue to navigate the challenge of an uncertain economic landscape.

So with that, let's turn it over to our CFO, Taylor Ritchie, and he'll give you a lot more of the detail of where we are and what to look forward to. Taylor?

Thank you, Dave and Erika, and good morning, everyone. Our results this quarter reflected solid earnings generation, continued strength within our investment portfolio and proactive capital management that supported the disciplined execution of our long-term strategy.

We generated net investment income of $15.9 million or $0.40 per share during the quarter compared with a net investment loss of $10.6 million in the prior quarter. Adjusted net investment income, which excludes the impact of capital gains-based incentive fees, increased to $10.4 million or $0.26 per share compared to $7.9 million or $0.20 per share in the prior quarter.

Importantly, both net investment income and adjusted net investment income exceeded our regular monthly distributions during the quarter. The increase in net investment income was driven by higher investment income, together with lower expenses, primarily reflecting the reversal of accrued capital gains-based incentive fees resulting from the changes in portfolio valuations.

The weighted average principal balance of our interest-bearing investment portfolio remained relatively stable during the quarter at approximately $706 million, providing a consistent base for recurring interest income. The portfolio's weighted average yield was 12.9% during the quarter.

This is supported by the interest rate floors including each of our debt investments. Given our recent investment activity, we expect the portfolio's weighted average yield to increase modestly as the investments originated subsequent to quarter end include interest rate floors above the weighted average of our existing portfolio.

We believe our debt investment portfolio is well positioned across a range of interest rate environments. As disclosed in our Form 10-Q, based on the current portfolio composition, a 50 to 150 basis point increase in SOFR would be expected to increase annual net investment income by approximately $0.02 to $0.09 per share, while equivalent decline in SOFR would reduce annual net investment income by approximately $0.01 to $0.03 per share.

This favorable interest rate profile continues to provide meaningful downside protection while preserving attractive upside should short-term interest rates increase. Total investment income increased to $28.4 million compared to $25.2 million in the prior quarter.

Interest income increased modestly, while stronger success fee income more than offset lower dividend income from our equity investments. As a reminder, both dividend income from our equity investments and success fee income from our debt investments are dependent upon events at our portfolio companies and are therefore inherently variable.

As a result, these income streams should be evaluated over longer periods rather than any individual quarter. Net expenses declined to $12.4 million compared to $35.8 million in the prior quarter.

The decrease primarily reflected the reversal of $5.6 million of accrued capital gains-based incentive fees during the current quarter compared with an $18.5 million accrual in the prior quarter. These lower incentive fee accruals more than offset higher interest expense associated with our financing activities as well as a modest increase in other operating expenses.

Portfolio valuations declined by $18.8 million during the quarter. The decline was primarily due to the adjustment in SFEG's valuation on an agreement on the final sale price.

Excluding this adjustment, the remainder of the portfolio generated net unrealized appreciation, reflecting positive operating performance trends at several portfolio companies together with higher market valuation multiples. As of June 30, three portfolio companies are on nonaccrual status, and we remain actively engaged with each borrower, continuing to work alongside management teams to either return these investments to accrual status or pursue orderly exits where appropriate.

The nonaccrual investments represent 3.9% of our total portfolio cost and only 1% at fair value as of quarter end. The increase in fair value from the prior quarter was driven primarily by the continued operational improvement at Diligent Delivery Systems, which experienced a $3.8 million increase in fair value during the quarter.

Based on current operating trends, we continue to believe management is making meaningful progress and remain optimistic regarding the collection of previously unpaid interest over the coming quarters. NAV decreased to $16.24 per share compared to $16.78 per share at the end of the prior quarter.

The decrease primarily reflected $0.47 per share of net unrealized appreciation, $0.23 per share of net realized losses and $0.24 per share of distributions to common shareholders. These items were partially offset by $0.40 per share of net investment income.

During the quarter, we completed 2 significant financing transactions that further strengthened our capital structure. The first, using the proceeds from our February issuance of 5-year unsecured notes, we repaid our 5% notes that maturity in May.

Second, we successfully amended our credit facility, reducing our bond spread over SOFR by 40 basis points, increasing the facility commitment size from $300 million to $405 million while extending the facility's maturity to 2031. We have ample liquidity to fund new investment opportunities from the unused borrowing capacity under our credit facility with approximately $158 million outstanding as of quarter end.

These actions position us to execute our investment strategy with enhanced financial flexibility through extending the duration of our debt capital and both expanding availability and lowering [ borrowing ] on our credit facility. While we were not active under our common stock ATM program during the quarter or subsequent to quarter end, we intend to access the equity market selectively when market conditions are favorable and doing so supports attractive shareholder returns over time.

Our balance sheet remains in a strong position, ending the quarter with an asset coverage ratio of 209% and a debt-to-equity ratio of 0.88x. We believe this provides meaningful leverage capacity to support our current investment pipeline.

Finally, on distributions, we ended the fiscal year with $21.3 million or $0.53 per share of spillover income. primarily due to adjusted net investment income exceeding our regular monthly distributions.

Spillover increased to $22.5 million or $0.56 per share at quarter end. This balance is sufficient to support approximately 7 months of our current monthly distribution rate and enhances our flexibility in determining both the timing and amount of future monthly and supplemental distributions.

We ended the quarter with total distributable income of $160.4 million or $4.03 per share. As this balance primarily represents unrealized appreciation across our investment portfolio, it reflects the potential for meaningful future shareholder distributions that we expect to monetize over time through successful portfolio company exits.

Looking ahead, we anticipate continuing our practice of making supplemental distributions to shareholders as we realize capital gains from the successful exit of appreciated equity investments. The timing and amount of these supplemental distributions will depend on the pace of portfolio realizations, taxable income consideration and our broader capital allocation priorities.

Overall, we believe the portfolio remains well positioned, supported by our strong liquidity profile, conservative leverage, growing spillover income, favorable interest rate positioning and healthy acquisition pipeline. We're confident in our ability to continue generating attractive long-term returns for our shareholders.

This covers my part of today's call. I'll now hand it back over to you, David, to wrap this up.

Well, thank you very much, Taylor. That was very nice.

And Dave and Erika and Catherine, good information for our shareholders this call. And the Form 10-Q should be bringing everybody up-to-date in our company.

The team has reported solid results for the quarter ended June 30, 2026, and has already shown positive performance for the upcoming quarter with new investment activity and some pending exits that we're pretty sure we'll get this quarter. We believe Gladstone Investment is an attractive investment for investors seeking continuous monthly distributions and then some supplemental distributions from potential capital gains and other income that we have.

The team hopes to continue to show you a strong return for the investments for this next quarter as well as the rest of the year, but now let's stop and turn to some questions from our analysts, as well as hopefully some of the shareholders will call in. Operator can come on please.

I guess for Taylor, there is another income of $5.6 million income line. Is that related to the incentive fee reversal at all?

No, it is not. That is the collection of exit fee income, prepayment of exit fee income, success fee income, rather, that we will collect from time to time from our portfolio companies, and this one was paid by SFEG in advance of their pending exit.

Okay. And then on the topic of SFEG and the other exits indicated, should we anticipate any sort of net gain from that at all?

Apologies. Did you say debt gain or net gain?

Net, net. Realized less, you know, the true-up on the unrealized.

Yes, I would expect where our valuation is with SFEG, that's our approximate value that we would expect to collect as part of an exit. Now it is discounted for potential transaction costs and other activities, but that is what I would expect for us to be able to collect and generate in potential realized gains.

Okay, and then finally, on the cash flow statement, I noticed that there appears to be no repayments in the quarter. Is that correct?

Yes, that's correct.

Thanks for the detailed commentary. You covered a number of the companies I wanted to ask about Galaxy and Diligent.

So I appreciate the positive updates there. I wanted to ask just a follow-up question first on SSEG.

I understand that the 630 mark reflected the negotiations and the net sales price and one, congrats on the sale there, another nice exit for you. But just kind of curious regarding the negotiations, how did the buyers view of valuation differ from the mark that you had on your statements as of 3/30.

Sure. This is Erika Highland.

So, as you can appreciate with these transactions, when we enter into an LOI with a prospective buyer, there are certain assumptions made around the company's financial performance, and as a buyer, with due diligence occasionally, not only may there be disagreements on certain assumptions, but also there may be certain findings in diligence where accommodations may need to be made in the value. Also, our valuation here reflects certain aspects of the purchase agreement that have funds reserved in escrow pending future activity, so there is the potential that some of those proceeds may flow back in, but you know, for purposes of our valuation here, this is based on the final negotiated contract with the buyer.

That's helpful, thank you...

Erik, the basic headline number that we had agreed to with them didn't really change, so to speak. As Erika said, it was just, you know, it's a very complicated transaction, very complex company, frankly, you know, facilities, operations, literally all over the world.

And so just when things, as you well know, gets finalized and going through some of the teams up in some of the countries, Erika correctly said, some of the escrows that we have to apply to the extent that they will get utilized. We won't know for sure until the dust settles affected somewhat in being sure we took that into account so that we're fairly conservative, frankly, in that valuation.

So we feel pretty good about where it's kind of settled, but it's really as a result of those impacts.

That makes sense. Thank you.

And even with the change from 330 to 630, you still stand to get a very nice gain. Nicely done there.

And then Taylor pointed out one thing I noticed as well, just if you remove that valuation change, there is actually net appreciation in the unrealized portion for the quarter. So just nice trends generally across the book.

You know, when I did notice that, you know, did have some net depreciation was Detroit Defense and just curious, maybe if you had any commentary of what, you know, kind of transpired there during the quarter to change your valuation.

Yes, I think Detroit Defense is an interesting company. Fundamentally, by the way, it's doing very well.

Part of some of their contracts that they were, I'll call it, anticipating or working on that they had, monies didn't get released with everything going on, as you know, in Washington on the defense sector side. So some of those have now been released indeed, but that really got caught up in just the timing around some of the work that they were doing on some of those contracts.

So unfortunately, we had a slight downtick in EBITDA, so that had an impact on that. But other than that, fundamentally the business is doing well.

Okay. And so if those contracts, it sounds like maybe post-quarter did come through, that would impact the [ 930 ] valuation mark?

Exactly, yes.

Most of what I'm going to ask is going to make me look stupid, but that's good. Could you go through the whole true-up of the unrealized depreciation and the realized loss and how that plays out.

I know there are a lot of moving parts there.

This is Taylor. Let me start with breaking them into different pieces.

So the realized gain loss, that was a $9 million realized loss as a result of a restructuring that we did at Home Concepts. So we wrote off $9 million of their existing term loan.

And that was really a proactive approach to allow the company further flexibility to execute on their operational initiatives and allow them to potentially grow and build out further. Then regarding the unrealized and the net unrealized appreciation -- depreciation rather for this quarter, we had market valuations and market multiples that increased quarter-over-quarter.

For most of the portfolio, that was the case where we saw those multiple increases. And then we had many of our portfolio companies that had improving EBITDA metrics, so that would further enhance the appreciation.

And then we did have some that saw a little bit of a downturn that we frankly anticipate that it will turn around in the coming quarters. We feel confident in these companies.

As Dave mentioned, with Detroit Defense, that's one we do feel confident that it's a strong company, operating well. And as these contracts for Detroit come back online, we'll see that reversal of the unrealized depreciation.

Well, I think, Henry, you might be also referring to our net unrealized was roughly about $22 million negative. Of that, roughly $36.6 million was this what we call reversal of value for SFEG holdings.

So I think the comment earlier was made that if you took that out of the mix, which, again, it's a valuation adjustment doesn't change the significant realized gain we're going to get there. We took that out of the mix, actually, then the unrealized is a net positive.

And I think is that probably what you're trying to get to.

That's what I was trying to sort out, and I'll be honest, I haven't gone through the Q yet. The other question is, you have some great insight into the real economy because you're not involved in a lot of tech.

We get a book overwhelmed with all the news about AI, et cetera. But when you look past the tech economy to the rest of the economy, what are you seeing?

And in particular, my colleagues and I were talking about this, obviously, post Iran, whatever your political views are, post Iran, we're likely to see a big infusion in defense spending as the U.S. rebuilds, et cetera.

Can you give us some sense of what -- when you look past the tech economy, what you're seeing going on in the "rest of the world" and particularly likely defense spending?

Yes, this is Erika. It's hard to overgeneralize, so at the risk of sharing anecdotes here, just kind of looking down the list of our portfolio companies, we're seeing that most of them are trending up quarter over quarter in terms of earnings performance.

So that would suggest there's no major disruptions in a broad macroeconomic way, particularly on defense spending. Again, we have a very small subset of those type of companies in our portfolio.

And Dave spoke earlier about Detroit Defense and how it was caught up in some of the administrative and spending hurdles, but I do think there is money being flowing into more defense-oriented businesses. Certainly on the opportunity side, we are seeing more businesses in the aerospace and defense sector coming to us for potential transactions, which suggests that those owners see potential growth in that sector.

So I do think, as you've pointed out, I think the trends that you're seeing are accurate. But again, while we do have a broad set here through 30-some-odd portfolio companies, it's still a relatively small sample size.

Henry, we touch, as you point out, when you think about it, consumer, industrial, and manufacturing. And as Erika said, the manufacturing groups that we have, because they're kind of spread across again, like some aerospace-oriented stuff.

They're all really doing well. We got stuff in the energy sector, and we're seeing good solid results there.

Consumer side, we're seeing with most of our consumer products, companies are all, some are doing hugely well, all doing fairly well. And again, we do touch on a few companies in the defense sector.

And they're all, as I mentioned earlier, starting to see definitely solid opportunities and backlog building in all of those companies. So, generally, you're right, we don't do much on the tech side of things, and that's probably a good thing.

So, fundamentally, we're guardedly optimistic about where we see these companies go in the next six, nine months.

That's very helpful. And then on the SFEG situation, I mean, that you sold 100% of the company.

I want to -- I've read the Street account summary like 4 times, and I still couldn't get it. You sold 100% of the company.

It's going to be a substantial gain. And what is your sort of philosophy on distributing that gain?

Are you going to hold some back for future periods or just pay it out as a onetime transaction sometime over the next 3 quarters? Or what is the thought process there?

That's a great question and we're going back to business school, corporate finance, first course in corporate finance, right? I want to think about that.

Seriously, it's a great question, it's a real question, it's because it is a real, for us, significant number and we have to do it carefully both from the standpoint of trying to certainly reward our shareholders with clarity, some cash at least, and then how we might be able to maintain capital because given the cost of capital, it's a smart thing to maybe keep some of it. Clearly, which you understand well with being a RIC and what have you, the timing will be important.

You know, we've got excise taxes that come into play. So there are a lot of factors to determine what is the right not only mix of, say, cash and stock, what might be the timing of it.

But regardless, I think it's going to be clearly a positive, certainly to shareholders and then from our own balance sheet. But we're looking at it carefully, taking it seriously, and we have not come to a final conclusion yet.

That's a good problem. Yep.

Well, thank you all for asking questions. We need more questions than that, so we hope you guys will get ready next quarter and let us have a lot of questions so we can talk about our company.

That's the end of this. Thank you very much for calling in.