Q2 2026 Neostellar Capital Corp Earnings Call

August 5, 2026

Speaker #1: Thanks for holding. We appreciate your time and patience. Please stay on the line and we'll be back in just a moment.

Operator: Thanks for holding. We appreciate your time and patience. Please stay on the line, and we'll be back in just a moment.

Operator: Welcome to the Neostellar Capital's Q2 2026 Earnings Call. My name is Paul, and I will be your coordinator for today's event. Please note this call is being recorded, and for the duration, your lines will be on listen only. You will have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad. If you require assistance at any time, please press star zero and you will be connected to an operator. I will now hand you over to your host, Willy Lee, to begin today's conference. Thank you.

Speaker #4: second quarter 2026 earnings call. My name is Paul and I will be your coordinator for today's event. Please note this call is being recorded.

Speaker #4: And for the duration, your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad.

Speaker #4: If you require assistance at any time, please press star zero and you will be connected to an operator. I will now hand you over to your host, Willie Lee, to begin today's conference.

Speaker #4: Thank you.

Speaker #5: Thank you for joining us on today's call. I'm joined today by Chairman and Chief Executive Officer of Neo Stellar Capital, Mark Klein, and Chief Financial Officer, Allison Green.

Willy Lee: Thank you for joining us on today's call. I am joined today by Chairman and Chief Executive Officer of Neostellar Capital, Mark Klein, and Chief Financial Officer, Allison Green. Please note that a slide presentation corresponding to today's prepared remarks by management is available on our website at neostellar.vc under Investor Relations, Events and Presentations. Today's call is being recorded and broadcast live on our website, neostellar.vc. Replay information is included in our press release issued today. This call is the property of Neostellar Capital, the unauthorized reproduction of this call in any form is strictly prohibited. I would also like to call your attention to customary disclosures in today's earning press release regarding forward-looking information. Statements made in today's conference call and webcast may constitute forward-looking statements which relate to future events or our future performance or financial condition.

Speaker #5: Please note that a slide presentation corresponding to today's prepared remarks by management is available on our website at neostellar.vc, under Investor Relations, Events and Presentations.

Speaker #5: Today's call is being recorded and broadcast live on our website neostellar.vc. Replay information is included in our press release issued today. This call is the property of Neo Stellar Capital and the unauthorized reproduction of this call in any form is strictly prohibited.

Speaker #5: I would also like to call your attention to customary disclosures in today's earning press release regarding forward-looking information. Statements made in today's conference call and webcast may constitute forward-looking statements which relate to future events or our future performance or financial condition.

Speaker #5: These statements are not guarantees of our future performance condition or results and involve a number of risks estimates and uncertainties including the impact of any market volatility that may be detrimental to our business, our portfolio companies, our industry, and the global economy.

Willy Lee: These statements are not guarantees of our future performance, condition, or results, involve a number of risks, estimates, and uncertainties, including the impact of any market volatility that may be detrimental to our business, our portfolio companies, our industry, and the global economy that could cause actual results to differ materially from the plans, intentions, and expectations reflected in or suggested by the forward-looking statements. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including but not limited to those described from time to time in the company's filings with the SEC. To obtain copies of Neostellar Capital's latest SEC filings, please visit our website at neostellar.vc or the SEC's website at sec.gov. Now, I would like to turn the call over to Mark Klein.

Speaker #5: That could cause actual results to different materially from the plans intentions and expectations reflected in or suggested by the forward-looking statements. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors including but not limited to those described from time to time in the company's filings with the SEC.

Speaker #5: To obtain copies of Neo Stellar Capital's latest SEC filings, please visit our website at neostellar.vc or the SEC's website at sec.gov. Now, I would like to turn the call over to Mark Klein.

Speaker #6: Thank you, Willie. Good afternoon, everyone, and thank you for joining us. Today, Mark's an important moment for our company. This is our first earnings call as Neo Stellar Capital.

Mark Klein: Thank you, Willie. Good afternoon, everyone, Thank you for joining us. Today marks an important moment for our company. This is our first earnings call as Neostellar Capital. For more than 15 years, our team has pursued a clear mission to provide public market investors with access to high growth, venture-backed private companies before those businesses become directly available in the public markets. Neostellar represents the next chapter of that mission. Our investment strategy is unchanged. The team responsible for the portfolio remains in place. What has changed is the breadth of resources, expertise, and capabilities supporting our strategy, We believe that meaningfully strengthens our ability to create long-term value for stockholders. Following stockholder approval, our transition to an externally managed structure became effective on 15 July. On 21 July, our team and Magnetar formally announced the launch of Neostellar Advisors.

Speaker #6: For more than 15 years, our team has pursued a clear mission to provide public market investors with access to high growth, venture-backed private companies before those businesses become directly available in the public markets.

Speaker #6: Neo Stellar represents the next chapter of that mission. Our investment strategy is unchanged. The team responsible for the portfolio remains in place. What has changed is the breadth of resources expertise and capabilities supporting our strategy.

Speaker #6: And we believe that meaningfully strengthens our ability to create long-term value for stockholders. Following stockholder approval, our transition to an externally managed structure became effective on July 15th.

Speaker #6: On July 21st, our team and Magnetar formerly announced the launch of Neo Stellar Advisors. This evolution comes at a pivotal time for the private markets.

Mark Klein: This evolution comes at a pivotal time for the private markets. Companies are staying private longer. They are raising more capital, and they are increasingly seeking financing solutions that extend beyond traditional equity. Neostellar Advisors brings together our team's 15-year history of investing in venture-backed private companies with Magnetar's institutional capabilities across credit, structured capital, technology, and AI infrastructure. That combination gives us broader resources for sourcing and underwriting, as well as greater flexibility to evaluate structured investments. We believe it expands the opportunity set available to Neostellar while preserving what has always distinguished our approach. The same core investment team, the same public company structure, and the same commitment to disciplined underwriting. Following quarter's end, a Magnetar-affiliated entity invested $20 million in Neostellar. We view that investment as a meaningful expression of Magnetar's commitment to Neostellar and confidence in the opportunity ahead.

Speaker #6: Companies are staying private longer. They are raising more capital. And they are increasingly seeking financing solutions that extend beyond traditional equity. Neo Stellar Advisors brings together our team's 15-year history of investing in venture-backed private companies with Magnetar's institutional capabilities across credit, structured capital, technology, and AI infrastructure.

Speaker #6: That combination gives us broader resources for sourcing and underwriting as well as greater flexibility to evaluate structured investments. We believe it expands the opportunity set available to Neo Stellar while preserving what has always distinguished our approach.

Speaker #6: The same core investment team the same public company structure and the same commitment to disciplined underwriting. Following quarter's end, a Magnetar affiliated entity invested $20 million in Neo Stellar.

Speaker #6: We view that investment as a meaningful expression of Magnetar's commitment to Neo Stellar and confidence in the opportunity ahead. With that context, let me turn to our second quarter results and investment activity.

Mark Klein: With that context, let me turn to our Q2 results and investment activity. We ended the Q2 with net assets of approximately $356 million, or $13.44 per share, compared with $14.24 per share at 31 March, and $9.18 a share a year ago. Our principal investment activity during the quarter centered on two companies, TensorWave and ClickHouse. We funded the remaining $15 million of our $20 million commitment to Magnetar Opportunity 2025-4 LP, a special purpose vehicle investing in TensorWave. We also invested approximately $9.5 million in ClickHouse. Before discussing those investments, I want to place them in the context of the broader AI infrastructure market and the disciplined approach guiding our capital allocation. AI is rapidly establishing itself as a foundational technology layer across the global economy. It remains a major investment theme for our team, building on several years of experience across the sector.

Speaker #6: We ended the second quarter with net assets of approximately $356 million or $13.44 per share. Compared with $14.24 per share at March 31st and $9.18 a share a year ago.

Speaker #6: Our principal investment activity during the quarter centered on two companies. TensorWave and ClickHouse. We funded the remaining $15 million of our $20 million commitment to Magnetar opportunity 2025 for LP a special purpose vehicle investing in TensorWave.

Speaker #6: We also invested approximately $9.5 million in ClickHouse. Before discussing those investments, I want to place them in the context of the broader AI infrastructure market and the disciplined approach guiding our capital allocation.

Speaker #6: AI is rapidly establishing itself as a foundational technology layer across the global economy. It remains a major investment theme for our team building on several years of experience across the sector.

Speaker #6: Our portfolio already includes investments in OpenAI, CoreWeave, Vast Data, and Canva. Together, those holdings provide exposure to and insight across multiple layers of the AI ecosystem including model development, compute, data infrastructure, and AI-enabled applications.

Mark Klein: Our portfolio already includes investments in OpenAI, CoreWeave, VAST Data, and Canva. Together, those holdings provide exposure to, and insight across multiple layers of the AI ecosystem, including model development, compute, data infrastructure, and AI-enabled applications. TensorWave and ClickHouse extend the exposure into specialized compute capacity and real-time data infrastructure. The pace of development continues to accelerate. When we made our initial investment in OpenAI, ChatGPT had approximately 200 million weekly active users. Today, OpenAI reports more than 900 million weekly active users. Over that period, model capabilities have advanced and adoption has broadened across consumers and enterprises. We are seeing that adoption translate into greater usage, more commercial deployments, and significant capital commitments to the infrastructure required to support them. The scale of this investment cycle is reflected in the capital plans of the world's leading technology companies.

Speaker #6: TensorWave and ClickHouse extend the exposure into specialized compute capacity and real-time data infrastructure. The pace of development continues to accelerate. When we made our initial investment in OpenAI, ChatGPT had approximately $200 million weekly active users.

Speaker #6: Today, OpenAI reports more than $900 million weekly active users. Over that period, model capabilities have advanced and adoption has brought in across consumers and enterprises.

Speaker #6: We are seeing that adoption translate into greater usage. More commercial deployments and significant capital commitments to the infrastructure required to support them. The scale of this investment cycle is reflected in the capital plans of the world's leading technology companies.

Speaker #6: Combined capital expenditures across Alphabet, Amazon, Meta, Microsoft, and Oracle were approximately $154 billion in 2023, $239 billion in 2024, and in comparison, Morgan Stanley Research estimates that capital expenditures by the five largest US technology companies will approach $800 billion in 2026 and approximately $1.2 trillion in 2027.

Mark Klein: Combined capital expenditures across Alphabet, Amazon, Meta, Microsoft, and Oracle were approximately $154 billion in 2023, $239 billion in 2024. In comparison, Morgan Stanley Research estimates that capital expenditures by the five largest US technology companies will approach $800 billion in 2026 and approximately $1.2 trillion in 2027. As AI becomes more deeply embedded across industries and business workflows, we expect demand for the supporting infrastructure to continue expanding. That includes compute capacity, data and networking infrastructure, cybersecurity, and power. We are excited about the long-term potential of AI, but enthusiasm is not a substitute for discipline. Valuations have risen, competition has intensified, and growth expectations have become very ambitious. In this environment, selectivity matters more, not less. We evaluate each opportunity on its own merits, including company execution, entry price, transaction structure, and downside risk.

Speaker #6: As AI becomes more deeply embedded across industries and business workflows, we expect demand for the supporting infrastructure to continue expanding. That includes compute capacity, data and networking infrastructure, cybersecurity, and power.

Speaker #6: We are excited about the long-term potential of AI, but enthusiasm is not a substitute for discipline. Valuations have risen. Competition has intensified. And growth expectations have become very ambitious.

Speaker #6: In this environment, selectivity matters more, not less. We evaluate each opportunity on its own merits, including company execution, entry price, transaction structure, and downside risk.

Speaker #6: We are not thinking to assemble a passive basket of the largest or best-known private companies. Our objective is to identify exceptional businesses early and invest on the terms that we believe appropriately balance risk and return.

Mark Klein: We are not seeking to assemble a passive basket of the largest or best-known private companies. Our objective is to identify exceptional businesses early and invest on the terms that we believe appropriately balance risk and return. Our investment in TensorWave exemplifies this discipline. During Q2, we funded the remaining $15 million of our $20 million commitment through a Magnetar special purpose vehicle in connection with TensorWave's $350 million Series B financing, co-led by Magnetar and AMD Ventures. This investment fulfilled the commitment we initially made at year-end and increased Neostellar's exposure to one of the most strategically important segments of the AI infrastructure market. Importantly, the stage structure allowed us to increase our exposure as the company executed, rather than committing the full amount at once.

Speaker #6: Our investment in TensorWave exemplifies this discipline. During the second quarter, we funded the remaining $15 million of our $20 million commitment through a Magnetar special purpose vehicle in connection with TensorWave's $350 million Series B financing co-led by Magnetar and AMD Ventures.

Speaker #6: This investment fulfilled the commitment we initially made at year-end and increased Neo Stellar's exposure to one of the most strategically important segments of the AI infrastructure market.

Speaker #6: Importantly, the stage structure allowed us to increase our exposure as the company executed, rather than committing the full amount at once. In a highly competitive market for private AI investments, we believe this measured approach preserved access to an attractive opportunity while reinforcing our risk discipline.

Mark Klein: In a highly competitive market for private AI investments, we believe this measured approach preserved access to an attractive opportunity while reinforcing our risk discipline. TensorWave is building an AI cloud around AMD's ecosystem with the goal of providing specialized compute capacity for increasingly demanding AI training and inference workloads. Given that focus, we are particularly encouraged by AMD Ventures' participation as a co-lead investor in the financing. We believe TensorWave is well-positioned as the AI compute market expands and customers seek additional sources of high-performance capacity, greater flexibility, and a more diversified hardware ecosystem. The investment also demonstrates the practical value of the Neostellar and Magnetar relationship. It combines our experience investing in private growth companies with Magnetar's AI infrastructure capabilities and transaction structuring expertise. Turning to ClickHouse, we invested $9.5 million in the company's Series A preferred shares through a secondary transaction in April.

Speaker #6: TensorWave is building an AI cloud around AMD's ecosystem with the goal of providing specialized compute capacity for increasingly demanding AI training and inference workloads.

Speaker #6: Given that focus, we are particularly encouraged by AMD Ventures' participation as a co-lead investor in the financing. We believe TensorWave is well-positioned as the AI compute market expands and customers seek additional sources of high-performance capacity greater flexibility and a more diversified hardware ecosystem.

Speaker #6: The investment also demonstrates the practical value of the Neo Stellar and Magnetar relationship. It combines our experience investing in private growth companies with Magnetar's AI infrastructure capabilities and transaction structuring expertise.

Speaker #6: Turning to ClickHouse, we invested $9.5 million in the company's Series A preferred shares through a secondary transaction in April. ClickHouse gives us exposure to an increasingly essential infrastructure category through what we believe is a category-leading company that has already achieved meaningful commercial scale.

Mark Klein: ClickHouse gives us exposure to an increasingly essential infrastructure category through what we believe is a category-leading company that has already achieved meaningful commercial scale. At its core, ClickHouse enables companies to analyze massive volumes of data quickly and in real time. That capability becomes increasingly important as AI and other data-intensive applications move from experimentation into production. These systems generate enormous amounts of operational data. Enterprises need to analyze that information in real time to monitor performance, identify issues, improve products, and make decisions faster. ClickHouse was purpose-built for that environment. The company reports that its cloud offering has surpassed $250 million in annual run rate revenue, more than tripling from a year earlier. It has also added more than 1,000 net new customers since January, bringing its total customer base to approximately 4,000. ClickHouse is already operating at a meaningful scale.

Speaker #6: At its core, ClickHouse enables companies to analyze massive volumes of data quickly and in real time. That capability becomes increasingly important as AI and other data-intensive applications move from experimentation into production.

Speaker #6: These systems generate enormous amounts of operational data. Enterprises need to analyze that information in real time to monitor performance, identify issues, improve products, and make decisions faster.

Speaker #6: ClickHouse was purpose-built for that environment. The company reports that its cloud offering has surpassed $250 million in annual run-rate revenue, more than tripling from a year earlier.

Speaker #6: It has also added more than 1,000 net new customers since January bringing its total customer base to approximately 4,000. ClickHouse is already operating at a meaningful scale.

Speaker #6: We believe continued demand for real-time analytics and observability can support further growth across both AI and broader enterprise workloads. Let me close with a few thoughts.

Mark Klein: We believe continued demand for real-time analytics and observability can support further growth across both AI and broader enterprise workloads. Let me close with a few thoughts. Q2 and the weeks immediately following it marked a defining period for our company. We made significant investments in TensorWave and ClickHouse. We completed our transition to an externally managed structure, and we began operating under the Neostellar name. The launch of Neostellar reflects the evolution of both private markets and our platform. Companies are remaining private longer. Their financing needs are becoming more sophisticated, and competing effectively for stockholders requires us to think not only about which investments we make, but also about how we access, underwrite, and structure those opportunities.

Speaker #6: The second quarter and the weeks immediately following it marked a defining period for our company. We made significant investments in TensorWave and ClickHouse. We completed our transition to an externally managed structure and we began operating under the Neo Stellar name.

Speaker #6: The launch of Neo Stellar reflects the evolution of both private markets and our platform. Companies are remaining private longer. Their financing needs are becoming more sophisticated, and competing effectively for stockholders requires us to think not only about which investments we make, but also about how we access, underwrite, and structure those opportunities.

Speaker #6: By combining our team's long history of investing in venture-backed private companies with Magnetar's institutional capabilities, we believe Neo Stellar is better positioned to identify compelling opportunities structure investments with discipline and support portfolio companies as they grow.

Mark Klein: By combining our team's long history of investing in venture-backed private companies with Magnetar's institutional capabilities, we believe Neostellar is better positioned to identify compelling opportunities, structure investments with discipline, and support portfolio companies as they grow. Put simply, Neostellar expands what we can do. It does not change how we invest. We have always believed that attractive long-term returns begin with disciplined underwriting, thoughtful portfolio construction, and patience. Those principles remain the foundation of our approach. We will continue to pursue opportunities where our experience, access, or structuring capabilities can create a genuine advantage. We will remain selective. We will stay focused on risk-adjusted returns, and we will allocate capital with the same discipline our stockholders have come to expect of us. We are energized by this next chapter and confident in the platform we are building.

Speaker #6: Put simply, Neo Stellar expands what we can do. It does not change how we invest. We have always believed that attractive long-term returns begin with disciplined underwriting.

Speaker #6: Thoughtful portfolio construction and patience. Those principles remain the foundation of our approach. We will continue to pursue opportunities where our experience access or structuring capabilities can create a genuine advantage.

Speaker #6: We will remain selective. We will stay focused on risk-adjusted returns. And we will allocate capital with the same discipline our stockholders have come to expect of us.

Speaker #6: We are energized by this next chapter and confident in the platform we are building. Most importantly, we remain fully aligned with our stockholders and committed to create durable long-term value.

Mark Klein: Thank you for your continued support. I would now like to turn the call over to Allison Green to review our financial results in greater detail.

Speaker #6: Thank you for your continued support. I will now like to turn the call over to Allison Green to review our financial results in greater detail.

Mark Klein: Thank you for your continued support. I would now like to turn the call over to Allison Green to review our financial results in greater detail.

Speaker #2: Thank you, Mark. I'd like to follow Mark's update with a review of our investment activity and portfolio company realizations during the second quarter and subsequent quarter end.

Allison Green: Thank you, Mark. I'd like to follow Mark's update with a review of our investment activity and portfolio company realizations during Q2 and subsequent to quarter end, a high-level review of our investment portfolios of quarter end, including the investment theme breakdown, and a more detailed review of our Q2 financial results, including our current liquidity as of 30 June. I'll also touch on notable items during Q2 and subsequent to quarter end, including the effectiveness of our externalization and the receipt of $20 million under the redeemable promissory note issued to a Magnetar affiliate. On 31 December, we committed up to $20 million to Magnetar Opportunity 2025-4 LP, a special purpose vehicle invested in TensorWave Inc. We funded the initial $5 million tranche on 2 January 2026, and the remaining $15 million tranche on 3 June.

Speaker #2: A high-level review of our investment portfolio as of quarter-end, including the investment theme breakdown, and a more detailed review of our second quarter financial results, including our current liquidity as of June 30.

Speaker #2: I'll also touch on notable items during the second quarter and subsequent two quarter end, including the effectiveness of our externalization, and the receipt of $20 million under the redeemable promissory note issued to a Magnetar affiliate.

Speaker #2: On December 31st, we committed up to $20 million to Magnetar opportunity 2025-4 LP a special purpose vehicle invested in TensorWave Inc. We funded the initial $5 million tranche on January 2nd, 2026, and the remaining $15 million tranche on June 3rd.

Speaker #2: We are invested in TensorWave Inc's Series B preferred shares via our investments in the class A interest and class B interest of Magnetar opportunity 2025-4 LP.

Allison Green: We are invested in TensorWave Inc.'s Series B preferred shares via our investments in the Class A interest and Class B interest of Magnetar Opportunity 2025-4 LP. As of 30 June, our $20 million commitment to Magnetar Opportunity 2025-4 LP has been fully funded. During the quarter, we also invested approximately $225,000 in Huntress Labs common shares and $9.5 million in ClickHouse Series A preferred shares, both through secondary transactions, not inclusive of capitalized fees. Throughout Q2, we received four distributions from CW Opportunity 2 LP, totaling approximately $6.5 million in net proceeds. CW Opportunity 2 LP is a special purpose vehicle for which the Class A interest is solely invested in the Class A common shares of CoreWeave, Inc. We are invested in the Class A common shares of CoreWeave through our investment in the Class A interests of CW Opportunity 2 LP.

Speaker #2: As of June 30th, our $20 million commitment to Magnetar opportunity 2025-4 LP has been fully funded. During the quarter, we also invested approximately $225,000 in Huntress Labs.

Speaker #2: Common shares. And $9.5 million in ClickHouse Series A preferred shares. Both through secondary transactions, not inclusive of capitalized fees. Throughout the second quarter, we received four distributions from CW opportunity 2 LP totaling approximately $6.5 million in net proceeds.

Speaker #2: CW opportunity 2 LP is a special purpose vehicle for which the class A interest is solely invested in the class A common shares of CoreWave Inc. We are invested in the class A common shares of CoreWave through our investment in the class A interest of CW opportunity 2 LP.

Speaker #2: The distributions were categorized in aggregate as approximately $1.9 million return of capital and a $4.6 million realized gain. The aggregate distribution represented approximately $12.2% of our $15 million initial investment in CW opportunity 2 LP.

Allison Green: The distributions were categorized in aggregate as approximately $1.9 million return of capital and a $4.6 million realized gain. The aggregate distribution represented approximately 12.2% of our $15 million initial investment in CW Opportunity 2 LP. The distributions received to date represent approximately 44.1% of the initial investment. As of quarter-end, we continue to have exposure to CoreWeave through our remaining investment in CW Opportunity 2 LP. Additionally, during the quarter, we sold 147,135 common shares of GrabAGun Digital Holdings, Inc. These sales resulted in net proceeds of approximately $467,000 and a realized gain of approximately $311,000. As of 30 June, we hold 452,619 public common shares or approximately 44% of our original position. Finally, during the quarter, we received a $5.2 million distribution, reflecting a full exit from our investment in HL Digital Assets, Inc., resulting in a realized gain of approximately $45,000.

Speaker #2: The distributions received to date represent approximately 44.1% of the initial investment. As of quarter end, we continue to have exposure to CoreWave through our remaining investment in CW opportunity 2 LP.

Speaker #2: Additionally, during the quarter, we sold 147,135 common shares of Gravel Gun Digital Holdings, Inc. These sales resulted in net proceeds of approximately $467,000 and a realized gain of approximately $311,000.

Speaker #2: As of June 30th, we hold 452,619 public common shares or approximately 44% of our original position. Finally, during the quarter, we received a $5.2 million distribution reflecting a full exit from our investment in HL Digital Assets, Inc. resulting in a realized gain of approximately $45,000.

Speaker #2: Subsequent to quarter end, on July 10th, we exercised $86,076 common warrants of Shogun Enterprises, Inc. doing business as hearth, acquiring $86,076 shares of class A common stock for an aggregate exercise price of approximately $861.

Allison Green: Subsequent to quarter-end, on 10 July, we exercised 86,076 common warrants of Shogun Enterprises, Inc., doing business as Hearth, acquiring 86,076 shares of Class A common stock for an aggregate exercise price of approximately $861. Additionally, subsequent to quarter-end through today, we sold 143,655 shares of GrabAGun Digital Holdings, Inc. at an average net price per share of $3.12. These sales resulted in net proceeds of approximately $448,000 and a realized gain of approximately $295,000. As of today, we hold 308,964 remaining common shares or 30% of our original position. I would now like to turn to our portfolio as of quarter-end. Our top five positions as of 30 June were WHOOP, OpenAI, VAST Data, TensorWave, and Blink Health. These positions accounted for approximately 69% of the investment portfolio at fair value.

Speaker #2: Additionally, subsequent to quarter end through today, we sold 143,655 shares of Gravel Gun Digital Holdings, Inc. at an average net price per share of $3.12.

Speaker #2: These sales resulted in net proceeds of approximately $448,000 and a realized gain of approximately $295,000. As of today, we hold 308,964 remaining common shares or 30% of our original position.

Speaker #2: I would now like to turn to our portfolio as of quarter end. Our top five positions as of June 30th were Whoop, OpenAI, Vast Data, TensorWave, and Blank Health.

Speaker #2: These positions accounted for approximately 69% of the investment portfolio at fair value. Additionally, as of June 30, our top 10 positions accounted for approximately 86% of the investment portfolio.

Allison Green: Additionally, as of 30 June, our top 10 positions accounted for approximately 86% of the investment portfolio. Segmented by seven general investment themes, the top allocation of our investment portfolio on 30 June was to consumer goods and services, representing approximately 41% of the investment portfolio at fair value. Artificial intelligence infrastructure and applications and software as a service were the next largest categories with approximately 34% and 10% of our portfolio, respectively. Approximately 6% of our portfolio was invested in education technology companies, and the logistics and supply chain segment accounted for approximately 4% of the fair value of our portfolio. The financial technology and services category also accounted for approximately 4% of the fair value of our portfolio, and Tharo Sports accounted for 2% as of 30 June.

Speaker #2: Segmented by seven general investment themes, the top allocation of our investment portfolio June 30th was to consumer goods and services representing approximately 41% of the investment portfolio at fair value.

Speaker #2: Artificial intelligence infrastructure, an applications, and software as a service were the next largest categories with approximately 34% and 10% of our portfolio respectively. Approximately 6% of our portfolio was invested in education technology companies, and the logistics and supply chain segment accounted for approximately 4% of the fair value of our portfolio.

Speaker #2: The financial technology and services category also accounted for approximately 4% of the fair value of our portfolio. And throw sports accounted for 2% as of June 30th.

Speaker #2: We ended the second quarter of 2026 with a net asset value of approximately $355.9 million or $13.44 per share, which is consistent with our financial reporting.

Allison Green: We ended Q2 2026 with a net asset value of approximately $355.9 million, or $13.44 per share, which is consistent with our financial reporting. The decrease in NAV per share from $14.24 at the end of Q1 2026 was primarily driven by an $0.88 per share decrease due to net investment loss, which includes approximately $20 million of accelerated and non-recurring expenses incurred in connection to the externalization. A $0.29 per share decrease related to the issuance of common shares from the partial conversions of our 6.5% convertible notes due 2029, and a $0.02 per share decrease from the net change in unrealized depreciation of our investments during the quarter.

Speaker #2: The decrease in NAV per share from $14.24 at the end of Q1 2026 was primarily driven by an 88 cent per share decrease due to net investment loss, which includes approximately $20 million of accelerated and non-recurring expenses incurred in connection to the externalization.

Speaker #2: A 29 cent per share decrease related to the issuance of common shares from the partial conversions of our 6.5% convertible notes due 2029 and a 2 cent per share decrease from the net change in unrealized depreciation of our investments during the quarter.

Speaker #2: The decrease in NAV per share was offset by a $0.20 per share increase related to stock-based compensation, net of share withholding settlements, and a $0.19 per share increase resulting from net realized gains from portfolio investments during the quarter.

Allison Green: The decrease in NAV per share was offset by a $0.20 per share increase related to stock-based compensation, net of share withholding settlements, and a $0.19 per share increase resulting from net realized gains from portfolio investments during the quarter. At 30 June, there were 26,473,222 shares of the company's common stock outstanding. Finally, regarding our liquidity as of quarter-end, we ended the quarter with approximately $14.6 million of liquid assets, including approximately $12.9 million in cash and approximately $1.7 million in unrestricted public securities. Not included in our unrestricted public securities are approximately $15.4 million of public securities subject to lock-up or other sales restrictions as of quarter-end. This represents our remaining investment in CoreWeave via our Class A interest of CW Opportunity 2 LP.

Speaker #2: As of June 30th, there were 26,473,222 shares of the company's common stock outstanding. Finally, regarding our liquidity as of quarter-end, we ended the quarter with approximately $14.6 million of liquid assets, including approximately $12.9 million in cash and approximately $1.7 million in unrestricted public securities.

Speaker #2: Not included in our unrestricted public securities are approximately 15.4 million of public securities subject to lockup or other sales restrictions as of quarter end.

Speaker #2: This represents our remaining investment in CoreWave via our Class A interest of CW Opportunity 2 LP. During the quarter, the purchaser of the 6.5% convertible notes due 2029 elected to exercise their conversion option on multiple occasions and converted an aggregate of $8 million of the $35 million principal amount of convertible notes into 1,092,504 shares of the company's common stock, with cash paid for fractional shares.

Allison Green: During the quarter, the purchaser of the 6.5% convertible notes due 2029 elected to exercise their conversion option on multiple occasions and converted an aggregate of $8 million of the $35 million principal amount of convertible notes into 1,092,504 shares of the company's common stock and cash into the fractional shares. Upon completion of these conversions, the remaining principal balance of the 6.5% convertible notes due 2029 was approximately $27 million at quarter-end. As Mark mentioned, on 2 April, our board of directors, including all of our independent directors, unanimously approved the company's transition from an internally managed BDC to an externally managed structure through an investment advisory agreement with Neostellar Advisors LLC, an entity jointly owned by certain members of the former SuRo Capital management team and Magnetar Holdings LLC, an affiliate of Magnetar's multi-strategy alternative investment platform.

Speaker #2: Upon completion of these conversions, the remaining principal balance of the 6.5% convertible notes due 2029 was approximately $27 million at quarter end. As Mark mentioned, on April 2nd, our board of directors, including all of our independent directors, unanimously approved the company's transition from an internally managed BDC to an externally managed structure through an investment advisory agreement with Neo Stellar Advisors, LLC.

Speaker #2: An entity jointly owned by certain members of the former SURO CAPITAL management team and Magna Tar Holdings, LLC, an affiliate of Magna Tar's multi-strategy alternative investment platform.

Speaker #2: Following stockholder approval on June 10th, the externalization became effective on July 15th, 2026, and Neo Stellar Advisors became the company's investment advisor. The company continues to trade on the NASDAQ Global Select Market under the ticker symbol NSLR and continues to be led by Mark Klein, chairman, president, and chief executive officer, and myself as chief financial officer, treasurer, and corporate secretary.

Allison Green: Following stockholder approval on 10 June, the externalization became effective on 15 July 2026, and Neostellar Advisors became the company's investment advisor. The company continues to trade on the Nasdaq Global Select Market under the ticker symbol NSLR and continues to be led by Mark Klein, Chairman, President, and Chief Executive Officer, and myself as Chief Financial Officer, Treasurer, and Corporate Secretary. In addition, Erik Falk, Partner and Head of Strategy at Magnetar, joined our board of directors in connection with the externalization. Subsequent to quarter-end on 17 July, we received $20 million in gross proceeds from the issuance of a redeemable promissory note to a Magnetar-affiliated entity.

Speaker #2: In addition, Eric Falk, partner and head of strategy at Magna Tar, joined our board of directors in connection with the externalization. Subsequent to quarter end on July 17th, we received $20 million in gross proceeds from the issuance of a redeemable promissory note to a Magna Tar affiliated entity.

Speaker #2: The redeemable promissory note bears interest at 6.5% per year, has a three-year maturity, and is mandatorily redeemable through the issuance of our common stock upon the completion of a qualifying equity financing resulting in the issuance of at least $230 million of common equity.

Allison Green: The redeemable promissory note bears interest at 6.5% per year, has a three-year maturity, and is mandatorily redeemable through the issuance of our common stock upon the completion of a qualifying equity financing, resulting in the issuance of at least $230 million of common equity. Additional details are set forth in the company's current report on Form 8-K, filed with the Securities and Exchange Commission on 21 July. That concludes my comments. We would like to thank you for your interest and support of Neostellar Capital. I will turn the call over to the operator to start the Q&A session. Operator?

Speaker #2: Additional details are set forth in the company's current report on Form 8-K, filed with the Securities and Exchange Commission on July 21st. That concludes my comments.

Speaker #2: We would like to thank you for your interest and support of Neo Stellar Capital. Now I will turn the call over to the operator to start the Q&A session.

Speaker #2: Operator?

Speaker #3: Thank you. If you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad.

Operator: Thank you. If you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. Please limit yourself to one question per person. You will be advised when to ask your question. We will take our first question from Alex Fuhrman of Lucid Capital Markets. Alex, your line is live.

Speaker #3: To withdraw your question, please press star two. Please limit yourself to one question per person. You will be advised when to ask your question.

Speaker #3: And we will take our first question from Alex Furman of Lucid Capital Markets. Alex, your line is live.

Speaker #4: Hi guys. Thanks very much for taking my question and congratulations on the business transformation here. I wanted to ask about your investment in Whoop.

Alex Fuhrman: Hi, guys. Thanks very much for taking my question. Congratulations on the business transformation here. Wanted to ask about your investment in WHOOP. It's obviously been tremendously successful, a large portion of your portfolio at this point. Can you give us a sense, as best you can now, what the strategy is going to be for that investment? When the IPO might happen, and what your monetization timeline could look like there?

Speaker #4: It's obviously been tremendously successful. A large portion of your portfolio at this point. Can you give us a sense, best you can now, what the strategy is going to be for that investment?

Speaker #4: When the IPO might happen and what your monetization timeline could look like

Speaker #5: Sure. And thank you. We're very fortunate of where Whoop is right now. We invested $11 million in its it's worth considerably more. So in some ways, a little bit of victim of our own success in the sense that it has become a large part of our portfolio.

Mark Klein: Sure. Thank you. We're very fortunate of where WHOOP is right now. We invested $11 million, and it's worth considerably more. In some ways, a little bit of victim of our own success in the sense that it has become a large part of our portfolio. I think you will note, if those who are following the company, the series of announcements that they have made in hiring very high-level folks and some of the other business initiatives, they've actually been extremely active. I think as you see the health and wellness market continue to grow, you've seen that Oura, the smart ring maker, has filed confidentially about 2 months ago to go public. I think how they move through the public markets is going to be extremely instructive to all.

Speaker #5: I think you will note if those who are following the company the series of announcements that they have made in hiring very high-level folks and some of the other business initiatives, they've actually been extremely active I think, as you see the health and wellness market continue to grow, you're seeing that Aura, the smart ring maker, has filed confidentially about two months ago to go public.

Speaker #5: I think how they move through the public markets is going to be all. I think it'll be very, very well received. And I think Whoop at least in the past has been somewhere between a quarter or two quarters behind Aura in their fundraising efforts.

Mark Klein: I think it'll be very, very well received. I think WHOOP, at least in the past, has been somewhere between a quarter or 2 quarters behind Oura in their fundraising efforts. I suspect, WHOOP has said this publicly, that their intention is to go public. All else being equal, I suspect they will try to do that at some time next year. Thank you.

Speaker #5: So I suspect that Whoop has said this publicly that their intention is to go public and all else being equal, I suspect they will try to do that at some time next year.

Speaker #5: Thank you.

Speaker #3: Thank you. There are no further questions on the line, so I will now hand you back to your host, Mark Klein, for closing remarks.

Operator: Thank you. There are no further questions on the line, so I will now hand you back to your host, Mark Klein, for closing remarks.

Speaker #5: Thank you all for attending our call today. It is an extremely exciting time for us. The transformation and partnership with Magna Tar is something that we are really, really excited about.

Mark Klein: Thank you all for attending our call today. It is an extremely exciting time for us. The transformation and partnership with Magnetar is something that we are really, really excited about. There's a lot of great things going on in our portfolio and a lot of interesting things for us to do. We greatly appreciate your time and support. Thank you.

Speaker #5: There's a lot of great things going on in our portfolio, and a lot of interesting things for us to do. So we greatly appreciate your time and support.

Speaker #5: Thank you.

Operator: Thank you for joining today's call. You may now disconnect.

Q2 2026 Neostellar Capital Corp Earnings Call

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