Q3 2025 Horizon Technology Finance Corp Earnings Call

Speaker #3: Ladies and gentlemen . Greetings and welcome to the horizon Corporation . Third quarter earnings conference call . At this time , all participants are in the listen only mode .

Operator: Ladies and gentlemen, greetings and welcome to the Horizon Technology Finance Corporation third quarter earnings conference call. At this time, all participants are in the listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today, Megan Bacon. Please go ahead.

Speaker #3: A brief question and answer session will follow the formal presentation . If anyone requires operator assistance during the conference , please signal the operator by pressing star and zero on your telephone keypad .

Speaker #3: As a reminder , this conference is being recorded . It is now my pleasure to introduce your host for today , Megan Bacon .

Speaker #3: Please go ahead .

Speaker #4: Thank you and welcome to Horizon Technology Finance Corporation's Third Quarter 2025 conference call . Representing the company today are Mike , Chief Executive Officer , Paul Seitz , chief investment officer and Daniel Trolio chief financial officer .

Megan Bacon: Thank you and welcome to Horizon Technology Finance Corporation's third quarter 2025 conference call. Representing the company today are Michael Balkin, Chief Executive Officer, Paul Seitz, Chief Investment Officer, and Dan Trolio, Chief Financial Officer. I would like to point out that the Q3 earnings press release and Form 10-Q are available on the company's website at horizontechfinance.com. Before we begin our formal remarks, I need to remind everyone that during this conference call the company will make certain forward-looking statements, including statements with regard to the future performance of the company. Words such as believes, expects, anticipates, intends, or similar expressions are used to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions.

Speaker #4: I would like to point out that the Q3 earnings press release and Form 10-Q are available on the company's website at Horizon Technology Finance.

Speaker #4: Com . Before we begin our formal remarks , I need to remind everyone that during this conference call , the company will make certain forward looking statements , including statements with regard to the future performance of the company .

Speaker #4: Words such as believes , expects , anticipates , intends or similar expressions are used to identify forward looking statements . These forward looking statements are subject to the inherent uncertainties in predicting future results and conditions .

Speaker #4: Certain factors could cause actual results to differ on a material basis from those projected in these forward looking statements , and some of these factors are detailed in the risk factor discussion in the company's filings with the Securities and Exchange Commission , including the company's form 10-K for the year ended December 31st , 2020 .

Megan Bacon: Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements, and some of these factors are detailed in the risk factor discussion in the company's filings with the Securities and Exchange Commission, including the company's Form 10-K for the year ended December 31, 2024. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. At this time I would like to turn the call over to Michael Balkin.

Speaker #4: For the company undertakes no obligation to update or revise any forward looking statements , whether as a result of new information , future events or otherwise .

Speaker #4: At this time , I would like to turn the call over to Michael Balkin .

Speaker #5: Thanks , Megan and welcome everyone and thank you for your interest in horizon . Today we will update you on our quarterly performance and the current operating environment .

Michael Balkin: Thanks Megan and welcome everyone and thank you for your interest in Horizon. Today we will update you on our quarterly performance in the current operating environment. Paul Seitz will take us through recent business and portfolio developments as well as the current status of the venture lending market, and Dan Trolio will detail our operating performance and financial condition. We will then take questions. It has been a very active several months since I assumed the CEO role. In June, I spent countless hours with our team together thinking about the next chapter of Horizon and how best to expand the Horizon platform moving forward. The first part of that strategy came to fruition when we announced in August that Monroe Capital Corporation and Horizon Technology Finance Corporation will be merging in a NAV for NAV Share Exchange, subject to shareholder approval and customary closing conditions.

Speaker #5: Paul Seitz will take us through recent business and portfolio developments , as well as the current status of the venture lending market and Daniel Trolio will detail our operating performance and financial condition .

Speaker #5: We will then take questions . Well , it has been a very active several months since I assumed the CEO role in June .

Speaker #5: I've spent countless hours with our team together thinking about the next chapter of horizon and how best to expand the horizon platform . Moving forward .

Speaker #5: The first part of that strategy came to fruition when we announced in August that Mr. Seek and HR will be merging in a Nav for Nav share exchange , subject to shareholder approval and customary closing conditions .

Speaker #5: The merger is progressing , but due to the federal government shutdown , we now expect to complete it in early 2026 . Upon closing , horizon will significantly increase their assets under management while MRC shareholders will have the opportunity to participate in what we expect to be a rapidly growing BDC that will be able to take advantage of greater economies of scale in the combined vehicle .

Michael Balkin: The merger is progressing, but due to the federal government shutdown, we now expect to complete it in early 2026. Upon closing, Horizon will significantly increase their assets under management. Monroe Capital Corporation shareholders will have the opportunity to participate in what we expect to be a rapidly growing BDC that will be able to take advantage of greater economies of scale in the combined vehicle. Importantly, Monroe Capital, which is the parent company of Horizon Technology Finance Management, will provide additional and ongoing support to the post-merger company. As a result, you will see a much more coordinated and synergistic effort in 2026 as we expect to take significant advantage of having such a premier asset manager and expert private credit lender providing us with stalwart backing. To that end, we added several new originators in the third quarter who are hitting the ground running with our reinforced team.

Speaker #5: Importantly , Monroe Capital , which is the parent company of Horizon Technology Finance management , will provide additional and ongoing support to the post-merger company .

Speaker #5: As a result, you will see a much more coordinated and synergistic effort in 2026, as we expect to take significant advantage of having such a premier asset manager and expert private credit lender providing us with stalwart backing.

Speaker #5: To that end , we added several new originators in the third quarter who were hitting the ground running with our reinforced team . Combined with Monroe's support .

Michael Balkin: Combined with Monroe's support, we expect to compete to originate larger venture loans to top early stage and late stage cutting edge companies and return to the growth trajectory that we've historically experienced. I could not be more excited for Horizon's future and while there is still plenty of work to be done, we have the right team in place to bring the Horizon platform to the next level. Turning to our specific results for the quarter, we generated net investment income of $0.32 per share. As we look to grow our portfolio in future quarters, it remains our goal to deliver NII at or above our declared distributions over time. Thanks in part to our accretive acquisition of the venture debt portfolio of a former co-lender as well as achieving favorable outcomes with two of our challenged portfolio companies, our NAV per share grew 5% to $7.12.

Speaker #5: We expect to compete to originate larger venture loans to top early stage and late stage cutting edge companies and return to the growth trajectory that we've historically experienced .

Speaker #5: I could not be more excited for Horizon's future , and while there is still plenty of work to be done , we have the right team in place to bring the horizon platform to the next level .

Speaker #5: Turning to our specific results for the quarter , we generated . Net investment income of $0.32 per share . As we look to grow our portfolio in future quarters , it remains our goal to deliver NII at or above are declared distributions over time .

Speaker #5: Thanks in part to our accretive acquisition of venture debt portfolio of a former Callender , as well as achieving favorable outcomes with two of our challenged portfolio companies , our Nav per grew 5% to $7.12 .

Speaker #5: Based on our outlook and our undistributed spillover income , our board declared regular monthly distributions of share through March 20th , 26 . Once again , we achieved a portfolio yield on debt investments at or near the top of the BDC industry .

Michael Balkin: Based on our outlook and our undistributed spillover income, our board declared regular monthly distributions of $0.11 per share through March 2026. Once again, we achieved a portfolio yield on debt investments at or near the top of the BDC industry. We also further strengthened our balance sheet in the quarter by accretively raising equity from our at-the-market equity program and successfully raised $40 million through the issuance of our 5.5% unsecured convertible notes due 2030. Through our more active relationship with Monroe Capital, our pipeline of larger potential venture debt transactions is growing while we maintain a solid base of additional opportunities to grow our portfolio over time. Before handing the call over to Paul, we are very excited for Horizon Technology Finance Corporation's long-term future and believe we have the right building blocks in place to execute.

Speaker #5: We also further strengthened our balance sheet in the quarter by actively raising equity from our at the market program and successfully raised $40 million through the issuance of our 5.5% unsecured convertible notes due 2030 .

Speaker #5: And through our more active relationship with Monroe Capital , our pipeline of larger potential venture debt transactions is growing . While we maintain a solid base of additional opportunities to grow our portfolio over time .

Speaker #5: Before handing the call over to Paul , we are very excited for the new Horizons long term future and believe we have the right building blocks in place to execute , namely our portfolio yield remains among the industry's highest , which we expect will lead to increased NII over time .

Michael Balkin: Namely, our portfolio yield remains among the industry's highest, which we expect will lead to increased net investment income over time. Our liquidity and balance sheet continue to remain strong and will further strengthen post-merger. We maintain a strong committed backlog, a robust pipeline, and we believe with the backing of Monroe Capital that we are in a great position to compete for even larger, higher quality opportunities to invest in new companies. We are already seeing the aperture widening as more private and public companies express interest in our venture lending solutions. Finally, the demand for venture debt capital remains high. We look forward to being a key supplier of such capital again. We appreciate your continued interest and support in the Horizon Technology Finance platform.

Speaker #5: Our liquidity and balance sheet continue to remain strong and will further strengthen post-merger . We maintain a strong , committed backlog , a robust pipeline , and we believe with the backing of Monroe Capital , that we are in a great position to compete for even larger , higher quality opportunities to invest in new companies .

Speaker #5: We are already seeing the aperture widening as more private and public companies express interest in our venture lending solutions . And finally , the demand for venture debt capital remains high .

Speaker #5: We look forward to being a key supplier of such capital . Again , we appreciate your continued interest and support in the horizon platform .

Speaker #5: I will now turn the call over to our Chief Investment Officer , Paul cites to give you the details of our third quarter results and progress .

Michael Balkin: I will now turn the call over to our Chief Investment Officer, Paul Seitz, to give you the details of our third quarter results and progress.

Speaker #5: Paul .

Paul Seitz: Paul, thanks Mike, and good morning to everyone. I'm happy to join today's call and look forward to speaking to you all in the quarters to come. It's an exciting time here at Horizon while we continue to work closely with all of our current portfolio companies to optimize returns and create further opportunities for additional value creation. We are very enthusiastic about our future. As Mike mentioned, we believe the combined company will provide us with the size and scale needed to originate larger venture loans to growing public and private small companies. At the end of the quarter, our current portfolio stood at $603 million as the loans we originated and acquired during the quarter were offset by prepayments and amortization in our existing portfolio. In the third quarter, we funded three debt investments totaling $15 million.

Speaker #6: Thanks , Mike , and good morning to everyone . I'm happy to join today's call and look forward to speaking to you all in the quarters to come .

Speaker #6: It's an exciting time here at Horizon. While we continue to work closely with all of our current portfolio companies to optimize returns and create further opportunities for additional value creation, we are very enthusiastic about our future.

Speaker #6: As Mike mentioned, we believe the combined company will provide us with the size and scale needed to originate larger venture loans to growing public and private small companies.

Speaker #6: At the end of the quarter, our current portfolio stood at $603 million, as the loans we originated and acquired during the quarter were offset by prepayments and amortization in our existing portfolio.

Speaker #6: In the third quarter , we funded three debt investments totaling 15 million , positively , we are making strong progress on building up our pipeline with larger venture loan opportunities and our target sectors , and we are positioning ourselves well to return to growing our portfolio .

Paul Seitz: Positively, we are making strong progress on building up our pipeline with larger venture loan opportunities in our target sectors, and we are positioning ourselves well to return to growing our portfolio. Looking ahead to Q4, we expect to grow our portfolio in the quarter driven by our pipeline thus far. In October, we have already funded a $10 million venture loan transaction and have been awarded three new venture loan transactions representing $50 million in total commitments, with much of that total to potentially fund in Q4. That said, we will always be disciplined in our approach to originating loans. During the third quarter, we experienced 6 loan prepayments totaling $50 million in prepaid principal and also collected over $3 million in equity and warrant proceeds. We currently expect more limited prepayments activity in Q4.

Speaker #6: Looking ahead to Q4 , we expect to grow our portfolio in the quarter , driven by our pipeline . Thus far in October , we have already funded a $10 million venture loan transaction and have been awarded three new venture loan transactions , representing $50 million in total commitments .

Speaker #6: With much of that total to potentially fund in Q4 . That said , we will always be disciplined in our approach to originating loans .

Speaker #6: During the third quarter, we experienced six loan prepayments totaling $50 million in prepaid principal and also collected over $3 million in equity and warrant proceeds.

Speaker #6: We currently expect more limited prepayment activity in Q4 . Our onboarding debt investment yield of 12.2% during the third quarter remained consistent with our historic levels .

Paul Seitz: Our onboarding debt investment yield of 12.2% during the third quarter remained consistent with our historic levels. We expect to continue to generate strong onboarding yields with our current pipeline of opportunities, which we believe will generate strong net investment income over time. Our debt portfolio yield of 18.6% for the quarter was once again one of the highest yielding debt portfolios in the BDC industry. Our ability to generate these industry leading yields continues to be a testament to our venture lending strategy and our execution of such strategy across various market cycles and interest rate environments. As of September 30, we held warrant equity positions in 95 portfolio companies for the fair value of $40 million. Structuring investments with warrants and equity rights is a key component of our venture debt strategy and a potential generator of shareholder value.

Speaker #6: We expect to continue to generate strong onboarding yields with our current pipeline of opportunities, which we believe will generate strong net investment income over time.

Speaker #6: Our debt portfolio yield of 18.6% for the quarter was once again one of the highest yielding debt portfolios in the BDC industry . Our ability to generate these industry leading yields continues to be a testament to our venture lending strategy and our execution of such strategy across various market cycles and interest rate environments .

Speaker #6: As of September 30th, we held Wharton equity positions in 95 portfolio companies with a fair value of $40 million. Structuring investments with warrants and equity rights is a key component of our venture debt strategy and a potential generator of shareholder value.

Speaker #6: We ended the third quarter with a committed and approved backlog of $119 million , compared to $149 million at the end of the second quarter .

Paul Seitz: We ended the third quarter with a committed and approved backlog of $119 million compared to $149 million at the end of the second quarter. We believe our pipeline combined with our committed backlog, with most of our funding commitments subject to companies achieving certain key milestones, provides a solid base to prudently grow our portfolio over time. As of quarter end, 87% of the fair value of our debt portfolio consisted of 3 and 4 rated debt investments, while 13% of the fair value of our portfolio was rated 2 or 1. While we continue to collaborate with all of our portfolio companies to optimize returns, we are pleased in the quarter to achieve two strong outcomes on stress investments, namely Soli and Hound Labs. These had a positive impact on both NII and NAV.

Speaker #6: We believe our pipeline , combined with our committed backlog , with most of our funding commitments subject to companies achieving certain key milestones , provides a solid base to prudently grow our portfolio over time .

Speaker #6: As of quarter end , 87% of the fair value of our debt portfolio consisted of three and four rated debt investments , while 13% of the fair value of our portfolio was rated 2 or 1 .

Speaker #6: While we continue to collaborate with all of our portfolio companies to optimize returns , we are pleased in the quarter to achieve two strong outcomes on stress investments , namely , solely and Hound Labs .

Speaker #6: These have a positive impact on both NII and Nav . This is the demonstration of our proven ability to utilize a variety of strategies to seek to optimize returns and create opportunities for potential future value .

Paul Seitz: This is a demonstration of our proven ability to utilize a variety of strategies to seek to optimize returns and create opportunities for potential future value. Turning to the venture capital environment, according to Pitchbook, the market is warming up with approximately $81 billion invested in VC backed companies in the third quarter, driven in significant part by continued large investments in AI. On the positive side, we saw exit markets further open in the third quarter with approximately $75 billion of exit value, driven primarily by tech IPOs along with acquisitions by VC backed companies. The IPO market is once again open and investors clearly are eager to put their money to work in life sciences. While there is optimism, there remain valuation disconnects and compression, which is keeping a relative lid on potential IPOs in that sector.

Speaker #6: Turning to the venture capital environment . According to PitchBook , the market is warming up with approximately $81 billion invested in VC backed companies in the third quarter , driven in significant part by continued large investments in AI .

Speaker #6: On the positive side , we saw exit markets further open in the third quarter with approximately $75 billion of exit value , driven primarily by tech IPOs , along with acquisitions by VC backed companies .

Speaker #6: The IPO market is once again open and investors clearly are eager to put their money to work in life sciences . While there is optimism , it remained valuation disconnects and compression , which is keeping a lid on potential IPOs in that sector .

Speaker #6: Meanwhile , on the tech side , there is considerable optimism and we are being very thoughtful about taking a deeper dive into the various subsectors , particularly in AI and defense technology , to determine the best path for future investments .

Paul Seitz: Meanwhile, on the tech side, there is considerable optimism and we are being very thoughtful about taking a deeper dive into the various subsectors, particularly in AI and defense technology, to determine the best path for future investments. Looking ahead, venture debt remains a significant option for companies to access capital as they continue to grow and prepare for exits. This provides opportunity for Horizon Technology Finance Corporation to seek high quality, well sponsored tech and life science companies to add to its portfolio. To sum up, as we close out 2025, we are increasingly excited for our long term future. As we prepare to merge with Monroe Capital Corporation, our alignment with Monroe is increasing and we are truly beginning to tap into Monroe as an incredible resource, which should significantly benefit us as we target larger venture loan opportunities for both public and private companies.

Speaker #6: Looking ahead , venture debt remains a significant option for companies to access capital as they continue to grow and prepare for exits . This provides opportunity for horizon to seek high quality , well sponsored tech and life science companies to add to its portfolio .

Speaker #6: To sum up , as we close out 2025 , we are increasingly excited for our long term future as we prepare to merge with MRC .

Speaker #6: Our alignment with Monro is increasing, and we are truly beginning to tap into Monro as an incredible resource, which should significantly benefit us as we target larger venture loan opportunities for both public and private companies.

Speaker #6: Additionally , we will continue to work diligently on optimizing outcomes with respect to our current portfolio . We are confident that we are taking the right steps to continue to be a leader in the venture lending space .

Paul Seitz: Additionally, we will continue to work diligently on optimizing outcomes with respect to our current portfolio. We are confident that we are taking the right steps to continue to be a leader in the venture lending space. These steps will enable us to originate larger venture loans to high quality, fast growing public and private companies and expand our portfolio over the longer term. This should lead to increased NII over time and ultimately additional value for shareholders. With that, I will now turn the call over to our Chief Financial Officer, Dan Trolio.

Speaker #6: These steps will enable us to originate larger venture loans to high-quality, fast-growing public and private companies and expand our portfolio over the longer term.

Speaker #6: This should lead to increased NII over time . And ultimately additional value for shareholders . With that , I will now turn the call over to our Chief Financial Officer , Daniel Trolio .

Speaker #7: Thanks , Paul , and good morning , everyone . Along with the hard work being accomplished to get the merger across the finish line as well as build up our originations pipeline , we further strengthen our balance sheet during the quarter .

Dan Trolio: Thanks Paul and good morning everyone. Along with the hard work being accomplished to get the merger across the finish line, as well as build up our originations pipeline, we further strengthened our balance sheet during the quarter. As Mike mentioned, we successfully raised $40 million through the issuance of our 5.5% convertible notes due 2030 and used the proceeds to retire our Horizon Funding Trust asset-backed notes which had an interest rate of just over 7.5%. Additionally, we continue to utilize our at-the-market equity program to successfully and accretively sell over 1.5 million shares in the quarter, raising an additional $10 million of equity. These actions demonstrate our continued ability to opportunistically access the debt and equity markets. In addition, we continue to diligently work with all of our portfolio companies to optimize outcomes for our investments and improve our credit quality.

Speaker #7: As Mike mentioned , we successfully raised $40 million through the issuance of our 5.5% convertible notes due 2030 and use the proceeds to retire our horizon Funding trust asset backed notes , which had an interest rate of just over 7.5% .

Speaker #7: Additionally , we continue to utilize our ATM program to successfully and increasingly sell over 1.5 million shares in the quarter , raising an additional 10 million of equity .

Speaker #7: These actions demonstrate our continued ability to opportunistically access the debt and equity markets . In addition , we continue to diligently work with all of our portfolio companies to optimize outcomes for our investments and improve our credit quality .

Speaker #7: As such , we believe we remain well positioned to grow our portfolio in the coming quarters and create additional value for our shareholders .

Dan Trolio: As such, we believe we remain well positioned to grow our portfolio in the coming quarters and create additional value for our shareholders moving forward. As of September 30, we had $151 million in available liquidity consisting of $130 million in cash and $21 million in funds available to be drawn under our existing credit facilities. We currently have no borrowings outstanding under our $150 million KeyBanc credit facility, $181 million outstanding on our $250 million New York Life credit facility, and $90 million outstanding on our $200 million Nuveen credit facility, leaving us with ample capacity to grow our portfolio of debt investments. Our debt to equity ratio stood at 1.36 to 1 as of September 30 and netting out cash on our balance sheet, our net leverage was 0.94 to 1, below our target leverage based on our cash position and our borrowing capacity on our credit facilities.

Speaker #7: Moving forward . As of September 30th , we had 151 million in available liquidity , consisting of 130 million in cash and 21 million in funds available to be drawn under our existing credit facilities .

Speaker #7: We currently have no borrowings outstanding under 150 million . KeyBank credit Facility 181 million . Outstanding on our 250 million New York Life credit facility and 90 million outstanding on our 200 million Nuveen Credit Facility , leaving us with ample capacity to grow our portfolio of debt investments .

Speaker #7: Our debt to equity ratio stood at 1.36 to 1 as of September 30th , and netting out cash in our balance sheet , our net leverage was 0.94 to 1 below our target leverage .

Speaker #7: Based on our cash position and our borrowing capacity on our credit facilities . Our potential new investment capacity as of September 30th was 460 million .

Dan Trolio: Our potential new investment capacity as of September 30 was $460 million. Turning to our operating results for the third quarter, we earned investment income of $26 million compared to $25 million in the prior year period, primarily due to higher interest income and fee income on our debt investment portfolio. Our debt investment portfolio on a net cost basis stood at $585 million as of September 30 compared to $636 million as of June 30, 2025. For the third quarter of 2025, we achieved onboarding yields of 12.2% compared to 12% achieved in the second quarter of 2025. Our loan portfolio yield was 18.6% for the third quarter compared to 15.9% for last year's third quarter. Total expenses for the quarter were $12 million compared to $12.4 million in Q3 2024.

Speaker #7: Turning to our operating results for the third quarter , we earned investment income of 26 million , compared to 25 million in the prior year period , primarily due to higher interest income and fee income on our debt investment portfolio .

Speaker #7: Our debt investment portfolio on a net cost basis stood at 585 million as of September 30th , compared to 636 million as of June 30th , 2025 .

Speaker #7: For the third quarter of 2025 , we achieved onboarding yields of 12.2% compared to 12% achieved in the second quarter of 2025 . Our loan portfolio yield was 18.6% for the third quarter , compared to 15.9% for last year's third quarter .

Speaker #7: Total expenses for the quarter were 12 million , compared to 12.4 million in the third quarter of 24 . Our interest expense of 7.9 million was comparable to last year's third quarter , while our base management fee was 2.7 million , 0.2 million lower than our prior year period due to a smaller portfolio .

Dan Trolio: Our interest expense of $7.9 million was comparable to last year's third quarter, while our base management fee was $2.7 million, $2 million lower than our prior year period due to a smaller portfolio. We received no performance-based incentive fees in the third quarter as we continue to experience the deferral of incentive fees otherwise earned by our Advisor under our incentive fee cap and deferral mechanism. While we expect that the Advisor will return to earning incentive fees, as we previously mentioned, the Advisor has agreed to waive a portion of any incentive fee in a quarter where we do not earn our distributions in 2025. Net investment income for Q3 2025 was $0.32 per share compared to $0.28 per share in Q2 2025 and $0.32 per share for Q3 2024. The company's undistributed spillover income as of September 30 was $0.93 per share.

Speaker #7: We received no performance based incentive fees in the third quarter as we continue to experience the deferral of incentive fees otherwise earned by our advisor under our incentive fee cap and deferral mechanism .

Speaker #7: While we expect that the advisor will return to earning incentive fees , as we previously mentioned , the advisor has agreed to waive a portion of any incentive fee in a quarter where we do not earn our distributions in 2025 .

Speaker #7: Net investment income for the third quarter of 2025 was $0.32 per share , compared to $0.28 per share in the second quarter of 25 and $0.32 per share for the third quarter of 24 .

Speaker #7: The company's undistributed spillover income as of September 30th was $0.93 per share . Based upon our outlook and undistributed spillover income . Our board declared monthly distributions of $0.11 per share for January , February and March 2026 .

Dan Trolio: Based upon our outlook and undistributed spillover income, our board declared monthly distributions of $0.11 per share for January, February, and March 2026. To summarize our portfolio activities for the quarter, new originations totaled $15 million. We also purchased for $23 million additional investments via the acquisition of the venture debt portfolio of a former co-lender. These were offset by $14 million in scheduled principal payments and $61 million in principal prepayments and partial paydowns. We ended the quarter with a total investment portfolio of $603 million as of September 30. The portfolio consisted of debt investments in 39 companies with an aggregate fair value of $560 million and a portfolio of warrant equity and other investments in 102 companies with an aggregate fair value of $43 million.

Speaker #7: The Summarize our portfolio activities for the quarter , new originations totaled 15 million . We also purchased for 23 million additional investments via the acquisition of the venture debt portfolio of a former Callender .

Speaker #7: These were offset by 14 million in scheduled principal payments and 61 million in principal prepayments and partial paydowns . We ended the quarter with a total investment portfolio of 603 million .

Speaker #7: As of September 30th , the portfolio consisted of debt investments and 39 companies with an aggregate fair value of 560 million and a portfolio of warrant , equity and other investments in 102 companies with an aggregate fair value of 43 million .

Speaker #7: Our Nav as of September 30th was $7.12 per share , compared to $6.75 as of June 30th , 2025 , and $9.06 as of September 30th , 2024 .

Dan Trolio: Our NAV as of September 30 was $7.12 per share, compared to $6.75 as of June 30, 2025, and $9.06 as of September 30, 2024. The $0.37 increase in NAV on a quarterly basis was primarily due to net investment income and positive adjustments to fair value, partially offset by our paid distributions. As we've consistently noted, nearly 100% of our outstanding principal amount of our debt investments bear interest at floating rates. Of those investments, almost 60% are already at their interest rate floors, which should mitigate the impact of decreasing interest rates. This concludes our opening remarks. We'll be happy to take questions you may have at this time.

Speaker #7: The 37 cent increase in Nav on a quarterly basis was primarily due to net investment income and positive adjustments to fair value , partially offset by our paid distributions .

Speaker #7: As we've consistently noted , nearly 100% of our outstanding principal amount of our debt investments bear interest at floating rates . Of those investments , almost 60% are already at their interest rate .

Speaker #7: Floors , which should mitigate the impact of decreasing interest rates . This concludes our opening remarks . We'll be happy to take questions you may have at this time .

Speaker #3: Thank you . Ladies and gentlemen , we will now begin with the question and answer session . If you would like to ask a question , please press star and one on your telephone keypad .

Operator: Thank you, ladies and gentlemen. We will now begin with the question and answer session. If you would like to ask a question, please press Star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Douglas Harter with UBS. Please go ahead.

Speaker #3: A confirmation tone will indicate your line is in the question queue . You may press star and two . If you would like to remove your question from the queue for participants using speaker equipment , it may be necessary to pick up your handset before pressing the star .

Speaker #3: Keyes: Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Douglas Harter with UBS.

Speaker #3: Please go ahead .

Speaker #8: Hi , this is Corey Johnson on for Doug Harter . So it sounds like the VC market is heating up and there are more exits out there in the market .

[Company Representative]: Hi, this is Corey Johnson on for Doug Carter. It sounds like the VC market is heating up and there are more exits out there in the market. Early payoffs have been strong for the last two quarters. I believe you mentioned that for Q4 those payoffs might be a little bit more limited. What do you expect that trend to be going forward maybe into 2026, and is it related to the government shutdown where we think that perhaps the Q4 payoffs might be a little bit more limited?

Speaker #8: And early payoffs have been strong for the last two quarters . But I believe you mentioned that for for Q that those payoffs might be a little bit more limited .

Speaker #8: I guess . What do you expect that trend to be going forward , maybe into 2026 ? And is it is it related to the government shutdown where we think we think that perhaps the for Q payoffs might be a little bit more limited ?

Speaker #6: Yeah . Hey , this is this is Paul Seitz . I don't think that the government shutdown necessarily is going to impact any payoffs or prepayments or anything like that .

Paul Seitz: Yeah, this is Paul Seitz. I don't think that the government shutdown necessarily is going to impact any payoffs or prepayments or anything like that. I would say that it was a little bit higher this quarter, but we expect probably our payoffs and early prepayments to revert to any sort of historical standard. The exit markets are heating up, which is a good thing. I think right now we're just sort of a little bit of a wait and see period.

Speaker #6: I would say that it was a little bit , higher this quarter , but we expect probably our our payoffs and and early prepayments to revert to a sort of historical standard .

Speaker #6: The exit markets are heating up , which is a good thing . But , you know , I think it's right now we're just sort of a little bit of a wait and see period .

Speaker #8: Got it . And during the quarter , you know , the net leverage your net leverage came came down just , you curious , are you seeing you know , you mentioned that you think your portfolio will grow next quarter and you're you're starting to see more deals come across your table .

[Company Representative]: Got it. During the quarter, the net leverage, your net leverage came down. Just curious, are you seeing, I know you mentioned that you think your portfolio will grow next quarter and you're starting to see more deals come across your table, but I was just sort of curious in terms of now that you are seeing more deals, what is the credit quality behind them? Are they names that you like or just more names that you seem to be looking to pass on? Obviously, it's a little bit difficult to exactly figure out the trajectory of where your leverage will go. How long do you think it might be before you perhaps reach your target leverage again?

Speaker #8: But just sort of curious in terms of like now that you are seeing more deals , what is sort of the credit quality behind them ?

Speaker #8: Are they are they names that you like or are you , you know , just more names that you seem to be you're looking to pass on .

Speaker #8: And then , you know , obviously it's a little bit difficult to exactly , you know , figure out the trajectory of , of your of where , you your leverage will go .

Speaker #8: But you know , how long do you think it might be before you perhaps reach your , your target leverage again ?

Speaker #7: Yeah . So , you know , as we as we say , every quarter , our target leverage is around 1.2 to 1.3 times net of cash .

Dan Trolio: Yeah. As we say every quarter, our target leverage is around 1.2 to 1.3 times net of cash. This quarter did come down a bit where we're at 0.94 to 1. As we talked in our prepared remarks, the pipeline is growing and originations, we expect originations to exceed prepayments going forward. I think when we look at the leverage, we should be getting back to that 1.2, 1.3x over the next quarter or two.

Speaker #7: This quarter . It did come down a bit where we're at 0.94 to 1 . So as we , you know , talked where , you know in our in our prepared remarks that the pipeline is growing and originations , you know , we expect originations to exceed prepayments going forward .

Speaker #7: And so I think when we look at the leverage , we should be getting back to that 1.2 , 1.3 times over the next quarter or two .

Speaker #8: Great . Thank you .

[Company Representative]: Great, thank you.

Speaker #3: Thank you . A reminder to all participants . You may press star one to ask a question . Our next question comes from Paul Johnson with KB .

Operator: Thank you. A reminder to all participants, you may press star and one to ask a question. Our next question comes from Paul Johnson with KBW. Please go ahead.

Speaker #3: Please go ahead .

Speaker #9: Yeah thanks . Good morning . Thanks for taking my questions . Just on the the debt portfolio yield or just the portfolio yield in general .

Paul Johnson: Yeah, thanks. Good morning. Thanks for taking my questions. Just on the debt portfolio yield or just the portfolio yield in general? Sounds like you're pretty confident about the onboarding yields coming in. Obviously, the income has been running higher with some one-time items and just running higher with the prepayments. I mean, the 18.9% yield, how should we be thinking about that? Is that sustainable going forward or what's kind of like the longer-term sort of target, I guess, based on what you're seeing in the pipeline?

Speaker #9: Sounds like you're pretty confident about the onboarding yields coming in. But obviously, the income has been running higher, with some one-time items just running higher with the prepayments.

Speaker #9: I mean the the 18.9% yield , I mean , how should we be thinking about that . Is that sustainable going forward or you know , what's what's kind of like the , you know , the I guess the longer term sort of target , I guess , based on what you're seeing in the pipeline .

Speaker #7: Yeah . So I would I would point you to our historical portfolio yield , which we've averaged around 14.5 to 15% . That's a more normalized yield .

Dan Trolio: Yeah. I would point you to our historical portfolio yield, which we've averaged around 14.5% to 15%. That's a more normalized yield. I'll just point out that is the portfolio yield after prepayments and one-time events. As we mentioned, the onboarding yield has been about 12% to 12.5% for the past few quarters, probably most likely be around that going forward.

Speaker #7: And then I'll just point out that is the portfolio yield . After prepayments . And , you know , one time events . And as we mentioned , you know , the onboarding yield has been about 12 , 12.5% for the past few quarters .

Speaker #7: Probably most likely be around that going forward .

Speaker #9: Got it . Okay . Thank you . That's helpful . And then , you know , maybe you could just take us through the debt portfolio that you acquired during the quarter .

Paul Johnson: Got it. Okay, thank you, that's helpful. Maybe you could just take us through the debt portfolio that you acquired during the quarter. Kind of what transpired there. It looks like you were able to buy and potentially at a discount to where I guess had previously been marked, but anything, any color on that would be helpful there.

Speaker #9: Kind of what transpired there . I mean , it looks like you were able to buy it at a potentially a discount to where it , I guess , had previously been marked .

Speaker #9: But yeah , any anything , any color on that would be helpful to hear .

Speaker #7: Yeah . Correct . We were able to acquire a , you know , a venture debt portfolio from one of our co lenders that we had created a sidecar fund SMA back in 2021 with a $300 million total commitment .

Dan Trolio: Yeah, correct. We were able to acquire a venture debt portfolio from one of our co-lenders that we had created a Sidecar Fund SMA back in 2021. With the $300 million total commitment, we were able to complete invest that completely. It was in runoff. Over the past year or so, when there are fewer names remaining, we were working with that co-lender on names that, you know, obviously we've already invested in and negotiated a price. They were a co-lender in venture debt, it was their only venture debt portfolio, and they were looking to just exit the market. Obviously, we were then the natural buyer.

Speaker #7: We were able to complete invest that completely . And so it was in runoff . And then over the past year or so , when there were fewer names remaining , we were working with that lender on names that , you know , obviously we've already invested in and negotiated a price .

Speaker #7: They were a Callender and venture debt was their only venture debt portfolio , and they were looking just to exit the market . And obviously we were then the natural buyer .

Speaker #9: Got it . Okay . It's interesting . And then maybe just , you know , it'd be helpful to hear , you know , kind of what is , you know , as we get into next year and get beyond the fee waivers , like what is kind of the idea with spillover , it still looks like there's a decent amount $0.93 , but I mean , would you like to just continue to work that down potentially further before evaluating , you know , the distribution or is that something you'd like to kind of maintain ?

Paul Johnson: Got it. Okay, interesting. Maybe it'd be helpful here, kind of what is, as we get into next year and get beyond the fee waivers, what is the idea with spillover? It still looks like there's a decent amount, $0.93. Would you like to just continue to work that down potentially further before evaluating the distribution, or is that something you'd like to maintain?

Speaker #7: Yeah. So I'll just remind you, every quarter we discuss the distribution and take into account the current income level and the future level of the Horizon platform.

Dan Trolio: Yeah. I'll just remind you every quarter we discuss the distribution and take into account the current income rate level and the future level of the Horizon platform and look at the spillover, and you know, we'll determine the amount of distribution on a quarterly basis.

Speaker #7: And look at the spillover . And , you know , we'll determine the amount of distribution on a quarterly basis .

Speaker #9: Got it . Okay . That's all for me . Thank you very much .

Paul Johnson: Got it. Okay, that's all for me. Thank you very much.

Speaker #3: Thank you . Our next question comes from Christopher Nolan with Ladenburg Thalmann . Please go ahead .

Operator: Thank you. Our next question comes from Christopher Nolan with Ladenburg Thalmann. Please go ahead.

Speaker #10: Hi. Thank you for taking my question. Assuming the deal with Mark closes, is the focus going to be on larger credits going forward?

[Analyst]: Hi, thank you for taking my question. Assuming the deal with Monroe Capital Corporation closes, is the focus going to be on larger credits going forward, and what does that do to the yield, if so.

Speaker #10: And what does that do to the yield? If so?

Speaker #7: That will be one . One of the benefits with a larger balance sheet you can hold larger position and stay diversified as we focus on our , you know , top one , top five , top ten diversification .

Dan Trolio: That will be one of the benefits. With a larger balance sheet, you can hold larger positions and stay diversified as we focus on our top one, top five, top ten diversification. There will still be venture debt deals in the market that we have played in. We'll just be able to hold larger pieces of it, and we don't expect the yields to change dramatically.

Speaker #7: But there will still be venture debt deals in the market that , you know , we have played in . We'll just be able to hold larger pieces of it .

Speaker #7: And so we don't expect the yields to change dramatically .

Speaker #10: Great. Given the stock price is trading below book, what’s the plan on using the common stock at-the-money (ATM) going forward?

[Analyst]: Great. Given the stock price is trading below book now, what's the plan on using the common stock at-the-market equity program going forward?

Speaker #7: Same plan as usual . You know we look at our originations pipeline . We look at our liquidity and our capacity and look to pull as many levers as possible to originate and grow the portfolio where we can .

Dan Trolio: Same plan as usual. You know, we look at our origination pipeline, we look at our liquidity and our capacity, and look to pull as many levers as possible to originate and grow the portfolio where we can. Obviously, we're trading below book. We won't be able to utilize the at-the-market equity program.

Speaker #7: You know, obviously, we're trading below book. We won't be able to utilize the ATM.

Speaker #10: Okay . And then given assuming the Monroe deal closes and you have a much larger balance sheet , any consideration in terms of revisiting the base management fee , I know it is 2% for the first $250 million in assets , and then there's a break point to 160 Bips above 250 million .

[Analyst]: Okay. Given assuming the Monroe deal closes, you're going to have a much larger balance sheet. Any consideration in terms of revisiting the base management fee? I know it is 2% for the first $250 million in assets and then there's a break point to 160 bps above $250 million. Even at 160 bps, you're sort of at the high end of the range for BDCs and Journals Day. Any comment on that?

Speaker #10: And even at 160 bips , you're sort of at the high end of the range for BDCs in general . Today . Any comment on that ?

Speaker #7: Yeah . So , you know , we have a our normal 15 C process that we do on an annual basis and we review all of our competitors .

Dan Trolio: Yeah, we have our normal 15C process that we do on an annual basis, and we review all of our competitors. Everybody calculates it differently, has different hurdles and different percentages on a blended effective cost percentage. We are within the average of our peers. We look at it every year through that 15C process, and we'll continue to do that going forward and make sure we're within market.

Speaker #7: And when you know everybody calculates it different , have has different , you know , hurdles and different percentages on a blended effective cost percentage .

Speaker #7: We are within , you know , within the the average of our peers . We look at it every year through that 15 C process .

Speaker #7: And we'll continue to do that going forward . And make sure we're we're within market . .

Speaker #10: Great . And then any target ROE for the new assets coming on from Monroe .

[Analyst]: Is there any target ROE for the new assets coming on from Monroe?

Speaker #7: We don't have any targeted new assets right now that are coming on . You know the the Monroe platform will help us get access to larger assets and potentially some additional assets .

Dan Trolio: We don't have any targeted new assets right now that are coming on. The Monroe platform will help us get access to larger assets and potentially some additional assets, but nothing specific today.

Speaker #7: But nothing specific today .

Speaker #10: Yeah . No , actually , I phrased it poorly for the new capital coming in from the Monroe deal . What is the target ROE or return hurdle that you're looking for to get from that new capital ?

[Analyst]: Actually, I phrased it poorly. For the new capital coming in from the Monroe deal, what is the target ROE or return hurdle that you're looking for to get from that new capital?

Speaker #7: You know , it's basically , you know , stick to what we do . The venture debt . Model that has a high yielding portfolio and that will drive the ROE .

Dan Trolio: It's basically stick to what we do, the venture debt model that has a high yielding portfolio and that will drive the ROE. We don't have a specific targeted ROE on that capital.

Speaker #7: We don't have a specific targeted ROE on that capital .

Speaker #10: Okay . Thank you .

[Analyst]: Okay, thank you.

Speaker #3: Thank you . Ladies and gentlemen . As there are no further questions , I would now like to hand the conference over to Michael Balkin for the closing comments .

Operator: Thank you, ladies and gentlemen. As there are no further questions, I would now like to hand the conference over to Michael Balkin for the closing comments.

Speaker #5: Thank you all for joining us this morning. We appreciate your continued interest in Horizon Technology Finance, and we look forward to speaking with you again soon.

Michael Balkin: Thank you all for joining us this morning. We appreciate your continued interest and support in Horizon Technology Finance Corporation, and we look forward to speaking with you again soon. This will conclude our call.

Speaker #5: This will conclude our call .

Speaker #3: Thank you , ladies and gentlemen . The Conference of Horizon Technology Finance Corporation has now concluded . Thank you for your participation . Participation .

Operator: Thank you. Ladies and gentlemen, the conference of Horizon Technology Finance Corporation has now concluded. Thank you for your participation. You may now disconnect your lines.

[Analyst]: SA.