Company Performance - Horizon Technology Finance reported quarterly earnings of $0.28 per share, matching the Zacks Consensus Estimate, but down from $0.36 per share a year ago [1] - The company posted revenues of $24.52 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 0.26%, but down from $25.68 million year-over-year [2] - Over the last four quarters, the company has not surpassed consensus EPS estimates and has topped consensus revenue estimates only once [2][3] Stock Movement and Outlook - Horizon Technology Finance shares have declined approximately 13.9% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The company's earnings outlook, including current consensus earnings expectations for upcoming quarters, will be crucial for stock price movement [4] - The current consensus EPS estimate for the coming quarter is $0.28 on revenues of $24.74 million, and $1.11 on revenues of $99.01 million for the current fiscal year [7] Industry Context - The Financial - SBIC & Commercial Industry, to which Horizon Technology Finance belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, indicating potential challenges [8] - Historical data suggests that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than a factor of 2 to 1 [8]

Financial Data and Key Metrics Changes - The merger is expected to provide Horizon with an estimated $165 million of incremental equity capital based on preliminary NAV estimates as of June 30, 2025, enhancing the combined company's estimated NAV to approximately $446 million [6][13]. - The transaction is structured to be accretive to net investment income, with expected G&A savings of approximately $2.5 million, translating to a 30% reduction in operating expenses compared to standalone entities [17]. Business Line Data and Key Metrics Changes - The merger will allow Horizon to leverage the additional capital to provide more investment capital, potentially increasing core net investment income growth [13][14]. - Horizon plans to continue providing venture debt to private companies while also expanding its lending to public small-cap companies, indicating a diversification of its business lines [15][16]. Market Data and Key Metrics Changes - The merger is anticipated to unlock shareholder value, with MRCC shareholders expected to realize a 33% premium to the market trading price as of August 5, 2025 [8][12]. - The combined platform is expected to enhance trading liquidity and provide a larger capital base for larger deals, improving the overall market position of Horizon [14][32]. Company Strategy and Development Direction - The merger is seen as a strategic move to optimize direct lending capabilities and enhance scale, operating efficiencies, and growth potential [5][10]. - Horizon aims to rapidly deploy the proceeds from the merger into attractive portfolio assets while maintaining a focus on operational efficiency and prudent capital deployment [16][17]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the merger will create a better business development company with more capital, scale, and earnings power, ultimately benefiting all shareholders [21][22]. - The management team is aligned with shareholders through fee waivers in the first year, emphasizing a commitment to shareholder success [17]. Other Important Information - The merger is expected to close in December 2025, contingent on regulatory approvals and shareholder votes [10][21]. - The combined board structure post-merger will include independent directors from both companies, ensuring balanced governance [11]. Q&A Session Summary Question: Summary of the transaction steps - The MRCC portfolio will be sold to Monroe's non-traded BDC, with cash proceeds going to Horizon [24]. Question: Nature of the transaction from Horizon's perspective - The transaction is viewed as a cost-efficient equity raise for Horizon [26]. Question: Targets for net investment income yield - No hard targets are set, but the focus will be on running the company efficiently [28]. Question: Timing for capital deployment - Capital is expected to be deployed rapidly, aiming for neutral EPS impact in the first year [29][31]. Question: Impact on deal sizes post-merger - The merger allows for larger deals due to an increased capital base [32]. Question: Lockup for Monroe shareholders - No lockup is contemplated for Monroe shareholders after receiving Horizon shares [40]. Question: G&A expense synergies details - Combined G&A expenses prior to synergies were approximately $8.4 million, expected to reduce to $5.8 million post-merger [41].

```markdown [PART I: FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201%2E%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Horizon Technology Finance Corporation, detailing financial position, operational results, cash flows, and investment schedules for the periods ended June 30, 2025, showing overall decreases in assets and net asset value [Consolidated Statements of Assets and Liabilities](index=4&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) As of June 30, 2025, total assets decreased to **$726.8 million** from **$821.8 million** at December 31, 2024, primarily due to reduced fair value of investments, leading to a decline in total net assets to **$283.8 million** and net asset value per common share to **$6.75** Consolidated Assets and Liabilities (in thousands) | Financial Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Investments at Fair Value** | $622,653 | $697,891 | | **Total Assets** | $726,797 | $821,833 | | **Total Liabilities** | $443,002 | $485,650 | | **Total Net Assets** | $283,795 | $336,183 | | **Net Asset Value Per Common Share** | $6.75 | $8.43 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, total investment income decreased to **$24.5 million**, with net investment income declining to **$11.4 million**, and a net decrease in net assets from operations of **$20.8 million** due to significant net realized and unrealized losses Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Investment Income** | $24,520 | $25,678 | $49,036 | $51,807 | | **Total Expenses** | $12,698 | $12,407 | $26,117 | $25,551 | | **Net Investment Income** | $11,449 | $12,914 | $22,169 | $25,520 | | **Net Realized and Unrealized Loss** | $(32,226) | $(22,047) | $(64,382) | $(25,999) | | **Net Decrease in Net Assets from Operations** | $(20,777) | $(9,133) | $(42,213) | $(479) | | **Net Investment Income Per Share - Basic** | $0.28 | $0.36 | $0.54 | $0.74 | | **Net Decrease in Net Assets Per Share - Basic** | $(0.50) | $(0.26) | $(1.04) | $(0.01) | [Consolidated Statements of Changes in Net Assets](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) The company's net assets decreased from **$336.2 million** at year-end 2024 to **$283.8 million** as of June 30, 2025, primarily due to a net decrease from operations and distributions declared, partially offset by common stock issuances - Net assets decreased by **$52.4 million** in the first six months of 2025, from **$336.2 million** to **$283.8 million**[13](index=13&type=chunk) - Key activities affecting net assets in the first six months of 2025 include a **$42.2 million** net decrease from operations, **$27.4 million** in distributions declared, and **$17.2 million** raised from stock issuances (including for debt extinguishment and dividend reinvestment)[13](index=13&type=chunk)[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities was **$36.4 million**, a decrease from the prior year, while net cash used in financing activities was **$56.1 million**, resulting in a net decrease in cash of **$19.7 million** Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $36,417 | $58,330 | | **Net Cash Used in Financing Activities** | $(56,134) | $(17,178) | | **Net (Decrease) Increase in Cash** | $(19,717) | $41,152 | | **Cash, Cash Equivalents and Restricted Cash, End of Period** | $81,151 | $116,874 | - Non-cash financing activities for the six months ended June 30, 2025, included the conversion of **$12.5 million** of debt into common stock[16](index=16&type=chunk) [Consolidated Schedules of Investments](index=9&type=section&id=Consolidated%20Schedules%20of%20Investments) As of June 30, 2025, the total investment portfolio fair value was **$622.7 million**, primarily composed of debt investments, with concentrations in Life Science, Technology, and Healthcare Information & Services sectors, detailing each investment's cost, fair value, interest rate, and maturity Total Portfolio Investment Assets (in thousands) | Date | Cost | Fair Value | | :--- | :--- | :--- | | **June 30, 2025** | $745,848 | $622,653 | | **December 31, 2024** | $766,774 | $697,891 | Portfolio Composition by Fair Value as of June 30, 2025 (in thousands) | Investment Type | Fair Value | % of Net Assets | | :--- | :--- | :--- | | **Non-Affiliate Debt Investments** | $578,370 | 203.8% | | **Non-Affiliate Warrant Investments** | $21,629 | 7.6% | | **Non-Affiliate Equity** | $5,492 | 1.9% | | **Non-Controlled Affiliate Investments** | $6,707 | 2.4% | | **Controlled Affiliate Investments** | $10,455 | 3.7% | | **Total Portfolio** | **$622,653** | **219.4%** | [Notes to the Consolidated Financial Statements](index=35&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section details accounting policies and financial data, covering organization, related party transactions, investment and borrowing breakdowns, fair value measurement, and significant subsequent events [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operational results, highlighting decreased investment income, portfolio changes, liquidity, and key subsequent events including a merger agreement - The company's investment objective is to maximize total return by generating current income from debt investments and capital appreciation from warrants in development-stage companies within its Target Industries (technology, life science, healthcare information and services, and sustainability)[237](index=237&type=chunk) - As of June 30, 2025, **93.9%** of the debt investment portfolio at fair value consisted of Senior Term Loans[237](index=237&type=chunk) - The company has elected to be regulated as a Business Development Company (BDC) and treated as a Regulated Investment Company (RIC) for tax purposes, allowing it to avoid corporate-level income tax by distributing at least **90%** of its taxable income[238](index=238&type=chunk)[336](index=336&type=chunk) [Portfolio Composition and Investment Activity](index=58&type=section&id=Portfolio%20Composition%20and%20Investment%20Activity) As of June 30, 2025, the total portfolio fair value was **$622.7 million**, with debt investments comprising **93.0%**, and the portfolio's weighted average credit rating slightly decreased from 3.1 to 3.0 Portfolio Composition by Fair Value (in thousands) | Investment Type | June 30, 2025 | % of Total | Dec 31, 2024 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Debt investments | $579,171 | 93.0% | $638,779 | 91.5% | | Warrants | $21,629 | 3.5% | $18,277 | 2.6% | | Other investments | $8,451 | 1.4% | $14,637 | 2.1% | | Equity | $13,402 | 2.1% | $26,198 | 3.8% | | **Total** | **$622,653** | **100.0%** | **$697,891** | **100.0%** | Debt Investment Credit Rating by Fair Value (in thousands) | Credit Rating | June 30, 2025 | % of Debt Portfolio | Dec 31, 2024 | % of Debt Portfolio | | :--- | :--- | :--- | :--- | :--- | | 4 (Highest Quality) | $70,411 | 12.2% | $159,944 | 25.1% | | 3 (Standard Risk) | $467,726 | 80.8% | $419,621 | 65.7% | | 2 (Increased Risk) | $14,125 | 2.4% | $48,760 | 7.6% | | 1 (Highest Risk) | $26,909 | 4.6% | $10,454 | 1.6% | | **Total** | **$579,171** | **100.0%** | **$638,779** | **100.0%** | [Consolidated Results of Operations](index=60&type=section&id=Consolidated%20Results%20of%20Operations) For Q2 2025, total investment income fell **4.5%** YoY to **$24.5 million**, and net investment income decreased to **$11.4 million**, resulting in a net decrease in net assets of **$20.8 million** for the quarter due to realized and unrealized losses - For Q2 2025, total investment income decreased by **$1.2 million** YoY, primarily due to a decrease in the Prime Rate, which is the base rate for most of the company's variable rate debt investments[251](index=251&type=chunk)[252](index=252&type=chunk) - Interest expense for Q2 2025 increased by **$0.3 million** YoY to **$8.2 million**, mainly due to a higher effective cost of debt, partially offset by a slight decrease in average borrowings[259](index=259&type=chunk) - The Incentive Fee Cap and Deferral Mechanism reduced the performance-based incentive fee expense by **$2.3 million** in Q2 2025 and **$4.4 million** in the first six months of 2025[261](index=261&type=chunk)[278](index=278&type=chunk) - For Q2 2025, the company realized a net loss of **$9.3 million**, primarily from the settlement of two debt investments, and recorded net unrealized depreciation of **$22.2 million**, driven by markdowns on seven debt investments[264](index=264&type=chunk)[265](index=265&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had **$77.9 million** in cash and money market funds, with total borrowings outstanding of **$425.1 million**, and believes its current liquidity is sufficient to meet commitments for at least the next 12 months - As of June 30, 2025, the company had **$77.9 million** in cash and investments in money market funds, down from **$97.5 million** at year-end 2024[283](index=283&type=chunk) Borrowings Outstanding (in thousands) | Facility/Note | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Key Facility | $— | $— | | NYL Facility | $181,000 | $181,000 | | Nuveen Facility | $90,000 | $75,000 | | 2022 Asset-Backed Notes | $34,169 | $81,078 | | 2027 Notes | $57,500 | $57,500 | | 2026 Notes | $57,500 | $57,500 | | 2031 Convertible Notes | $7,500 | $20,000 | | **Total Borrowings (Net)** | **$425,138** | **$467,904** | - During the six months ended June 30, 2025, the company sold **404,305 shares** under its ATM program, raising net proceeds of approximately **$3.6 million**[286](index=286&type=chunk) - As of June 30, 2025, the company had unfunded commitments to extend credit totaling **$149.0 million**[210](index=210&type=chunk)[330](index=330&type=chunk) [Recent Developments](index=71&type=section&id=Recent%20Developments) Subsequent to quarter-end, the company engaged in significant activities including warrant exercises, convertible note conversions, principal prepayments, an increased stock repurchase authorization, and a merger agreement with Monroe Capital Corporation - **Merger Agreement:** On August 7, 2025, the company entered into a merger agreement with Monroe Capital Corporation (MRCC), where MRCC will merge into the company, subject to shareholder approvals and other conditions[230](index=230&type=chunk)[366](index=366&type=chunk) - **Portfolio Activity:** Received prepayments totaling **$30.2 million** from Noodle Partners, Pivot Bio, and Native Microbials in July 2025[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - **Capital Activity:** Converted **$3.75 million** of 2031 Convertible Notes into **496,256 shares** of common stock on July 10, 2025[224](index=224&type=chunk)[360](index=360&type=chunk) - **Stock Repurchase Program:** On August 5, 2025, the Board increased the stock repurchase authorization from **$5 million** to **$10 million**[228](index=228&type=chunk)[364](index=364&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk, with **99%** of its debt investments having floating rates, and a sensitivity analysis indicates a **$4.1 million** annual increase in net assets for a 100 basis point rate increase, while also acknowledging risks from inflation, market volatility, and supply chain disruptions - As of June 30, 2025, **99%** of the company's debt investments bore interest at floating rates, making its income sensitive to changes in interest rates[367](index=367&type=chunk) Annual Impact of Interest Rate Changes on Net Assets (in thousands) | Change in Basis Points | Change in Net Assets (1) | | :--- | :--- | | Up 300 basis points | $15,941 | | Up 100 basis points | $4,145 | | Down 100 basis points | $(1,709) | | Down 300 basis points | $(3,726) | (1) Excludes the impact of incentive fees - The company acknowledges risks from inflation, market volatility, and supply chain issues, which could affect the profit margins of its portfolio companies[373](index=373&type=chunk) [Item 4. Controls and Procedures](index=74&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - As of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[374](index=374&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter ended June 30, 2025[375](index=375&type=chunk) [PART II: OTHER INFORMATION](index=74&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=74&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings, nor is it aware of any material legal proceedings being threatened against it - The company reports no current material legal proceedings against it[376](index=376&type=chunk) [Item 1A. Risk Factors](index=74&type=section&id=Item%201A%2E%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors disclosed in the 2024 Form 10-K have occurred during the six months ended June 30, 2025[377](index=377&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities during the period - None[378](index=378&type=chunk) [Item 3. Defaults Upon Senior Securities](index=75&type=section&id=Item%203%2E%20Defaults%20Upon%20Senior%20Securities) This section reports that there were no defaults upon senior securities during the period - None[379](index=379&type=chunk) [Item 5. Other Information](index=75&type=section&id=Item%205%2E%20Other%20Information) During the fiscal quarter ended June 30, 2025, none of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or any non-Rule 10b5-1 trading arrangements - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the quarter ended June 30, 2025[380](index=380&type=chunk) [Item 6. Exhibits](index=75&type=section&id=Item%206%2E%20Exhibits) This section provides an index of the exhibits filed with the Form 10-Q, including amendments to credit agreements, certifications by the CEO and CFO, and XBRL data files ```

E x p e r i e n c e | S e c u r i t y | C o n s i s t e n c y Overview of Merger Between Horizon Technology Finance Corporation (HRZN) and Monroe Capital Corporation (MRCC) August 7, 2025 1 Forward-Looking Statements and Disclaimers Unless otherwise stated, all financial information and other data presented in this presentation is as of June 30, 2025. Forward-Looking Statements Some of the statements in this presentation constitute forward-looking statements because they relate to future events, future perf ...

[Form 8-K Current Report](index=1&type=section&id=Form%208-K%20Current%20Report) [Item 2.02 Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) Horizon Technology Finance Corporation announced its Q2 2025 investment portfolio update via a furnished press release on July 9, 2025 - The company issued a press release on July 9, 2025, announcing its investment portfolio update for the three months ended June 30, 2025[5](index=5&type=chunk) - The information provided, including Exhibit 99.1, is officially 'furnished' and not 'filed', which has specific legal implications regarding liability under the Exchange Act[6](index=6&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=2&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This section lists Form 8-K exhibits, primarily the July 9, 2025 press release with the financial update Exhibits Furnished | Exhibit No. | Description | | :--- | :--- | | 99.1 | Press Release of the Company dated July 9, 2025 | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | [Signature](index=3&type=section&id=Signature) The report was officially signed and authorized by Michael P. Balkin, CEO, on July 9, 2025 - The report was signed on July 9, 2025, by Michael P. Balkin, Chief Executive Officer[10](index=10&type=chunk)

Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The investment approach focuses on high-quality dividend stocks and assets that provide long-term growth potential, which can significantly contribute to income generation [1]. - A balanced portfolio that includes both growth and income-generating assets can lead to efficient investment income and total returns that align with the S&P 500 [1].

Group 1 - The article presents a bullish perspective on investing in high-quality Business Development Companies (BDCs), highlighting their attractive double-digit yields and uncorrelated income streams [1] - Roberts Berzins has over a decade of experience in financial management, focusing on helping top-tier corporates with financial strategies and large-scale financings [1] - Berzins has contributed to the institutionalization of the REIT framework in Latvia, aiming to enhance the liquidity of pan-Baltic capital markets [1] Group 2 - The article mentions Berzins' involvement in developing national SOE financing guidelines and frameworks to channel private capital into affordable housing [1] - Berzins holds a CFA Charter and an ESG investing certificate, indicating a strong background in investment analysis and sustainable investing [1] - His experience includes an internship at the Chicago Board of Trade, showcasing a diverse financial background despite residing in Latvia [1]

Financial Data and Key Metrics Changes - The company generated net investment income (NII) of $0.27 per share, consistent with the previous quarter but down from $0.38 per share in the same quarter last year [26] - The net asset value (NAV) decreased to $7.57 per share from $8.43 at the end of the previous quarter and $9.64 a year ago, primarily due to fair value adjustments and distributions [27] - Investment income for the first quarter was $25 million, slightly down from $26 million in the prior year period, attributed to lower interest and fee income [24] Business Line Data and Key Metrics Changes - The portfolio at the end of the first quarter stood at $690 million, with new debt investments totaling $100 million and equity investments of $2 million [11] - The debt portfolio yield was 15% for the quarter, compared to 15.6% in the same quarter last year, while onboarding yields were 13%, up from 12.6% in the previous quarter [24][12] - The company funded nine debt investments during the quarter, with a significant portion directed towards life science and technology sectors [11] Market Data and Key Metrics Changes - Approximately $92 billion was invested in VC-backed companies in the first quarter, marking a 19% increase from the previous quarter, driven largely by large AI deals [17] - The exit market for VC-backed tech and life science companies remains nearly shut due to tariff-related uncertainties, impacting investor sentiment [18] - The S&P Biotech Select Industry Index is down 14% year over year, reflecting cooling investor sentiment in the life sciences market [18] Company Strategy and Development Direction - The company aims to grow its portfolio while maintaining a focus on high-quality investments, particularly in the tech and life science sectors [10] - The management remains selective in originating loans due to the current macroeconomic environment, with a commitment to optimizing returns from stressed investments [15] - The partnership with Monroe Capital is expected to enhance capital access and operational support, aiding in portfolio growth [9] Management's Comments on Operating Environment and Future Outlook - The management expressed guarded optimism for 2025, despite macroeconomic headwinds impacting recovery from stressed assets [6] - The company anticipates that the venture debt market will remain active, providing opportunities for investment despite current challenges [10] - Management highlighted the importance of maintaining strong liquidity and a robust balance sheet to navigate the current environment [23] Other Important Information - The company declared regular monthly distributions of $0.11 per share through September 2025, supported by undistributed spillover income of $1 per share [7][26] - The company has a committed backlog of $236 million, providing a solid base for future portfolio growth [8] Q&A Session Summary Question: How is the company managing spillover earnings in the current uncertain environment? - The company plans to continue growing distributions through 2025 and will manage spillover earnings quarterly, with confidence in covering distributions over time [32][34] Question: What is the quality of deals currently being pursued? - The company is seeing a higher bar for transaction selection, focusing on companies with strong operational performance and quality VC backing [36][37] Question: Will the company raise leverage ratios to grow the portfolio? - The target leverage ratio is around 1.2x to 1.3x, with the current ratio at 1.29x, indicating a cautious approach to leverage [41] Question: Is there any discussion about cutting the base management fee? - The company’s base management fee is competitive with industry standards, and it is reviewed regularly [43] Question: How does the company plan to address the frozen market conditions? - The company is focusing on generating yield through higher returns from existing portfolio companies rather than relying on warrant expectations [55][52] Question: What is the impact of tariffs on the portfolio? - The primary impact of tariffs is the uncertainty they create, affecting market transactions rather than direct exposure to specific tariffs [63] Question: Has the partnership with Monroe Capital provided additional resources? - The partnership is expected to enhance operational support and focus on stabilizing and growing the business [66]

Financial Data and Key Metrics Changes - The company generated net investment income (NII) of $0.27 per share, unchanged from the previous quarter but down from $0.38 per share in the same quarter last year [27] - The net asset value (NAV) decreased to $7.57 per share from $8.43 at the end of the previous quarter and $9.64 a year ago, primarily due to fair value adjustments and distributions [28] - Investment income for the first quarter was $25 million, a slight decrease from $26 million in the prior year period, attributed to lower interest and fee income [25] Business Line Data and Key Metrics Changes - The total investment portfolio at the end of the first quarter stood at $690 million, with debt investments in 53 companies valued at $644 million and equity investments in 110 companies valued at $46 million [27] - New originations totaled $102 million, offset by $11 million in scheduled principal payments and $68 million in prepayments [27] - The debt portfolio yield was 15%, slightly down from 15.6% in the same quarter last year, while onboarding yields were 13%, up from 12.6% in the previous quarter [25][12] Market Data and Key Metrics Changes - Approximately $92 billion was invested in VC-backed companies in the first quarter, a 19% increase from the previous quarter, driven largely by significant AI deals [18] - The S&P Biotech Select Industry Index is down 14% year-over-year, indicating cooling investor sentiment in the life sciences market [19] - The exit market for VC-backed tech and life science companies remains nearly shut due to macroeconomic uncertainties, impacting the overall venture capital ecosystem [20] Company Strategy and Development Direction - The company aims to grow its portfolio while maintaining a focus on high-quality, well-sponsored tech and life science companies [20] - The management remains selective in originating loans due to the current macro environment, with a commitment to optimizing returns from stressed investments [16] - The partnership with Monroe Capital is expected to provide additional capital and scale, enhancing the company's ability to navigate current market challenges [9] Management's Comments on Operating Environment and Future Outlook - Management expressed guarded optimism for the year despite recent macroeconomic headwinds, including tariff-related uncertainties impacting recovery from stressed assets [5] - The company anticipates that as the macro environment normalizes, it will be positioned to grow its portfolio and increase NII to cover distributions over time [16] - Management highlighted the importance of maintaining a strong liquidity position, with $126 million in available liquidity as of March 31 [23] Other Important Information - The company declared regular monthly distributions of $0.11 per share through September 2025, supported by undistributed spillover income of $1 per share [27] - The advisor has agreed to waive a portion of its quarterly income incentive fees if NII falls below declared distributions [7] - The company is actively managing its portfolio to optimize returns and mitigate risks associated with stressed investments [15] Q&A Session Summary Question: How is the company managing spillover earnings in the current uncertain environment? - Management indicated that they plan to continue growing distributions through 2025 and will manage spillover earnings quarterly, reviewing them in discussions with the board [32][34] Question: What is the quality of deals currently being pursued? - Management noted a higher bar for selecting transactions, focusing on companies performing well operationally and backed by quality VCs, while being selective due to the current market conditions [36][38] Question: Is there a plan to raise leverage ratios to grow the portfolio? - The target leverage ratio is around 1.2x to 1.3x, with the current ratio at 1.29x, indicating a cautious approach to leverage [42][43] Question: How does the company plan to address the high dividend payout relative to debt yields? - Management stated that they review equity needs and funding pipelines quarterly, considering the balance between dividends and investment returns [47][48] Question: What is the impact of tariffs on the portfolio? - Management indicated that while there is some uncertainty due to tariffs, most portfolio companies have planned for potential impacts, and the overall effect has been more about market volatility than specific tariff issues [65][66] Question: What resources are available from the recent Monroe partnership? - The partnership is expected to provide support in stabilizing and growing the business, with ongoing collaboration to enhance operational effectiveness [68][69]

Company Performance - Horizon Technology Finance reported quarterly earnings of $0.27 per share, missing the Zacks Consensus Estimate of $0.33 per share, and down from $0.38 per share a year ago, representing an earnings surprise of -18.18% [1][2] - The company posted revenues of $24.52 million for the quarter, missing the Zacks Consensus Estimate by 9.22%, and down from $26.13 million year-over-year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates only once [2] Stock Outlook - Horizon Technology Finance shares have lost about 2.3% since the beginning of the year, while the S&P 500 has declined by 6% [3] - The current consensus EPS estimate for the coming quarter is $0.33 on revenues of $27.69 million, and for the current fiscal year, it is $1.31 on revenues of $112.8 million [7] Industry Context - The Financial - SBIC & Commercial Industry, to which Horizon Technology Finance belongs, is currently in the bottom 44% of over 250 Zacks industries, indicating potential underperformance compared to the top 50% of industries [8] - The outlook for the industry can significantly impact the stock's performance, as empirical research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]