Group 1 - Halper Sadeh LLC is investigating BankFinancial Corporation's sale to First Financial Bancorp, which involves an exchange of 0.48 shares of First Financial common stock for each share of BankFinancial [1] - The firm is also looking into Monroe Capital Corporation's merger with Horizon Technology Finance Corporation [2] - Halper Sadeh LLC may seek increased consideration for shareholders and additional disclosures regarding the proposed transactions [3] Group 2 - Shareholders are encouraged to contact Halper Sadeh LLC to discuss their legal rights and options at no charge [4] - The firm represents investors globally who have experienced securities fraud and corporate misconduct, recovering millions for defrauded investors [4]

Group 1 - The core focus of the news is the investigation by Monteverde & Associates PC into Monroe Capital Corporation's proposed sale to Horizon Technology Finance Corporation, questioning whether the deal is fair for shareholders [1] - Monteverde & Associates PC is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report and has successfully recovered millions for shareholders [1] - The proposed transaction involves converting Monroe shares into the right to receive Horizon shares based on an Exchange Ratio [1] Group 2 - Monteverde & Associates PC operates from the Empire State Building in New York City and is a national class action securities firm with a strong track record in litigation [2] - The firm emphasizes that it has a successful history in recovering money for shareholders through various legal actions [2] - The firm encourages shareholders with concerns regarding the transaction to reach out for additional information [3]

Core Viewpoint - Monroe Capital (MRCC) reported quarterly earnings of $0.15 per share, missing the Zacks Consensus Estimate of $0.21 per share, and down from $0.31 per share a year ago, indicating a significant earnings surprise of -28.57% [1][2] Financial Performance - The company posted revenues of $9.87 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 18.17%, and down from $15.63 million year-over-year [2] - Over the last four quarters, Monroe Capital has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Performance - Monroe Capital shares have declined approximately 19.4% since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [3] - The current Zacks Rank for Monroe Capital is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.20 on revenues of $11.97 million, and for the current fiscal year, it is $0.85 on revenues of $47.44 million [7] - The trend of estimate revisions for Monroe Capital was mixed ahead of the earnings release, which could change following the recent report [6] Industry Context - The Financial - Investment Management industry, to which Monroe Capital belongs, is currently in the top 28% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

PART I. FINANCIAL INFORMATION [ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents Monroe Capital Corporation's unaudited consolidated financial statements for the period ended June 30, 2025, including statements of assets and liabilities, operations, changes in net assets, cash flows, schedules of investments, and detailed notes on accounting policies and recent developments [Consolidated Statements of Assets and Liabilities](index=3&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) Total assets and net assets decreased from December 31, 2024, to June 30, 2025, primarily due to reductions in investments at fair value and cash, alongside a decrease in total debt | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total investments, at fair value | $367,700 | $457,048 | | Cash and cash equivalents | $2,425 | $9,044 | | Total assets | $394,617 | $490,671 | | Total debt, less unamortized debt issuance costs | $208,578 | $291,975 | | Total liabilities | $215,025 | $298,909 | | Total net assets | $179,592 | $191,762 | | Net asset value per share | $8.29 | $8.85 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Total investment income and net investment income significantly decreased for the three and six months ended June 30, 2025, leading to a net decrease in net assets from operations, contrasting with an increase in 2024 | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Total investment income | $9,873 | $15,627 | | Total operating expenses | $6,618 | $8,933 | | Net investment income | $3,298 | $6,559 | | Net gain (loss) | $(5,167) | $(3,301) | | Net increase (decrease) in net assets resulting from operations | $(1,869) | $3,258 | | Net investment income per share - basic and diluted | $0.15 | $0.30 | | Net increase (decrease) in net assets resulting from operations per share - basic and diluted | $(0.09) | $0.15 | | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Total investment income | $21,511 | $30,809 | | Total operating expenses | $14,051 | $18,627 | | Net investment income | $7,383 | $12,029 | | Net gain (loss) | $(8,720) | $(5,576) | | Net increase (decrease) in net assets resulting from operations | $(1,337) | $6,453 | | Net investment income per share - basic and diluted | $0.34 | $0.56 | | Net increase (decrease) in net assets resulting from operations per share - basic and diluted | $(0.06) | $0.30 | [Consolidated Statements of Changes in Net Assets](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) Total net assets decreased from **$191,762 thousand** at December 31, 2024, to **$179,592 thousand** at June 30, 2025, mainly due to net change in unrealized loss and stockholder distributions, partially offset by net investment income | Metric (in thousands) | Six months ended June 30, 2025 | | :-------------------- | :----------------------------- | | Balances at December 31, 2024 | $191,762 | | Net investment income | $7,383 | | Net realized gain (loss) | $(361) | | Net change in unrealized gain (loss) | $(8,359) | | Distributions to stockholders | $(10,833) |\n| Balances at June 30, 2025 | $179,592 | | Metric (in thousands) | Six months ended June 30, 2024 | | :-------------------- | :----------------------------- | | Balances at December 31, 2023 | $203,724 | | Net investment income | $12,029 |\n| Net realized gain (loss) | $510 | | Net change in unrealized gain (loss) | $(6,086) | | Distributions to stockholders | $(10,833) |\n| Balances at June 30, 2024 | $199,344 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) A net decrease in cash and cash equivalents for the six months ended June 30, 2025, resulted primarily from significant net cash used in financing activities, despite positive cash flow from operating activities | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $88,361 | $6,051 | | Net cash provided by (used in) financing activities | $(94,980) | $(7,133) | | Net increase (decrease) in cash and cash equivalents | $(6,619) | $(1,082) | | Cash and cash equivalents, end of period | $2,425 | $3,876 | [Consolidated Schedules of Investments as of June 30, 2025](index=7&type=section&id=Consolidated%20Schedules%20of%20Investments%20as%20of%20June%2030%2C%202025) The investment portfolio at fair value totaled **$367,700 thousand** as of June 30, 2025, primarily comprising senior secured loans (**73.5%**) and equity investments (**9.1%**), with FIRE: Real Estate (**24.4%**) and Healthcare & Pharmaceuticals (**15.5%**) as top industry concentrations | Investment Type | Amortized Cost (in thousands) | % of Total | Fair Value (in thousands) | % of Total | | :---------------------- | :---------------------------- | :--------- | :------------------------ | :--------- | | Senior secured loans | $285,753 | 68.9% | $270,091 | 73.5% | | Unitranche secured loans | $2,163 | 0.5% | $2,183 | 0.6% | | Junior secured loans | $41,810 | 10.1% | $31,679 | 8.6% | | LLC equity interest in SLF | $42,650 | 10.3% | $30,157 | 8.2% | | Equity investments | $42,432 | 10.2% | $33,590 | 9.1% | | Total | $414,808 | 100.0% | $367,700 | 100.0% | Industry (Fair Value in thousands) | Industry (Fair Value in thousands) | June 30, 2025 | % of Total | | :--------------------------------- | :------------ | :--------- | | FIRE: Real Estate | $89,625 | 24.4% | | Healthcare & Pharmaceuticals | $56,713 | 15.5% | | High Tech Industries | $37,155 | 10.1% | | Investment Funds & Vehicles | $30,157 | 8.2% | | Services: Business | $29,644 | 8.1% | | Media: Diversified & Production | $24,752 | 6.7% | [Consolidated Schedules of Investments as of December 31, 2024](index=21&type=section&id=Consolidated%20Schedules%20of%20Investments%20as%20of%20December%2031%2C%202024) The investment portfolio at fair value totaled **$457,048 thousand** as of December 31, 2024, with senior secured loans constituting **78.3%** and top industry concentrations in FIRE: Real Estate (**18.2%**) and Healthcare & Pharmaceuticals (**17.5%**) | Investment Type | Amortized Cost (in thousands) | % of Total | Fair Value (in thousands) | % of Total | | :---------------------- | :---------------------------- | :--------- | :------------------------ | :--------- | | Senior secured loans | $372,074 | 75.0% | $357,994 | 78.3% | | Unitranche secured loans | $3,835 | 0.8% | $3,862 | 0.8% | | Junior secured loans | $35,771 | 7.2% | $29,634 | 6.5% | | LLC equity interest in SLF | $42,650 | 8.6% | $32,730 | 7.2% | | Equity investments | $41,467 | 8.4% | $32,828 | 7.2% | | Total | $495,797 | 100.0% | $457,048 | 100.0% | Industry (Fair Value in thousands) | Industry (Fair Value in thousands) | December 31, 2024 | % of Total | | :--------------------------------- | :---------------- | :--------- | | FIRE: Real Estate | $83,037 | 18.2% | | Healthcare & Pharmaceuticals | $79,784 | 17.5% | | Services: Business | $51,175 | 11.2% | | Media: Diversified & Production | $43,717 | 9.6% | | High Tech Industries | $41,240 | 9.0% | | Investment Funds & Vehicles | $32,730 | 7.2% | [Notes to Consolidated Financial Statements](index=36&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details the company's accounting policies, investment valuation, related party transactions, and recent developments, including the Adviser Change in Control and subsequent merger agreements [Note 1. Organization and Principal Business](index=36&type=section&id=Note%201.%20Organization%20and%20Principal%20Business) Monroe Capital Corporation, an externally managed BDC and RIC, aims to maximize stockholder returns through debt and equity investments, with a change of control in its investment adviser effective March 31, 2025 - Monroe Capital Corporation is an externally managed, non-diversified, closed-end management investment company regulated as a Business Development Company (BDC) under the 1940 Act and has elected to be treated as a Regulated Investment Company (RIC) for U.S. federal income tax purposes[80](index=80&type=chunk) - The company's investment objective is to maximize total return to stockholders through current income and capital appreciation via investments in senior secured, junior secured, and unitranche secured debt, and to a lesser extent, unsecured subordinated debt and equity co-investments[80](index=80&type=chunk) - An Adviser Change in Control became effective on **March 31, 2025**, with Momentum US Bidco LLC, an affiliate of Wendel SE, acquiring a **75% interest** in Monroe Capital, the parent of MC Advisors[81](index=81&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=36&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's GAAP-compliant accounting policies, including fair value measurement, revenue recognition for investments, non-accrual status, distributions, and debt issuance costs - The company prepares consolidated financial statements in accordance with GAAP, following ASC Topic 946 for investment companies, and consolidates wholly-owned taxable subsidiaries[82](index=82&type=chunk)[85](index=85&type=chunk) - Fair value is applied to substantially all financial instruments, categorized into a three-level hierarchy based on input observability (ASC Topic 820)[86](index=86&type=chunk)[164](index=164&type=chunk) - Interest and dividend income are recorded on an accrual basis, with PIK provisions added to principal[88](index=88&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) Loan origination fees and discounts are capitalized and amortized using the effective interest method[92](index=92&type=chunk) Investments are placed on non-accrual status when payments are materially past due or collection is doubtful[96](index=96&type=chunk) Total Investment Income (in thousands) | Income Type | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | | Interest income | $6,864 | $11,850 | | PIK interest income | $1,660 | $2,099 | | Dividend income | $829 | $1,017 | | Other income | $54 | $265 | | Prepayment gain (loss) | $288 | $145 | | Accretion of discounts and amortization of premiums | $178 | $251 | | **Total investment income** | **$9,873** | **$15,627** | Total Investment Income (in thousands) | Income Type | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $14,830 | $23,512 | | PIK interest income | $3,560 | $4,214 | | Dividend income | $1,858 | $2,029 | | Other income | $282 | $302 | | Prepayment gain (loss) | $532 | $250 | | Accretion of discounts and amortization of premiums | $449 | $502 | | **Total investment income** | **$21,511** | **$30,809** | [Note 3. Investments](index=42&type=section&id=Note%203.%20Investments) This note details the investment portfolio's composition by type, region, and industry, along with a comprehensive overview of MRCC Senior Loan Fund I, LLC, an unconsolidated co-investment entity Investment Portfolio Composition (in thousands) | Investment Type | June 30, 2025 (Fair Value) | % of Total | December 31, 2024 (Fair Value) | % of Total | | :---------------------- | :------------------------- | :--------- | :----------------------------- | :--------- | | Senior secured loans | $270,091 | 73.5% | $357,994 | 78.3% | | Unitranche secured loans | $2,183 | 0.6% | $3,862 | 0.8% | | Junior secured loans | $31,679 | 8.6% | $29,634 | 6.5% | | LLC equity interest in SLF | $30,157 | 8.2% | $32,730 | 7.2% | | Equity investments | $33,590 | 9.1% | $32,828 | 7.2% | | **Total** | **$367,700** | **100.0%** | **$457,048** | **100.0%** | Investment Portfolio by Geographic Region (Fair Value in thousands) | Region | June 30, 2025 | % of Total | December 31, 2024 | % of Total | | :------------ | :------------ | :--------- | :---------------- | :--------- | | Midwest | $142,353 | 38.7% | $152,880 | 33.4% | | Northeast | $84,604 | 23.0% | $94,766 | 20.7% | | Southeast | $64,628 | 17.6% | $111,115 | 24.4% | | West | $66,051 | 18.0% | $79,683 | 17.4% | | Southwest | $8,738 | 2.4% | $13,186 | 2.9% | | International | $1,326 | 0.3% | $1,388 | 0.3% | Investment Portfolio by Industry (Fair Value in thousands) | Industry | June 30, 2025 | % of Total | December 31, 2024 | % of Total | | :--------------------------- | :------------ | :--------- | :---------------- | :--------- | | FIRE: Real Estate | $89,625 | 24.4% | $83,037 | 18.2% | | Healthcare & Pharmaceuticals | $56,713 | 15.5% | $79,784 | 17.5% | | High Tech Industries | $37,155 | 10.1% | $41,240 | 9.0% | | Investment Funds & Vehicles | $30,157 | 8.2% | $32,730 | 7.2% | | Services: Business | $29,644 | 8.1% | $51,175 | 11.2% | | Media: Diversified & Production | $24,752 | 6.7% | $43,717 | 9.6% | - As of June 30, 2025, ten borrowers had debt or preferred equity investments on non-accrual status, totaling **$13,373 thousand** at fair value (**3.6%** of total investments)[96](index=96&type=chunk) MRCC Senior Loan Fund I, LLC (SLF) Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | Company's investment in SLF (fair value) | $30,157 | $32,730 | | SLF Total assets (fair value) | $75,899 | $104,159 | | SLF Secured loans (outstanding principal) | $70,941 | $101,624 | | SLF Weighted average current interest rate on secured loans | 8.7% | 9.3% | | SLF Portfolio company investments on non-accrual status (fair value) | $5,560 | $5,184 | [Note 4. Fair Value Measurements](index=56&type=section&id=Note%204.%20Fair%20Value%20Measurements) This note details the company's fair value measurement policies for investments, categorizing them into a three-level hierarchy, with the Valuation Designee overseeing the process using income and market approaches for Level 3 assets - The company values all investments in accordance with ASC Topic 820, using a three-level fair value hierarchy based on market price observability of inputs[159](index=159&type=chunk)[161](index=161&type=chunk) - The Board has designated MC Advisors as the Valuation Designee, responsible for determining fair value, especially for investments lacking readily available market quotations, through a multi-step valuation process involving internal evaluations and independent appraisals[162](index=162&type=chunk)[163](index=163&type=chunk)[170](index=170&type=chunk) - Valuation techniques for Level 3 debt include the income approach (discounted cash flow models) and market approach (enterprise value methodology, often based on EBITDA or revenue multiples)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) Fair Value Measurements of Investments (in thousands) | Category | June 30, 2025 (Level 3) | December 31, 2024 (Level 3) | | :------------------------ | :---------------------- | :-------------------------- | | Senior secured loans | $270,091 | $357,994 | | Unitranche secured loans | $2,183 | $3,862 | | Junior secured loans | $31,679 | $29,634 | | Equity investments | $33,590 | $32,767 | | Investments measured at NAV | $30,157 | $32,730 | | **Total investments** | **$367,700** | **$457,048** | Debt Carrying Value vs. Fair Value (in thousands) | Debt Type | June 30, 2025 (Carrying Value) | June 30, 2025 (Fair Value) | December 31, 2024 (Carrying Value) | December 31, 2024 (Fair Value) | | :-------------------- | :----------------------------- | :------------------------- | :--------------------------------- | :----------------------------- | | Revolving Credit Facility | $79,080 | $79,080 | $162,872 | $162,872 | | 2026 Notes | $129,498 | $127,830 | $129,103 | $124,161 | | **Total Debt** | **$208,578** | **$206,910** | **$291,975** | **$287,033** | [Note 5. Transactions with Affiliate Companies](index=64&type=section&id=Note%205.%20Transactions%20with%20Affiliate%20Companies) This note details transactions with non-controlled and controlled affiliate companies, including changes in fair value, purchases, sales, and income generated, highlighting the impact of PIK interest and unrealized gains/losses - An affiliate company is defined as one where the Company holds **5% or more** of voting securities, while a controlled affiliate company involves **more than 25%** ownership[195](index=195&type=chunk) Non-Controlled Affiliate Company Investments (Fair Value in thousands) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------------------- | :---------------- | :------------ | | Total non-controlled affiliate company investments | $80,483 | $76,379 | | Net change in unrealized gain (loss) | N/A | $(610) | | PIK interest capitalized (cost) | N/A | $1,919 | Controlled Affiliate Company Investments (Fair Value in thousands) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------------------- | :---------------- | :------------ | | Total controlled affiliate company investments | $32,730 | $30,157 | | Net change in unrealized gain (loss) | N/A | $(2,573) | Investment Income from Affiliate Companies (Six months ended June 30, in thousands) | Income Type | 2025 (Interest Income) | 2025 (Dividend Income) | 2024 (Interest Income) | 2024 (Dividend Income) | | :-------------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Non-controlled affiliate company investments | $2,469 | $117 | $5,096 | $108 | | Controlled affiliate company investments | $0 | $1,600 | $0 | $1,800 | [Note 6. Transactions with Related Parties](index=69&type=section&id=Note%206.%20Transactions%20with%20Related%20Parties) This note details the company's relationships and transactions with related parties, including the Amended Investment Advisory Agreement with MC Advisors and the Administration Agreement with MC Management, outlining fee structures and the impact of the Wendel Transaction - On **March 31, 2025**, the company entered into the Second Amended and Restated Investment Advisory and Management Agreement with MC Advisors following a change of control where Wendel SE acquired a **75% interest** in Monroe Capital[206](index=206&type=chunk) The terms, including fee structure, remained unchanged[206](index=206&type=chunk) - The base management fee is **1.75% annually** of average invested assets, reduced to **1.00%** for assets exceeding **200%** of average net assets[207](index=207&type=chunk) - The incentive fee has two parts: **20%** of pre-incentive fee net investment income (subject to a **2% hurdle** and catch-up, and a total return limitation) and **20%** of cumulative realized capital gains (net of losses and unrealized depreciation)[211](index=211&type=chunk)[212](index=212&type=chunk) Management and Incentive Fees (in thousands) | Fee Type (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | | Base management fees | $1,742 | $2,037 | | Incentive fees | $0 | $351 | Management and Incentive Fees (in thousands) | Fee Type (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------- | :----------------------------- | :----------------------------- | | Base management fees | $3,593 | $4,085 | | Incentive fees | $0 | $1,719 | - The company incurred **$873 thousand** and **$1,716 thousand** in administrative expenses for the three and six months ended June 30, 2025, respectively, under the Administration Agreement with MC Management[215](index=215&type=chunk) [Note 7. Borrowings](index=71&type=section&id=Note%207.%20Borrowings) This note details the company's borrowing arrangements, including a **$255 million** revolving credit facility and **$130 million** in 2026 Notes, outlining terms, covenants, interest rates, and the company's **185%** asset coverage ratio - The company's asset coverage ratio was **185%** as of June 30, 2025, and **165%** as of December 31, 2024, exceeding the 1940 Act requirement of at least **150%**[218](index=218&type=chunk) - The company has a **$255,000 thousand** revolving credit facility with ING Capital LLC, maturing on **December 27, 2027**, with an accordion feature up to **$400,000 thousand**[219](index=219&type=chunk)[224](index=224&type=chunk) Borrowings bear interest at SOFR plus **2.625%** or a daily rate based on prime/federal funds/SOFR, with a SOFR floor of **0.5%**[224](index=224&type=chunk) - As of June 30, 2025, **$80,300 thousand** was outstanding on the revolving credit facility, with **$174,700 thousand** available for additional borrowings[306](index=306&type=chunk) - The company has **$130,000 thousand** in senior unsecured 2026 Notes outstanding, maturing on **February 15, 2026**, bearing interest at an annual rate of **4.75%**[225](index=225&type=chunk) Interest and Other Debt Financing Expenses (in thousands) | Expense Type | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | | Interest expense - revolving credit facility | $1,977 | $3,898 | | Interest expense - 2026 Notes | $1,555 | $1,555 | | Amortization of debt issuance costs | $401 | $327 | | **Total interest and other debt financing expenses** | **$3,933** | **$5,780** | | Average debt outstanding | $228,226 | $315,611 | | Average stated interest rate | 6.2% | 6.9% | Interest and Other Debt Financing Expenses (in thousands) | Expense Type | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Interest expense - revolving credit facility | $4,750 | $7,523 | | Interest expense - 2026 Notes | $3,110 | $3,110 | | Amortization of debt issuance costs | $750 | $654 | | **Total interest and other debt financing expenses** | **$8,610** | **$11,287** | | Average debt outstanding | $252,837 | $308,327 | | Average stated interest rate | 6.3% | 6.9% | [Note 8. Derivative Instruments](index=73&type=section&id=Note%208.%20Derivative%20Instruments) The company may use foreign currency forward contracts to mitigate exchange rate exposure but held no such contracts as of June 30, 2025, or December 31, 2024, resulting in no related gains or losses - The company may use foreign currency forward contracts to mitigate foreign currency exchange rate fluctuations[228](index=228&type=chunk) - As of June 30, 2025, and December 31, 2024, the company held no foreign currency forward contracts[43](index=43&type=chunk)[75](index=75&type=chunk)[228](index=228&type=chunk) - No net realized or unrealized gain (loss) on foreign currency forward contracts was recognized for the three and six months ended June 30, 2025 and 2024[229](index=229&type=chunk) [Note 9. Distributions](index=74&type=section&id=Note%209.%20Distributions) The company declared total distributions of **$0.50 per share** (**$10,833 thousand**) for both the six months ended June 30, 2025, and 2024, primarily as cash with a portion reinvested through the Dividend Reinvestment Plan Distributions Declared (Six months ended June 30, in thousands) | Period | Amount Per Share | Total Cash Distribution | DRIP Shares Repurchased (shares) | Cost of DRIP Shares Repurchased | | :---------------------- | :--------------- | :---------------------- | :------------------------------- | :------------------------------ | | Six months ended June 30, 2025 | $0.50 | $10,833 | 54,778 | $383 | | Six months ended June 30, 2024 | $0.50 | $10,833 | 36,735 | $274 | - The company adopted an 'opt out' Dividend Reinvestment Plan (DRIP) in October 2012, allowing stockholders to automatically reinvest cash distributions into additional common stock unless they elect to receive cash[99](index=99&type=chunk)[321](index=321&type=chunk) [Note 10. Stock Issuances and Repurchases](index=74&type=section&id=Note%2010.%20Stock%20Issuances%20and%20Repurchases) The company had no stock issuances through its At-The-Market (ATM) equity distribution program during the six months ended June 30, 2025, or 2024 - The company has an At-The-Market (ATM) equity distribution program, established in May 2017 and amended in May 2020, allowing for the sale of up to **$50,000 thousand** of common stock[232](index=232&type=chunk)[313](index=313&type=chunk) - There were no stock issuances through the ATM Program during the six months ended June 30, 2025, and 2024[232](index=232&type=chunk)[313](index=313&type=chunk) [Note 11. Commitments and Contingencies](index=74&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) The company had outstanding commitments to fund investments totaling **$31,605 thousand** as of June 30, 2025, and **$38,509 thousand** as of December 31, 2024, and faces credit, counterparty, and market risks, but no material legal proceedings - As of June 30, 2025, and December 31, 2024, the company had outstanding commitments to fund investments of **$31,605 thousand** and **$38,509 thousand**, respectively, excluding unfunded commitments in SLF[233](index=233&type=chunk)[347](index=347&type=chunk) - The company had unfunded commitments of **$7,350 thousand** to SLF as of both June 30, 2025, and December 31, 2024[233](index=233&type=chunk)[347](index=347&type=chunk) - The company is subject to credit risk, counterparty risk, and market risk, but expects the risk of future obligations under indemnification provisions to be remote[239](index=239&type=chunk)[240](index=240&type=chunk) - The company is not currently aware of any material legal proceedings that would have a material adverse effect on its consolidated financial statements[242](index=242&type=chunk) [Note 12. Financial Highlights](index=77&type=section&id=Note%2012.%20Financial%20Highlights) This note provides key financial highlights for the six months ended June 30, 2025, and 2024, showing a decrease in net asset value per share and a negative total return based on market value in 2025 Financial Highlights (Six months ended June 30) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------------- | :------------ | :------------ | | Net asset value at beginning of period | $8.85 | $9.40 | | Net increase (decrease) in net assets resulting from operations | $(0.06) | $0.30 | | Stockholder distributions - income | $(0.50) | $(0.50) | | Net asset value at end of period | $8.29 | $9.20 | | Total return based on market value | (19.84)% | 14.97% | | Total return based on average net asset value | 0.34% | 4.54% | | Ratio of net investment income to average net assets | 8.00% | 12.87% | | Ratio of total expenses to average net assets | 15.31% | 17.88% | [Note 13. Segment Reporting](index=78&type=section&id=Note%2013.%20Segment%20Reporting) The company operates as a single operating and reporting segment, with its CEO and CFO serving as Chief Operating Decision Makers, assessing performance on a consolidated basis using net income and net investment income - The company operates through a single operating and reporting segment, with an investment objective to generate current income and capital appreciation through debt and equity investments[246](index=246&type=chunk) - The Chief Operating Decision Makers (CODM) are the Chief Executive Officer and Chief Financial Officer, who assess performance and make operating decisions on a consolidated basis, primarily using net increase (decrease) in net assets and net investment income[246](index=246&type=chunk) [Note 14. Subsequent Events](index=78&type=section&id=Note%2014.%20Subsequent%20Events) Subsequent to June 30, 2025, the company entered into a Merger Agreement with Horizon Technology Finance Corporation and an Asset Purchase Agreement with Monroe Capital Income Plus Corporation, outlining an asset sale followed by a merger - On **August 7, 2025**, the company entered into a Merger Agreement with Horizon Technology Finance Corporation (HRZN) and an Asset Purchase Agreement with Monroe Capital Income Plus Corporation (MCIP)[247](index=247&type=chunk)[254](index=254&type=chunk) - The Asset Purchase Agreement stipulates that MCIP will acquire the company's investment assets at fair value for cash, immediately prior to the merger with HRZN[254](index=254&type=chunk)[255](index=255&type=chunk) - In the merger, each share of the company's common stock will be converted into HRZN common stock based on an Exchange Ratio, calculated from the respective Net Asset Values (NAVs) of the companies[248](index=248&type=chunk)[251](index=251&type=chunk) - The transactions are anticipated to close in the **fourth quarter of 2025**, subject to stockholder and regulatory approvals[253](index=253&type=chunk)[257](index=257&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=81&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section discusses Monroe Capital Corporation's financial condition, operations, and liquidity, highlighting a net decrease in investments and net assets from operations, and significant merger and asset sale agreements [FORWARD-LOOKING STATEMENTS](index=81&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section contains forward-looking statements based on current expectations and assumptions, which involve risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements based on current expectations, estimates, and projections about the company, its industry, beliefs, and assumptions[262](index=262&type=chunk) - These statements involve risks and uncertainties, and actual results could differ materially due to factors such as future operating results, business prospects, general economy, political and regulatory conditions, market liquidity, competition, interest rates, inflation, and the valuation of investments[262](index=262&type=chunk)[263](index=263&type=chunk) - The company uses words like 'anticipates,' 'believes,' 'expects,' 'intends,' 'seeks,' 'plans,' 'estimates,' and 'targets' to identify forward-looking statements[263](index=263&type=chunk) [Overview](index=82&type=section&id=Overview) Monroe Capital Corporation is an externally managed BDC and RIC providing financing to lower middle-market companies, aiming to maximize total return through senior secured, unitranche secured, junior secured debt, and equity investments - Monroe Capital Corporation is an externally managed, closed-end, non-diversified management investment company regulated as a BDC and elected as a RIC[266](index=266&type=chunk) - The company specializes in providing financing solutions primarily to lower middle-market companies in the United States and Canada[267](index=267&type=chunk) - Investment objective is to maximize total return to stockholders through current income and capital appreciation via senior secured, unitranche secured, and junior secured debt, and equity investments[270](index=270&type=chunk) Portfolio Composition by Investment Type (Fair Value) | Investment Type | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Senior secured loans | 73.5% | 78.3% | | Unitranche secured loans | 0.6% | 0.8% | | Junior secured loans | 8.6% | 6.5% | | Equity investments | 17.3% | 14.4% | [Investment income](index=83&type=section&id=Investment%20income) Investment income is primarily generated from interest on debt investments (senior secured, unitranche secured, junior secured) and dividend income on preferred and common equity, including contractual interest, PIK interest, loan origination fees, and prepayment premiums, all recognized on an accrual basis - Investment income is generated from interest on debt investments (senior secured, unitranche secured, junior secured) and dividend income on preferred and common equity investments[272](index=272&type=chunk)[273](index=273&type=chunk) - Income sources include contractual interest, payment-in-kind (PIK) interest, commitment, origination, amendment, structuring or due diligence fees, and prepayment premiums[272](index=272&type=chunk) - Loan origination fees, original issue discount, and market discount/premium are capitalized and amortized into interest income using the effective interest method[272](index=272&type=chunk) [Expenses](index=84&type=section&id=Expenses) The company's primary operating expenses include base management and incentive fees to MC Advisors, administrative fees to MC Management, interest expense on indebtedness, and other out-of-pocket operational and transactional costs - Primary operating expenses include base management and incentive fees paid to MC Advisors under the Amended Investment Advisory Agreement[274](index=274&type=chunk) - Fees are also paid to MC Management for allocable overhead and other expenses under the Administration Agreement[274](index=274&type=chunk) - Other operating costs include interest expense on indebtedness and all other out-of-pocket expenses of operations and transactions[274](index=274&type=chunk) [Net gain (loss)](index=84&type=section&id=Net%20gain%20%28loss%29) Net realized gains or losses result from investment dispositions and derivative instruments, while net change in unrealized gain or loss reflects period-over-period fair value changes in investments and derivative instruments - Net realized gains or losses on investments, foreign currency forward contracts, and other foreign currency transactions are recognized based on the difference between net disposition proceeds and cost basis[275](index=275&type=chunk) - Net change in unrealized gain or loss reflects current period changes in the fair value of investments and derivative instruments[275](index=275&type=chunk) [Portfolio and Investment Activity](index=84&type=section&id=Portfolio%20and%20Investment%20Activity) For the six months ended June 30, 2025, the company experienced a net decrease in investments of **$85.1 million**, with a weighted average effective yield decreasing to **8.8%** from **10.2%** due to lower spreads and payoffs of higher-yielding assets Investment Activity (in millions) | Period | Investments in new portfolio companies | Investments in existing portfolio companies | Sales and principal repayments | Net decrease in investments | | :----------------------------- | :------------------------------------- | :------------------------------------------ | :----------------------------- | :-------------------------- | | Three months ended June 30, 2025 | $0.0 | $3.5 | $63.0 | $59.5 | | Six months ended June 30, 2025 | $7.6 | $12.3 | $105.0 | $85.1 | | Three months ended June 30, 2024 | $0.0 | $21.7 | $35.9 | $14.2 | | Six months ended June 30, 2024 | $10.2 | $35.7 | $48.0 | $2.1 | Portfolio Yield by Investment Type | Investment Type | June 30, 2025 (Weighted Average Annualized Effective Yield) | December 31, 2024 (Weighted Average Annualized Effective Yield) | | :--------------------- | :-------------------------------------------------------- | :-------------------------------------------------------------- | | Senior secured loans | 9.2% | 10.7% | | Unitranche secured loans | 12.2% | 14.5% | | Junior secured loans | 7.6% | 7.5% | | Equity investments | 2.8% | 2.8% | | **Total** | **8.8%** | **10.2%** | - The decrease in effective yield was primarily due to lower spreads on certain assets and the payoff of certain higher yielding assets during the six months ended June 30, 2025[282](index=282&type=chunk) [Portfolio Asset Quality](index=86&type=section&id=Portfolio%20Asset%20Quality) MC Advisors monitors portfolio asset quality using a 1-to-5 risk rating scale, with **80.6%** of investments rated Grade 2 (acceptable risk) and **14.4%** Grade 3 (below expectations) as of June 30, 2025 - MC Advisors monitors portfolio asset quality using an internal proprietary 1-to-5 investment performance risk rating system[286](index=286&type=chunk) - Investments rated Grade 3, 4, or 5 trigger increased monitoring and action plans by the Portfolio Management Group (PMG)[286](index=286&type=chunk)[287](index=287&type=chunk) Investment Performance Risk Rating Distribution (Fair Value in thousands) | Risk Rating | June 30, 2025 (Fair Value) | Percentage of Total Investments | | :---------- | :------------------------- | :------------------------------ | | Grade 1 | $0 | 0% | | Grade 2 | $296,419 | 80.6% | | Grade 3 | $52,725 | 14.4% | | Grade 4 | $13,351 | 3.6% | | Grade 5 | $5,205 | 1.4% | | **Total** | **$367,700** | **100.0%** | - As of June 30, 2025, ten borrowers had debt or preferred equity investments on non-accrual status, totaling **$13.4 million** at fair value (**3.6%** of total investments)[289](index=289&type=chunk) [Results of Operations](index=88&type=section&id=Results%20of%20Operations) The company experienced a significant decline in net investment income and a net decrease in net assets from operations for the three and six months ended June 30, 2025, primarily due to lower investment income and increased unrealized losses Operating Results (in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | | Total investment income | $9,873 | $15,627 | | Total operating expenses | $6,618 | $8,933 | | Net investment income | $3,298 | $6,559 | | Net realized gain (loss) | $77 | $506 | | Net change in unrealized gain (loss) | $(5,244) | $(3,807) | | Net increase (decrease) in net assets resulting from operations | $(1,869) | $3,258 | Operating Results (in thousands) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Total investment income | $21,511 | $30,809 | | Total operating expenses | $14,051 | $18,627 | | Net investment income | $7,383 | $12,029 | | Net realized gain (loss) | $(361) | $510 | | Net change in unrealized gain (loss) | $(8,359) | $(6,086) | | Net increase (decrease) in net assets resulting from operations | $(1,337) | $6,453 | [Investment Income](index=89&type=section&id=Investment%20Income) Total investment income decreased by **$5.8 million** and **$9.3 million** for the three and six months ended June 30, 2025, respectively, primarily due to lower interest and PIK interest income from reduced average invested assets and more non-accrual portfolio companies Investment Income (in thousands) | Income Type | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | | Interest income | $6,864 | $11,850 | | PIK interest income | $1,660 | $2,099 | | Dividend income | $829 | $1,017 | | Other income | $54 | $265 | | Prepayment gain (loss) | $288 | $145 | | Accretion of discounts and amortization of premiums | $178 | $251 | | **Total investment income** | **$9,873** | **$15,627** | Investment Income (in thousands) | Income Type | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $14,830 | $23,512 | | PIK interest income | $3,560 | $4,214 | | Dividend income | $1,858 | $2,029 | | Other income | $282 | $302 | | Prepayment gain (loss) | $532 | $250 | | Accretion of discounts and amortization of premiums | $449 | $502 | | **Total investment income** | **$21,511** | **$30,809** | - Total investment income decreased by **$5.8 million** and **$9.3 million** during the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024[293](index=293&type=chunk) - The reduction was primarily due to lower interest and PIK interest income, driven by a decrease in average invested assets, lower effective rates, and the placement of additional portfolio companies on non-accrual status[293](index=293&type=chunk) [Operating Expenses](index=90&type=section&id=Operating%20Expenses) Total operating expenses decreased by **$2.3 million** and **$4.6 million** for the three and six months ended June 30, 2025, respectively, mainly due to lower interest and other debt financing expenses, incentive fees, and base management fees Operating Expenses (in thousands) | Expense Type | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | | Interest and other debt financing expenses | $3,933 | $5,780 | | Base management fees | $1,742 | $2,037 | | Incentive fees | $0 | $351 | | Professional fees | $267 | $199 | | Administrative service fees | $374 | $250 | | General and administrative expenses | $232 | $243 | | Directors' fees | $70 | $73 | | **Total operating expenses** | **$6,618** | **$8,933** | Operating Expenses (in thousands) | Expense Type | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Interest and other debt financing expenses | $8,610 | $11,287 | | Base management fees | $3,593 | $4,085 | | Incentive fees | $0 | $1,719 | | Professional fees | $530 | $467 | | Administrative service fees | $727 | $459 | | General and administrative expenses | $459 | $461 | | Directors' fees | $132 | $149 | | **Total operating expenses** | **$14,051** | **$18,627** | - Total operating expenses decreased by **$2.3 million** and **$4.6 million** during the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024[296](index=296&type=chunk) - The decrease was primarily due to lower interest and other debt financing expenses from a reduced interest rate environment and lower average debt outstanding, as well as decreases in incentive fees and base management fees[296](index=296&type=chunk) [Income Taxes, Including Excise Taxes](index=91&type=section&id=Income%20Taxes%2C%20Including%20Excise%20Taxes) As a RIC, the company distributes at least **90%** of its taxable income to avoid federal income tax, accruing excise tax on estimated excess taxable income, and recorded a net excise tax expense of **$70 thousand** for the six months ended June 30, 2025 - The company operates as a RIC, requiring annual distribution of at least **90%** of its investment company taxable income to avoid U.S. federal income tax[297](index=297&type=chunk) - For the three and six months ended June 30, 2025, the company recorded a net expense (benefit) of **$(49) thousand** and **$70 thousand**, respectively, for U.S. federal excise tax[298](index=298&type=chunk) - For the three and six months ended June 30, 2025, the company recorded a net tax expense of **$6 thousand** and **$7 thousand**, respectively, for its consolidated taxable subsidiaries[299](index=299&type=chunk) [Net Realized Gain (Loss)](index=91&type=section&id=Net%20Realized%20Gain%20%28Loss%29) For the three months ended June 30, 2025, the company recorded a net realized gain of **$0.1 million** on investments, while for the six months ended June 30, 2025, it recorded a net realized loss of **$(0.4) million** Net Realized Gain (Loss) on Investments (in millions) | Period | 2025 | 2024 | | :----------------------------- | :--- | :--- | | Three months ended June 30, 2025 | $0.1 | $0.5 | | Six months ended June 30, 2025 | $(0.4) | $0.5 | [Net Change in Unrealized Gain (Loss)](index=91&type=section&id=Net%20Change%20in%20Unrealized%20Gain%20%28Loss%29) The company experienced net unrealized losses of **$(5.2) million** and **$(8.4) million** for the three and six months ended June 30, 2025, respectively, primarily from mark-to-market losses on portfolio companies with credit performance concerns and unrealized losses on the SLF equity investment Net Change in Unrealized Gain (Loss) on Investments (in millions) | Period | 2025 | 2024 | | :----------------------------- | :----- | :----- | | Three months ended June 30, 2025 | $(5.2) | $(3.8) | | Six months ended June 30, 2025 | $(8.4) | $(6.1) | - The net change in unrealized loss on investments for the three and six months ended June 30, 2025, was primarily driven by mark-to-market losses from portfolio companies with underlying credit performance concerns (risk rating of Grade 3, 4 or 5) and unrealized losses on the equity investment in SLF[302](index=302&type=chunk) [Net Increase (Decrease) in Net Assets Resulting from Operations](index=92&type=section&id=Net%20Increase%20%28Decrease%29%20in%20Net%20Assets%20Resulting%20from%20Operations) For the three and six months ended June 30, 2025, the net increase (decrease) in net assets from operations was a decrease of **$(1.9) million** and **$(1.3) million**, respectively, translating to **$(0.09)** and **$(0.06) per share** Net Increase (Decrease) in Net Assets from Operations | Period | Net Increase (Decrease) (in millions) | Per Share | | :----------------------------- | :------------------------------------ | :-------- | | Three months ended June 30, 2025 | $(1.9) | $(0.09) | | Three months ended June 30, 2024 | $3.3 | $0.15 | | Six months ended June 30, 2025 | $(1.3) | $(0.06) | | Six months ended June 30, 2024 | $6.5 | $0.30 | [Liquidity and Capital Resources](index=92&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had **$2.4 million** in cash, **$80.3 million** outstanding on its revolving credit facility, and **$130.0 million** on its 2026 Notes, maintaining an **185%** asset coverage ratio and relying on future offerings and borrowings for capital - As of June 30, 2025, the company had **$2.4 million** in cash and cash equivalents, **$80.3 million** of total debt outstanding on its revolving credit facility, and **$130.0 million** on the 2026 Notes[306](index=306&type=chunk) - The company had **$174.7 million** available for additional borrowings on its revolving credit facility, subject to borrowing base availability[306](index=306&type=chunk) - The asset coverage ratio was **185%** as of June 30, 2025, exceeding the 1940 Act requirement of at least **150%**[307](index=307&type=chunk) [Cash Flows](index=92&type=section&id=Cash%20Flows) For the six months ended June 30, 2025, the company experienced a net decrease in cash and cash equivalents of **$6.6 million**, with **$88.4 million** provided by operating activities and **$95.0 million** used in financing activities Cash Flow Summary (Six months ended June 30, in millions) | Activity | 2025 | 2024 | | :-------------------------------------- | :----- | :----- | | Net cash provided by (used in) operating activities | $88.4 | $6.1 | | Net cash provided by (used in) financing activities | $(95.0) | $(7.1) |\n| Net increase (decrease) in cash and cash equivalents | $(6.6) | $(1.0) | [Capital Resources](index=92&type=section&id=Capital%20Resources) As a BDC, the company distributes substantially all net income, requiring additional capital from future securities offerings, borrowings, and operational cash flows, with stockholder approval obtained to issue common stock below NAV - As a BDC, the company distributes substantially all net income, necessitating additional capital for investment purposes[310](index=310&type=chunk) - Capital will be generated from future securities offerings, borrowings, and cash flows from operations[310](index=310&type=chunk) - On **June 17, 2025**, stockholders approved the ability to sell common stock below Net Asset Value (NAV) per share for one year, subject to limitations[311](index=311&type=chunk) - The company has a standing authorization, approved on **June 24, 2015**, to issue warrants, options, or rights to purchase common stock[312](index=312&type=chunk) [Borrowings](index=93&type=section&id=Borrowings) The company's borrowing capacity includes a **$255 million** revolving credit facility and **$130 million** in 4.75% senior unsecured 2026 Notes, with the credit facility amended to provide refinancing flexibility and subject to borrowing base and financial covenants - The company has a **$255 million** revolving credit facility with ING Capital LLC, maturing **December 27, 2027**, with an accordion feature up to **$400 million**[314](index=314&type=chunk) - The revolving credit facility was amended on **February 27, 2025**, to provide additional flexibility for refinancing the 2026 Notes[314](index=314&type=chunk) - Borrowing under the facility is subject to borrowing base availability (up to **72.5%** of fair market value of portfolio investments), concentration limits, and financial covenants, including a minimum consolidated total net assets and asset coverage ratios[315](index=315&type=chunk) - As of June 30, 2025, **$80.3 million** in U.S. dollar borrowings were outstanding on the revolving credit facility, accruing at a weighted average interest rate of **7.1%**[317](index=317&type=chunk)[318](index=318&type=chunk) - The company has **$130.0 million** in **4.75%** senior unsecured 2026 Notes outstanding, maturing on **February 15, 2026**[319](index=319&type=chunk) [Distributions](index=94&type=section&id=Distributions) The Board determines quarterly distributions, aiming to distribute at least **90%** of ordinary income to maintain RIC status, with total distributions of **$10.8 million** (**$0.50 per share**) for the six months ended June 30, 2025 and 2024, under an 'opt out' Dividend Reinvestment Plan - The Board determines quarterly distributions, aiming to distribute at least **90%** of ordinary income and realized net short-term capital gains to maintain RIC status[320](index=320&type=chunk) - Total distributions for both the three and six months ended June 30, 2025 and 2024, totaled **$5.4 million** (**$0.25 per share**) and **$10.8 million** (**$0.50 per share**), respectively, with no portion characterized as a return of capital[320](index=320&type=chunk) - The company operates an 'opt out' Dividend Reinvestment Plan (DRIP), where cash distributions are automatically reinvested in common stock unless stockholders elect to receive cash[321](index=321&type=chunk) [MRCC Senior Loan Fund I, LLC](index=94&type=section&id=MRCC%20Senior%20Loan%20Fund%20I%2C%20LLC) The company co-invests with LSW in senior secured loans through MRCC Senior Loan Fund I, LLC (SLF), an unconsolidated entity, with the company's **50.0%** equity interest valued at **$30.2 million** as of June 30, 2025 - The company co-invests with Life Insurance Company of the Southwest (LSW) in senior secured loans through MRCC Senior Loan Fund I, LLC (SLF), an unconsolidated Delaware LLC[322](index=322&type=chunk) - As of June 30, 2025, and December 31, 2024, the company and LSW each owned **50.0%** of SLF's LLC equity interests[323](index=323&type=chunk) - The company's investment in SLF had a fair value of **$30.2 million** as of June 30, 2025, and **$32.7 million** as of December 31, 2024[324](index=324&type=chunk) - For the six months ended June 30, 2025, the company received **$1.6 million** in dividend income from its SLF equity interest[325](index=325&type=chunk) - As of June 30, 2025, SLF had total assets at fair value of **$75.9 million** and **$15.2 million** outstanding on its senior secured revolving credit facility[328](index=328&type=chunk) - As of June 30, 2025, SLF had seven portfolio company investments on non-accrual status with a fair value of **$5.6 million**[328](index=328&type=chunk) [Related Party Transactions](index=104&type=section&id=Related%20Party%20Transactions) The company has various business relationships with affiliated parties, including MC Advisors (investment adviser), MC Management (administrator), and Monroe Capital LLC (licensor of name), involving advisory and administrative services, fee structures, and a non-exclusive license - The company has an Amended Investment Advisory Agreement with MC Advisors, approved by stockholders, for investment advisory services, including base management and incentive fees[349](index=349&type=chunk) - An Administration Agreement with MC Management provides office facilities and administrative services, with the company reimbursing allocable overhead and expenses[349](index=349&type=chunk) - SLF also has an administration agreement with MC Management for loan servicing and administrative functions[349](index=349&type=chunk) - Theodore L. Koenig (CEO and Chairman) and Lewis W. Solimene, Jr. (CFO and CIO) hold management positions across MC Advisors and MC Management[349](index=349&type=chunk) - The company has a license agreement with Monroe Capital LLC for a non-exclusive, royalty-free use of the 'Monroe Capital' name[349](index=349&type=chunk) [Commitments and Contingencies and Off-Balance Sheet Arrangements](index=104&type=section&id=Commitments%20and%20Contingencies%20and%20Off-Balance%20Sheet%20Arrangements) As of June 30, 2025, the company had **$31.6 million** in outstanding commitments to fund investments and **$7.3 million** in unfunded commitments

[Merger Announcement & Overview](index=1&type=section&id=Merger%20Announcement%20%26%20Overview) This section outlines the definitive merger agreement, asset purchase, shareholder exchange, and management commentary on the strategic rationale [Definitive Merger Agreement](index=1&type=section&id=Definitive%20Merger%20Agreement) MRCC will merge into HRZN, with HRZN as the surviving public entity managed by HTFM and trading on NASDAQ - Monroe Capital Corporation (MRCC) and Horizon Technology Finance Corporation (HRZN) have entered into a definitive merger agreement[1](index=1&type=chunk) - **HRZN** will be the surviving public entity, managed by Horizon Technology Finance Management LLC (HTFM), and will continue to trade on NASDAQ under the symbol "**HRZN**"[1](index=1&type=chunk) [Asset Purchase Agreement](index=1&type=section&id=Asset%20Purchase%20Agreement) MCIP will acquire substantially all of MRCC's assets for cash, leaving MRCC with net cash proceeds before its merger into HRZN - Monroe Capital Income Plus Corporation (MCIP) will acquire substantially all of MRCC's assets at fair value for cash immediately prior to the Merger[2](index=2&type=chunk) - Following the Asset Sale, MRCC's only assets will be net cash proceeds after liabilities and transaction costs[2](index=2&type=chunk) [Shareholder Exchange & Ownership](index=1&type=section&id=Shareholder%20Exchange%20%26%20Ownership) MRCC shareholders will receive HRZN shares based on a NAV-for-NAV exchange, resulting in approximately 37% ownership of HRZN post-merger - MRCC shareholders will receive HRZN shares with a net asset value (NAV) equal to the NAV of their MRCC shares[3](index=3&type=chunk) - The merger transaction is structured as a **NAV-for-NAV exchange** of shares[3](index=3&type=chunk) - Former MRCC shareholders are expected to own approximately **37%** of HRZN upon closing[3](index=3&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management expects the transaction to unlock MRCC shareholder value, position HRZN for strategic growth, and be accretive to both shareholder bases - Theodore L. Koenig (Monroe Capital CEO) believes the transaction unlocks MRCC shareholder value and positions HRZN better for strategic initiatives[4](index=4&type=chunk) - The transaction is expected to be accretive to both MRCC and HRZN shareholders, offering compelling synergies and cost-savings[4](index=4&type=chunk) - Michael P. Balkin (Horizon Technology Finance CEO) states the transaction provides HRZN with significant incremental leverageable capital and a larger shareholder base, enhancing earnings power and expanding investment opportunities[5](index=5&type=chunk) [Key Transaction Highlights](index=2&type=section&id=Key%20Transaction%20Highlights) This section details the anticipated benefits of the merger, including enhanced scale, financial accretion, and tax implications [Enhanced Scale & Operational Efficiency](index=2&type=section&id=Enhanced%20Scale%20%26%20Operational%20Efficiency) The merger is expected to significantly increase HRZN's scale, reduce per-share operating expenses, and improve trading liquidity - The Merger will increase the size and scale of HRZN[6](index=6&type=chunk) Projected Financial Impact of Merger | Metric | Value (Millions USD) | | :-------------------------------- | :------------------- | | Additional Equity Capital | ~$165 | | Current Combined NAV (June 30, 2025) | ~$446 | - Expected reduction in per-share operating expenses for HRZN shareholders on a pro forma basis[6](index=6&type=chunk) - Shareholders of the combined company are expected to benefit from improved trading liquidity[6](index=6&type=chunk) [Financial Accretion & Capital Access](index=2&type=section&id=Financial%20Accretion%20%26%20Capital%20Access) The merger is projected to be NII neutral initially, then accretive over time, providing HRZN with incremental capital and enhanced debt access - The Merger is expected to be neutral to net investment income (NII) for the combined company during the first year post-closing, and accretive over time[6](index=6&type=chunk) - Accretion driven by operational savings, portfolio mix optimization, and cost savings from capital structure improvements[6](index=6&type=chunk) - The Merger will provide HRZN with incremental capital to execute its current investment strategy and broaden its platform to public small-cap growth companies[6](index=6&type=chunk) - The Merger should enable HRZN to better access a wider array of debt funding solutions, including potential borrowing cost reductions[6](index=6&type=chunk) [Tax & Advisory Fee Implications](index=2&type=section&id=Tax%20%26%20Advisory%20Fee%20Implications) The merger is structured as a tax-free reorganization for MRCC shareholders, with HTFM waiving $4 million in fees to support the transaction - The Merger is structured as a **tax-free reorganization** under Section 368(a) for MRCC shareholders[6](index=6&type=chunk) - The Asset Sale will be treated as a taxable transaction, but MRCC is not expected to incur any tax liability from realized gains[6](index=6&type=chunk) - HTFM has agreed to waive an aggregate of **$4 million** of base management fees and incentive fees over the first four full fiscal quarters following the closing[6](index=6&type=chunk) [Transaction Mechanics & Approvals](index=3&type=section&id=Transaction%20Mechanics%20%26%20Approvals) This section covers board approvals, the anticipated closing timeline, exchange ratio details, and other key transaction provisions [Board Approvals & Recommendations](index=3&type=section&id=Board%20Approvals%20%26%20Recommendations) The Boards of MRCC, HRZN, and MCIP have unanimously approved the transactions and recommend shareholder votes in favor - The Boards of Directors of MRCC, HRZN, and MCIP unanimously approved the Merger and/or Asset Sale[7](index=7&type=chunk) - MRCC's Board will recommend shareholders vote in favor of the Merger and Asset Sale[7](index=7&type=chunk) - HRZN's Board will recommend shareholders vote in favor of the issuance of HRZN common stock in connection with the Merger[7](index=7&type=chunk) [Closing Timeline & Conditions](index=3&type=section&id=Closing%20Timeline%20%26%20Conditions) The transactions are anticipated to close in Q4 2025, subject to regulatory and shareholder approvals, and mutual consummation - The transactions are expected to close in the **fourth quarter of 2025**[8](index=8&type=chunk) - Closing is subject to customary regulatory approvals, MRCC and HRZN shareholder approvals, and other closing conditions[8](index=8&type=chunk) - The Asset Sale and the Merger are conditioned upon the substantially concurrent consummation of the other[8](index=8&type=chunk) [Exchange Ratio & Distributions](index=3&type=section&id=Exchange%20Ratio%20%26%20Distributions) MRCC shareholders will receive HRZN common stock based on a NAV-for-NAV exchange ratio determined prior to closing, with regular distributions expected - MRCC shareholders will receive newly issued HRZN common stock based on an Exchange Ratio[9](index=9&type=chunk) - The Exchange Ratio is calculated as MRCC NAV per share divided by HRZN NAV per share, determined shortly before closing[9](index=9&type=chunk) - Prior to closing, HRZN and MRCC expect to declare and make regular distributions[10](index=10&type=chunk) - MRCC will declare a distribution to its shareholders equal to any undistributed net investment income remaining as of the closing[10](index=10&type=chunk) [Other Transaction Details](index=3&type=section&id=Other%20Transaction%20Details) The agreements include termination fee provisions, HRZN's stock repurchase program will remain, and HRZN's post-merger board composition is outlined - The Merger Agreement and Asset Purchase Agreement require payment of a termination fee if agreements are terminated under certain circumstances[11](index=11&type=chunk) - HRZN's existing stock repurchase program, authorizing repurchases of up to **2%** of outstanding shares when trading below **90% of NAV**, will remain in place[12](index=12&type=chunk) - Upon closing, HRZN's board will consist of two independent HRZN members, one independent MRCC member (subject to HRZN shareholder approval), and HRZN's CEO[13](index=13&type=chunk) [Advisors & Corporate Information](index=4&type=section&id=Advisors%20%26%20Corporate%20Information) This section lists the financial and legal advisors involved, conference call details, and background information on HRZN and MRCC [Transaction Advisors](index=4&type=section&id=Transaction%20Advisors) This section lists the financial and legal advisors for MRCC, MCIP, and HRZN Special Committees, and legal counsel for the BDC investment advisers - Houlihan Lokey is financial advisor and Nelson Mullins Riley & Scarborough LLP is legal counsel to MRCC's Special Committee[14](index=14&type=chunk) - Keefe, Bruyette & Woods is financial advisor and Eversheds Sutherland is legal counsel to MCIP's Special Committee[14](index=14&type=chunk) - Oppenheimer & Co. is financial advisor and Blank Rome LLP is legal counsel to HRZN's Special Committee[15](index=15&type=chunk) - Dechert LLP is legal counsel to each BDC's investment adviser[16](index=16&type=chunk) [Conference Call Details](index=4&type=section&id=Conference%20Call%20Details) A joint conference call is scheduled for August 7, 2025, at 5:00 PM ET to discuss the transaction, with an accompanying investor presentation - Joint conference call to discuss the transaction on **Thursday, August 7, 2025, at 5:00 PM ET**[17](index=17&type=chunk) - Dial-in numbers: **(877) 407-9716** (domestic) or **(201) 493-6779** (international), Conference ID: **13754326**[17](index=17&type=chunk) - An investor presentation will be available at https://ir.horizontechfinance.com[17](index=17&type=chunk) [About Horizon Technology Finance Corporation (HRZN)](index=4&type=section&id=About%20Horizon%20Technology%20Finance%20Corporation%20(HRZN)) HRZN is a specialty finance company providing secured loans to venture capital and private equity-backed companies across various sectors - Horizon Technology Finance Corporation (NASDAQ: HRZN) is a leading specialty finance company[18](index=18&type=chunk) - Provides secured loans to venture capital and private equity-backed companies and publicly traded companies in technology, life science, healthcare, and sustainability industries[18](index=18&type=chunk) - Investment objective: maximize investment portfolio's return by generating current income from debt and capital appreciation from warrants[18](index=18&type=chunk) [About Monroe Capital Corporation (MRCC)](index=4&type=section&id=About%20Monroe%20Capital%20Corporation%20(MRCC)) MRCC is a publicly-traded specialty finance company primarily investing in secured debt and equity in middle-market companies - Monroe Capital Corporation is a publicly-traded specialty finance company[19](index=19&type=chunk) - Principally invests in senior, unitranche, and junior secured debt, and to a lesser extent, unsecured debt and equity investments in middle-market companies[19](index=19&type=chunk) - Investment objective: maximize total return to stockholders in the form of current income and capital appreciation[19](index=19&type=chunk) [Legal & Regulatory Disclosures](index=5&type=section&id=Legal%20%26%20Regulatory%20Disclosures) This section provides important legal disclaimers regarding forward-looking statements, additional information, and the nature of the press release [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section warns that the press release contains forward-looking statements subject to risks and uncertainties, with no obligation to update - The press release contains forward-looking statements related to future events, performance, or financial condition of MRCC, HRZN, MCIP, and the proposed transactions[20](index=20&type=chunk) - Forward-looking statements are based on current plans, estimates, and expectations, subject to risks, uncertainties, and assumptions[20](index=20&type=chunk) - Actual events and results may vary materially from those indicated or anticipated due to various factors, including timing of closing, synergies, regulatory approvals, and economic changes[20](index=20&type=chunk) - MRCC, HRZN, and MCIP assume no obligation to update forward-looking statements; readers are advised to consult SEC filings for additional disclosures[20](index=20&type=chunk) [Additional Information & Solicitation Participants](index=6&type=section&id=Additional%20Information%20%26%20Solicitation%20Participants) HRZN and MRCC will file a joint proxy statement and registration statement with the SEC, urging shareholders to review these documents - HRZN and MRCC plan to file a joint proxy statement (Schedule 14A), and HRZN plans to file a registration statement (Form N-14) with the SEC[21](index=21&type=chunk) - These documents will contain important information about HRZN, MRCC, the Merger, the Asset Sale, and related matters[21](index=21&type=chunk) - Shareholders of HRZN and MRCC are urged to read these documents carefully when they become available[21](index=21&type=chunk) - Information about participants in the solicitation of proxies will be contained in the Joint Proxy Statement[23](index=23&type=chunk) [No Offer or Solicitation](index=7&type=section&id=No%20Offer%20or%20Solicitation) This press release is explicitly not an offer to sell or a solicitation of an offer to purchase any securities - This press release is not an offer to sell or a solicitation of an offer to purchase any securities in MRCC, HRZN, MCIP, or any fund managed by Monroe Capital or its affiliates[24](index=24&type=chunk) [Contacts](index=7&type=section&id=Contacts) This section provides investor relations contacts for HRZN and MRCC, and media relations contact for Monroe Capital Corporation - Contact information for Investor Relations for Horizon Technology Finance Corporation: Dan Trolio (EVP & CFO) and ICR (Garrett Edson)[25](index=25&type=chunk) - Contact information for Investor Relations for Monroe Capital Corporation: Mick Solimene (CFO & CIO)[25](index=25&type=chunk) - Contact information for Media Relations for Monroe Capital Corporation: BackBay Communications (Daniel Abramson)[25](index=25&type=chunk)

Core Viewpoint - Monroe Capital Corporation (MRCC) announced its financial results for Q2 2025 and revealed a merger agreement with Horizon Technology Finance Corporation (HRZN), which is subject to shareholder approvals and closing conditions [1][4]. Financial Highlights - Adjusted Net Investment Income (NII) for Q2 2025 was $3.3 million, or $0.15 per share, down from $4.2 million, or $0.19 per share in Q1 2025 [6][13]. - Net Asset Value (NAV) decreased to $179.6 million, or $8.29 per share, from $186.9 million, or $8.63 per share in the previous quarter [6][10]. - The company paid a quarterly dividend of $0.25 per share, reflecting an annualized dividend yield of approximately 14.6% [4][9]. Investment Portfolio - Total investments at fair value were $367.7 million as of June 30, 2025, down from $430.6 million at the end of Q1 2025 [8][11]. - The number of portfolio company investments decreased from 85 to 80, with 3.6% of these investments on non-accrual status [11][12]. - The weighted average contractual yield on the portfolio was 9.9%, down from 10.1% in the previous quarter [11]. Debt and Leverage - Debt-to-equity leverage decreased from 1.45 times to 1.17 times during the quarter, as proceeds from sales and paydowns were used to reduce the revolving credit facility balance [7][19]. - As of June 30, 2025, the company had $2.4 million in cash and cash equivalents and $210.3 million in total debt [19][25]. Merger and Asset Sale - MRCC entered into a definitive merger agreement with HRZN, which includes an asset purchase agreement to sell its investment assets to Monroe Capital Income Plus Corporation (MCIP) prior to the merger closing [1][4]. - The merger is expected to unlock value for shareholders through synergies and operating leverage in a larger, more scaled HRZN [4].

Company Overview - Monroe Capital Corporation is a publicly-traded specialty finance company that primarily invests in senior, unitranche, and junior secured debt, as well as unsecured debt and equity investments in middle-market companies [2] - The company's investment objective is to maximize total return to stockholders through current income and capital appreciation [2] - Investment activities are managed by Monroe Capital BDC Advisors, LLC, an investment adviser registered under the Investment Advisers Act of 1940 [2] Recent Developments - Monroe Capital Corporation will report its second quarter financial results for the period ended June 30, 2025, on August 11, 2025, after the close of financial markets [1] Awards and Recognition - Monroe has received multiple awards, including Private Debt Investor's 2024 Lower Mid-Market Lender of the Year and 2023 Lower Mid-Market Lender of the Decade [4] - Other accolades include recognition from Global M&A Network and Creditflux for excellence in private debt and direct lending [4] Investment Strategy - Monroe Capital LLC specializes in private credit markets, offering various strategies such as direct lending, technology finance, and alternative credit solutions [3] - The firm aims to provide high-quality "alpha" returns regardless of business or economic cycles [3]

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].

Transaction Overview - Monroe Capital Corporation (MRCC) and Horizon Technology Finance Corporation (HRZN) have announced a proposed merger[7] - MRCC will sell substantially all of its assets to Monroe Capital Income Plus Corporation (MCIP) at fair value[7] - The merger is structured as a tax-free exchange, offering long-term upside for MRCC shareholders[7, 14] - The merger is expected to close in December 2025, pending shareholder approvals and customary conditions[7, 13] Financial Benefits and Synergies - The merger will provide HRZN with approximately $165 million in equity capital[7] - MRCC shareholders realize an immediate 33% NAV premium to the current trading price[14] - The combined company's investment adviser, HTFM, will waive $4 million in management and incentive fees[13, 19] - Estimated annualized G&A expense savings of $2.5 million are expected in the first year, a 30% expense reduction[28] Post-Merger Structure and Governance - HRZN will be the surviving public entity, managed by Horizon Technology Finance Management LLC (HTFM)[12] - MRCC shareholders are expected to own approximately 37% of the combined company immediately following closing[29] - HRZN's existing stock purchase program will be available for open market repurchases of up to 2% of outstanding shares when trading below 90% of NAV[13]

Company Overview - Monroe Capital (MRCC) operates as a business development company (BDC) focused on providing attractive total returns through a diverse portfolio of debt investments [1] Investment Strategy - BDCs are highlighted as an efficient way for investors to generate income, particularly through a combination of classic dividend growth stocks, BDCs, REITs, and Closed End Funds [1] - The company emphasizes a hybrid investment strategy that balances growth and income, aiming to achieve total returns comparable to traditional index funds like the S&P [1]