Company Overview - Horizon Technology Finance Corporation (NASDAQ: HRZN) is a leading specialty finance company that provides secured loans to venture capital and private equity-backed companies, as well as publicly traded companies in technology, life sciences, healthcare information and services, and sustainability industries [1][2] - The company is externally managed by Horizon Technology Finance Management LLC, an affiliate of Monroe Capital, which specializes in private credit markets across various strategies [1] Financial Results Announcement - Horizon Technology Finance plans to release its financial results for the fourth quarter ended December 31, 2025, on March 3, 2026, after market close [1] - A conference call to discuss these results is scheduled for March 4, 2026, at 9:00 a.m. ET, featuring remarks from key executives including the CEO, Senior VP and Chief Investment Officer, and Executive VP and CFO [1] Recent Financial Activities - The company has provided a $50 million venture loan facility to Pelthos Therapeutics Inc., with an initial funding of $30 million and up to $20 million available for future growth [1] - Horizon Technology Finance has priced a registered direct offering of $57.50 million aggregate principal amount of 7.00% Notes due 2028, which will mature on December 15, 2028 [1] Monthly Distributions - The board of directors has declared monthly cash distributions for January, February, and March 2026, totaling $0.33 per share [2]

分组1 - PhenixFIN (PFX) reported quarterly earnings of $1.07 per share, significantly exceeding the Zacks Consensus Estimate of $0.39 per share, and up from $0.8 per share a year ago, representing an earnings surprise of +174.36% [1] - The company achieved revenues of $6.66 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 13.85%, and an increase from $6.22 million year-over-year [2] - Over the last four quarters, PhenixFIN has surpassed consensus EPS estimates three times and has also topped consensus revenue estimates three times [2] 分组2 - The stock has underperformed the market, losing about 2.7% since the beginning of the year, while the S&P 500 has gained 1.3% [3] - The current consensus EPS estimate for the coming quarter is $0.40 on revenues of $5.86 million, and for the current fiscal year, it is $1.61 on revenues of $23.43 million [7] - The Zacks Industry Rank for Financial - SBIC & Commercial Industry is currently in the bottom 44% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Core Insights - During market turbulence, investors often seek dividend-yielding stocks, which typically have high free cash flows and offer substantial dividends [1] Group 1: Horizon Technology Finance Corp (NASDAQ:HRZN) - The stock has a dividend yield of 19.61% [6] - Analyst Michael Diana from Maxim Group maintained a Buy rating but reduced the price target from $10 to $7.5 as of August 11, 2025, with an accuracy rate of 56% [6] - Analyst Bryce Rowe from B. Riley Securities upgraded the stock from Sell to Neutral and lowered the price target from $9 to $7 on May 13, 2025, with an accuracy rate of 57% [6] - Recent news includes the pricing of a $57.50 million offering of 7.00% notes due 2028 on December 11 [6] Group 2: Invesco Mortgage Capital Inc (NYSE:IVR) - The stock has a dividend yield of 15.84% [6] - Analyst Douglas Harter from UBS maintained a Neutral rating and increased the price target from $7.25 to $7.5 on September 3, 2025, with an accuracy rate of 56% [6] - Analyst Aaron Hecht from JMP Securities maintained a Market Perform rating on January 23, 2025, with an accuracy rate of 55% [6] - Recent news indicates that Invesco Mortgage Capital posted in-line quarterly earnings on October 30 [6] Group 3: ARMOUR Residential REIT, Inc. (NYSE:ARR) - The stock has a dividend yield of 15.26% [6] - Analyst Douglas Harter from UBS maintained a Neutral rating but cut the price target from $16 to $15.5 on September 3, 2025, with an accuracy rate of 56% [6] - Analyst Jason Weaver from Jones Trading maintained a Hold rating on April 24, 2025, with an accuracy rate of 53% [6] - Recent news reveals that ARMOUR Residential REIT posted downbeat quarterly sales on October 22 [6]

Core Viewpoint - Kodiak AI, Inc. has established a new debt facility with Horizon Technology Finance Corporation, which enhances its financial position by providing additional capital, lowering interest rates, extending maturity, and improving liquidity [1][2][7] Group 1: Debt Facility Details - The new debt facility amounts to $30 million, with terms that include a 200 basis point reduction in interest rates and an extension of maturity from 2026 to 2030 [1][7] - Borrowings under the Loan Agreement will accrue interest at a rate equal to the prime rate plus 3.50%, with a prime rate floor of 6.50% [3] - The Term Loans will be repayable in monthly interest-only payments from February 1, 2026, until July 1, 2028, followed by 18 equal monthly payments of principal and interest until maturity on January 1, 2030 [3] Group 2: Financial Impact - The favorable terms of the debt facility will strengthen Kodiak's financial position by increasing debt capacity, eliminating near-term principal payments, and extending debt maturity, resulting in reduced near-term cash outflows and improved liquidity [2][7] - The transaction reflects Horizon's confidence in Kodiak's business model and performance, enhancing the company's ability to execute on strategic priorities [2][7] Group 3: Company Overview - Kodiak AI, Inc. is a leading provider of AI-powered autonomous vehicle technology, aiming to address supply chain challenges through its driverless solution [9] - The company has achieved significant milestones, including deploying customer-owned and operated driverless trucks in commercial service and supporting national security initiatives with its technology [9]

Core Insights - Generative AI is viewed as a transformative technology by Amazon's CEO Andy Jassy, indicating its potential to significantly enhance customer experiences across the company [1] - Elon Musk predicts that humanoid robots could create a market worth $250 trillion by 2040, representing a major shift in the global economy driven by AI innovation [2] - Major firms like PwC and McKinsey acknowledge the multi-trillion-dollar potential of AI, suggesting a broad consensus on its economic impact [3] Company and Industry Analysis - A breakthrough in AI technology is seen as a catalyst for redefining work, learning, and creativity, attracting significant interest from hedge funds and top investors [4] - There is speculation about an under-owned company that may play a crucial role in the AI revolution, with its technology posing a threat to competitors [4] - Prominent figures in technology and investment, including Bill Gates and Warren Buffett, recognize AI as a major technological advancement with the potential for substantial social benefits [8] Market Opportunities - The AI ecosystem is expected to reshape business, government, and consumer operations globally, indicating vast investment opportunities [2] - The narrative suggests that investors may soon regret not investing in a specific AI stock that is positioned to capitalize on this technological wave [9] - The subscription service offers detailed insights into a promising AI company, emphasizing the urgency for investors to act before the market becomes saturated [10][12]

Core Insights - The article focuses on Horizon Technology Finance (HRZN) and its baby bonds, highlighting the investment opportunities they present [1]. Group 1: Company Overview - Horizon Technology Finance is discussed in the context of its baby bonds and the potential investment opportunities they offer [1]. Group 2: Investment Strategy - The article emphasizes the importance of identifying mispriced investments in fixed-income and closed-end funds, which is a strategy employed by Denislav Iliev and his team [2]. - The investing group Trade With Beta provides features such as frequent picks for mispriced preferred stocks and baby bonds, along with weekly reviews of over 1200 equities [2].

Financial Data and Key Metrics Changes - The company generated net investment income (NII) of $0.32 per share, compared to $0.28 per share in the previous quarter and $0.32 per share in the same quarter last year [21] - The net asset value (NAV) per share increased by 5% to $7.12, up from $6.75 at the end of the previous quarter [7][23] - The company achieved a debt investment portfolio yield of 18.6% for the quarter, compared to 15.9% for the same quarter last year [20][12] Business Line Data and Key Metrics Changes - The current portfolio stood at $603 million, with new originations totaling $15 million during the quarter [10][22] - The company funded three debt investments totaling $15 million in the third quarter [10] - The onboarding debt investment yield was 12.2%, consistent with historical levels [12] Market Data and Key Metrics Changes - The venture capital market saw approximately $81 billion invested in VC-backed companies in the third quarter, with significant investments in AI [15] - The exit markets opened further with approximately $75 billion of exit value driven primarily by tech IPOs [15] Company Strategy and Development Direction - The company announced a merger with Monroe Capital Corporation, expected to close in early 2026, which will significantly increase assets under management [5] - The merger aims to create a more coordinated effort and leverage economies of scale in venture lending [5][6] - The company plans to focus on originating larger venture loans to top early-stage and late-stage companies [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a strong pipeline of larger venture debt transactions and high demand for venture debt capital [9][16] - The company expects to return to a growth trajectory historically experienced, supported by the merger with Monroe Capital [6][9] Other Important Information - The company raised $40 million through the issuance of 5.5% unsecured convertible notes due 2030, which will strengthen the balance sheet [8][18] - The company has a committed backlog of $119 million, down from $149 million at the end of the previous quarter [13] Q&A Session Summary Question: What do you expect the trend of early payoffs to be going forward? - Management expects early payoffs to revert to historical standards despite a higher rate in the recent quarter [26] Question: What is the credit quality of the new deals coming in? - Management indicated that they expect originations to exceed prepayments and are optimistic about the credit quality of new deals [28] Question: How sustainable is the current portfolio yield? - Management noted that the historical average portfolio yield is around 14.5% to 15%, which is more normalized compared to the current yield [32] Question: What is the plan for using the at-the-market program given the stock price is below book? - The company will evaluate its liquidity and capacity before utilizing the at-the-market program [39] Question: What is the target return on equity for new assets from the Monroe deal? - Management stated that they do not have a specific targeted return on equity but will stick to their high-yielding venture debt model [42]

Core Insights - Horizon Technology Finance (HRZN) reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.28 per share, but down from $0.32 per share a year ago, resulting in an earnings surprise of +10.71% [1] - The company generated revenues of $26.32 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 12.49% and increasing from $24.56 million year-over-year [2] - Horizon Technology Finance shares have declined approximately 32.5% year-to-date, contrasting with the S&P 500's gain of 16.9% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.29 on revenues of $23.83 million, and for the current fiscal year, it is $1.11 on revenues of $96.26 million [7] - The estimate revisions trend for Horizon Technology Finance was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Financial - SBIC & Commercial Industry, to which Horizon Technology Finance belongs, is currently ranked in the bottom 17% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Another company in the same industry, Palmer Square Capital BDC Inc. (PSBD), is expected to report quarterly earnings of $0.41 per share, reflecting a year-over-year decline of -14.6% [9]

Debt Investments - As of September 30, 2025, 97.0% ($543.6 million) of the debt investment portfolio at fair value consisted of Senior Term Loans[254] - As of September 30, 2025, the company had 39 debt investments valued at $560.2 million, representing 92.9% of the total portfolio[262] - Total debt investments amounted to $560.2 million, a decrease of 12.3% from $638.8 million on December 31, 2024[265] - The five largest debt investments at cost represented 25% of total debt investments outstanding as of September 30, 2025[265] - As of September 30, 2025, 100% of the outstanding principal amount of debt investments bore interest at floating rates, compared to 99% as of December 31, 2024[396] Investment Performance - The company reported a net realized loss on investments of $22.5 million for the three months ended September 30, 2025[262] - Net realized losses on investments totaled $22.5 million for the three months ended September 30, 2025, compared to $33.9 million for the same period in 2024[283] - During the nine months ended September 30, 2025, net realized losses on investments totaled $31.8 million, primarily due to the settlement of multiple investments and the realization of warrant investments[303] - Net unrealized depreciation on investments for the nine months ended September 30, 2025, totaled $13.8 million, primarily due to unrealized depreciation of various debt and equity investments[305] Financial Results - The total portfolio value as of September 30, 2025, was $603.5 million, a decrease from $697.9 million as of December 31, 2024[262] - Total investment income increased by $1.8 million, or 7.1%, to $26.3 million for the three months ended September 30, 2025, compared to $24.6 million for the same period in 2024[270] - Interest income on debt investments rose by $1.1 million, or 4.8%, to $24.3 million for the three months ended September 30, 2025[271] - For the nine months ended September 30, 2025, total investment income decreased by $1.0 million, or 1.3%, to $75.4 million compared to the same period in 2024[289] - Interest income on debt investments decreased by $3.4 million, or 4.6%, to $70.4 million for the nine months ended September 30, 2025, primarily due to a decrease in average earning debt investments[290] Expenses and Fees - Total expenses decreased by $0.4 million, or 3.2%, to $12.0 million for the three months ended September 30, 2025[277] - Total expenses increased by $0.2 million, or 0.4%, to $38.1 million for the nine months ended September 30, 2025[297] - Fee income increased by $0.6 million, or 46.7%, to $2.0 million for the three months ended September 30, 2025[273] - Fee income increased by $2.3 million, or 88.0%, to $5.0 million for the nine months ended September 30, 2025, driven by a higher amount of principal prepayments[292] Borrowings and Debt Facilities - The company expects to finance its investments through borrowings subject to a 150% asset coverage test[255] - Total borrowings outstanding as of September 30, 2025, amounted to $757.75 million, with a net balance of $424.03 million after debt issuance costs[327] - The outstanding principal balance under the NYL Facility was $181.0 million as of September 30, 2025, with a borrowing capacity of $69.0 million[317] - The Key Facility commitment was increased to $150 million, with a potential total commitment of $300 million, and the interest rate was adjusted to 7.35% as of September 30, 2025[329] - The NYL Facility had an outstanding balance of $181 million as of September 30, 2025, with a borrowing capacity of $69 million[334] Cash and Liquidity - As of September 30, 2025, cash and investments in money market funds amounted to $128.5 million, an increase from $97.5 million as of December 31, 2024[307] - Operating activities provided cash of $87.1 million for the nine months ended September 30, 2025, while financing activities used cash of $57.0 million[322] - The company believes its current cash and available funds will be sufficient to meet working capital and capital expenditure commitments for at least the next 12 months[326] Regulatory and Compliance - The company must distribute at least 90% of its net ordinary income and net short-term capital gains to qualify as a RIC, avoiding corporate-level tax[368] - The company operates as a RIC and is required to distribute at least 90% of its investment company taxable income to avoid corporate-level U.S. federal income tax[390] Advisor Fees - For the three months ended September 30, 2025, the Advisor earned $2.7 million, a decrease of 10% from $3.0 million in the same period of 2024[373] - For the nine months ended September 30, 2025, the Advisor earned $8.9 million, down from $9.5 million in 2024, reflecting a decline of approximately 6.3%[373] - The Advisor earned $0.4 million under the Administration Agreement for the three months ended September 30, 2025, compared to $0.4 million in 2024[375] - The Advisor earned $1.2 million under the Administration Agreement for the nine months ended September 30, 2025, slightly down from $1.3 million in 2024[375] Economic Environment - Economic activity has accelerated, but inflation in the U.S. rose due to global supply chain issues and strong consumer demand, before falling to lower levels at the end of 2023[400] - Persistent inflationary pressures and foreign currency exchange volatility could affect the profit margins of the company's portfolio companies[400]

Financial Performance - Third Quarter 2025 net investment income (NII) was $14.0 million, or $0.32 per basic share, compared to $11.8 million, or $0.32 per basic share for the prior-year period [4]. - Total investment income for the three months ended September 30, 2025, was $26,318 million, an increase from $24,563 million in the same period of 2024, representing a growth of 7.1% [45]. - Net investment income for the nine months ended September 30, 2025, was $36,162 million, compared to $37,357 million for the same period in 2024, reflecting a decrease of 3.2% [45]. - Net increase in net assets resulting from operations for the three months ended September 30, 2025, was $30,722 million, a substantial increase from $7,278 million in the same period of 2024 [45]. - Net investment income per common share (basic) for the three months ended September 30, 2025, was $0.32, unchanged from the same period in 2024 [45]. - Weighted average shares outstanding (basic) increased to 43,101,307 for the three months ended September 30, 2025, compared to 36,571,000 in the same period of 2024 [45]. - Distributions declared per share remained stable at $0.33 for the three months ended September 30, 2025, consistent with the same period in 2024 [45]. - Total expenses for the three months ended September 30, 2025, were $11,952 million, a decrease from $12,353 million in the same period of 2024, reflecting a reduction of 3.2% [45]. - Provision for excise tax for the nine months ended September 30, 2025, was $1,123 million, slightly higher than $1,109 million for the same period in 2024 [45]. Investment Portfolio - The total investment portfolio was valued at $603.5 million as of September 30, 2025 [4]. - The net asset value (NAV) per share increased to $7.12 as of September 30, 2025 [4]. - The annualized portfolio yield on debt investments was 18.6% for the quarter, up from 15.9% in the prior year [6]. - The Company funded three loans totaling $15.0 million during the quarter [4]. - The Company funded a $10.0 million debt investment to a new portfolio company on October 1, 2025 [30]. - The Company continues to hold warrants in several portfolio companies, indicating potential future income from these investments [22][23][25]. - The net unrealized appreciation on investments was $40.5 million, or $0.94 per basic share, compared to $29.3 million, or $0.80 per basic share in the prior-year period [9]. - Net unrealized appreciation on non-affiliate investments for the three months ended September 30, 2025, was $25,659 million, compared to $35,407 million in the same period of 2024, indicating a decrease of 27.7% [45]. Liquidity and Capital Structure - As of September 30, 2025, the company had $130.9 million in cash and a credit facility capacity of $329.0 million [4]. - The Company sold 1,570,248 shares of common stock under its ATM offering program, generating approximately $10.6 million in net proceeds [20]. - Horizon completed a $40 million convertible notes offering and raised approximately $10.6 million through its ATM program [3]. - The Company's net debt to equity leverage ratio was 94%, below the targeted leverage of 120%, with an asset coverage ratio for borrowed amounts at 174% [20]. - The Company has repurchased 167,465 shares of its common stock at an average price of $11.22, totaling $1.9 million since the inception of the stock repurchase program [29]. - As of September 30, 2025, total assets were $759.2 million, down from $821.8 million as of December 31, 2024 [43]. Mergers and Acquisitions - Horizon entered into an agreement to merge with Monroe Capital Corporation (MRCC), subject to shareholder approvals [4]. - The company experienced liquidity events from eight portfolio companies during the quarter [4].