Equibles

10-Q

Horizon Technology Finance Corp (HRZN)

10-Q 2025-08-07 For: 2025-06-30
View Original
Added on April 05, 2026

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _____TO

COMMISSION FILE NUMBER: 814-00802

HORIZON TECHNOLOGY FINANCE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware 27-2114934
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
312 Farmington Avenue
Farmington, CT 06032
(Address of principal executive offices) (Zip Code)

(860) 676‑8654

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
--- ---

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock traded under the symbol “HRZN” on the Nasdaq Global Select Market, $0.001 par value per share, outstanding as of August 7, 2025 was 42,545,719.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Ticker symbol(s) Name of each exchange on which registered
Common Stock, par value $0.001 per share HRZN The Nasdaq Stock Market LLC
4.875% Notes due 2026 HTFB The New York Stock Exchange
6.25% Notes due 2027 HTFC The New York Stock Exchange

Table of Contents

HORIZON TECHNOLOGY FINANCE CORPORATION

FORM 10‑Q

TABLE OF CONTENTS

Page
PART I
Item 1 Consolidated Financial Statements. 3
Consolidated Statements of Assets and Liabilities as of June 30, 2025 (unaudited) and December 31, 2024 3
Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 (unaudited) 4
Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2025 and 2024 (unaudited) 5
Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (unaudited) 6
Consolidated Schedules of Investments as of June 30, 2025 (unaudited) and December 31, 2024 7
Notes to the Consolidated Financial Statements (unaudited) 28
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 56
Item 3. Quantitative and Qualitative Disclosures About Market Risk 73
Item 4. Controls and Procedures 74
PART II
Item 1. Legal Proceedings 74
Item 1A. Risk Factors 74
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 75
Item 3. Defaults Upon Senior Securities 75
Item 4. Mine Safety Disclosures 75
Item 5. Other Information 75
Item 6. Exhibits 75
Signatures 76
EX‑14
EX‑31.1
EX‑31.2
EX‑32.1
EX‑32.2

2

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Statements of Assets and Liabilities

(Dollars in thousands, except share and per share data)

December 31,
2024
****
Assets **** ****
Non-affiliate investments at fair value (cost of 669,153 and 694,503, respectively) 605,491 $ 657,765
Non-controlled affiliate investments at fair value (cost of 27,493 and 27,491, respectively) (Note 5) 6,707 8,307
Controlled affiliate investments at fair value (cost of 49,202 and 44,780, respectively) (Note 5) 10,455 31,819
Total investments at fair value (cost of 745,848 and 766,774, respectively) (Note 4) 622,653 697,891
Cash 24,664 70,264
Investments in money market funds 53,261 27,266
Restricted investments in money market funds 3,226 3,338
Interest receivable 14,329 16,559
Other assets 8,664 6,515
Total assets 726,797 $ 821,833
Liabilities **** ****
Borrowings (Note 7) 425,138 $ 467,904
Distributions payable 13,869 13,159
Base management fee payable (Note 3) 944 1,045
Other accrued expenses 3,051 3,542
Total liabilities 443,002 485,650
Commitments and contingencies (Notes 3 and 8)
Net assets **** ****
Preferred stock, par value 0.001 per share, 1,000,000 shares authorized, zero shares issued and outstanding as of June 30, 2025 and December 31, 2024 — —
Common stock, par value 0.001 per share, 100,000,000 shares authorized, 42,195,032 and 40,043,312 shares issued and 42,027,567 and 39,875,847 shares outstanding as of June 30, 2025 and December 31, 2024, respectively 47 44
Paid-in capital in excess of par 535,423 518,200
Distributable loss (251,675 ) (182,061 )
Total net assets 283,795 336,183
Total liabilities and net assets 726,797 $ 821,833
Net asset value per common share 6.75 $ 8.43

All values are in US Dollars.

See Notes to Consolidated Financial Statements

3

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except share and per share data)

For the Three Months Ended For The Six Months Ended
June 30, June 30,
2025 2024 2025 2024
Investment income **** **** **** ****
From non-affiliate investments:
Interest income $ 22,588 $ 24,480 $ 46,103 $ 50,164
Prepayment fee income 1,712 865 2,499 1,090
Fee income 200 145 475 188
From controlled affiliate investments:
Interest income (reversal) 20 188 (41 ) 365
Total investment income 24,520 25,678 49,036 51,807
Expenses **** **** **** ****
Interest expense 8,201 7,940 16,882 16,101
Base management fee (Note 3) 2,959 3,027 6,139 6,189
Performance based incentive fee (Note 3) — — — 295
Administrative fee (Note 3) 420 426 826 859
Professional fees 505 455 1,230 1,120
General and administrative 613 559 1,040 987
Total expenses 12,698 12,407 26,117 25,551
Net investment income before excise tax 11,822 13,271 22,919 26,256
Provision for excise tax 373 357 750 736
Net investment income 11,449 12,914 22,169 25,520
Net realized and unrealized loss **** **** **** ****
Net realized (loss) gain on non-affiliate investments (9,294 ) 2,424 (9,293 ) 2,435
Net realized gain on non-controlled affiliate investments — 40 — 37
Net realized (loss) gain on investments (9,294 ) 2,464 (9,293 ) 2,472
Net realized loss on extinguishment of debt (776 ) — (776 ) —
Net realized (loss) gain (10,070 ) 2,464 (10,069 ) 2,472
Net unrealized depreciation on non-affiliate investments (14,887 ) (23,287 ) (26,925 ) (37,501 )
Net unrealized (depreciation) appreciation on non-controlled affiliate investments (1,600 ) 3,178 (1,602 ) 14,611
Net unrealized depreciation on controlled affiliate investments (5,669 ) (4,402 ) (25,786 ) (5,581 )
Net unrealized depreciation on investments (22,156 ) (24,511 ) (54,313 ) (28,471 )
Net realized and unrealized loss (32,226 ) (22,047 ) (64,382 ) (25,999 )
Net decrease in net assets resulting from operations $ (20,777 ) $ (9,133 ) $ (42,213 ) $ (479 )
Net investment income per common share - basic $ 0.28 $ 0.36 $ 0.54 $ 0.74
Net investment income per common share - diluted $ 0.28 $ 0.36 $ 0.54 $ 0.74
Net decrease in net assets resulting from operations per common share - basic $ (0.50 ) $ (0.26 ) $ (1.04 ) $ (0.01 )
Net decrease in net assets resulting from operations per common share - diluted (1) $ (0.50 ) $ (0.26 ) $ (1.04 ) $ (0.01 )
Weighted average shares outstanding - basic 41,221,283 35,434,761 40,725,094 34,507,252
Weighted average shares outstanding - diluted 41,221,283 35,434,761 40,725,094 34,507,252
Distributions declared per share $ 0.33 $ 0.33 $ 0.66 $ 0.71
(1) For the three and six months ended June 30, 2025, the impact of the hypothetical conversion of 2031 Convertible Notes would have been antidilutive to net decrease in net assets resulting from operations per common share (Note 11).
--- ---

See Notes to Consolidated Financial Statements

4

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Statements of Changes in Net Assets (Unaudited)

(Dollars in thousands, except share data)

Paid-In Capital **** ****
Common Stock in Excess of Distributable Total Net
Shares Amount Par Loss Assets
Balance at March 31, 2024 34,469,878 $ 37 $ 463,539 $ (131,455 ) $ 332,121
Issuance of common stock, net of offering costs 1,516,249 3 17,135 — 17,138
Net decrease in net assets resulting from operations, net of excise tax:
Net investment income, net of excise tax — — — 12,914 12,914
Net realized gain on investments — — — 2,464 2,464
Net unrealized depreciation on investments — — — (24,511 ) (24,511 )
Issuance of common stock under dividend reinvestment plan 57,688 — 675 — 675
Distributions declared — — — (12,023 ) (12,023 )
Balance at June 30, 2024 36,043,815 40 481,349 (152,611 ) 328,778
Balance at March 31, 2025 40,331,962 45 522,285 (216,873 ) 305,457
Issuance of common stock, net of offering costs — — (42 ) — (42 )
Net decrease in net assets resulting from operations, net of excise tax:
Net investment income, net of excise tax — — — 11,449 11,449
Net realized loss on investments — — — (9,294 ) (9,294 )
Net realized loss on extinguishment of debt — — — (776 ) (776 )
Net unrealized depreciation on investments — — — (22,156 ) (22,156 )
Issuance of common stock under dividend reinvestment plan 74,102 — 577 — 577
Issuance of common stock in extinguishment of debt 1,621,503 2 12,603 — 12,605
Distributions declared — — — (14,025 ) (14,025 )
Balance at June 30, 2025 42,027,567 $ 47 $ 535,423 $ (251,675 ) $ 283,795
Paid-In Capital **** ****
--- --- --- --- --- --- --- --- --- --- --- --- ---
Common Stock in Excess of Distributable Total Net
Shares Amount Par Loss Assets
Balance at December 31, 2023 33,367,389 $ 36 $ 450,949 $ (127,004 ) $ 323,981
Issuance of common stock, net of offering costs 2,570,045 4 29,106 — 29,110
Net decrease in net assets resulting from operations, net of excise tax:
Net investment income, net of excise tax — — — 25,520 25,520
Net realized gain on investments — — — 2,472 2,472
Net unrealized depreciation on investments — — — (28,471 ) (28,471 )
Issuance of common stock under dividend reinvestment plan 106,381 — 1,294 — 1,294
Distributions declared — — — (25,128 ) (25,128 )
Balance at June 30, 2024 36,043,815 40 481,349 (152,611 ) 328,778
Balance at December 31, 2024 39,875,847 44 518,200 (182,061 ) 336,183
Issuance of common stock, net of offering costs 404,305 1 3,559 — 3,560
Net decrease in net assets resulting from operations, net of excise tax:
Net investment income, net of excise tax — — — 22,169 22,169
Net realized loss on investments — — — (9,293 ) (9,293 )
Net realized loss on extinguishment of debt — — — (776 ) (776 )
Net unrealized depreciation on investments — — — (54,313 ) (54,313 )
Issuance of common stock under dividend reinvestment plan 125,912 — 1,061 — 1,061
Issuance of common stock in extinguishment of debt 1,621,503 2 12,603 — 12,605
Distributions declared — — — (27,401 ) (27,401 )
Balance at June 30, 2025 42,027,567 $ 47 $ 535,423 $ (251,675 ) $ 283,795

See Notes to Consolidated Financial Statements

5

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

For the six months ended June 30,
2025 2024
Cash flows from operating activities: **** ****
Net decrease in net assets resulting from operations $ (42,213 ) $ (479 )
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities:
Amortization of debt issuance costs 1,331 814
Net realized loss (gain) on investments 9,293 (2,472 )
Net realized loss on extinguishment of debt 776 —
Net unrealized depreciation on investments 54,313 28,471
Purchase of investments (116,058 ) (35,384 )
Principal payments received on investments 129,238 76,056
Payment-in-kind (“PIK”) interest on investments (528 ) (1,737 )
Proceeds from sale of investments 784 88
Warrants received in settlement of fee income (10 ) (359 )
Accrued interest converted to common stock 105 —
Changes in assets and liabilities:
Decrease (increase) in interest receivable 185 (982 )
Decrease (increase) in end-of-term payments 2,046 (1,825 )
Decrease in unearned income (1,794 ) (2,429 )
Increase in other assets (459 ) (292 )
Decrease in other accrued expenses (491 ) (1,066 )
Decrease in base management fee payable (101 ) (74 )
Net cash provided by operating activities 36,417 58,330
Cash flows from financing activities: **** ****
Repayment of 2022 Asset-Backed Notes (46,909 ) —
Proceeds from issuance of common stock, net of offering costs 3,560 29,110
Advances on Credit Facilities 15,000 50,000
Repayment of Credit Facilities — (70,000 )
Debt issuance costs (2,155 ) (3,337 )
Distributions paid (25,630 ) (22,951 )
Net cash used in financing activities (56,134 ) (17,178 )
Net (decrease) increase in cash, cash equivalents and restricted cash (19,717 ) 41,152
Cash, cash equivalents and restricted cash: **** ****
Beginning of period 100,868 75,722
End of period $ 81,151 $ 116,874
Supplemental disclosure of cash flow information:
Cash paid for interest $ 15,490 $ 15,237
Supplemental non-cash operating and financing activities:
Refinanced debt investment balances $ 46,250 $ 11,250
Warrant investments received and recorded as unearned income $ 278 $ 858
Debt converted to common stock $ 12,500 $ —
Distributions payable $ 13,869 $ 11,894
End-of-term payments receivable $ 11,482 $ 13,641
Non-cash income $ 4,150 $ 7,983

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the consolidated statements of assets and liabilities to the total amount shown at the end of the applicable period in the consolidated statements of cash flows:

June 30,
2025 2024
Cash $ 24,664 $ 81,333
Investments in money market funds 53,261 32,320
Restricted investments in money market funds 3,226 3,221
Total cash, cash equivalents and restricted cash $ 81,151 $ 116,874

See Notes to Consolidated Financial Statements

6

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2025

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
Non-Affiliate Investments — 213.3% (8) **** **** ****
Non-Affiliate Debt Investments — 203.8% (8) **** **** ****
Non-Affiliate Debt Investments — Life Science — 97.2% (8) **** ****
Castle Creek Biosciences, Inc. (2)(12) Biotechnology Term Loan 12.00 % Prime 4.25 % 12.00 % — 4.00 % March 1, 2028 10,000 9,933 9,933
Term Loan 12.00 % Prime 4.25 % 12.00 % — 4.00 % March 1, 2028 5,500 5,463 5,463
Term Loan 12.00 % Prime 4.25 % 12.00 % — 4.00 % March 1, 2028 5,000 4,967 4,967
Term Loan 12.00 % Prime 4.25 % 12.00 % — 4.00 % March 1, 2028 5,000 4,967 4,967
Emalex Biosciences, Inc. (2)(12) Biotechnology Term Loan 12.22 % Prime 4.72 % 9.75 % — 5.00 % November 1, 2025 1,667 1,658 1,658
Term Loan 12.22 % Prime 4.72 % 9.75 % — 5.00 % May 1, 2026 4,167 4,155 4,155
Greenlight Biosciences, Inc. (2)(12) Biotechnology Term Loan 13.25 % Prime 5.75 % 9.00 % — 3.00 % July 1, 2025 167 167 167
Term Loan 13.25 % Prime 5.75 % 9.00 % — 3.00 % July 1, 2025 83 83 83
KSQ Therapeutics, Inc. (2)(12) Biotechnology Term Loan 11.25 % Prime 4.75 % 10.75 % — 5.00 % April 1, 2030 4,750 4,734 4,734
Term Loan 11.25 % Prime 4.75 % 10.75 % — 5.00 % April 1, 2030 4,750 4,734 4,734
Term Loan 11.25 % Prime 4.75 % 10.75 % — 5.00 % April 1, 2030 4,750 4,734 4,734
Term Loan 11.25 % Prime 3.75 % 10.75 % — 5.00 % April 1, 2030 4,750 4,734 4,734
Long Grove Pharmaceuticals, LLC (2)(12) Biotechnology Term Loan 8.32 % (11) 1-month SOFR 4.00 % 6.00 % — — February 27, 2031 10,138 9,919 9,919
Native Microbials, Inc (2)(12) Biotechnology Term Loan 12.75 % Prime 5.25 % 8.50 % — 5.00 % November 1, 2026 2,125 2,118 2,118
Term Loan 12.75 % Prime 5.25 % 8.50 % — 5.00 % November 1, 2026 1,417 1,411 1,411
Provivi, Inc. (2)(12)(14) Biotechnology Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.30 % January 1, 2027 3,482 3,434 1,443
Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.30 % January 1, 2027 3,482 3,434 1,443
Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.31 % January 1, 2027 1,741 1,714 720
Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.31 % January 1, 2027 1,741 1,714 720
Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.31 % January 1, 2027 1,741 1,713 720
Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.31 % January 1, 2027 1,741 1,713 720
Stealth Biotherapeutics Inc. (2)(12) Biotechnology Term Loan 13.00 % Prime 5.50 % 8.75 % — 6.00 % October 1, 2025 810 801 801
Term Loan 13.00 % Prime 5.50 % 8.75 % — 6.00 % October 1, 2025 405 401 401
Tallac Therapeutics, Inc. (2)(12) Biotechnology Term Loan 12.25 % Prime 4.25 % 12.25 % — 14.00 % August 1, 2027 2,500 2,478 1,600
Term Loan 12.25 % Prime 4.25 % 12.25 % — 14.00 % August 1, 2027 2,500 2,478 1,600
Aerobiotix, LLC (2)(12)(14) Medical Device Term Loan 9.00 % Fixed — — — 18.00 % April 1, 2028 2,500 2,485 1,091
Term Loan 9.00 % Fixed — — — 18.00 % April 1, 2028 2,500 2,485 1,091
Term Loan 9.00 % Fixed — — — 18.00 % April 1, 2028 200 194 85

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2025

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
Ceribell, Inc. (2)(5)(12) Medical Device Term Loan 10.25 % Prime 2.75 % 9.25 % — 4.00 % March 1, 2029 5,000 4,826 4,826
Term Loan 10.25 % Prime 2.75 % 9.25 % — 4.00 % March 1, 2029 5,000 4,947 4,947
Term Loan 10.25 % Prime 2.75 % 9.25 % — 4.00 % March 1, 2029 4,000 3,957 3,957
Conventus Orthopaedics, Inc. (2)(12) Medical Device Term Loan 12.32 % Prime 4.82 % 9.25 % — 10.88 % July 1, 2026 2,801 2,769 2,769
Term Loan 12.32 % Prime 4.82 % 9.25 % — 10.88 % July 1, 2026 2,801 2,769 2,769
Infobionic, Inc. (2)(12) Medical Device Term Loan 12.00 % Prime 4.50 % 12.00 % — 2.00 % September 1, 2029 5,000 4,928 4,928
Term Loan 12.00 % Prime 4.50 % 12.00 % — 2.00 % September 1, 2029 5,000 4,928 4,928
Term Loan 12.00 % Prime 4.50 % 12.00 % — 2.00 % September 1, 2029 5,000 4,928 4,928
MicroTransponder, Inc. (2)(12) Medical Device Term Loan 12.25 % Prime 3.75 % 12.25 % — 3.50 % January 1, 2029 3,750 3,705 3,705
Term Loan 12.25 % Prime 3.75 % 12.25 % — 3.50 % January 1, 2029 3,750 3,705 3,705
MML US, Inc. (2)(12) Medical Device Term Loan 10.50 % (11) Prime 3.00 % 10.00 % — 3.00 % March 1, 2030 2,526 2,402 2,402
Term Loan 10.50 % (11) Prime 3.00 % 10.00 % — 3.00 % March 1, 2030 2,526 2,502 2,502
Term Loan 10.50 % (11) Prime 3.00 % 10.00 % — 3.00 % March 1, 2030 5,051 5,005 5,005
Term Loan 10.50 % (11) Prime 3.00 % 10.00 % — 3.00 % March 1, 2030 5,051 4,967 4,967
Term Loan 10.50 % (11) Prime 3.00 % 10.00 % — 3.00 % March 1, 2030 5,013 5,002 5,002
Term Loan 10.50 % (11) Prime 3.00 % 10.00 % — 3.00 % March 1, 2030 5,013 4,964 4,964
Onkos Surgical, Inc. (2)(12) Medical Device Term Loan 10.75 % Prime 3.25 % 10.75 % — 4.00 % January 1, 2030 10,000 9,832 9,832
Term Loan 10.75 % Prime 3.25 % 10.75 % — 4.00 % January 1, 2030 10,000 9,859 9,859
Term Loan 10.75 % Prime 3.25 % 10.75 % — 4.00 % January 1, 2030 5,000 4,930 4,930
Term Loan 10.75 % Prime 3.25 % 10.75 % — 4.00 % January 1, 2030 5,000 4,930 4,930
Scientia Vascular, Inc. (2)(12) Medical Device Term Loan 10.25 % Prime 2.75 % 10.25 % — 4.00 % July 1, 2030 10,000 9,838 9,838
Term Loan 10.25 % Prime 2.75 % 10.25 % — 4.00 % July 1, 2030 10,000 9,880 9,880
Term Loan 10.25 % Prime 2.75 % 10.25 % — 4.00 % July 1, 2030 5,000 4,940 4,940
Term Loan 10.25 % Prime 2.75 % 10.25 % — 4.00 % July 1, 2030 1,500 1,482 1,482
Sonex Health, Inc. (2)(12) Medical Device Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % September 1, 2027 2,500 2,484 2,484
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % September 1, 2027 2,500 2,484 2,484
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % September 1, 2027 5,000 4,969 4,969
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % September 1, 2027 5,000 4,969 4,969
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % April 1, 2028 3,750 3,719 3,719
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % April 1, 2028 3,750 3,719 3,719
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % April 1, 2028 3,750 3,719 3,719
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % April 1, 2028 3,750 3,719 3,719
Spineology, Inc. (2)(12) Medical Device Term Loan 12.50 % Prime 5.00 % 12.00 % — 1.00 % August 1, 2029 5,000 4,925 4,925
Term Loan 12.50 % Prime 5.00 % 12.00 % — 1.00 % August 1, 2029 4,250 4,186 4,186
Term Loan 12.50 % Prime 5.00 % 12.00 % — 1.00 % August 1, 2029 4,250 4,187 4,187
Term Loan 12.50 % Prime 5.00 % 12.00 % — 1.00 % August 1, 2029 2,500 2,463 2,463

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2025

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
Vero Biotech, Inc. (2)(12) Medical Device Term Loan 12.25 % Prime 3.75 % 12.25 % — 4.00 % January 1, 2029 15,000 14,768 14,768
Term Loan 12.25 % Prime 3.75 % 12.25 % — 4.00 % January 1, 2029 10,000 9,845 9,845
Term Loan 12.25 % Prime 3.75 % 12.25 % — 4.00 % January 1, 2029 5,000 4,922 4,922
Term Loan 12.25 % Prime 3.75 % 12.25 % — 4.00 % January 1, 2029 2,500 2,461 2,461
Total Non-Affiliate Debt Investments — Life Science 288,355 275,746
Non-Affiliate Debt Investments — Sustainability — 10.2% (8) ****
SparkCharge, Inc. (2)(12) Alternative Energy Term Loan 12.00 % Prime 4.00 % 12.00 % — 5.00 % May 1, 2029 2,500 2,343 2,343
Term Loan 12.00 % Prime 4.00 % 12.00 % — 5.00 % May 1, 2029 2,500 2,466 2,466
Pivot Bio, Inc.(2)(12) Energy Efficiency Term Loan 12.00 % Prime 4.00 % 12.00 % — 4.00 % February 1, 2029 5,000 4,852 4,852
Term Loan 12.00 % Prime 4.00 % 12.00 % — 4.00 % February 1, 2029 5,000 4,957 4,957
Soli Organic, Inc. (2)(12)(13) Other Sustainability Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.75 % April 1, 2026 5,000 4,941 3,161
Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.75 % April 1, 2026 2,500 2,471 1,581
Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.75 % May 1, 2026 5,000 4,941 3,161
Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.75 % May 1, 2026 2,500 2,471 1,581
Term Loan 13.00 % Prime 5.50 % 11.75 % — 2.75 % December 1, 2026 5,000 4,939 3,161
Term Loan 13.00 % Prime 5.50 % 11.75 % — 2.75 % December 1, 2026 2,500 2,469 1,580
Total Non-Affiliate Debt Investments — Sustainability 36,850 28,843

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2025

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
Non-Affiliate Debt Investments — Technology — 61.0% (8)
Havenly, Inc. (2)(12) Consumer-related Technologies Term Loan 12.50 % Prime 5.00 % 5.00 % — 10.40 % March 1, 2027 1,556 1,296 1,296
Term Loan 12.50 % Prime 5.00 % 5.00 % — 10.40 % March 1, 2027 2,333 2,019 2,019
Term Loan 11.00 % Prime 3.50 % 10.50 % — 7.78 % February 1, 2028 2,813 2,813 2,813
Term Loan 11.00 % Prime 3.50 % 10.50 % — 7.78 % February 1, 2028 2,813 2,813 2,813
Lyrical Foods, Inc. (2)(12) Consumer-related Technologies Term Loan 11.00 % Prime 3.50 % 9.00 % — 5.00 % July 1, 2028 2,679 2,768 2,289
NextCar Holding Company, Inc. (2)(12)(13) Consumer-related Technologies Term Loan 13.25 % (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 6,313 5,275 931
Term Loan 13.25 % (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 3,157 2,637 465
Term Loan 13.25 % (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 2,525 2,110 372
Term Loan 13.25 % (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 3,157 2,637 465
Term Loan 13.25 % (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 3,788 3,165 558
Term Loan 13.25 % (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 3,157 2,637 465
Term Loan 13.25 % (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 6,313 5,275 931
Term Loan 13.25 % (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 3,157 2,637 465
Optoro, Inc. (2)(12) Consumer-related Technologies Term Loan 13.75 % Prime 6.25 % 9.50 % — 4.00 % August 1, 2027 2,500 2,464 2,464
Term Loan 13.75 % Prime 6.25 % 9.50 % — 4.00 % July 1, 2028 1,875 1,816 1,816
BriteCore Holdings, Inc. (2)(12) Software Term Loan 14.00 % Prime 5.50 % 14.00 % — 3.00 % October 1, 2028 5,000 4,952 4,952
Term Loan 14.00 % Prime 5.50 % 14.00 % — 3.00 % October 1, 2028 2,500 2,476 2,476
Term Loan 14.00 % Prime 5.50 % 14.00 % — 3.00 % October 1, 2028 2,500 2,476 2,476
Term Loan 14.00 % Prime 5.50 % 14.00 % — 3.00 % October 1, 2028 2,500 2,476 2,476
Term Loan 14.00 % Prime 5.50 % 14.00 % — 3.00 % April 1, 2029 2,500 2,472 2,472
Term Loan 14.00 % Prime 5.50 % 14.00 % — 3.00 % February 1, 2030 2,500 2,467 2,467
Crafty Holdings, Inc. (2)(12) Software Term Loan 12.00 % Prime 4.50 % 12.00 % — 4.00 % January 1, 2029 5,000 4,856 4,856
Term Loan 12.00 % Prime 4.50 % 12.00 % — 4.00 % January 1, 2029 5,000 4,921 4,921
Term Loan 12.00 % Prime 4.50 % 12.00 % — 4.00 % January 1, 2029 5,000 4,921 4,921
Dropoff, Inc. (2)(12) Software Term Loan 14.00 % Prime 6.50 % 9.75 % — 3.50 % June 1, 2026 6,804 6,762 3,741
Term Loan 14.00 % Prime 6.50 % 9.75 % — 3.50 % June 1, 2026 6,280 6,242 3,454
Term Loan 14.00 % Prime 6.50 % 9.75 % — 3.50 % June 1, 2026 2,617 2,604 1,441
HappyCo, Inc. (2)(12) Software Term Loan 11.50 % Prime 4.00 % 11.00 % — 2.75 % February 1, 2030 3,000 2,940 2,940
Term Loan 11.50 % Prime 4.00 % 11.00 % — 2.75 % February 1, 2030 3,000 2,966 2,966
Term Loan 11.50 % Prime 4.00 % 11.00 % — 2.75 % February 1, 2030 2,000 1,975 1,975

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2025

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
Kodiak Robotics, Inc. (2)(12) Software Term Loan 13.00 % Prime 5.50 % 10.25 % — 4.00 % April 1, 2026 8,333 8,313 8,313
Term Loan 13.00 % Prime 5.50 % 10.25 % — 4.00 % April 1, 2026 8,333 8,313 8,313
Term Loan 13.00 % Prime 5.50 % 10.25 % — 4.00 % April 1, 2026 4,167 4,156 4,156
Term Loan 13.00 % Prime 5.50 % 10.25 % — 4.00 % April 1, 2026 4,167 4,156 4,156
MasteryPrep, LLC (2)(12) Software Term Loan 11.50 % Prime 4.00 % 11.50 % — 3.75 % July 1, 2029 7,500 7,375 7,375
Term Loan 11.50 % Prime 4.00 % 11.50 % — 3.75 % July 1, 2029 7,500 7,425 7,425
Mirantis, Inc. (2)(12) Software Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2028 5,000 4,945 4,945
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2028 5,000 4,945 4,945
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2028 5,000 4,945 4,945
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2028 5,000 4,945 4,945
Noodle Partners, Inc. (2)(12) Software Term Loan 12.50 % Prime 5.00 % 12.00 % — 3.00 % March 1, 2027 8,750 8,701 8,701
Term Loan 12.50 % Prime 5.00 % 12.00 % — 3.00 % March 1, 2027 4,375 4,350 4,350
Term Loan 12.50 % Prime 5.00 % 12.00 % — 3.00 % March 1, 2027 4,375 4,350 4,350
Supply Network Visibility Holdings LLC (2)(12) Software Term Loan 12.00 % Prime 4.25 % 12.00 % — 2.50 % June 1, 2028 2,500 2,415 2,415
Term Loan 12.00 % Prime 4.25 % 12.00 % — 2.50 % June 1, 2028 3,500 3,493 3,493
Term Loan 12.00 % Prime 4.25 % 12.00 % — 2.50 % June 1, 2028 2,500 2,495 2,495
Term Loan 12.00 % Prime 4.25 % 12.00 % — 2.50 % June 1, 2028 1,500 1,497 1,497
Term Loan 12.00 % Prime 4.25 % 12.00 % — 2.50 % July 1, 2029 5,000 4,986 4,986
Ursa Space Systems, Inc. (2)(12) Software Term Loan 12.00 % Prime 4.00 % 12.00 % — 3.00 % November 1, 2028 2,500 2,374 2,374
Term Loan 12.00 % Prime 4.00 % 12.00 % — 3.00 % November 1, 2028 2,500 2,450 2,450
Viken Detection Corporation (2)(12) Software Term Loan 11.75 % Prime 4.00 % 11.75 % — 3.50 % June 1, 2027 4,000 3,970 3,970
Term Loan 11.75 % Prime 4.00 % 11.75 % — 3.50 % June 1, 2027 2,000 1,985 1,985
Term Loan 11.75 % Prime 4.00 % 11.75 % — 3.50 % June 1, 2027 2,000 1,985 1,985
Total Non-Affiliate Debt Investments — Technology 202,437 173,265
Non-Affiliate Debt Investments — Healthcare information and services — 35.4% (8)
Hound Labs Inc. (12)(13) Diagnostics Term Loan 13.50 % Prime 6.00 % 9.25 % — 3.50 % June 1, 2026 1,929 300 —
Term Loan 13.50 % Prime 6.00 % 9.25 % — 3.50 % June 1, 2026 1,607 1,575 —
Term Loan 13.50 % Prime 6.00 % 9.25 % — 3.50 % June 1, 2026 1,607 1,575 —
Term Loan 13.50 % Prime 6.00 % 9.25 % — 3.50 % June 1, 2026 964 150 —
Term Loan 13.50 % Prime 6.00 % 9.25 % — 3.50 % June 1, 2026 3,214 3,152 —
Term Loan 14.00 % Fixed — — — 50.00 % March 1, 2025 300 300 —
Term Loan 14.00 % Fixed — — — 100.00 % March 1, 2025 250 250 —
Parse Biosciences, Inc. (2)(12) Diagnostics Term Loan 11.50 % Prime 3.25 % 11.50 % — 5.00 % January 1, 2028 5,000 4,840 4,840
Term Loan 11.50 % Prime 3.25 % 11.50 % — 5.00 % January 1, 2028 5,000 4,925 4,925

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2025

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
BrightInsight, Inc. (2)(12) Software Term Loan 13.00 % Prime 5.50 % 9.50 % — 3.00 % August 1, 2027 7,000 6,968 6,968
Term Loan 13.00 % Prime 5.50 % 9.50 % — 3.00 % August 1, 2027 3,500 3,484 3,484
Term Loan 13.00 % Prime 5.50 % 9.50 % — 3.00 % August 1, 2027 3,500 3,484 3,484
Term Loan 13.00 % Prime 5.50 % 9.50 % — 3.00 % April 1, 2028 2,750 2,725 2,725
Elligo Health Research, Inc. (2)(12) Software Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2027 10,000 9,912 9,912
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2027 5,000 4,956 4,956
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2027 5,000 4,956 4,956
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2027 5,000 4,956 4,956
SafelyYou, Inc. (2)(12) Software Term Loan 11.00 % Prime 3.25 % 11.00 % — 5.00 % June 1, 2027 5,000 4,960 4,960
Term Loan 11.00 % Prime 3.25 % 11.00 % — 5.00 % June 1, 2027 5,000 4,960 4,960
GT Medical Technologies, Inc. (2)(12) Other Healthcare Services Term Loan 11.25 % Prime 3.25 % 11.25 % — 4.00 % October 1, 2029 3,750 3,600 3,600
Term Loan 11.25 % Prime 3.25 % 11.25 % — 4.00 % October 1, 2029 3,750 3,700 3,700
Term Loan 11.25 % Prime 3.25 % 11.25 % — 4.00 % October 1, 2029 7,500 7,400 7,400
Hometeam Technologies, Inc. (2)(12) Other Healthcare Services Term Loan 11.25 % Prime 3.25 % 11.25 % — 3.50 % August 1, 2029 5,000 4,858 4,858
Term Loan 11.25 % Prime 3.25 % 11.25 % — 3.50 % August 1, 2029 5,000 4,958 4,958
Term Loan 11.25 % Prime 3.25 % 11.25 % — 3.50 % August 1, 2029 5,000 4,958 4,958
Term Loan 11.25 % Prime 3.25 % 11.25 % — 3.50 % August 1, 2029 5,000 4,958 4,958
Term Loan 11.25 % Prime 3.25 % 11.25 % — 3.50 % August 1, 2029 5,000 4,958 4,958
Total Non-Affiliate Debt Investments — Healthcare information and services 107,818 100,516
Total Non- Affiliate Debt Investments $ 635,460 $ 578,370
Cost of Fair
--- --- --- --- --- --- --- --- ---
Portfolio Company (1)(3) Sector Type of Investment (7) Number of Shares Investments (6)(9) Value (9)
Non-Affiliate Warrant Investments — 7.6% (8)
Non-Affiliate Warrants — Life Science — 2.1% (8)
Avalo Therapeutics, Inc. (2)(5)(12) Biotechnology Common Stock Warrant 117 $ 311 $ —
BioVaxys Technology Corp. (2)(5)(12) Biotechnology Common Stock Warrant 2,800,000 5 3
Castle Creek Biosciences, Inc. (2)(12) Biotechnology Preferred Stock Warrant 9,775 279 257
Emalex Biosciences, Inc. (2)(12) Biotechnology Preferred Stock Warrant 110,402 176 452
Imunon, Inc. (2)(5)(12) Biotechnology Common Stock Warrant 19,671 65 —
KSQ Therapeutics, Inc. (2)(12) Biotechnology Preferred Stock Warrant 105,768 118 125
Mustang Bio, Inc. (2)(5)(12) Biotechnology Common Stock Warrant 568 146 —
Native Microbials, Inc (2)(12) Biotechnology Preferred Stock Warrant 112,879 73 64
PDS Biotechnology Corporation (2)(5)(12) Biotechnology Common Stock Warrant 299,848 160 4
Provivi, Inc. (2)(12) Biotechnology Common Stock Warrant 175,098 278 —
Provivi, Inc. (2)(12) Biotechnology Preferred Stock Warrant 709,980 312 —
Stealth Biotherapeutics Inc. (2)(12) Biotechnology Common Stock Warrant 318,181 264 5
Tallac Therapeutics, Inc. (2)(12) Biotechnology Preferred Stock Warrant 2,266,669 198 —
Xeris Pharmaceuticals, Inc. (2)(5)(12) Biotechnology Common Stock Warrant 126,000 73 229
Aerin Medical, Inc. (2)(12) Medical Device Preferred Stock Warrant 1,818,183 65 1,349
Aerobiotix, LLC (2)(12) Medical Device Preferred Stock Warrant 8,800 48 —
Canary Medical Inc. (2)(12) Medical Device Preferred Stock Warrant 12,153 86 1
Ceribell, Inc. (2)(5)(12) Medical Device Preferred Stock Warrant 89,903 147 927
Cognoa, Inc. (2)(12) Medical Device Common Stock Warrant 30,585 — 2
Cognoa, Inc. (2)(12) Medical Device Preferred Stock Warrant 4,635,991 162 1
Conventus Orthopaedics, Inc. (2)(12) Medical Device Preferred Stock Warrant 13,203,395 268 1
CSA Medical, Inc. (2)(12) Medical Device Preferred Stock Warrant 4,939,813 174 468
CVRx, Inc. (2)(5)(12) Medical Device Common Stock Warrant 47,410 76 9
Infobionic, Inc. (2)(12) Medical Device Preferred Stock Warrant 5,361,130 231 169

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2025

(Dollars in thousands)

Cost of Fair
Portfolio Company (1)(3) Sector Type of Investment (7) Number of Shares Investments (6)(9) Value (9)
Magnolia Medical Technologies, Inc. (2)(12) Medical Device Preferred Stock Warrant 900,043 194 549
Meditrina, Inc. (2)(12) Medical Device Preferred Stock Warrant 233,993 83 31
MicroTransponder, Inc. (2)(12) Medical Device Preferred Stock Warrant 103,172 47 50
Onkos Surgical, Inc. (2)(12) Medical Device Preferred Stock Warrant 443,674 192 221
Scientia Vascular, Inc (2)(12) Medical Device Preferred Stock Warrant 58,410 163 487
Sonex Health, Inc. (2)(12) Medical Device Preferred Stock Warrant 2,637,133 275 258
Spineology, Inc. (2)(12) Medical Device Common Stock Warrant 27,139 143 107
Spineology, Inc. (2)(12) Medical Device Preferred Stock Warrant 22,551 17 28
VERO Biotech LLC (2)(12) Medical Device Preferred Stock Warrant 3,701 377 191
Total Non-Affiliate Warrants — Life Science 5,206 5,988
Non-Affiliate Warrants — Sustainability — 0.0% (8)
SparkCharge, Inc. (2)(12) Alternative Energy Preferred Stock Warrant 2,264,151 45 36
Pivot Bio, Inc. (2)(12) Energy Efficiency Preferred Stock Warrant 210,418 14 12
New Aerofarms, Inc. assignee of Aerofarms, Inc. (2)(12)(15) Other Sustainability Preferred Stock Warrant 400,000 81 12
LiquiGlide, Inc. (2)(12) Other Sustainability Preferred Stock Warrant 61,359 39 23
Soli Organic, Inc. (2)(12) Other Sustainability Common Stock Warrant 296 20 —
Soli Organic, Inc. (2)(12) Other Sustainability Preferred Stock Warrant 1,075 382 —
Temperpack Technologies, Inc. (2)(12) Other Sustainability Preferred Stock Warrant 49,693 178 37
Total Non-Affiliate Warrants — Sustainability 759 120
Non-Affiliate Warrants — Technology — 4.4% (8)
Axiom Space Holdings, Inc. (2)(12) Communications Common Stock Warrant 1,991 45 24
Intelepeer Holdings, Inc. (2)(12) Communications Preferred Stock Warrant 2,936,535 138 3,129
Alula Holdings, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 20,000 93 7
CAMP NYC, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 112,356 36 39
Clara Foods Co. (2)(12) Consumer-related Technologies Preferred Stock Warrant 46,745 30 42
Divergent Technologies, Inc. (2)(12) Consumer-related Technologies Common Stock Warrant 9,801 79 4
Divergent Technologies, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 45,273 454 442
Havenly, Inc. (2)(12) Consumer-related Technologies Common Stock Warrant 1,446,429 3,178 3,107
MyForest Foods Co. (2)(12) Consumer-related Technologies Preferred Stock Warrant 250 29 24
NextCar Holding Company, Inc. (2)(12) Consumer-related Technologies Common Stock Warrant 12,618 188 —
NextCar Holding Company, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 3,913,723 9 —
Optoro, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 11,550 182 —
Primary Kids, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 553,778 57 333
Quip NYC Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 6,191 325 —
Updater, Inc.(2)(12) Consumer-related Technologies Preferred Stock Warrant 108,333 34 26
CPG Beyond, Inc. (2)(12) Data Storage Preferred Stock Warrant 500,000 242 226
Silk, Inc. (2)(12) Data Storage Preferred Stock Warrant 394,110 175 104
Global Worldwide LLC (2)(12) Internet and Media Preferred Stock Warrant 245,810 75 —
Rocket Lawyer Incorporated (2)(12) Internet and Media Preferred Stock Warrant 261,721 92 216
Skillshare, Inc. (2)(12) Internet and Media Preferred Stock Warrant 139,074 162 389
Liqid, Inc. (2)(12) Networking Preferred Stock Warrant 344,102 364 121
BriteCore Holdings, Inc. (2)(12) Software Preferred Stock Warrant 161,215 98 237
Crafty Holdings, Inc. (2)(12) Software Common Stock Warrant 243,278 132 132
Dropoff, Inc. (2)(12) Software Common Stock Warrant 516,535 455 —
E La Carte, Inc. (2)(5)(12) Software Common Stock Warrant 147,361 60 —
HappyCo, Inc. (2)(12) Software Preferred Stock Warrant 96,228 26 23
Everstream Holdings, LLC (2)(12) Software Preferred Stock Warrant 525,000 82 24
Kodiak Robotics, Inc. (2)(12) Software Preferred Stock Warrant 639,918 273 2,551
Lemongrass Holdings, Inc. (2)(12) Software Preferred Stock Warrant 101,308 34 43
Mirantis, Inc. (2)(12) Software Common Stock Warrant 948,275 223 425

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2025

(Dollars in thousands)

Cost of Fair
Portfolio Company (1)(3) Sector Type of Investment (7) Number of Shares Investments (6)(9) Value (9)
Noodle Partners, Inc. (2)(12) Software Preferred Stock Warrant 84,037 116 —
OneNetworks, Inc. (2)(12) Software Preferred Stock Warrant 184,646 3 3
Revinate Holdings, Inc. (2)(12) Software Preferred Stock Warrant 682,034 44 87
SIGNiX, Inc. (12) Software Preferred Stock Warrant 186,235 177 —
Slingshot Aerospace, Inc. (2)(12) Software Preferred Stock Warrant 309,208 123 30
Supply Network Visibility Holdings LLC (2)(12) Software Preferred Stock Warrant 682 64 73
Topia Mobility, Inc. (2)(12) Software Common Stock Warrant 30,496 138 —
Ursa Space Systems, Inc. (2)(12) Software Preferred Stock Warrant 1,075,072 151 144
Viken Detection Corporation (2)(12) Software Preferred Stock Warrant 345,443 120 374
xAd, Inc. (2)(12) Software Preferred Stock Warrant 4,343,348 177 6
Total Non-Affiliate Warrants — Technology 8,483 12,385
Non-Affiliate Warrants — Healthcare information and services — 1.1% (8)
Hound Labs, Inc (12) Diagnostics Preferred Stock Warrant 451,796 46 —
Parse Biosciences, Inc. (2)(12) Diagnostics Common Stock Warrant 32,244 71 43
Parse Biosciences, Inc. (2)(12) Diagnostics Preferred Stock Warrant 184,253 166 132
Kate Farms, Inc. (2)(12) Other Healthcare Preferred Stock Warrant 82,965 102 2,712
GT Medical Technologies, Inc. (2)(12) Other Healthcare Preferred Stock Warrant 195,984 83 92
BrightInsight, Inc. (2)(12) Software Preferred Stock Warrant 85,066 167 —
Elligo Health Research, Inc. (2)(12) Software Preferred Stock Warrant 652,250 191 13
SafelyYou, Inc. (2)(12) Software Preferred Stock Warrant 206,983 164 144
Total Non-Affiliate Warrants — Healthcare information and services 990 3,136
Total Non-Affiliate Warrants 15,438 21,629
Non-Affiliate Other Investments — Life Science — 0.0% (8)
Lumithera, Inc. (12) Medical Device Royalty Agreement 1,116 —
Robin Healthcare, Inc. (2)(12) Medical Device Royalty Agreement 7,330 —
Total Non-Affiliate Other Investments 8,446 —
Non-Affiliate Equity — 1.9% (8)
Cadrenal Therapeutics, Inc. (5) Biotechnology Common Stock 40,000 — 482
Castle Creek Biosciences, Inc. (12) Biotechnology Common Stock 1,162 250 250
Emalex Biosciences, Inc. (12) Biotechnology Preferred Stock 47,461 545 655
Axiom Space, Inc. (12) Communications Preferred Stock 1,810 261 306
PebblePost, Inc. (2)(12) Communications Preferred Stock 56,212 73 73
Caastle, Inc. (2)(12) Consumer-related Technologies Preferred Stock 242,180 2,681 —
Getaround, Inc. (2)(5) Consumer-related Technologies Common Stock 87,082 253 1
NextCar Holding Company, Inc. (2)(12) Consumer-related Technologies Preferred Stock 2,688,971 89 —
SnagAJob.com, Inc. (12) Consumer-related Technologies Common Stock 82,974 9 —
Cognoa, Inc. (2)(12) Medical Device Common Stock 8,123,877 487 487
Cognoa, Inc. (2)(12) Medical Device Preferred Stock 1,059,636 250 250
Lumithera, Inc. (12) Medical Device Common Stock 392,651 2,000 1,700
Tigo Energy, Inc. (5) Other Sustainability Common Stock 5,205 111 7
Decisyon, Inc. (12) Software Preferred Stock 280,000 2,800 1,281
Total Non-Affiliate Equity 9,809 5,492
Total Non-Affiliate Portfolio Investment Assets $ 669,153 $ 605,491

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2025

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cost of Investments (6)(9) Fair Value (9)
Non-Controlled Affiliate Investments — 2.4% (8)
Non-Controlled Affiliate Other Investments — 2.4% (8)
Evelo Holdings, Inc. (2)(5)(12)(16) Biotechnology Other Investment $ 22,366 $ 6,707
Total Non-Controlled Affiliate Other Investments 22,366 6,707
Cost of Fair
--- --- --- --- --- --- --- --- ---
Portfolio Company (1)(3) Sector Type of Investment (7) Number of Shares Investments (6)(9) Value (9)
Non-controlled Affiliate Equity — 0.0% (8)
Aulea Medical, Inc. (12) Medical Device Common Stock 660,537 — —
Evelo Holdings, Inc. (2)(5)(12) Biotechnology Common Stock 2,164,502 5,000 —
Total Non-Controlled Affiliate Equity 5,000 —
Non-controlled Affiliate Warrants — 0.0% (8)
Evelo Holdings, Inc. (2)(5)(12) Biotechnology Common Stock 23,196 127 —
Total Non-Controlled Affiliate Warrants 127 —
Total Non-Controlled Affiliate Portfolio Investment Assets $ 27,493 $ 6,707
Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Controlled Affiliate Investments — 3.7% (8) **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Controlled Affiliate Debt Investments — 0.3% (8) **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Nexii, Inc. (12) Other Sustainability Term Loan 10.00 % Fixed — — — — July 1, 2027 $ 790 $ 801 $ 801
Total Controlled Affiliate Debt Investments $ 801 $ 801
Cost of Fair
--- --- --- --- --- --- --- --- ---
Portfolio Company (1)(3) Sector Type of Investment (7) Number of Shares Investments (6)(9) Value (9)
Controlled Affiliate Equity — 2.8% (8)
Better Place Forests Co. (12) Consumer-related Technologies Common Stock 2,278,272 639 —
Better Place Forests Co. (12) Consumer-related Technologies Preferred Stock 5,350,142 3,922 —
Nexii, Inc. (2)(12) Other Sustainability Common Stock 108,320 3,297 —
Nexii, Inc. (2)(12) Other Sustainability Preferred Stock 542 3,419 7,910
Swift Health Systems Inc. (2)(12) Medical Device Preferred Stock 4,233,666 12,012 —
Total Controlled Affiliate Equity 23,289 7,910
Controlled Affiliate Other Investments — 0.6% (8)
Better Place Forests Co. (12)(17) Consumer-related Technologies Other Investment 10,703 879
HIMV LLC (12)(18) Biotechnology Other Investment 5,880 865
Swift Health Systems Inc. (2)(12)(19) Medical Device Other Investment 8,529 -
Total Controlled Affiliate Other 25,112 1,744
Total Controlled Affiliate Portfolio Investment Assets 49,202 $ 10,455
Total Portfolio Investment Assets — 219.4% (8) $ 745,848 $ 622,653
Short Term Investments - Unrestricted Investments - 18.8% (8)
--- --- --- --- ---
US Bank Money Market Deposit Account 53,261 53,261
Total Short Term Investments - Unrestricted Investments $ 53,261 $ 53,261
Short Term Investments - Restricted Investments - 1.1% (8)
US Bank Money Market Deposit Account 3,226 3,226
Total Short Term Investments - Restricted Investments $ 3,226 $ 3,226

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2025

(Dollars in thousands)

(1) All investments of the Company are in entities which are organized under the laws of the United States and have a principal place of business in the United States, unless otherwise noted.
(2) Has been pledged as collateral under the revolving credit facility (the “Key Facility”) with KeyBank National Association (“Key”), a credit facility (the “NYL Facility”) led by New York Life Insurance Company, a credit facility (the “Nuveen Facility”, together with the Key Facility and the NYL Facility, the “Credit Facilities”) led by Nuveen Alternatives Advisors LLC, and/or the term debt securitization in connection with which an affiliate of the Company made an offering of $100.0 million in aggregate principal amount of fixed rate asset-backed notes that were issued in conjunction with the $157.8 million securitization of secured loans the Company completed on *November 9, 2022 (*the “2022 Asset-Backed Notes”).
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(3) All non-affiliate investments are investments in which the Company owns less than 5% of the voting securities of the portfolio company. All non-controlled affiliate investments are investments in which the Company owns 5% or more of the voting securities of the portfolio company but not more than 25% of the voting securities of the portfolio company. All controlled affiliate investments are investments in which the Company owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement).
(4) All interest is payable in cash due monthly in arrears, unless otherwise indicated, and applies only to the Company’s debt investments. Interest rate is the annual interest rate on the debt investment and does not include end-of-term payments (“ETPs”), and any additional fees related to the investments, such as deferred interest, commitment fees or prepayment fees. Debt investments are at variable rates for the term of the debt investment, unless otherwise indicated. For each debt investment, the current interest rate in effect as of  June 30, 2025 is provided.
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(5) Portfolio company is a public company.
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(6) For debt investments, represents principal balance less unearned income.
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(7) Warrants, Equity and Other Investments are non-income producing.
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(8) Value as a percent of net assets.
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(9) As of June 30, 2025, 0.0% of the Company's total assets on a cost and fair value basis are in non-qualifying assets under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying assets unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets.
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(10) ETPs are contractual fixed-interest payments due in cash at the maturity date of the applicable debt investment, including upon any prepayment, and are a fixed percentage of the original principal balance of the debt investments unless otherwise noted. Interest will accrue during the life of the debt investment on each ETP and will be recognized as non-cash income until it is actually paid. Therefore, a portion of the incentive fee the Company may pay its Advisor will be based on income that the Company has not yet received in cash.
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(11) Investment has a PIK feature in which the accrued interest or a portion of the accrued interest is added to the then-outstanding principal amount of the investment.
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(12) The fair value of the investment was valued using significant unobservable inputs.
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(13) Debt investment is on non-accrual status as of June 30, 2025.
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(14) Debt investment is on non-accrual status as of June 30, 2025 and interest payments will be recognized as income on a cash basis.
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(15) On or about  *September 13, 2023,*in connection with New Aerofarms, Inc. purchase of substantially all of the assets of Aerofarms, Inc. in a bankruptcy process, New Aerofarms, Inc. assumed all of the debt investments of Horizon in Aerofarms, Inc.
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(16) The investment originally consisted of debt investments in Evelo Biosciences Inc. (“Evelo”). Evelo was a clinical stage life science company that was unable to raise additional capital to continue as a going concern and, through a series of transactions, Evelo became a subsidiary of Evelo Holdings, Inc. (“Evelo Holdings”) and Evelo Holdings assumed the indebtedness of Evelo to the Company.  Evelo Holdings is not an operating company but holds certain contractual rights to contingent payments and owns equity in Evelo, as well as certain assets it seeks to sell. The Company has a first priority security interest in the assets of Evelo Holdings, so if any payments are received by Evelo Holdings or any of its equity holdings or other assets are sold, the Company will receive substantially all of the proceeds from the same, until such time, if ever, that all of the indebtedness is repaid. Accordingly, the Company characterizes this investment as an “Other Investment” rather than a “Debt Investment”.
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(17) The investment originally consisted of debt investments in Better Place Forests Co. (“Better Place”).  On April 30, 2025, Better Place transferred ownership of all of its right, title and interest in and to all of its tangible and intangible assets to Better Place ABC, LLC, a California limited liability company (“BP ABC”) and BP ABC sold a portion of such assets to Memorial Forests Foundation in consideration for, among other things, the assumption of certain liabilities of BP ABC. The Company has a first priority security interest in the remaining assets of BP ABC, including certain rights to employee retention tax credits, so if any payments are received by BP ABC, the Company will receive a portion of the proceeds from the same, until such time, if ever, that all of the obligations of BP ABC to the Company are repaid. Accordingly, the Company characterizes this investment as an “Other Investment” rather than a “Debt Investment”.
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(18) By an Order of the Supreme Court of Nova Scotia made  *May 1, 2023,*as amended and restated by an Order of the CCAA Court made  May 5,IMV, Inc. (“IMV”) commenced proceedings  (the “CCAA Proceedings”) under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended to seek creditor protection for IMV and on  *June 2, 2023,*IMV obtained recognition of the CCAA Proceedings under Chapter 15 of the United States Bankruptcy Code in proceedings before the United States Bankruptcy Court for the District of Delaware. In  *September 2023,*the Company, with its co-lender to IMV, credit-bid and acquired substantially all of the assets of IMV through HIMV LLC, an entity formed to acquire the assets of IMV. HIMV LLC is 70% owned by the Company and 30% owned by such co-lender.
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(19) The investment originally consisted of debt investments in Swift Health Systems Inc. (“Swift”). In the second quarter, Swift shut down all operations and began a process to sell its assets. The Company has a lien on the assets of the Company and will receive a portion of any proceeds received from the sale of such assets. Accordingly, the Company characterizes this investment as an “Other Investment” rather than a “Debt Investment”.
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See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2024

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
Non-Affiliate Investments — 195.6% (8) ****
Non-Affiliate Debt Investments — 187.7% (8) ****
Non-Affiliate Debt Investments — Life Science — 77.8% (8) ****
Castle Creek Biosciences, Inc. (2)(12) Biotechnology Term Loan 12.88 % Prime 5.13 % 9.55 % 13.50 % 5.50 % May 1, 2026 $ 3,333 $ 3,326 $ 3,326
Term Loan 12.88 % Prime 5.13 % 9.55 % 13.50 % 5.50 % May 1, 2026 3,333 3,326 3,326
Term Loan 12.88 % Prime 5.13 % 9.55 % 13.50 % 5.50 % May 1, 2026 2,000 1,996 1,996
Term Loan 12.88 % Prime 5.13 % 9.55 % 13.50 % 5.50 % May 1, 2026 3,333 3,326 3,326
Term Loan 12.88 % Prime 5.13 % 9.55 % 13.50 % 5.50 % May 1, 2026 3,333 3,326 3,326
Term Loan 12.88 % Prime 5.13 % 9.55 % 13.50 % 5.50 % May 1, 2026 2,000 1,996 1,996
Emalex Biosciences, Inc. (2)(12) Biotechnology Term Loan 12.22 % Prime 4.72 % 9.75 % — 5.00 % November 1, 2025 4,167 4,144 4,144
Term Loan 12.22 % Prime 4.72 % 9.75 % — 5.00 % May 1, 2026 5,000 4,982 4,982
Greenlight Biosciences, Inc. (2)(12) Biotechnology Term Loan 13.25 % Prime 5.75 % 9.00 % — 3.00 % July 1, 2025 1,000 971 971
Term Loan 13.25 % Prime 5.75 % 9.00 % — 3.00 % July 1, 2025 500 486 486
KSQ Therapeutics, Inc. (2)(12) Biotechnology Term Loan 12.25 % Prime 4.75 % 8.50 % — 5.50 % May 1, 2027 6,250 6,220 6,220
Term Loan 12.25 % Prime 4.75 % 8.50 % — 5.50 % May 1, 2027 6,250 6,220 6,220
Native Microbials, Inc (2)(12) Biotechnology Term Loan 12.75 % Prime 5.25 % 8.50 % — 5.00 % November 1, 2026 2,875 2,862 2,862
Term Loan 12.75 % Prime 5.25 % 8.50 % — 5.00 % November 1, 2026 1,917 1,906 1,906
PDS Biotechnology Corporation (2)(5)(12) Biotechnology Term Loan 13.25 % Prime 5.75 % 9.75 % — 3.75 % September 1, 2026 8,750 8,712 8,712
Term Loan 13.25 % Prime 5.75 % 9.75 % — 3.75 % September 1, 2026 3,281 3,267 3,267
Term Loan 13.25 % Prime 5.75 % 9.75 % — 3.75 % September 1, 2026 3,281 3,267 3,267
Provivi, Inc. (2)(12) Biotechnology Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.30 % January 1, 2027 3,482 3,418 3,182
Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.30 % January 1, 2027 3,482 3,418 3,182
Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.31 % January 1, 2027 1,741 1,705 1,588
Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.31 % January 1, 2027 1,741 1,705 1,588
Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.31 % January 1, 2027 1,741 1,704 1,587
Term Loan 12.86 % Prime 5.36 % 9.50 % — 4.31 % January 1, 2027 1,741 1,704 1,587
Stealth Biotherapeutics Inc. (2)(12) Biotechnology Term Loan 13.00 % Prime 5.50 % 8.75 % — 6.00 % October 1, 2025 2,024 1,999 1,999
Term Loan 13.00 % Prime 5.50 % 8.75 % — 6.00 % October 1, 2025 1,012 1,000 1,000
Tallac Therapeutics, Inc. (2)(12) Biotechnology Term Loan 12.25 % Prime 4.25 % 12.25 % — 4.00 % August 1, 2027 2,500 2,471 2,471
Term Loan 12.25 % Prime 4.25 % 12.25 % — 4.00 % August 1, 2027 2,500 2,471 2,471
Aerobiotix, LLC (2)(12) Medical Device Term Loan 9.00 % Fixed — — — 18.00 % April 1, 2028 2,500 2,480 2,085
Term Loan 9.00 % Fixed — — — 18.00 % April 1, 2028 2,500 2,480 2,085
Term Loan 9.00 % Fixed — — — 18.00 % April 1, 2028 200 190 160

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2024

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
Candesant Biomedical, Inc. (2)(12) Medical Device Term Loan 11.50 % Prime 3.50 % 11.50 % — 5.00 % September 1, 2027 5,000 4,785 4,785
Term Loan 11.50 % Prime 3.50 % 11.50 % — 5.00 % September 1, 2027 2,500 2,468 2,468
Term Loan 11.50 % Prime 3.50 % 11.50 % — 5.00 % September 1, 2027 2,500 2,468 2,468
Ceribell, Inc. (2)(5)(12) Medical Device Term Loan 10.25 % Prime 2.75 % 9.25 % — 4.00 % March 1, 2029 5,000 4,820 4,820
Term Loan 10.25 % Prime 2.75 % 9.25 % — 4.00 % March 1, 2029 5,000 4,941 4,941
Term Loan 10.25 % Prime 2.75 % 9.25 % — 4.00 % March 1, 2029 4,000 3,952 3,952
Conventus Orthopaedics, Inc. (2)(12) Medical Device Term Loan 12.32 % Prime 4.82 % 9.25 % — 10.36 % July 1, 2025 3,187 3,168 3,168
Term Loan 12.32 % Prime 4.82 % 9.25 % — 10.36 % July 1, 2025 3,187 3,168 3,168
Infobionic, Inc. (2)(12) Medical Device Term Loan 12.25 % Prime 4.50 % 12.00 % — 2.00 % September 1, 2029 5,000 4,920 4,920
Term Loan 12.25 % Prime 4.50 % 12.00 % — 2.00 % September 1, 2029 5,000 4,920 4,920
Term Loan 12.25 % Prime 4.50 % 12.00 % — 2.00 % September 1, 2029 5,000 4,920 4,920
MicroTransponder, Inc. (2)(12) Medical Device Term Loan 12.25 % Prime 3.75 % 12.25 % — 3.50 % January 1, 2029 3,750 3,699 3,699
Term Loan 12.25 % Prime 3.75 % 12.25 % — 3.50 % January 1, 2029 3,750 3,699 3,699
Onkos Surgical, Inc. (2)(12) Medical Device Term Loan 10.75 % Prime 3.25 % 10.75 % — 4.00 % January 1, 2030 10,000 9,818 9,818
Term Loan 10.75 % Prime 3.25 % 10.75 % — 4.00 % January 1, 2030 10,000 9,845 9,845
Term Loan 10.75 % Prime 3.25 % 10.75 % — 4.00 % January 1, 2030 5,000 4,923 4,923
Term Loan 10.75 % Prime 3.25 % 10.75 % — 4.00 % January 1, 2030 5,000 4,923 4,923
Scientia Vascular, Inc. (2)(12) Medical Device Term Loan 12.50 % Prime 4.75 % 8.50 % — 5.00 % January 1, 2027 3,750 3,735 3,735
Term Loan 12.50 % Prime 4.75 % 8.50 % — 5.00 % January 1, 2027 3,750 3,735 3,735
Term Loan 13.00 % Prime 5.25 % 9.00 % — 5.00 % January 1, 2027 5,000 4,964 4,964
Term Loan 13.00 % Prime 5.25 % 9.00 % — 5.00 % January 1, 2027 5,000 4,937 4,937
Sonex Health, Inc. (2)(12) Medical Device Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % September 1, 2027 2,500 2,480 2,480
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % September 1, 2027 2,500 2,480 2,480
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % September 1, 2027 5,000 4,961 4,961
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % September 1, 2027 5,000 4,961 4,961
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % April 1, 2028 3,750 3,714 3,714
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % April 1, 2028 3,750 3,714 3,714
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % April 1, 2028 3,750 3,714 3,714
Term Loan 11.75 % Prime 3.50 % 11.75 % — 8.00 % April 1, 2028 3,750 3,714 3,714
Spineology, Inc. (2)(12) Medical Device Term Loan 12.50 % Prime 5.00 % 12.00 % — 1.00 % August 1, 2029 5,000 4,916 4,916
Term Loan 12.50 % Prime 5.00 % 12.00 % — 1.00 % August 1, 2029 4,250 4,178 4,178
Term Loan 12.50 % Prime 5.00 % 12.00 % — 1.00 % August 1, 2029 4,250 4,178 4,178
Term Loan 12.50 % Prime 5.00 % 12.00 % — 1.00 % August 1, 2029 2,500 2,458 2,458

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2024

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
Vero Biotech, Inc. (2)(12) Medical Device Term Loan 12.25 % Prime 3.75 % 12.25 % — 4.00 % January 1, 2029 15,000 14,735 14,735
Term Loan 12.25 % Prime 3.75 % 12.25 % — 4.00 % January 1, 2029 10,000 9,823 9,823
Term Loan 12.25 % Prime 3.75 % 12.25 % — 4.00 % January 1, 2029 5,000 4,912 4,912
Term Loan 12.25 % Prime 3.75 % 12.25 % — 4.00 % January 1, 2029 2,500 2,456 2,456
Total Non-Affiliate Debt Investments — Life Science 263,280 261,520
Non-Affiliate Debt Investments — Sustainability — 19.9% (8)
Pivot Bio, Inc.(2)(12) Energy Efficiency Term Loan 12.00 % Prime 4.00 % 12.00 % — 4.00 % February 1, 2029 5,000 4,742 4,742
Term Loan 12.00 % Prime 4.00 % 12.00 % — 4.00 % February 1, 2029 5,000 4,951 4,951
New Aerofarms, Inc. assignee of Aerofarms, Inc. (2)(12)(14) Other Sustainability Term Loan 14.25 % Prime 6.75 % 10.00 % — 4.33 % December 1, 2026 3,594 3,564 3,564
Term Loan 14.25 % Prime 6.75 % 10.00 % — 4.33 % December 1, 2026 3,594 3,564 3,564
Soli Organic, Inc. (2)(12) Other Sustainability Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.75 % April 1, 2026 5,000 4,922 4,792
Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.75 % April 1, 2026 2,500 2,461 2,396
Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.75 % May 1, 2026 5,000 4,922 4,792
Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.75 % May 1, 2026 2,500 2,461 2,396
Term Loan 13.00 % Prime 5.50 % 11.75 % — 2.75 % December 1, 2026 5,000 4,925 4,795
Term Loan 13.00 % Prime 5.50 % 11.75 % — 2.75 % December 1, 2026 2,500 2,462 2,397
Temperpack Technologies, Inc. (2)(12) Other Sustainability Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.50 % April 1, 2028 3,750 3,707 3,707
Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.50 % April 1, 2028 3,750 3,707 3,707
Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.50 % April 1, 2028 7,500 7,407 7,407
Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.50 % April 1, 2028 3,750 3,704 3,704
Term Loan 14.25 % Prime 6.75 % 10.00 % — 2.50 % April 1, 2028 3,750 3,704 3,704
Term Loan 13.50 % Prime 6.00 % 10.00 % — 2.00 % January 1, 2029 4,500 4,454 4,454
Term Loan 13.50 % Prime 6.00 % 10.00 % — 2.00 % January 1, 2029 2,000 1,980 1,980
Total Non-Affiliate Debt Investments — Sustainability 67,637 67,052
Non-Affiliate Debt Investments — Technology — 59.0% (8) **** **** **** ****
Axiom Space, Inc. (2)(12) Communications Term Loan 13.75 % Prime 6.00 % 9.25 % — 2.50 % June 1, 2026 3,750 3,731 3,731
Term Loan 13.75 % Prime 6.00 % 9.25 % — 2.50 % June 1, 2026 3,750 3,731 3,731
Term Loan 13.75 % Prime 6.00 % 9.25 % — 2.50 % June 1, 2026 3,750 3,731 3,731

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2024

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
Havenly, Inc. (2)(12) Consumer-related Technologies Term Loan 12.50 % Prime 5.00 % 5.00 % — 10.40 % March 1, 2027 2,000 1,568 1,568
Term Loan 12.50 % Prime 5.00 % 5.00 % — 10.40 % March 1, 2027 3,000 2,529 2,529
Term Loan 11.00 % Prime 3.50 % 10.50 % — 7.78 % February 1, 2028 2,813 2,813 2,813
Term Loan 11.00 % Prime 3.50 % 10.50 % — 7.78 % February 1, 2028 2,813 2,813 2,813
Lyrical Foods, Inc. (2)(12) Consumer-related Technologies Term Loan 11.00% (11) Prime 3.50 % 9.00 % — 5.00 % July 1, 2028 2,679 2,768 2,405
NextCar Holding Company, Inc. (2)(12)(13) Consumer-related Technologies Term Loan 13.50% (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 6,042 5,415 1,271
Term Loan 13.50% (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 3,021 2,707 635
Term Loan 13.50% (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 2,417 2,166 508
Term Loan 13.50% (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 3,021 2,707 635
Term Loan 13.50% (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 3,625 3,249 762
Term Loan 13.50% (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 3,021 2,707 635
Term Loan 13.50% (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 6,042 5,415 1,271
Term Loan 13.50% (11) Prime 5.75 % 9.00 % — 5.25 % October 31, 2023 3,021 2,707 635
Optoro, Inc. (2)(12) Consumer-related Technologies Term Loan 14.00 % Prime 6.25 % 9.50 % — 4.00 % August 1, 2027 2,500 2,448 2,448
Term Loan 14.00 % Prime 6.25 % 9.50 % — 4.00 % July 1, 2028 1,875 1,805 1,805
Standvast Holdings, LLC (2)(12) Consumer-related Technologies Term Loan 12.75 % Prime 4.25 % 12.75 % — 3.00 % June 1, 2028 2,500 2,339 2,267
Term Loan 12.75 % Prime 4.25 % 12.75 % — 3.00 % June 1, 2028 2,500 2,426 2,352
Term Loan 12.75 % Prime 4.25 % 12.75 % — 3.00 % November 1, 2028 2,500 2,417 2,343
Unagi, Inc. (2)(12)(13) Consumer-related Technologies Term Loan 15.25% (11) Prime 7.75 % 11.00 % — — May 1, 2027 1,415 1,086 —
Term Loan 15.25% (11) Prime 7.75 % 11.00 % — — May 1, 2027 708 543 —
Term Loan 15.25% (11) Prime 7.75 % 11.00 % — — May 1, 2027 708 543 —
Fictiv, Inc. (2)(12) Networking Term Loan 10.88 % Prime 3.375 % 10.00 % — 4.00 % April 1, 2029 5,000 4,706 4,706
Term Loan 10.88 % Prime 3.375 % 10.00 % — 4.00 % April 1, 2029 5,000 4,941 4,941
BriteCore Holdings, Inc. (2)(12) Software Term Loan 14.00 % Prime 5.50 % 14.00 % — 3.00 % October 1, 2028 5,000 4,909 4,909
Term Loan 14.00 % Prime 5.50 % 14.00 % — 3.00 % October 1, 2028 2,500 2,472 2,472
Term Loan 14.00 % Prime 5.50 % 14.00 % — 3.00 % October 1, 2028 2,500 2,472 2,472
Term Loan 14.00 % Prime 5.50 % 14.00 % — 3.00 % October 1, 2028 2,500 2,472 2,472
Term Loan 14.00 % Prime 5.50 % 14.00 % — 3.00 % April 1, 2029 2,500 2,469 2,469
Crafty Holdings, Inc. (2)(12) Software Term Loan 12.00 % Prime 4.50 % 12.00 % — 4.00 % January 1, 2029 5,000 4,846 4,846
Term Loan 12.00 % Prime 4.50 % 12.00 % — 4.00 % January 1, 2029 5,000 4,911 4,911
Term Loan 12.00 % Prime 4.50 % 12.00 % — 4.00 % January 1, 2029 5,000 4,911 4,911
OneNetworks, Inc. (2)(12) Software Term Loan 11.125 % Prime 3.625 % 11.00 % — 3.75 % January 1, 2030 2,500 2,448 2,448
Term Loan 11.125 % Prime 3.625 % 11.00 % — 3.75 % January 1, 2030 2,500 2,474 2,474
Dropoff, Inc. (2)(12) Software Term Loan 14.00 % Prime 6.50 % 9.75 % — 3.50 % June 1, 2026 6,804 6,740 6,362
Term Loan 14.00 % Prime 6.50 % 9.75 % — 3.50 % June 1, 2026 6,280 6,221 5,872
Term Loan 14.00 % Prime 6.50 % 9.75 % — 3.50 % June 1, 2026 2,617 2,595 2,449

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2024

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
Kodiak Robotics, Inc. (2)(12) Software Term Loan 13.00 % Prime 5.50 % 10.25 % — 4.00 % April 1, 2026 10,000 9,977 9,977
Term Loan 13.00 % Prime 5.50 % 10.25 % — 4.00 % April 1, 2026 10,000 9,955 9,955
Term Loan 13.00 % Prime 5.50 % 10.25 % — 4.00 % April 1, 2026 5,000 4,978 4,978
Term Loan 13.00 % Prime 5.50 % 10.25 % — 4.00 % April 1, 2026 5,000 4,978 4,978
Mirantis, Inc. (2)(12) Software Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2028 5,000 4,934 4,934
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2028 5,000 4,934 4,934
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2028 5,000 4,934 4,934
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2028 5,000 4,934 4,934
Noodle Partners, Inc. (2)(12) Software Term Loan 12.50 % Prime 5.00 % 12.00 % — 3.00 % March 1, 2027 10,000 9,928 9,928
Term Loan 12.50 % Prime 5.00 % 12.00 % — 3.00 % March 1, 2027 5,000 4,964 4,964
Term Loan 12.50 % Prime 5.00 % 12.00 % — 3.00 % March 1, 2027 5,000 4,964 4,964
Supply Network Visibility Holdings LLC (2)(12) Software Term Loan 12.00 % Prime 4.25 % 12.00 % — 2.50 % June 1, 2028 2,500 2,414 2,414
Term Loan 12.00 % Prime 4.25 % 12.00 % — 2.50 % June 1, 2028 3,500 3,492 3,492
Term Loan 12.00 % Prime 4.25 % 12.00 % — 2.50 % June 1, 2028 2,500 2,494 2,494
Term Loan 12.00 % Prime 4.25 % 12.00 % — 2.50 % June 1, 2028 1,500 1,496 1,496
Term Loan 12.00 % Prime 4.25 % 12.00 % — 2.50 % July 1, 2029 5,000 4,984 4,984
Ursa Space Systems, Inc. (2)(12) Software Term Loan 12.00 % Prime 4.00 % 12.00 % — 3.00 % November 1, 2028 2,500 2,365 2,365
Term Loan 12.00 % Prime 4.00 % 12.00 % — 3.00 % November 1, 2028 2,500 2,440 2,440
Viken Detection Corporation (2)(12) Software Term Loan 11.75 % Prime 4.00 % 11.75 % — 3.50 % June 1, 2027 4,833 4,791 4,791
Term Loan 11.75 % Prime 4.00 % 11.75 % — 3.50 % June 1, 2027 2,417 2,396 2,396
Term Loan 11.75 % Prime 4.00 % 11.75 % — 3.50 % June 1, 2027 2,417 2,396 2,396
Total Non-Affiliate Debt Investments — Technology 222,699 198,350
Non-Affiliate Debt Investments — Healthcare information and services — 31.0% (8) **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Hound Labs Inc. (12)(13) Diagnostics Term Loan 13.50 % Prime 6.00 % 9.25 % — 3.50 % June 1, 2026 1,607 1,576 943
Term Loan 13.50 % Prime 6.00 % 9.25 % — 3.50 % June 1, 2026 1,607 1,576 943
Term Loan 13.50 % Prime 6.00 % 9.25 % — 3.50 % June 1, 2026 3,214 3,151 1,886
Term Loan 14.00 % Fixed — — — 50.00 % March 1, 2025 300 300 180
Term Loan 14.00 % Fixed — — — 100.00 % March 1, 2025 250 250 150
Parse Biosciences, Inc. (2)(12) Diagnostics Term Loan 11.50 % Prime 3.25 % 11.50 % — 5.00 % January 1, 2028 5,000 4,659 4,659
Term Loan 11.50 % Prime 3.25 % 11.50 % — 5.00 % January 1, 2028 5,000 4,910 4,910

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2024

(Dollars in thousands)

Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
BrightInsight, Inc. (2)(12) Software Term Loan 13.25 % Prime 5.50 % 9.50 % — 3.00 % August 1, 2027 7,000 6,954 6,954
Term Loan 13.25 % Prime 5.50 % 9.50 % — 3.00 % August 1, 2027 3,500 3,477 3,477
Term Loan 13.25 % Prime 5.50 % 9.50 % — 3.00 % August 1, 2027 3,500 3,477 3,477
Term Loan 13.25 % Prime 5.50 % 9.50 % — 3.00 % April 1, 2028 2,750 2,719 2,719
Elligo Health Research, Inc. (2)(12) Software Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2027 10,000 9,890 9,890
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2027 5,000 4,945 4,945
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2027 5,000 4,945 4,945
Term Loan 11.75 % Prime 3.50 % 11.75 % — 4.00 % October 1, 2027 5,000 4,945 4,945
SafelyYou, Inc. (2)(12) Software Term Loan 11.00 % Prime 3.25 % 11.00 % — 5.00 % June 1, 2027 5,000 4,872 4,872
Term Loan 11.00 % Prime 3.25 % 11.00 % — 5.00 % June 1, 2027 5,000 4,945 4,945
GT Medical Technologies, Inc. (2)(12) Other Healthcare Services Term Loan 11.25 % Prime 3.25 % 11.25 % — 4.00 % October 1, 2029 3,750 3,595 3,595
Term Loan 11.25 % Prime 3.25 % 11.25 % — 4.00 % October 1, 2029 3,750 3,695 3,695
Term Loan 11.25 % Prime 3.25 % 11.25 % — 4.00 % October 1, 2029 7,500 7,389 7,389
Hometeam Technologies, Inc. (2)(12) Other Healthcare Services Term Loan 11.25 % Prime 3.25 % 11.25 % — 3.50 % August 1, 2029 5,000 4,854 4,854
Term Loan 11.25 % Prime 3.25 % 11.25 % — 3.50 % August 1, 2029 5,000 4,954 4,954
Term Loan 11.25 % Prime 3.25 % 11.25 % — 3.50 % August 1, 2029 5,000 4,954 4,954
Term Loan 11.25 % Prime 3.25 % 11.25 % — 3.50 % August 1, 2029 5,000 4,954 4,954
Term Loan 11.25 % Prime 3.25 % 11.25 % — 3.50 % August 1, 2029 5,000 4,954 4,954
Total Non-Affiliate Debt Investments — Healthcare information and services 106,940 104,189
Total Non- Affiliate Debt Investments $ 660,556 $ 631,111

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2024

(Dollars in thousands)

**** **** Cost of Fair
Portfolio Company (1)(3) Sector Type of Investment (7) Number of Shares Investments (6)(9) Value (9)
Non-Affiliate Warrant Investments — 5.4% (8) **** **** **** **** **** ****
Non-Affiliate Warrants — Life Science — 1.9% (8) **** **** **** **** **** ****
Avalo Therapeutics, Inc. (2)(5)(12) Biotechnology Common Stock Warrant 117 $ 311 $ —
Castle Creek Biosciences, Inc. (2)(12) Biotechnology Preferred Stock Warrant 7,404 214 270
Emalex Biosciences, Inc. (2)(12) Biotechnology Preferred Stock Warrant 110,402 176 129
Imunon, Inc. (2)(5)(12) Biotechnology Common Stock Warrant 19,671 65 —
KSQ Therapeutics, Inc. (2)(12) Biotechnology Preferred Stock Warrant 48,076 50 53
Mustang Bio, Inc. (2)(5)(12) Biotechnology Common Stock Warrant 16,611 146 —
Native Microbials, Inc (2)(12) Biotechnology Preferred Stock Warrant 112,879 73 68
PDS Biotechnology Corporation (2)(5)(12) Biotechnology Common Stock Warrant 299,848 160 14
Provivi, Inc. (2)(12) Biotechnology Common Stock Warrant 175,098 278 —
Provivi, Inc. (2)(12) Biotechnology Preferred Stock Warrant 709,980 312 59
Stealth Biotherapeutics Inc. (2)(12) Biotechnology Common Stock Warrant 318,181 264 —
Tallac Therapeutics, Inc. (2)(12) Biotechnology Preferred Stock Warrant 1,600,002 194 167
Xeris Pharmaceuticals, Inc. (2)(5)(12) Biotechnology Common Stock Warrant 126,000 73 91
AccuVein Inc. (2)(12) Medical Device Common Stock Warrant 271 7 —
Aerin Medical, Inc. (2)(12) Medical Device Preferred Stock Warrant 1,818,183 65 1,418
Aerobiotix, LLC (2)(12) Medical Device Preferred Stock Warrant 8,800 48 16
Canary Medical Inc. (2)(12) Medical Device Preferred Stock Warrant 12,153 86 2
Candesant Biomedical, Inc. (2)(12) Medical Device Preferred Stock Warrant 93,336 152 78
Ceribell, Inc. (2)(5)(12) Medical Device Preferred Stock Warrant 89,903 147 1,573
Cognoa, Inc. (2)(12) Medical Device Common Stock Warrant 30,585 — 2
Cognoa, Inc. (2)(12) Medical Device Preferred Stock Warrant 4,635,991 162 1
Conventus Orthopaedics, Inc. (2)(12) Medical Device Preferred Stock Warrant 9,313,541 256 102
CSA Medical, Inc. (2)(12) Medical Device Preferred Stock Warrant 4,917,794 174 479
CVRx, Inc. (2)(5)(12) Medical Device Common Stock Warrant 47,410 76 160
Infobionic, Inc. (2)(12) Medical Device Preferred Stock Warrant 5,361,130 231 175

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2024

(Dollars in thousands)

**** **** Cost of Fair
Portfolio Company (1)(3) Sector Type of Investment (7) Number of Shares Investments (6)(9) Value (9)
Magnolia Medical Technologies, Inc. (2)(12) Medical Device Preferred Stock Warrant 809,931 194 368
Meditrina, Inc. (2)(12) Medical Device Preferred Stock Warrant 233,993 83 34
MicroTransponder, Inc. (2)(12) Medical Device Preferred Stock Warrant 103,172 47 66
Onkos Surgical, Inc. (2)(12) Medical Device Preferred Stock Warrant 443,674 192 187
Scientia Vascular, Inc (2)(12) Medical Device Preferred Stock Warrant 34,410 103 262
Sonex Health, Inc. (2)(12) Medical Device Preferred Stock Warrant 2,637,133 275 266
VERO Biotech LLC (2)(12) Medical Device Preferred Stock Warrant 3,701 376 198
Spineology, Inc. (2)(12) Medical Device Common Stock Warrant 2,714,033 143 108
Spineology, Inc. (2)(12) Medical Device Preferred Stock Warrant 2,255,155 16 28
Total Non-Affiliate Warrants — Life Science 5,149 6,374
Non-Affiliate Warrants — Sustainability — 0.1% (8) **** **** **** **** **** ****
New Aerofarms, Inc. assignee of Aerofarms, Inc. (2)(12)(14) Other Sustainability Preferred Stock Warrant 400,000 82 17
LiquiGlide, Inc. (2)(12) Other Sustainability Preferred Stock Warrant 61,359 39 25
Soli Organic, Inc. (2)(12) Other Sustainability Common Stock Warrant 296 20 19
Soli Organic, Inc. (2)(12) Other Sustainability Preferred Stock Warrant 1,075 382 10
Temperpack Technologies, Inc. (2)(12) Other Sustainability Preferred Stock Warrant 49,693 178 102
Pivot Bio, Inc. (2)(12) Energy Efficiency Preferred Stock Warrant 210,418 14 14
Total Non-Affiliate Warrants — Sustainability 715 187
Non-Affiliate Warrants — Technology — 3.1% (8) **** **** **** **** **** ****
Axiom Space Holdings, Inc. (2)(12) Communications Common Stock Warrant 1,991 46 35
Intelepeer Holdings, Inc. (2)(12) Communications Preferred Stock Warrant 2,936,535 138 3,156
Alula Holdings, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 20,000 93 7
CAMP NYC, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 112,356 36 40
Clara Foods Co. (2)(12) Consumer-related Technologies Preferred Stock Warrant 46,745 30 43
Divergent Technologies, Inc. (2)(12) Consumer-related Technologies Common Stock Warrant 9,801 79 7
Divergent Technologies, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 45,273 454 440
Havenly, Inc. (2)(12) Consumer-related Technologies Common Stock Warrant 1,446,429 3,178 3,106
MyForest Foods Co. (2)(12) Consumer-related Technologies Preferred Stock Warrant 250 29 25
NextCar Holding Company, Inc. (2)(12) Consumer-related Technologies Common Stock Warrant 12,618 188 —
NextCar Holding Company, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 3,913,723 9 —
Optoro, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 11,550 182 99
Primary Kids, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 553,778 57 412
Quip NYC Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 6,191 325 —
Standvast Holdings, LLC (2)(12) Consumer-related Technologies Preferred Stock Warrant 1,225,492 275 —
Unagi, Inc. (2)(12) Consumer-related Technologies Preferred Stock Warrant 171,081 32 —
Updater, Inc.(2)(12) Consumer-related Technologies Preferred Stock Warrant 108,333 34 26
CPG Beyond, Inc. (2)(12) Data Storage Preferred Stock Warrant 500,000 242 231
Silk, Inc. (2)(12) Data Storage Preferred Stock Warrant 394,110 175 119
Global Worldwide LLC (2)(12) Internet and Media Preferred Stock Warrant 245,810 75 —
Rocket Lawyer Incorporated (2)(12) Internet and Media Preferred Stock Warrant 261,721 92 319
Skillshare, Inc. (2)(12) Internet and Media Preferred Stock Warrant 139,074 162 680
Liqid, Inc. (2)(12) Networking Preferred Stock Warrant 344,102 364 103
Fictiv, Inc. (2)(12) Networking Common Stock Warrant 126,841 59 77
Avalanche Technology, Inc. (2)(12) Semiconductors Preferred Stock Warrant 5,938 45 —
BriteCore Holdings, Inc. (2)(12) Software Preferred Stock Warrant 161,215 98 289
Crafty Holdings, Inc. (2)(12) Software Common Stock Warrant 243,278 132 132
Dropoff, Inc. (2)(12) Software Common Stock Warrant 516,535 455 —
E La Carte, Inc. (2)(5)(12) Software Common Stock Warrant 147,361 60 —
Everstream Holdings, LLC (2)(12) Software Preferred Stock Warrant 525,000 82 34
Kodiak Robotics, Inc. (2)(12) Software Preferred Stock Warrant 639,918 273 15
Lemongrass Holdings, Inc. (2)(12) Software Preferred Stock Warrant 101,308 34 48
Mirantis, Inc. (2)(12) Software Common Stock Warrant 948,275 223 585

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2024

(Dollars in thousands)

**** **** Cost of Fair
Portfolio Company (1)(3) Sector Type of Investment (7) Number of Shares Investments (6)(9) Value (9)
Noodle Partners, Inc. (2)(12) Software Preferred Stock Warrant 84,037 116 —
OneNetworks, Inc. (2)(12) Software Preferred Stock Warrant 184,646 3 3
Revinate Holdings, Inc. (2)(12) Software Preferred Stock Warrant 682,034 44 90
SIGNiX, Inc. (12) Software Preferred Stock Warrant 186,235 225 —
Slingshot Aerospace, Inc. (2)(12) Software Preferred Stock Warrant 309,208 123 66
Supply Network Visibility Holdings LLC (2)(12) Software Preferred Stock Warrant 682 65 75
Topia Mobility, Inc. (2)(12) Software Common Stock Warrant 30,496 138 —
Ursa Space Systems, Inc. (2)(12) Software Preferred Stock Warrant 1,075,072 151 148
Viken Detection Corporation (2)(12) Software Preferred Stock Warrant 345,443 120 234
xAd, Inc. (2)(12) Software Preferred Stock Warrant 4,343,348 177 6
Total Non-Affiliate Warrants — Technology 8,918 10,650
Non-Affiliate Warrants — Healthcare information and services — 0.3% (8) **** **** **** **** **** ****
Hound Labs, Inc (12) Diagnostics Preferred Stock Warrant 451,796 45 —
Parse Biosciences, Inc. (2)(12) Diagnostics Common Stock Warrant 32,244 71 15
Parse Biosciences, Inc. (2)(12) Diagnostics Preferred Stock Warrant 184,253 166 15
Kate Farms, Inc. (2)(12) Other Healthcare Preferred Stock Warrant 82,965 101 700
GT Medical Technologies, Inc. (2)(12) Other Healthcare Preferred Stock Warrant 195,984 83 95
BrightInsight, Inc. (2)(12) Software Preferred Stock Warrant 85,066 167 —
Elligo Health Research, Inc. (2)(12) Software Preferred Stock Warrant 652,250 191 92
Medsphere Systems Corporation (2)(12) Software Preferred Stock Warrant 7,097,792 60 —
SafelyYou, Inc. (2)(12) Software Preferred Stock Warrant 150,353 163 149
Total Non-Affiliate Warrants — Healthcare information and services 1,047 1,066
Total Non-Affiliate Warrants 15,829 18,277
Non-Affiliate Other Investments — Life Science — 0.0% (8) **** **** **** **** **** ****
Lumithera, Inc. (12) Medical Device Royalty Agreement 1,146 100
Robin Healthcare, Inc. (2)(12) Medical Device Royalty Agreement 7,319 —
Total Non-Affiliate Other Investments 8,465 100
Non-Affiliate Equity — 2.5% (8) **** **** **** **** **** ****
Cadrenal Therapeutics, Inc. (5) Biotechnology Common Stock 40,000 — 580
Castle Creek Biosciences, Inc. (12) Biotechnology Common Stock 1,162 250 250
Emalex Biosciences, Inc. (12) Biotechnology Preferred Stock 32,831 356 356
Axiom Space, Inc. (12) Communications Preferred Stock 1,810 261 306
PebblePost, Inc. (2)(12) Communications Preferred Stock 56,212 73 73
Caastle, Inc. (2)(12) Consumer-related Technologies Preferred Stock 242,180 2,681 2,681
Getaround, Inc. (2)(5) Consumer-related Technologies Common Stock 87,082 253 3
NextCar Holding Company, Inc. (2)(12) Consumer-related Technologies Preferred Stock 2,688,971 89 —
SnagAJob.com, Inc. (12) Consumer-related Technologies Common Stock 82,974 9 83
Cognoa, Inc. (2)(12) Medical Device Common Stock 8,123,877 487 487
Cognoa, Inc. (2)(12) Medical Device Preferred Stock 1,059,636 250 250
Lumithera, Inc. (12) Medical Device Common Stock 392,651 2,000 1,700
Tigo Energy, Inc. (5) Other Sustainability Common Stock 5,205 111 5
Decisyon, Inc. (12) Software Preferred Stock 280,000 2,800 1,281
Lotame, Inc. (12) Software Preferred Stock 66,127 4 193
Lotame, Inc. (12) Software Preferred Stock 9,381 29 29
Total Non-Affiliate Equity 9,653 8,277
Total Non-Affiliate Portfolio Investment Assets $ 694,503 $ 657,765
Portfolio Company (1)(3) Sector Type of Investment (7) Cost of Investments (6)(9) Fair Value (9)
--- --- --- --- --- --- ---
Non-Controlled Affiliate Investments — 2.5% (8) **** **** **** ****
Non-Controlled Affiliate Other Investments — 2.5% (8) **** **** **** ****
Evelo Holdings, Inc. (2)(5)(12)(16) Biotechnology Other Investment $ 4,910 $ 1,825
Other Investment 7,634 2,832
Other Investment 2,946 1,095
Other Investment 2,946 1,095
Other Investment 1,964 730
Other Investment 1,964 730
Total Non-Controlled Affiliate Other Investments 22,364 8,307

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2024

(Dollars in thousands)

**** **** Cost of Fair
Portfolio Company (1)(3) Sector Type of Investment (7) Number of Shares Investments (6)(9) Value (9)
Non-controlled Affiliate Equity — 0.0% (8) **** **** **** **** **** ****
Aulea Medical, Inc. (12) Medical Device Common Stock 660,537 — —
Evelo Holdings, Inc. (2)(5)(12) Biotechnology Common Stock 2,164,502 5,000 —
Total Non-Controlled Affiliate Equity 5,000 —
Non-controlled Affiliate Warrants — 0.0% (8) **** **** **** **** **** ****
Evelo Holdings, Inc. (2)(5)(12) Biotechnology Common Stock 23,196 127 —
Total Non-Controlled Affiliate Warrants 127 —
Total Non-Controlled Affiliate Portfolio Investment Assets $ 27,491 $ 8,307
Portfolio Company (1)(3) Sector Type of Investment (7) Cash Rate (4) Index Margin Floor Ceiling ETP (10) Maturity Date Principal Amount Cost of Investments (6)(9) Fair Value (9)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Controlled Affiliate Investments — 9.5% (8) **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Controlled Affiliate Debt Investments — 2.3% (8) **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** **** ****
Better Place Forests Co. (12)(13) Consumer-related Technologies Term Loan 12.00% (11) Prime 3.75 % 12.00 % — 2.78 % August 1, 2029 $ 4,012 $ 4,058 $ —
Term Loan 12.00% (11) Prime 3.75 % 12.00 % — 2.78 % August 1, 2029 2,006 1,989 —
Term Loan 12.00% (11) Prime 3.75 % 12.00 % — — August 1, 2025 538 538 —
Term Loan 12.00% (11) Prime 3.75 % 12.00 % — — August 1, 2025 532 532 —
Term Loan 12.00% (11) Prime 3.75 % 12.00 % — — August 1, 2025 521 521 —
Term Loan 12.00% (11) Prime 3.75 % 12.00 % — — August 1, 2025 513 513 —
Term Loan 12.00% (11) Prime 3.75 % 12.00 % — — August 1, 2025 505 505 —
Nexii, Inc. (12) Other Sustainability Term Loan 10.00 % Fixed — — — — July 1, 2027 790 790 638
Swift Health Systems Inc. (2)(12) Medical Device Term Loan 10.25% (11) Prime 2.50 % 2.50 % — 9.14 % June 1, 2028 1,948 1,925 1,658
Term Loan 10.25% (11) Prime 2.50 % 2.50 % — 9.14 % June 1, 2028 1,948 1,925 1,658
Term Loan 10.25% (11) Prime 2.50 % 2.50 % — 9.14 % June 1, 2028 1,948 1,922 1,654
Term Loan 10.25% (11) Prime 2.50 % 2.50 % — 9.14 % June 1, 2028 1,948 1,922 1,654
Term Loan 10.25% (11) Prime 2.50 % 2.50 % — 100.00 % June 1, 2028 315 315 271
Term Loan 10.25% (11) Prime 2.50 % 2.50 % — 100.00 % June 1, 2028 156 156 135
Total Controlled Affiliate Debt Investments $ 17,611 $ 7,668
Cost of Fair
--- --- --- --- --- --- --- --- ---
Portfolio Company (1)(3) Sector Type of Investment (7) Number of Shares Investments (6)(9) Value (9)
Controlled Affiliate Equity — 5.3% (8)
Better Place Forests Co. (12) Consumer-related Technologies Common Stock 2,278,272 639 —
Better Place Forests Co. (12) Consumer-related Technologies Preferred Stock 5,350,142 3,922 —
Nexii, Inc. (2)(12) Other Sustainability Common Stock 108,320 3,297 —
Nexii, Inc. (2)(12) Other Sustainability Preferred Stock 542 3,419 7,909
Swift Health Systems Inc. (2)(12) Medical Device Preferred Stock 3,588,505 10,012 10,012
Total Controlled Affiliate Equity 21,289 17,921
Controlled Affiliate Other Investments — 1.9% (8)
HIMV LLC (12)(15) Biotechnology Other Investment 5,880 6,230
Total Controlled Affiliate Other 5,880 6,230
Total Controlled Affiliate Portfolio Investment Assets 44,780 31,819
Total Portfolio Investment Assets — 207.6% (8) $ 766,774 $ 697,891
Short Term Investments - Unrestricted Investments - 8.1% (8)
--- --- ---
US Bank Money Market Deposit Account 27,266 27,266
Total Short Term Investments - Unrestricted Investments $27,266 $27,266
Short Term Investments - Restricted Investments - 1.0% (8)
US Bank Money Market Deposit Account 3,338 3,338
Total Short Term Investments - Restricted Investments $3,338 $3,338

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2024

(Dollars in thousands)

(1) All investments of the Company are in entities which are organized under the laws of the United States and have a principal place of business in the United States, unless otherwise noted.
(2) Has been pledged as collateral under the Key Facility, the NYL Facility, the Nuveen Facility and/or the 2022 Asset-Backed Notes.
(3) All non-affiliate investments are investments in which the Company owns less than 5% of the voting securities of the portfolio company. All non-controlled affiliate investments are investments in which the Company owns 5% or more of the voting securities of the portfolio company but not more than 25% of the voting securities of the portfolio company. All controlled affiliate investments are investments in which the Company owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement).
(4) All interest is payable in cash due monthly in arrears, unless otherwise indicated, and applies only to the Company’s debt investments. Interest rate is the annual interest rate on the debt investment and does not include ETPs, and any additional fees related to the investments, such as deferred interest, commitment fees or prepayment fees. Debt investments are at variable rates for the term of the debt investment, unless otherwise indicated. For each debt investment, the current interest rate in effect as of  December 31, 2024 is provided.
(5) Portfolio company is a public company.
--- ---
(6) For debt investments, represents principal balance less unearned income.
(7) Warrants, Equity and Other Investments are non-income producing.
(8) Value as a percent of net assets.
(9) The Company did not have any non-qualifying assets under Section 55(a) of the 1940 Act as of  December 31, 2024. Under the 1940 Act, the Company may not acquire any non-qualifying assets unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets.
(10) ETPs are contractual fixed-interest payments due in cash at the maturity date of the applicable debt investment, including upon any prepayment, and are a fixed percentage of the original principal balance of the debt investments unless otherwise noted. Interest will accrue during the life of the debt investment on each ETP and will be recognized as non-cash income until it is actually paid. Therefore, a portion of the incentive fee the Company may pay its Advisor will be based on income that the Company has not yet received in cash.
(11) Debt investment has a PIK feature in which the accrued interest is added to the then-outstanding principal amount of the debt investment.
--- ---
(12) The fair value of the investment was valued using significant unobservable inputs.
(13) Debt investment is on non-accrual status as of December 31, 2024.
(14) On or about  *September 13, 2023,*in connection with New Aerofarms, Inc. purchase of substantially all of the assets of Aerofarms, Inc. in a bankruptcy process, New Aerofarms, Inc. assumed all of the debt investments of Horizon in Aerofarms, Inc..
(15) By an Order of the Supreme Court of Nova Scotia made  May 1, 2023,as amended and restated by an Order of the CCAA Court made  May 5, IMV commenced the CCAA Proceedings under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended to seek creditor protection for IMV and on  *June 2, 2023,*IMV obtained recognition of the CCAA Proceedings under Chapter 15 of the United States Bankruptcy Code in proceedings before the United States Bankruptcy Court for the District of Delaware. In  *September 2023,*the Company, with its co-lender to IMV, credit-bid and acquired substantially all of the assets of IMV through HIMV LLC, an entity formed to acquire the assets of IMV. HIMV LLC is 70% owned by the Company and 30% owned by such co-lender.
(16) The investment originally consisted of debt investments in Evelo. Evelo was a clinical stage life science company that was unable to raise additional capital to continue as a going concern and, through a series of transactions, Evelo became a subsidiary of Evelo Holdings and Evelo Holdings assumed the indebtedness of Evelo to the Company.  Evelo Holdings is not an operating company but holds certain contractual rights to contingent payments and owns equity in Evelo, as well as certain assets it seeks to sell. The Company has a first priority security interest in the assets of Evelo Holdings, so if any payments are received by Evelo Holdings or any of its equity holdings or other assets are sold, the Company will receive substantially all of the proceeds from the same, until such time, if ever, that all of the indebtedness is repaid. Accordingly, the Company characterizes this investment as an “Other Investment” rather than a “Debt Investment”.

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Notes to Consolidated Financial Statements

Note 1. Organization

Horizon Technology Finance Corporation (the “Company”) was organized as a Delaware corporation on March 16, 2010 and is an externally managed, non-diversified, closed-end investment company. The Company has elected to be regulated as a business development company (“BDC”) under the 1940 Act. In addition, for tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a RIC, the Company generally is not subject to corporate-level federal income tax on the portion of its taxable income (including net capital gains) the Company distributes to its stockholders. The Company primarily makes secured debt investments to development-stage companies in the technology, life science, healthcare information and services and sustainability industries. All of the Company’s debt investments consist of loans secured by all of, or a portion of, the applicable debtor company’s tangible and intangible assets.

On October 28, 2010, the Company completed an initial public offering (“IPO”) and its common stock trades on the Nasdaq Global Select Market under the symbol “HRZN”.

Horizon Credit II LLC (“Credit II”) was formed as a Delaware limited liability company on June 28, 2011, with the Company as its sole equity member. Credit II is a special purpose bankruptcy-remote entity and is a separate legal entity from the Company. Any assets conveyed to Credit II are not available to creditors of the Company or any other entity other than Credit II’s lenders. Credit II is consolidated in the financial statements of the Company.

Horizon Funding I, LLC (“HFI”) was formed as a Delaware limited liability company on May 9, 2018, with Horizon Secured Loan Fund I LLC, a Delaware limited liability company (“HSLFI”) as its sole member. HFI is a special purpose bankruptcy-remote entity and is a separate legal entity from HSLFI. Any assets conveyed to HFI are not available to creditors of HSLFI or any other entity other than HFI’s lenders. As of April 21, 2020, HSLFI and its subsidiary, HFI, are consolidated in the financial statements of the Company.

The Company formed Horizon Funding 2022‑1 LLC (“2022‑1 LLC”) as a Delaware limited liability company on September 30, 2022and Horizon Funding Trust 2022‑1 as a Delaware statutory trust on October 18, 2022 ( “2022‑1 Trust” and, together with the 2022‑1 LLC, the “2022‑1 Entities”). The 2022‑1 Entities are special purpose bankruptcy remote entities and are separate legal entities from the Company. The Company formed the 2022‑1 Entities for purposes of securitizing the 2022 Asset-Backed Notes. The 2022-1 Entities are consolidated in the financial statements of the Company.

Horizon Funding II, LLC (“HFII”) was formed as a Delaware limited liability company on  May 13, 20**24, with the Company as its sole equity member. HFII is a special purpose bankruptcy-remote entity and is a separate legal entity from the Company. Any assets conveyed to HFII are not available to creditors of the Company or any other entity other than HFII’s lenders. HFII is consolidated in the financial statements of the Company.

The Company has established wholly owned subsidiaries, which are structured as Delaware limited liability companies, either to hold assets of portfolio companies acquired in connection with a foreclosure or bankruptcy or to hold equity in portfolio companies which the Company may control. Such wholly-owned subsidiaries are separate legal entities from the Company and are consolidated in the financial statements of the Company.

The Company, together with its co-lender to IMV, established HIMV LLC, a Delaware limited liability company to purchase and sell the assets of IMV, a past borrower of the Company. The assets of IMV were sold for (i) the right to receive certain payments, if any, in connection with the potential future development and licensing of the assets sold and (ii) equity in the buyer of such assets. HIMV LLC is 70% owned by the Company and 30% owned by a third-party co-lender.

The Company’s investment strategy is to maximize the investment portfolio’s return by generating current income from the debt investments the Company makes and capital appreciation from the warrants the Company receives when making such debt investments. The Company has entered into an investment management agreement (the “Investment Management Agreement”) with Horizon Technology Finance Management LLC (the “Advisor”) under which the Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company.

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Notes to Consolidated Financial Statements

Note 2. Basis of presentation and significant accounting policies

The consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the requirements for reporting on Form 10‑Q and Articles 6 and 10 of Regulation S-X (“Regulation S-X”) under the Securities Act of 1933, as amended (the “Securities Act”). In the opinion of management, the consolidated financial statements reflect all adjustments and reclassifications, consisting solely of normal recurring accruals, that are necessary for the fair presentation of financial results as of and for the periods presented. All intercompany balances and transactions have been eliminated. The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the year. Therefore, the unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto as of and for the year ended December 31, 2024.

Principles of consolidation

As required under GAAP and Regulation S-X, the Company will generally consolidate its investment in a company that is an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the results of the Company’s wholly-owned subsidiaries in its consolidated financial statements.

Assets related to transactions that do not meet Accounting Standards Codification (“ASC”) Topic 860, Transfers and Servicing requirements for accounting sale treatment are reflected in the Company’s Consolidated Statements of Assets and Liabilities as investments. Those assets are owned by special purpose entities, including 2019‑1 Entities and 2022-1 Entities, that are consolidated in the Company’s consolidated financial statements. The creditors of the special purpose entities have received security interests in such assets, and such assets are not intended to be available to the creditors of the Company (or any affiliate of the Company).

Use of estimates

In preparing the consolidated financial statements in accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, as of the date of the balance sheet and income and expenses for the period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the valuation of investments.

Fair value

The Company records all of its investments at fair value in accordance with relevant GAAP, which establishes a framework used to measure fair value and requires disclosures for fair value measurements. The Company has categorized its investments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy as more fully described in Note 6. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity specific measure. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.

The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market conditions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3.

See Note 6 for additional information regarding fair value.

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Notes to Consolidated Financial Statements

Segments

The Company has determined that it has a single reporting segment and operating unit structure. The Company lends to and invests in portfolio companies in various technology, life science, healthcare information and services and sustainability industries. The Company separately evaluates the performance of each of its lending and investment relationships. However, because each of these debt investments and investment relationships has similar business and economic characteristics, they have been aggregated into a single lending and investment segment.

The chief operating decision maker (“CODM”) is comprised of the Company’s Chief Executive Officer, President, Chief Financial Officer and Chief Operating Officer. The CODM assesses the performance of and makes operating decisions on behalf of the Company on a consolidated basis primarily based on the Company’s net increase (decrease) in net assets resulting from operations (“net income”). In addition to numerous other factors and metrics, the CODM utilizes net income as a key metric in recommending to the Company's board of directors (the “Board”) the amount of dividends to be distributed to the Company’s stockholders and the Board makes the determination of the amount of dividends to be distributed to the Company's stockholders. As the Company’s operations comprise a single reporting segment, the segment assets are reflected on the Company’s Consolidated Statements of Assets and Liabilities as “Total assets” and the significant segment expenses are listed on the Company’s Consolidated Statements of Operations.

Investments

Investments are recorded at fair value. Pursuant to the amended SEC Rule 2a-5 of the 1940 Act, on July 29, 2022, the Board designated the Advisor as the Company’s “valuation designee.” The valuation designee determines the fair value of the Company’s portfolio investments and the Company's Board oversees the valuation designee. The Company has the intent to hold its debt investments for the foreseeable future or until maturity or payoff.

Interest on debt investments is accrued and included in income based on contractual rates applied to principal amounts outstanding. Interest income is determined using a method that results in a level rate of return on principal amounts outstanding. Generally, when a debt investment becomes 90 days or more past due, or if the Company otherwise does not expect to receive interest and principal repayments, the debt investment is placed on non-accrual status and the recognition of interest income may be discontinued. Interest payments received on non-accrual debt investments may be recognized as income, on a cash basis, or applied to principal depending upon management’s judgment at the time the debt investment is placed on non-accrual status. As of June 30, 2025, there were five investments on nonaccrual status with a cost of $74.8 million and a fair value of $26.9 million. As of December 31, 2024, there were four investments on non-accrual status with a cost of $44.8 million and a fair value of $10.5 million. For the three and six months ended June 30, 2025, the Company recognized as interest income $0.2 million received from debt investments while on non-accrual status. For the three and six months ended June 30, 2024, the Company did not recognize any interest income from debt investments while on non-accrual status.

From time to time, the Company may have debt investments that contain a PIK provision. Contractual PIK interest, which represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on an accrual basis to the extent such amounts are expected to be collected. As of June 30, 2025 and  December 31, 2024, there were three and five investments, respectively, with PIK provisions. For the three months ended  June 30, 2025 and 2024, PIK interest income totaled $0.2 million and $0.4 million, respectively. For the three months ended  June 30, 2025 and 2024, 1.0% and 1.4%, respectively, of the Company’s total investment income was attributable to non-cash PIK interest. For the six months ended June 30, 2025 and 2024, PIK interest income totaled $0.5 million and $1.7 million, respectively. For the six months ended June 30, 2025 and 2024, 1.1% and 3.3%, respectively, of the Company's total investment income was attributable to non-cash PIK interest. The Company will generally cease accruing PIK interest if management does not expect the portfolio company to be able to pay all principal and interest due. For the three months ended June 30, 2025 and 2024, there were no debt investments which had accrued PIK interest into income placed on nonaccrual status as of June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025, one debt investment, which had accrued PIK interest into income of $0.2 million during the six months ended June 30, 2025 was placed on nonaccrual status as of June 30, 2025. For the six months ended June 30, 2024, one debt investment, which had accrued PIK interest into income of $1.0 million during the six months ended June 30, 2024 was placed on nonaccrual status as of June 30, 2024.

The Company receives a variety of fees from borrowers in the ordinary course of conducting its business, including advisory fees, commitment fees, amendment fees, non-utilization fees, success fees and prepayment fees. In a limited number of cases, the Company may also receive a non-refundable deposit earned upon the termination of a transaction. Debt investment origination fees, net of certain direct origination costs, are deferred and, along with unearned income, are amortized as a level-yield adjustment over the respective term of the debt investment. All other income is recognized when earned. Fees for counterparty debt investment commitments with multiple debt investments are allocated to each debt investment based upon each debt investment’s relative fair value. When a debt investment is placed on non-accrual status, the amortization of the related fees and unearned income is discontinued until the debt investment is returned to accrual status.

Certain debt investment agreements also require the borrower to make an ETP, that is accrued into interest receivable and taken into income over the life of the debt investment to the extent such amounts are expected to be collected. The Company will generally cease accruing the income if there is insufficient value to support the accrual or the Company does not expect the borrower to be able to pay the ETP when due. The proportion of the Company’s total investment income that resulted from the portion of ETPs not received in cash for the three months ended  June 30, 2025 and 2024 was 2.8% and 6.6%, respectively. The proportion of the Company’s total investment income that resulted from the portion of ETPs not received in cash for the six months ended June 30, 2025 and 2024 was 3.7% and 6.7%, respectively.

In connection with substantially all lending arrangements, the Company receives warrants to purchase shares of stock from the borrower. The warrants are recorded as assets at estimated fair value on the grant date using the Black-Scholes valuation model. The warrants are considered loan fees and are recorded as unearned income on the grant date. The unearned income is recognized as interest income over the contractual life of the related debt investment in accordance with the Company’s income recognition policy. Subsequent to debt investment origination, the fair value of the warrants is determined using the Black-Scholes valuation model. Any adjustment to fair value is recorded through earnings as net unrealized appreciation or depreciation on investments. Gains and losses from the disposition of the warrants or stock acquired from the exercise of warrants are recognized as realized gains and losses on investments.

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Notes to Consolidated Financial Statements

Realized gains or losses on the sale of investments, or upon the determination that an investment balance, or portion thereof, is not recoverable, are calculated using the specific identification method. The Company measures realized gains or losses by calculating the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment. Net change in unrealized appreciation or depreciation reflects the change in the fair values of the Company’s portfolio investments during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

Debt issuance costs

Debt issuance costs are fees and other direct incremental costs incurred by the Company in obtaining debt financing from its lenders and issuing debt securities. The unamortized balance of debt issuance costs as of  June 30, 2025 and  December 31, 2024 was $8.9 million. These amounts are capitalized and amortized and included in interest expense in the consolidated statements of operations over the life of the borrowings. The accumulated amortization balances as of June 30, 2025 and  December 31, 2024 were $8.6 million and $7.2 million, respectively. The amortization expense for the three months ended  June 30, 2025 and 2024 was $0.7 million and $0.4 million, respectively.  The amortization expense for the six months ended June 30, 2025 and 2024 was $1.3 million and $0.8 million, respectively.

Income taxes

As a BDC, the Company has elected to be treated as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify as a RIC and to avoid the imposition of corporate-level income tax on the portion of its taxable income distributed to stockholders, among other things, the Company is required to meet certain source of income and asset diversification requirements and to timely distribute dividends out of assets legally available for distribution to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax year. The Company, among other things, has made and intends to continue to make the requisite distributions to its stockholders, which generally relieves the Company from corporate-level U.S. federal income taxes. Accordingly, no provision for federal income tax has been recorded in the financial statements. Differences between taxable income and net increase in net assets resulting from operations either can be temporary, meaning they will reverse in the future, or permanent. In accordance with ASC Topic 946, Financial Services—Investment Companies, as amended, of the Financial Accounting Standards Board (“FASB”), permanent tax differences, such as non-deductible excise taxes paid, are reclassified from distributions in excess of net investment income and net realized loss on investments to paid-in-capital at the end of each fiscal year. These permanent book-to-tax differences are reclassified on the consolidated statements of changes in net assets to reflect their tax character but have no impact on total net assets.

Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year and incur a 4% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the three months ended June 30, 2025 and 2024, $0.4 million was accrued for U.S. federal excise tax. For the six months ended June 30, 2025 and 2024, $0.8 million and $0.7 million, respectively, was accrued for U.S. federal excise tax

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Notes to Consolidated Financial Statements

The Company evaluates tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority in accordance with ASC Topic 740, Income Taxes, as modified by ASC Topic 946. Tax benefits of positions not deemed to meet the more-likely-than-not threshold, or uncertain tax positions, would be recorded as a tax expense in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. The Company had no material uncertain tax positions at June 30, 2025 and  December 31, 2024. The Company’s income tax returns for the 2025, 2024, 2023 and 2022 tax years remain subject to examination by U.S. federal and state tax authorities.

Distributions

Distributions to common stockholders are recorded on the declaration date. The Board continually monitors and reassesses the amount of cash to be paid out as distributions relative to the net investment income generated by the Company and other metrics. Net realized capital gains, if any, may be distributed, although the Company may decide to retain such net realized gains for investment.

The Company has adopted a dividend reinvestment plan that provides for reinvestment of cash distributions on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Board declares a cash distribution, then stockholders who have not “opted out” of the dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. The Company may issue new shares or purchase shares in the open market to fulfill its obligations under the plan.

Stockholders’ Equity

On September 22, 2023, the Company entered into an At-The-Market (“ATM”) sales agreement (the “2023 Equity Distribution Agreement”), with Goldman Sachs & Co. LLC and B. Riley FBR, Inc. (each a “Sales Agent” and, collectively, the “Sales Agents”). The 2023 Equity Distribution Agreement provides that the Company may offer and sell shares of its common stock from time to time through the Sales Agents up to $150.0 million worth of its common stock, in amounts and at times to be determined by the Company. Sales of the Company’s common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market,” as defined in Rule 415 under the Securities Act, including sales made directly on the Nasdaq or similar securities exchange or sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices.

During the three months ended June 30, 2025, the Company did not sell shares of common stock under the 2023 Equity Distribution Agreement.

During the three months ended June 30, 2024, the Company sold 1,516,249 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $17.1 million, including $0.4 million of offering expenses, from these sales.

During the six months ended June 30, 2025, the Company sold 404,305 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $3.6 million, including $0.2 million of offering expenses, from these sales.

During the six months ended June 30, 2024, the Company sold 2,570,045 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $29.1 million, including $0.6 million of offering expenses, from these sales.

The Company generally uses net proceeds from these offerings to make investments, to pay down liabilities and for general corporate purposes. As of June 30, 2025, shares representing approximately $75.2 million of its common stock remain available for issuance and sale under the 2023 Equity Distribution Agreement.

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Notes to Consolidated Financial Statements

Stock Repurchase Program

On April 25, 2025, the Board extended a previously authorized stock repurchase program which allows the Company to repurchase up to $5.0 million of its common stock at prices below the Company’s net asset value per share as reported in its most recent consolidated financial statements. Under the repurchase program, the Company may, but is not obligated to, repurchase shares of its outstanding common stock in the open market or in privately negotiated transactions from time to time. Any repurchases by the Company intends to comply with the requirements of Rule 10b‑18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any applicable requirements of the 1940 Act. Unless extended by the Board, the repurchase program will terminate on the earlier of June 30, 2026 or the repurchase of $5.0 million of the Company’s common stock. During the three and six months ended June 30, 2025 and 2024, the Company did not make any repurchases of its common stock. From the inception of the stock repurchase program through June 30, 2025, the Company repurchased 167,465 shares of its common stock at an average price of $11.22 on the open market at a total cost of $1.9 million. From time to time, the Board assesses the size and effectiveness of the stock repurchase program and could elect to increase or decrease the size of the program in the future.

Transfers of financial assets

Assets related to transactions that do not meet the requirements under ASC Topic 860, Transfers and Servicing for sale treatment under GAAP are reflected in the Company’s consolidated statements of assets and liabilities as investments. Those assets are owned by special purpose entities that are consolidated in the Company’s financial statements. The creditors of the special purpose entities have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or any other affiliate of the Company).

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company — put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the transferor does not maintain effective control over the transferred assets through either (a) an agreement that both entitles and obligates the transferor to repurchase or redeem the assets before maturity or (b) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.

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Notes to Consolidated Financial Statements

Note 3. Related party transactions

Investment Management Agreement

At a meeting of the stockholders convened on  May 25, 2023and reconvened on  June 28, 2023 , the Company’s stockholders, upon the recommendation of the Board, approved an investment management agreement with the Advisor, which became effective on  June 30, 2023 (the “Original Investment Management Agreement”). The Original Investment Management Agreement was effective for two years from the date of approval and then was required to be annually reapproved by the Board for a one-year period. The Original Investment Management Agreement was considered and reapproved by the Company’s Board, including a majority of the independent directors, on December 10, 2024 for a one-year period.

On March 31, 2025, the Company entered into a new investment management agreement with the Advisor (the “New Investment Management Agreement, collectively with the Original Investment Management Agreement, the “Investment Management Agreement”) in connection with the closing of a transaction pursuant to which Momentum US Bidco LLC, an affiliate of Wendel SE, acquired 75% of the outstanding equity interests of Monroe Capital Intermediate Holdings, LLC, the indirect parent company of the Advisor, and certain other affiliates of Monroe Capital LLC (the “Transaction”) (any such affiliate party to the Transaction, collectively, “Monroe”). The Transaction, if closed, would constitute a change of control in the Advisor and terminated the Original Investment Management Agreement. On December 10, 2024, the Company’s Board, including a majority of the independent directors, approved, and recommended for approval by the Company’s stockholders, the New Investment Management Agreement. The New Investment Management Agreement was approved, subject to the closing of the Transaction, by the Company’s stockholders at a special meeting of stockholders held on February 21, 2025. The terms of the New Investment Management Agreement, including the fee structure and services to be provided, are the same as the terms of the Original Investment Management Agreement, except for the date and term. Under the terms of the Investment Management Agreement, the Advisor determines the composition of the Company’s investment portfolio, the nature and timing of the changes to the investment portfolio and the manner of implementing such changes; identifies, evaluates and negotiates the structure of the investments the Company makes (including performing due diligence on the Company’s prospective portfolio companies); and closes, monitors and administers the investments the Company makes, including the exercise of any voting or consent rights.

The Advisor’s services under the Investment Management Agreement are not exclusive to the Company, and the Advisor is free to furnish similar services to other entities so long as its services to the Company are not impaired. The Advisor is a registered investment adviser with the SEC. The Advisor receives fees for providing services to the Company under the Investment Management Agreement, consisting of two components, a base management fee and an incentive fee.

The base management fee is calculated at an annual rate of 2.00% of the Company’s gross assets (less cash and cash equivalents) including any assets acquired with the proceeds of leverage; provided, that, to the extent the Company’s gross assets (less cash and cash equivalents) exceed $250 million, the base management fee on the amount of such excess over $250 million will be calculated at an annual rate of 1.60% of the Company’s gross assets (less cash and cash equivalents) including any assets acquired with the proceeds of leverage. The base management fee is payable monthly in arrears and is prorated for any partial month.

The base management fee payable at June 30, 2025 and  December 31, 2024 was $0.9 million and $1.0 million, respectively. The base management fee expense was $3.0 million for the three months ended June 30, 2025 and 2024. The base management fee expense was $6.1 million and $6.2 million for the six months ended June 30, 2025 and 2024, respectively.

The incentive fee has two parts, as follows:

The first part, which is subject to the Incentive Fee Cap and Deferral Mechanism, as defined below, is calculated and payable quarterly in arrears based on the Company’s Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter. For this purpose, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees received from portfolio companies) accrued during the calendar quarter, minus expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement (as defined below), and any interest expense and any dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income the Company has not yet received in cash. The incentive fee with respect to the Pre-Incentive Fee Net Investment Income is 20.00% of the amount, if any, by which the Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter exceeds a hurdle rate of 1.75% (which is 7.00% annualized) of the Company’s net assets at the end of the immediately preceding calendar quarter, adjusted for any share issuances or repurchases during the relevant quarter, subject to a “catch-up” provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, the Advisor receives no incentive fee until the Pre-Incentive Fee Net Investment Income equals the hurdle rate of 1.75%, but then receives, as a “catch-up,” 100.00% of the Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than 2.1875% quarterly (which is 8.75% annualized). The effect of this “catch-up” provision is that, if Pre-Incentive Fee Net Investment Income exceeds 2.1875% in any calendar quarter, the Advisor will receive 20.00% of the Pre-Incentive Fee Net Investment Income as if the hurdle rate did not apply.

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Notes to Consolidated Financial Statements

Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter in which the Company incurs a loss. For example, if the Company receives Pre-Incentive Fee Net Investment Income in excess of the quarterly minimum hurdle rate, the Company will pay the applicable incentive fee up to the Incentive Fee Cap, defined below, even if the Company has incurred a loss in that quarter due to realized and unrealized capital losses. The Company’s net investment income used to calculate this part of the incentive fee is also included in the amount of the Company’s gross assets used to calculate the 2.00% base management fee. These calculations are appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

The incentive fee on Pre-Incentive Fee Net Investment Income is subject to a fee cap and deferral mechanism which is determined based upon a look-back period of up to three years and is expensed when incurred. For this purpose, the look-back period for the incentive fee based on Pre-Incentive Fee Net Investment Income (the “Incentive Fee Look-back Period”) includes the relevant calendar quarter and the 11 preceding full calendar quarters. Each quarterly incentive fee payable on Pre-Incentive Fee Net Investment Income is subject to a cap (the “Incentive Fee Cap”) and a deferral mechanism through which the Advisor may recoup a portion of such deferred incentive fees (collectively, the “Incentive Fee Cap and Deferral Mechanism”). The Incentive Fee Cap is equal to (a) 20.00% of Cumulative Pre-Incentive Fee Net Return (as defined below) during the Incentive Fee Look-back Period less (b) cumulative incentive fees of any kind paid to the Advisor during the Incentive Fee Look-back Period. To the extent the Incentive Fee Cap is zero or a negative value in any calendar quarter, the Company will not pay an incentive fee on Pre-Incentive Fee Net Investment Income to the Advisor in that quarter. To the extent that the payment of incentive fees on Pre-Incentive Fee Net Investment Income is limited by the Incentive Fee Cap, the payment of such fees will be deferred and paid in subsequent calendar quarters up to three years after their date of deferment, subject to certain limitations, which are set forth in the Investment Management Agreement. The Company only pays incentive fees on Pre-Incentive Fee Net Investment Income to the extent allowed by the Incentive Fee Cap and Deferral Mechanism. “Cumulative Pre-Incentive Fee Net Return” during any Incentive Fee Look-back Period means the sum of (a) Pre-Incentive Fee Net Investment Income and the base management fee for each calendar quarter during the Incentive Fee Look-back Period and (b) the sum of cumulative realized capital gains and losses, cumulative unrealized capital appreciation and cumulative unrealized capital depreciation during the applicable Incentive Fee Look-back Period.

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or, upon termination of the Investment Management Agreement, as of the termination date), and equals 20.00% of the Company’s realized capital gains, if any, on a cumulative basis from the date of the election to be a BDC through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis through the end of such year, less all previous amounts paid in respect of the capital gain incentive fee. However, in accordance with GAAP, the Company is required to include the aggregate unrealized capital appreciation on investments in the calculation and accrue a capital gain incentive fee on a quarterly basis, as if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Management Agreement.

There was no performance based incentive fee expense for the three months ended  June 30, 2025 and 2024. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap and Deferral Mechanism for the three months ended June 30, 2025 and 2024, which resulted in $2.3 million and $2.6 million, respectively, of reduced expense and additional net investment income. There was no performance based incentive fee expense for the six months ended June 30, 2025. The performance based incentive fee expense for the six months ended June 30, 2024 was $0.3 million. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap and Deferral Mechanism for the six months ended June 30, 2025 and 2024, which resulted in $4.4 million and $4.9 million, respectively, of reduced expense and additional net investment income. This deferral represents a contingent future liability and is not accrued until the amount can be reasonably estimated and payment is probable. The remaining deferred amount may be paid up to three years after the date of deferment.

The Company’s Advisor agreed to waive the portion of its quarterly income incentive fee, if any, if and to the extent that, after payment of such portion, the Company’s net investment income per share for such quarter would be less than the quarterly distribution per share declared in such quarter. The income incentive fee waiver is effective commencing with the quarter ending March 31, 2025 and terminates with the quarter ending *December 31, 2025.*During the three and six months ended June 30, 2025, no income incentive fee was earned.

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Notes to Consolidated Financial Statements

The following table provides the expiration dates of the Company’s Incentive Fee Cap and Deferral Mechanism contingent future liability as of  June 30, 2025:

Expiration Total
(In thousands)
December 31, 2025 $ 1,037
March 31, 2026 219
June 30, 2026 3,120
September 30, 2026 3,471
December 31, 2026 3,002
March 31, 2027 2,285
June 30, 2027 2,582
September 30, 2027 2,368
December 31, 2027 2,085
March 31, 2028 2,144
June 30, 2028 2,290
Total $ 24,603

There was no performance based incentive fee payable as of June 30, 2025 and  December 31, 2024.

Administration Agreement

The Company entered into an administration agreement (the “Administration Agreement”) with the Advisor to provide administrative services to the Company. For providing these services, facilities and personnel, the Company reimburses the Advisor for the Company’s allocable portion of overhead and other expenses incurred by the Advisor in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions and the Company’s allocable portion of the costs of compensation and related expenses of the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs. The administrative fee expense was $0.4 million for the three months ended June 30, 2025 and 2024. The administrative fee expense was $0.8 million and $0.9 million for the six months ended June 30, 2025 and 2024, respectively. The administrative fee payable at  June 30, 2025 and  December 31, 2024 was $0.5 million and $0.4 million, respectively. The administrative fee payable is included in other accrued liabilities on the Company's Statement of Assets and Liabilities.

Exemptive Relief

The Advisor may provide the Company with an opportunity to co-invest with other investment vehicles managed by the Advisor, Monroe and/or their affiliates. Under the 1940 Act, absent receipt of exemptive relief from the SEC, the Company and its affiliates are precluded from co-investing in negotiated investments with other funds and accounts sponsored or managed by the Advisor, Monroe and their affiliates. Since June 30, 2023, the Company and its Advisor have relied on exemptive relief from the SEC granted to certain affiliates of Monroe on October 15, 2014, as amended on January 10, 2023. The exemptive relief affords the Advisor greater flexibility to negotiate the terms of co-investments if the Board determines that it would be advantageous for the Company to co-invest with other accounts sponsored or managed by the Advisor, Monroe or their affiliates in a manner consistent with the Company's investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. On May 14, 2025, Monroe and the Advisor filed a new exemptive relief application that seeks to modify the co-investment exemptive relief previously granted to Monroe on January 10, 2023.

Note 4. Investments

The following table shows the Company’s investments as of June 30, 2025 and  December 31, 2024:

June 30, 2025 December 31, 2024
Cost Fair Value Cost Fair Value
(In thousands)
Investments
Debt $ 636,261 $ 579,171 $ 678,167 $ 638,779
Warrants 15,565 21,629 15,956 18,277
Other 55,924 8,451 36,709 14,637
Equity 38,098 13,402 35,942 26,198
Total investments $ 745,848 $ 622,653 $ 766,774 $ 697,891

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Notes to Consolidated Financial Statements

The following table shows the Company’s investments by industry sector as of June 30, 2025 and  December 31, 2024:

June 30, 2025 December 31, 2024
Cost Fair Value Cost Fair Value
(In thousands)
Life Science
Biotechnology $ 120,283 $ 84,043 $ 118,221 $ 97,562
Medical Device 239,170 209,087 213,564 205,634
Technology
Communications 517 3,532 11,711 14,763
Consumer-Related 65,352 25,066 74,421 36,667
Data Storage 417 330 417 350
Internet and Media 329 605 329 999
Networking 364 121 10,070 9,827
Semiconductors — — 45 —
Software 165,371 158,536 154,040 151,043
Sustainability
Alternative Energy 4,854 4,845 — —
Energy Efficiency 9,934 9,828 9,818 9,712
Other Sustainability 30,449 23,008 66,151 66,079
Healthcare Information and Services
Diagnostics 17,350 9,940 16,704 13,701
Other 39,575 42,194 39,533 40,144
Software 51,883 51,518 51,750 51,410
Total investments $ 745,848 $ 622,653 $ 766,774 $ 697,891

Note 5. Transactions with affiliated companies

A non-controlled affiliated company is generally a portfolio company in which the Company owns 5% or more of such portfolio company’s voting securities but not more than 25% of such portfolio company’s voting securities.

Transactions related to investments in non-controlled affiliated companies for the three months ended June 30, 2025 were as follows:

Three months ended June 30, 2025
Fair value at Transfers Net Fair value at
Portfolio March 31, Principal in/(out) at Discount unrealized Net realized June 30, Interest
Company 2025 Purchases payments fair value accretion gain/(loss) gain/(loss) 2025 income
(In thousands)
Aulea Medical, Inc. $ — $ — $ — $ — $ — $ — $ — $ — $ —
Evelo Biosciences, Inc. 8,307 — — — — (1,600 ) — 6,707 —
Total non-controlled affiliates $ 8,307 $ — $ — $ — $ — $ (1,600 ) $ — $ 6,707 $ —

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Notes to Consolidated Financial Statements

Transactions related to investments in non-controlled affiliated companies for the three months ended June 30, 2024 were as follows:

Three months ended June 30, 2024
Fair value at **** Transfers Net Fair value at
Portfolio March 31, **** in/(out) at Discount unrealized Net realized June 30, Interest
Company 2024 Purchases Sales fair value accretion gain/(loss) gain/(loss) 2024 income
(In thousands)
Aulea Medical, Inc. $ — $ — $ (40 ) $ — $ — $ — $ 40 $ — $ —
Evelo Biosciences, Inc. 12,577 92 — — — 3,178 — 15,847 —
Total controlled affiliates $ 12,577 $ 92 $ (40 ) $ — $ — $ 3,178 $ 40 $ 15,847 $ —

Transactions related to investments in non-controlled affiliated companies for the six months ended June 30, 2025 were as follows:

Six months ended June 30, 2025
Fair value at Transfers Net Fair value at
Portfolio December 31, Principal in/(out) at Discount unrealized Net realized June 30, Interest
Company 2024 Purchases payments fair value accretion gain/(loss) gain/(loss) 2025 income
(In thousands)
Aulea Medical, Inc. $ — $ — $ — $ — $ — $ — $ — $ — $ —
Evelo Biosciences, Inc. 8,307 2 — — — (1,602 ) — 6,707 —
Total non-controlled affiliates $ 8,307 $ 2 $ — $ — $ — $ (1,602 ) $ — $ 6,707 $ —

Transactions related to investments in non-controlled affiliated companies for the six months ended June 30, 2024 were as follows:

Six months ended June 30, 2024
Fair value at **** Transfers Net Fair value at
Portfolio December 31, Principal in/(out) at Discount unrealized Net realized June 30, Interest
Company 2023 Purchases payments fair value accretion gain/(loss) gain/(loss) 2024 income
(In thousands)
Aulea Medical, Inc. $ — $ 3 $ (40 ) $ — $ — $ — $ 37 $ — $ —
Evelo Biosciences, Inc. 1,132 104 — — — 14,611 — 15,847 —
Total non-controlled affiliates $ 1,132 $ 107 $ (40 ) $ — $ — $ 14,611 $ 37 $ 15,847 $ —

A controlled affiliated company is generally a portfolio company in which the Company owns more than 25% of such portfolio company’s voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement).

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Notes to Consolidated Financial Statements

Transactions related to investments in controlled affiliated companies for the three months ended  June 30, 2025 were as follows:

Three months ended June 30, 2025
Fair value at Transfers Net Fair value at
Portfolio March 31, Principal in/(out) at Discount unrealized Net realized June 30, Interest
Company 2025 Purchases payments PIK fair value accretion gain/(loss) gain/(loss) 2025 income
(In thousands)
Better Place Forests Co. $ 879 $ 1,107 $ — $ — $ — $ — $ (1,107 ) $ — $ 879 $ —
HIMV LLC 5,290 — — — — — (4,425 ) — 865 —
Nexii, Inc. 8,700 11 — — — — — — 8,711 20
Swift Health Systems, Inc. — 137 — — — — (137 ) — — —
Total controlled affiliates $ 14,869 $ 1,255 $ — $ — $ — $ — $ (5,669 ) $ — $ 10,455 $ 20

Transactions related to investments in controlled affiliated companies for the three months ended June 30, 2024 were as follows:

Three months ended June 30, 2024
Fair value at Transfers Net Fair value at
Portfolio March 31 Principal in/(out) at Discount unrealized Net realized June 30, Interest
Company 2024 Purchases payments PIK fair value accretion gain/(loss) gain/(loss) 2024 income
(In thousands)
Better Place Forests Co. $ 7,799 $ 1,500 $ — $ 178 $ — $ 3 $ (3,930 ) $ — $ 5,550 $ 188
HIMV LLC 5,845 — — — 463 — (472 ) — 5,836 —
Total controlled affiliates $ 13,644 $ 1,500 $ — $ 178 $ 463 $ 3 $ (4,402 ) $ — $ 11,386 $ 188

Transactions related to investments in controlled affiliated companies for the six months ended  June 30, 2025 were as follows:

Six months ended June 30, 2025 ****
Fair value at Transfers Net Fair value at ****
Portfolio December 31, Principal in/(out) at Discount unrealized Net realized June 30, Interest
Company 2024 Purchases payments PIK fair value accretion gain/(loss) gain/(loss) 2025 income (reversal)
(In thousands)
Better Place Forests Co. $ — $ 2,048 $ — $ — $ — $ — $ (1,169 ) $ — $ 879 $ —
HIMV LLC 6,230 — — — — — (5,365 ) — 865 —
Nexii, Inc. 8,547 11 — — — — 153 — 8,711 40
Swift Health Systems, Inc. 17,042 2,146 — 208 — 9 (19,405 ) — — (81 )
Total controlled affiliates $ 31,819 $ 4,205 $ — $ 208 $ — $ 9 $ (25,786 ) $ — $ 10,455 $ (41 )

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Notes to Consolidated Financial Statements

Transactions related to investments in controlled affiliated companies for the six months ended June 30, 2024 were as follows:

Six months ended June 30, 2024
Fair value at **** Transfers Net Fair value at
Portfolio December 31, Principal in/(out) at Discount unrealized Net realized June 30, Interest
Company 2023 Purchases payments PIK fair value accretion gain/(loss) gain/(loss) 2024 income
(In thousands)
Better Place Forests Co. $ 7,993 $ 2,250 $ — $ 344 $ — $ 7 $ (5,044 ) $ — $ 5,550 $ 365
HIMV LLC 6,230 227 (547 ) — 463 — (537 ) — 5,836 —
Total controlled affiliates $ 14,223 $ 2,477 $ (547 ) $ 344 $ 463 $ 7 $ (5,581 ) $ — $ 11,386 $ 365

Note 6. Fair value

Prior to July 30, 2022, the Board determined the fair value of the Company’s investments. Pursuant to the amended SEC Rule 2a-5 of the 1940 Act, on July 29, 2022, the Board designated the Advisor as the Company’s “valuation designee.” The Board is responsible for oversight of the valuation designee. The valuation designee has established a Valuation Committee to determine in good faith the fair value of the Company’s investments, based on input from the Advisor’s management and personnel and independent valuation firms which are engaged at the direction of the Valuation Committee to assist in the valuation of certain portfolio investments lacking a readily available market quotation at least once during a trailing twelve-month period. The Valuation Committee determines fair values pursuant to a valuation policy approved by the Board and pursuant to a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter, with at least 25% (based on fair value) of the Company’s valuation of portfolio companies lacking readily available market quotations subject to review by an independent valuation firm.

The Company uses fair value measurements made by the valuation designee to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in certain instances, there are no quoted market prices for certain assets or liabilities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the asset or liability.

Fair value measurements focus on exit prices in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment.

The Company’s fair value measurements are classified into a fair value hierarchy in accordance with ASC Topic 820, Fair Value Measurement, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The three categories within the hierarchy are as follows:

Level 1 Quoted prices in active markets for identical assets and liabilities.
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, and model-based valuation techniques for which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
--- ---
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
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Notes to Consolidated Financial Statements

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded such portfolio investment.

Cash: The carrying amount is a reasonable estimate of fair value. These financial instruments are not recorded at fair value on a recurring basis and are categorized as Level 1 within the fair value hierarchy described above.

Money market funds:  The carrying amounts are valued at their net asset value as of the close of business on the day of valuation. These financial instruments are recorded at fair value on a recurring basis and are categorized as Level 1 within the fair value hierarchy described above as these funds can be redeemed daily.

Debt investments: The fair value of debt investments is estimated by discounting the expected future cash flows using the period end rates at which similar debt investments would be made to borrowers with similar credit ratings and for the same remaining maturities. Significant increases (decreases) in this unobservable input would result in a significantly lower (higher) fair value measurement. These assets are recorded at fair value on a recurring basis and are categorized as Level 3 within the fair value hierarchy described above.

Under certain circumstances, the Company  may use an alternative technique to value debt investments that better reflects its fair value such as the use of multiple probability weighted cash flow models when the expected future cash flows contain elements of variability.

Warrant investments: The Company values its warrants using the Black-Scholes valuation model incorporating the following material assumptions:

● Underlying asset value of the issuer is estimated based on information available, including any information regarding the most recent rounds of borrower funding. Significant increases (decreases) in this unobservable input would result in a significantly higher (lower) fair value measurement.
● Volatility, or the amount of uncertainty or risk about the size of the changes in the warrant price, is based on indices of publicly traded companies similar in nature to the underlying company issuing the warrant. A total of seven such indices are used. Significant increases (decreases) in this unobservable input would result in a significantly higher (lower) fair value measurement.
--- ---
● The risk-free interest rates are derived from the U.S. Treasury yield curve. The risk-free interest rates are calculated based on a weighted average of the risk-free interest rates that correspond closest to the expected remaining life of the warrant.
--- ---
● Other adjustments, including a marketability discount on private company warrants, are estimated based on management’s judgment about the general industry environment.
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Notes to Consolidated Financial Statements

● Historical portfolio experience on cancellations and exercises of the Company’s warrants are utilized as the basis for determining the estimated time to exit of the warrants in each financial reporting period. Warrants may be exercised in the event of acquisitions, mergers or initial public offerings, and cancelled due to events such as bankruptcies, restructuring activities or additional financings. These events cause the expected remaining life assumption to be shorter than the contractual term of the warrants. Significant increases (decreases) in this unobservable input would result in significantly higher (lower) fair value measurement.

Under certain circumstances the Company may use an alternative technique to value warrants that better reflects the warrants’ fair value, such as an expected settlement of a warrant in the near term or a model that incorporates a put feature associated with the warrant. The fair value may be determined based on the expected proceeds to be received from such settlement or based on the net present value of the expected proceeds from the put option.

The fair value of the Company’s warrants held in publicly traded companies is determined based on inputs that are readily available in public markets or can be derived from information available in public markets. Therefore, the Company has categorized these warrants as Level 2 within the fair value hierarchy described above. The fair value of the Company’s warrants held in private companies is determined using both observable and unobservable inputs and represents management’s best estimate of what market participants would use in pricing the warrants at the measurement date. Therefore, the Company has categorized these warrants as Level 3 within the fair value hierarchy described above. These assets are recorded at fair value on a recurring basis.

Equity investments: The fair value of an equity investment in a privately held company is initially the face value of the amount invested. The Company adjusts the fair value of equity investments in private companies upon the completion of a new third-party round of equity financing. The Company may make adjustments to fair value, absent a new equity financing event, based upon positive or negative changes in a portfolio company’s financial or operational performance. Significant increases (decreases) in this unobservable input would result in a significantly higher (lower) fair value measurement. The Company has categorized these equity investments as Level 3 within the fair value hierarchy described above. The fair value of an equity investment in a publicly traded company is based upon the closing public share price on the date of measurement. Therefore, the Company has categorized these equity investments as Level 1 within the fair value hierarchy described above. These assets are recorded at fair value on a recurring basis.

Other investments: Other investments are valued based on the facts and circumstances of the underlying contractual agreement. The Company currently values these contractual agreements using a multiple probability weighted cash flow model as the contractual future cash flows contain elements of variability. Significant changes in the estimated cash flows and probability weightings would result in a significantly higher or lower fair value measurement. The Company has categorized these other investments as Level 3 within the fair value hierarchy described above. These other investments are recorded at fair value on a recurring basis.

The following tables detail the assets that are carried at fair value and measured at fair value on a recurring basis as of June 30, 2025 and  December 31, 2024 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

June 30, 2025
Level 1 Level 2 Level 3 Total
(In thousands)
Debt investments $ — $ — $ 579,171 $ 579,171
Warrant investments — 1,173 20,456 21,629
Other investments — — 8,451 8,451
Equity investments 490 — 12,912 13,402
Total investments $ 490 $ 1,173 $ 620,990 $ 622,653
December 31, 2024
--- --- --- --- --- --- --- --- ---
Level 1 Level 2 Level 3 Total
(In thousands)
Debt investments $ — $ — $ 638,779 $ 638,779
Warrant investments — 1,839 16,438 18,277
Other investments — — 14,637 14,637
Equity investments 587 — 25,611 26,198
Total investments $ 587 $ 1,839 $ 695,465 $ 697,891

The following tables provide a summary of quantitative information about the Company’s Level 3 fair value measurements of the Company’s investments as of June 30, 2025 and  December 31, 2024. In addition to the techniques and inputs noted in the table below, according to the Company’s valuation policy, the Company may also use other valuation techniques and methodologies when determining its fair value measurements.

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Notes to Consolidated Financial Statements

The following table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements as of June 30, 2025:

June 30, 2025
Fair Valuation Techniques/ Unobservable Weighted
Investment Type Value Methodologies Input Range Average(1)
(Dollars in thousands, except per share data) ****
Debt investments $ 540,426 Discounted Expected Future Cash Flows Hypothetical Market Yield 10% – 20% 13 %
38,745 Multiple Probability Weighted Cash Flow Model Probability Weighting 0% - 100% 47 %
Warrant investments 15,193 Black-Scholes Valuation Model Price Per Share 0.000 –807.9191 $ 16.26
Average Industry Volatility 24% 24 %
Marketability Discount 0 - 20% 20 %
Estimated Time to Exit (in years) 1 to 5 3
2,712 Expected Proceeds Price Per Share $32.69 $ 32.69
2,551 Conversion Model Price Per Share $3.99 $ 3.99
Other investments 8,451 Multiple Probability Weighted Cash Flow Model Discount Rate 25% – 30% 26 %
Probability Weighting 0% – 100% 97 %
Equity investments 11,631 Last Equity Financing Price Per Share 0.066 –215.0303 $ 54.69
1,281 Multiple Probability Weighted Scenario Model Probability Weighting 20% – 100% 33 %
Total Level 3 investments $ 620,990
(1) Weighted average is calculated by multiplying (a) the unobservable input for each investment in the investment type by (b) (1) the fair value of the related investment in the investment type divided by (2) the total fair value of the investment type.
--- ---

The following table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements as of December 31, 2024:

December 31, 2024
Fair Valuation Techniques/ Unobservable Weighted
Investment Type Value Methodologies Input Range Average(1)
(Dollars in thousands, except per share data) ****
Debt investments $ 628,325 Discounted Expected Future Cash Flows Hypothetical Market Yield 11% – 20% 14 %
10,454 Multiple Probability Weighted Cash Flow Model Probability Weighting 10% - 100% 57 %
Warrant investments 16,438 Black-Scholes Valuation Model Price Per Share 0.000 –807.9191 $ 16.80
Average Industry Volatility 24% 24 %
Marketability Discount 0 - 20% 15 %
Estimated Time to Exit (in years) 1 to 5 3
Other investments 14,637 Multiple Probability Weighted Cash Flow Model Discount Rate 15% – 25% 18 %
Probability Weighting 30% – 100% 90 %
Equity investments 21,648 Last Equity Financing Price Per Share 0.066 –215.0303 $ 30.47
3,963 Multiple Probability Weighted Scenario Model Probability Weighting 10% – 100% 33 %
Total Level 3 investments $ 695,465
(1) Weighted average is calculated by multiplying (a) the unobservable input for each investment in the investment type by (b) (1) the fair value of the related investment in the investment type divided by (2) the total fair value of the investment type.
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Notes to Consolidated Financial Statements

Borrowings: The Credit Facilities approximate fair value due to the variable interest rate of the facilities and are categorized as Level 2 within the fair value hierarchy described above. Additionally, the Company considers its creditworthiness in determining the fair value of such borrowings. The fair value of the fixed-rate 2026 Notes (as defined in Note 7) is based on the closing public share price on the date of measurement. On June 30, 2025, the closing price of the 2026 Notes on the New York Stock Exchange was $24.75 per note, and the 2026 Notes had an aggregate fair value of $56.9 million. Therefore, the Company has categorized this borrowing as Level 1 within the fair value hierarchy described above. The fair value of the fixed-rate 2027 Notes (as defined in Note 7) is based on the closing public share price on the date of measurement. On June 30, 2025, the closing price of the 2027 Notes on the New York Stock Exchange was $24.75 per note, and the 2027 Notes had an aggregate fair value of $56.9 million. Therefore, the Company has categorized this borrowing as Level 1 within the fair value hierarchy described above. Based on market yields on  June 30, 2025, the fair value of the 2031 Convertible Notes (as defined in Note 7) was $7.4 million, and the 2031 Convertible Notes are categorized as Level 3 within the fair value hierarchy described above. Based on market quotations on June 30, 2025, the 2022 Asset-Backed Notes (as defined in Note 7) were trading at par value, or $34.2 million, and 2022 Asset-Backed Notes are categorized as Level 3 within the fair value hierarchy described above. These borrowings are not recorded at fair value on a recurring basis.

Off-balance-sheet instruments: Fair values for off-balance-sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standings. Therefore, the Company has categorized these instruments as Level 3 within the fair value hierarchy described above.

The following table shows a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the three months ended June 30, 2025:

Three months ended June 30, 2025
Debt Warrant Equity Other ****
Investments Investments Investments Investments Total
(In thousands)
Level 3 assets, beginning of period $ 643,567 $ 17,159 $ 12,974 $ 13,697 $ 687,397
Purchase of investments 42,225 — 144 — 42,369
Warrants received and classified as Level 3 — 117 — — 117
Principal payments received on investments (78,493 ) — — — (78,493 )
PIK interest on investments 243 — — — 243
Proceeds from sale of investments (1 ) (579 ) (203 ) — (783 )
Net realized (loss) gain on investments (9,364 ) (99 ) 169 — (9,294 )
Unrealized (depreciation) appreciation included in earnings (18,005 ) 3,858 (172 ) (7,339 ) (21,658 )
Transfer out of debt investments (2,093 ) — — 2,093 —
Other 1,092 — — — 1,092
Level 3 assets, end of period $ 579,171 $ 20,456 $ 12,912 $ 8,451 $ 620,990

During the three months ended June 30, 2025, there were no transfers in or out of Level 3.

The following table shows a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the three months ended June 30, 2024:

Three months ended June 30, 2024
Debt Warrant Equity Other ****
Investments Investments Investments Investments Total
(In thousands)
Level 3 assets, beginning of period $ 670,773 $ 23,156 $ 6,825 $ 9,192 $ 709,946
Purchase of investments 11,605 — 500 (40 ) 12,065
Warrants received and classified as Level 3 — 1,089 — — 1,089
Principal payments received on investments (56,906 ) — — 493 (56,413 )
Payment-in-kind interest on investments 355 — — — 355
Proceeds from sale of investments (3 ) (4 ) — (40 ) (47 )
Net realized gain on investments 3 2,617 — 40 2,660
Unrealized depreciation included in earnings (17,501 ) (3,046 ) (3,156 ) (462 ) (24,165 )
Transfer out of warrant investments — (2,681 ) 2,681 — —
Other 742 — — — 742
Level 3 assets, end of period $ 609,068 $ 21,131 $ 6,850 $ 9,183 $ 646,232

During the three months ended June 30, 2024, there were no transfers in or out of Level 3.

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Notes to Consolidated Financial Statements

The following table shows a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the six months ended June 30, 2025:

Six months ended June 30, 2025
Debt Warrant Equity Other ****
Investments Investments Investments Investments Total
(In thousands)
Level 3 assets, beginning of period $ 638,779 $ 16,438 $ 25,611 $ 14,637 $ 695,465
Purchase of investments 113,854 — 2,189 15 116,058
Warrants received and classified as Level 3 — 282 — — 282
Principal payments received on investments (129,238 ) — — — (129,238 )
PIK interest on investments 528 — — — 528
Proceeds from sale of investments (2 ) (579 ) (203 ) — (784 )
Net realized (loss) gain on investments (9,363 ) (99 ) 169 — (9,293 )
Unrealized (depreciation) appreciation included in earnings (34,811 ) 4,414 (14,854 ) (8,294 ) (53,545 )
Transfer out of debt investments (2,093 ) — — 2,093 —
Other 1,517 — — — 1,517
Level 3 assets, end of period $ 579,171 $ 20,456 $ 12,912 $ 8,451 $ 620,990

During the six months ended June 30, 2025, there were no transfers in or out of Level 3.

The change in unrealized depreciation included in the consolidated statement of operations attributable to Level 3 investments still held at June 30, 2025 included $45.5 million in unrealized depreciation on debt and other investments, $14.7 million in unrealized depreciation on equity investments and $3.9 million in unrealized appreciation on warrant investments.

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Notes to Consolidated Financial Statements

The following table shows a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the six months ended June 30, 2024:

Six months ended June 30, 2024
Debt Warrant Equity Other ****
Investments Investments Investments Investments Total
(In thousands)
Level 3 assets, beginning of period $ 670,172 $ 22,975 $ 7,281 $ 6,430 $ 706,858
Purchase of investments 33,782 — 1,250 352 35,384
Warrants received and classified as Level 3 — 1,217 — — 1,217
Principal payments received on investments (75,986 ) — — (70 ) (76,056 )
PIK interest on investments 1,737 — — — 1,737
Proceeds from sale of investments (44 ) (4 ) — (40 ) (88 )
Net realized gain (loss) on investments 41 2,600 — 40 2,681
Unrealized depreciation included in earnings (19,010 ) (2,976 ) (4,362 ) (720 ) (27,068 )
Transfer out of debt investments (3,191 ) (2,681 ) 2,681 3,191 —
Other 1,567 — — 1,567
Level 3 assets, end of period $ 609,068 $ 21,131 $ 6,850 $ 9,183 $ 646,232

During the six months ended June 30, 2024, there were no transfers in or out of Level 3.

The change in unrealized depreciation included in the consolidated statement of operations attributable to Level 3 investments still held at  June 30, 2024 included $19.7 million in unrealized depreciation on debt and other investments, $4.4 million in unrealized depreciation on equity investments and $2.0 million in unrealized depreciation on warrant investments.

The Company discloses fair value information about financial instruments, whether or not recognized in the consolidated statement of assets and liabilities, for which it is practicable to estimate that value. Certain financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The fair value amounts have been measured as of the reporting date and have not been reevaluated or updated for purposes of these financial statements subsequent to that date. As such, the fair values of these financial instruments subsequent to the reporting date may be different than amounts reported.

As of June 30, 2025 and  December 31, 2024, all of the balances of all the Company’s financial instruments were recorded at fair value, except for the Company’s borrowings, as previously described.

Market risk

The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments maychange when interest rate levels change, and that change may be either favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk by adjusting terms of new debt investments and by investing in securities with terms that mitigate the Company’s overall interest rate risk.

Note 7. Borrowings

The following table shows the Company’s borrowings as of June 30, 2025 and  December 31, 2024:

June 30, 2025 December 31, 2024
Total Balance Unused Total Balance Unused
Commitment Outstanding Commitment Commitment Outstanding Commitment
(In thousands)
Key Facility $ 150,000 $ — $ 150,000 $ 150,000 $ — $ 150,000
NYL Facility 250,000 181,000 69,000 250,000 181,000 69,000
Nuveen Facility 200,000 90,000 110,000 100,000 75,000 25,000
2022 Asset-Backed Notes 34,169 34,169 — 81,078 81,078 —
2027 Notes 57,500 57,500 — 57,500 57,500 —
2026 Notes 57,500 57,500 — 57,500 57,500 —
2031 Convertible Notes 7,500 7,500 — 20,000 20,000 —
Total before debt issuance costs 756,669 427,669 329,000 716,078 472,078 244,000
Unamortized debt issuance costs attributable to term borrowings — (2,531 ) — — (4,174 ) —
Total borrowings outstanding, net $ 756,669 $ 425,138 $ 329,000 $ 716,078 $ 467,904 $ 244,000

As of June 30, 2025, with certain limited exceptions, the Company, as a BDC, was only allowed to borrow amounts such that the Company’s asset coverage, as defined in the 1940 Act, was at least 150% after such borrowings. As of June 30, 2025, the asset coverage for borrowed amounts was 166%.

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Notes to Consolidated Financial Statements

Credit Facilities

Key Facility

The Company entered into the Key Facility with Key effective November 4, 2013. On June 20, 2024, the Company amended the Key Facility, among other things, (i) to extend the date on which the Company may request advances under the Key Facility to June 20, 2027 and to extend the maturity date to June 20, 2029 and (ii) to amend the interest rate to be based on the rate of interest published in The Wall Street Journal as the prime rate in the United States plus 0.10%, with a prime rate floor of 4.10%. Prior to June 20, 2024, the interest rate on the Key Facility was based on Prime plus 0.25%, with a prime rate floor of 4.25%. On June 29, 2023, the Company amended the Key Facility, among other things, to increase the commitment amount to $150 million and to increase the amount of the accordion feature which now allows for the potential increase in the total commitment amount to $300 million. The Key Facility is collateralized by all debt investments and warrants held by Credit II and permits an advance rate of up to 60% of eligible debt investments held by Credit II. The Key Facility contains covenants that, among other things, require the Company to maintain a minimum net worth and to restrict the debt investments securing the Key Facility to certain criteria for qualified debt investments and includes portfolio company concentration limits as defined in the related loan agreement. The prime rate was 7.50% on June 30, 2025 and December 31, 2024. The average interest rate on the Key Facility for the three months ended June 30, 2025 and 2024 was 7.60% and 8.73%, respectively. The average interest rate on the Key Facility for the six months ended June 30, 2025 and 2024 was 7.60% and 8.74%, respectively. The Key Facility requires the payment of an unused line fee in an amount up to 0.75% on an annualized basis of any unborrowed amount available under the facility. As of June 30, 2025 and  December 31, 2024, the Company had borrowing capacity under the Key Facility of $150.0 million. At June 30, 2025 and  December 31, 2024, $38.3 million and $24.8 million, respectively, was available for borrowing, subject to existing terms and advance rates.

NYL Facility

HFI entered into the NYL Facility with the NYL Noteholders for an aggregate purchase price of up to $100.0 million, with an accordion feature of up to $200.0 million at the mutual discretion and agreement of HSLFI and the NYL Noteholders. On June 1, 2018, HSLFI sold or contributed to HFI certain secured loans made to certain portfolio companies pursuant to the Sale and Servicing Agreement. Any notes issued by HFI are collateralized by all investments held by HFI and permit an advance rate of up to 67% of the aggregate principal amount of eligible debt investments. The notes were issued pursuant to the indenture. All advances under the NYL Facility are scheduled to mature in June 2030.

On May 24, 2023, the Company amended its NYL Facility to, among other things, increase the commitment by $50.0 million to enable its wholly-owned subsidiary to issue up to $250.0 million of secured notes. On April 25, 2025, the Company amended its NYL Facility to, among other things, extend the investment period to June 5, 2027. In addition, the amendment amended the interest rate for advances made after April 25, 2025, fixing the interest rate at the greater of (i) 4.60% and (ii) the Three Year I Curve plus 2.95% with the interest rate to be reset on any advance date.

There were $181.0 million in advances made by the NYL Noteholders as of June 30, 2025 and  December 31, 2024. The interest rate was 6.55% and 6.34% as of June 30, 2025 and 2024, respectively. As of June 30, 2025 and  December 31, 2024, the Company had borrowing capacity under the NYL Facility of $69.0 million. At June 30, 2025 and  December 31, 2024, $0.2 million and $8.4 million, respectively, was available for borrowing, subject to existing terms and advance rates.

Under the terms of the NYL Facility, the Company is required to maintain a reserve cash balance, which may be used to pay monthly interest and principal payments on the NYL Facility. The Company has segregated these funds and classified them as restricted investments in money market funds. At  June 30, 2025 and December 31, 2024, there were approximately $1.4 million of such restricted investments.

Nuveen Facility

HFII entered into the Nuveen Facility with the Nuveen Noteholders for an aggregate purchase price of up to $100.0 million, with an accordion feature of up to $200.0 million at the mutual discretion and agreement of HFII and the Nuveen Noteholders. On June 21, 2024, the Company sold or contributed to HFII certain secured loans made to certain portfolio companies pursuant to the Sale and Servicing Agreement. Any notes issued by HFII are collateralized by all investments held by HFII and permit an advance rate of up to 67.5% of the aggregate principal amount of eligible debt investments. The notes were issued pursuant to the Indenture. The Nuveen Facility bore interest, payable monthly, determined at a rate per annum equal to the greater of (i) the yield for the United States Treasury constant maturity 3-year and 5-year in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily) – H.15” interpolated to a 4.88-year weighted average life (the “Pricing Benchmark”) plus 3.15% and (ii) 5.00%.

On May 23, 2025, the Company amended its Nuveen Facility to, among other things, extend the investment period to June 21, 2028 and the maturity date to June 10, 2034, and increase the commitment by $100.0 million which enables its wholly-owned subsidiary to issue up to $200.0 million of secured notes. In addition, the amendment amended the interest rate for advances made after May 23, 2025, fixing the interest rate at the greater of (i) 5.00% and (ii) the Pricing Benchmark plus 2.95%.

There were $90.0 million and $75.0 million in advances made by the Nuveen Noteholders as of June 30, 2025 and  December 31, 2024, respectively. The interest rate as of June 30, 2025 and 2024 was 7.21%. and 7.38%, respectively. As of June 30, 2025 and  December 31, 2024 the Company had borrowing capacity under the Nuveen Facility of $110.0 million and $25.0 million, respectively. At June 30, 2025, and  December 31, 2024, $0.8 million and $9.9 million, respectively, was available for borrowing, subject to existing terms and advance rates.

Under the terms of the Nuveen Facility, the Company is required to maintain a reserve cash balance, which may be used to pay monthly interest and principal payments on the Nuveen Facility. The Company has segregated these funds and classified them as restricted investments in money market funds. At June 30, 2025 and  December 31, 2024 there were approximately $1.1 million and $1.0 million, respectively, of such restricted investments.

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Notes to Consolidated Financial Statements

Securitization

2022 Asset-Backed Notes

On November 9, 2022, the Company completed a term debt securitization in connection with which an affiliate of the Company made an offering of the 2022 Asset-Backed Notes. The 2022 Asset-Backed Notes were rated A by DBRS, Inc. There has been no change in the rating since November 9, 2022.

The 2022 Asset-Backed Notes were issued by the 2022‑1 Trust pursuant to a note purchase agreement, dated as of November 9, 2022, by and among the Company and Keybanc Capital Markets Inc. as Initial Purchaser, and are backed by a pool of loans made to certain portfolio companies of the Company and secured by certain assets of those portfolio companies and are to be serviced by the Company. Interest on the 2022 Asset-Backed Notes will be paid, to the extent of funds available, at a fixed rate of 7.56% per annum. The reinvestment period of the 2022 Asset-Backed Notes ends November 15, 2024 and the maturity date is November 15, 2030.

As of  June 30, 2025 and  December 31, 2024, the 2022 Asset-Backed Notes had an outstanding principal balance of $34.2 million and $81.1 million, respectively.

Under the terms of the 2022 Asset-Backed Notes, the Company is required to maintain a reserve cash balance, funded through proceeds from the sale of the 2022 Asset-Backed Notes, which may be used to pay monthly interest and principal payments on the 2022 Asset-Backed Notes. The Company has segregated these funds and classified them as restricted investments in money market funds. At  June 30, 2025 and  December 31, 2024, there were approximately $0.8 million and $1.0 million, respectively, of such restricted investments.

Unsecured Notes

2026 Notes

On March 30, 2021, the Company issued and sold an aggregate principal amount of $57.5 million of 4.875% notes due in 2026 (the “2026 Notes”). The amount of 2026 Notes issued and sold included the full exercise by the underwriters of their option to purchase $7.5 million in aggregate principal of additional notes. The 2026 Notes have a stated maturity of March 30, 2026 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or after March 30, 2023 at a redemption price of $25 per security plus accrued and unpaid interest. The 2026 Notes bear interest at a rate of 4.875% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year. The 2026 Notes are the Company’s direct unsecured obligations and (i) rank equally in right of payment with the Company’s current and future unsecured indebtedness; (ii) are senior in right of payment to any of the Company’s future indebtedness that expressly provides it is subordinated to the 2026 Notes; (iii) are effectively subordinated to all of the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to the extent of the value of the assets securing such indebtedness, and (iv) are structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries. As of June 30, 2025, the Company was in material compliance with the terms of the 2026 Notes. The 2026 Notes are listed on the New York Stock Exchange under the symbol “HTFB”.

2027 Notes

On June 15, 2022, the Company issued and sold an aggregate principal amount of $50.0 million of 6.25% notes due in 2027 and on July 11, 2022, pursuant to the underwriters’ 30 day option to purchase additional notes, the Company sold an additional $7.5 million of such notes (collectively, the “2027 Notes”). The 2027 Notes have a stated maturity of June 15, 2027 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or after June 15, 2024 at a redemption price of $25 per security plus accrued and unpaid interest. The 2027 Notes bear interest at a rate of 6.25% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year, commencing on September 30, 2022. The 2027 Notes are the Company’s direct unsecured obligations and (i) rank equally in right of payment with the Company’s current and future unsecured indebtedness; (ii) are senior in right of payment to any of the Company’s future indebtedness that expressly provides it is subordinated to the 2027 Notes; (iii) are effectively subordinated to all of the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to the extent of the value of the assets securing such indebtedness, and (iv) are structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries. As of June 30, 2025, the Company was in material compliance with the terms of the 2027 Notes. The 2027 Notes are listed on the New York Stock Exchange under the symbol “HTFC”.

Convertible Notes

2031 Convertible Notes

On October 17, 2024, the Company entered into a note purchase agreement (the “2031 Note Purchase Agreement”), by and among the Company, and each purchaser named therein, in connection with the issuance and sale of $20.0 million aggregate principal of the Company’s 7.125% convertible notes due 2031 (the “2031 Convertible Notes”), in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. The Company received net proceeds (before expenses) from the sale of the 2031 Convertible Notes of approximately $18.6 million.

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Notes to Consolidated Financial Statements

The 2031 Convertible Notes mature on October 17, 2031, unless earlier converted or repurchased in accordance with their terms. The 2031 Convertible Notes bear interest at a rate of 7.125% per year, subject to additional interest or repurchase obligation upon certain events, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on December 31, 2024. If an investment grade rating is not maintained with respect to the 2031 Convertible Notes, additional interest of 1.00% per annum will accrue on the 2031 Convertible Notes until such time as the 2031 Convertible Notes have received an investment grade rating of “BBB-” (or its equivalent) or better. The Company will also be required to pay additional interest of 2.00% per annum (x) on any overdue payment of interest and (y) during the continuance of an Event of Default (as defined in the 2031 Note Purchase Agreement). In addition, on the occurrence of a Change in Control Repurchase Event (as defined in the 2031 Note Purchase Agreement) or Delisting Event (as defined in the 2031 Note Purchase Agreement), the Company will generally be required to make an offer to purchase the outstanding 2031 Convertible Notes at a price equal to 100% of the principal amount of such 2031 Convertible Notes plus accrued and unpaid interest to the repurchase date.

The 2031 Convertible Notes are direct unsecured obligations of the Company and rank (i) equal in right of payment to the Company’s existing and future unsecured indebtedness that is not subordinated in right of payment to the 2031 Convertible Notes; (ii) senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the 2031 Convertible Notes; (iii) effectively junior in right of payment to the Company’s existing and future secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries. No sinking fund is provided for the 2031 Convertible Notes.

At any time on or after April 17, 2025, at the Company’s sole option, the Company may redeem, from time to time, the 2031 Convertible Notes in whole or in part, out of funds legally available for such redemption, at 100% of the principal amount prepaid plus accrued but unpaid interest to but excluding the date of prepayment.

Each holder of a 2031 Convertible Note has the right, at such holder’s option, to convert any such 2031 Convertible Note, at any time on or after April 17, 2025 and prior to the close of business on the business day immediately preceding the maturity date, into such number of shares of common stock of the Company equal to the principal balance of the 2031 Convertible Note being converted on the conversion date plus the accrued but unpaid interest on the 2031 Convertible Note as of the conversion date, divided by the greater of (i) volume-weighted average closing sale price for the five trading days immediately prior to the relevant conversion date, or (ii) the Company’s most recently reported net asset value (“NAV”) per share immediately prior to the date of exercise. If the 2031 Convertible Notes were converted as of June 30, 2025, 990,753 shares would have been issued based on the Company’s most recently reported NAV per share immediately prior to June 30, 2025 of $7.57. The last reported price for the Company’s common stock on June 30, 2025 was $7.20 per share.

No holder of 2031 Convertible Notes may exercise its conversion right if upon conversion the holder would receive shares that would cause funds and accounts managed by the investment adviser to such funds and accounts and any person controlled by the parent company of such investment adviser to beneficially own in the aggregate more than 4.99% of the shares outstanding at such time.

The 2031 Convertible Notes are not listed on any exchange and may not be transferred without the consent of the Company.

The 2031 Convertible Notes are recorded at their contractual amounts. At issuance, the Company determined that the embedded conversion option in the 2031 Convertible Notes is not required to be separately accounted for as a derivative under ASC 815, Derivatives and Hedging.

During the three and six months ended June 30, 2025, the holders of a portion of the 2031 Convertible Notes converted $12.5 million in outstanding principal of the 2031 Convertible Notes plus accrued but unpaid interest on such outstanding principal as of the conversion date into 1,621,503 shares of common stock at a weighted average conversion price of $7.79, together with cash in lieu of fractional shares, in accordance with noteholder conversion notice. The Company accelerated $0.8 million of unamortized debt issuance costs related to the 2031 Convertible Notes.

As of  June 30, 2025 and December 31, 2024, the aggregate outstanding principal balance of the 2031 Convertible Notes was $7.5 million and $20.0 million, respectively. The 2031 Convertible Notes were not outstanding as of June 30, 2024.

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Notes to Consolidated Financial Statements

Note 8. Financial instruments with off-balance-sheet risk

In the normal course of business, the Company is party to financial instruments with off-balance-sheet risk to meet the financing needs of its borrowers. These financial instruments include commitments to extend credit and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated statement of assets and liabilities. The Company attempts to limit its credit risk by conducting extensive due diligence and obtaining collateral where appropriate.

The balance of unfunded commitments to extend credit was $149.0 million and $181.0 million as of June 30, 2025 and  December 31, 2024, respectively. Commitments to extend credit consist principally of the unused portions of commitments that obligate the Company to extend credit, often subject to financial or non-financial milestones and other conditions to borrow that must be achieved before the commitment can be drawn. In addition, the commitments generally have fixed expiration dates or other termination clauses. Since commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

The following table provides the Company’s unfunded commitments by portfolio company as of June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024
Fair Value of Fair Value of
Unfunded Unfunded
Commitment Commitment Commitment Commitment
Amount Liability Amount Liability
(In thousands) (In thousands)
Britecore Holdings, Inc. $ — $ — $ 2,500 $ 36
Candesant Biomedical, Inc. — — 10,000 151
Ceribell, Inc. 21,000 120 21,000 120
Crafty Holdings, Inc. 5,000 65 5,000 65
Fictiv, Inc. — — 30,000 236
GT Medical Technologies, Inc. 20,000 100 20,000 100
HappyCo. Inc. 2,000 25 — —
Hometeam Technologies, Inc. 10,000 100 10,000 100
Long Grove Pharmaceuticals LLC 10,000 75 — —
MasteryPrep, LLC 5,000 50 — —
MicroTransponder, Inc. 7,500 — 15,000 —
MML US, Inc. 20,000 100 — —
OneNetworks, Inc. dba Finexio — — 5,000 26
Onkos Surgical, Inc. 5,000 27 5,000 27
Parse Biosciences, Inc. 5,000 84 15,000 252
Pivot Bio, Inc. 10,000 105 20,000 209
SafelyYou, Inc. — — 5,000 73
Scientia Vascular, Inc. 3,500 42 — —
Sparkcharge, Inc. 10,000 123 — —
Standvast Holdings, LLC — — 2,500 88
Supply Network Visibility Holdings, LLC 10,000 79 10,000 79
Ursa Space Systems Inc. 5,000 75 5,000 75
Total $ 149,000 $ 1,170 $ 181,000 $ 1,637

The table above also provides the fair value of the Company’s unfunded commitment liability as of June 30, 2025 and December 31, 2024, which totaled $1.2 million and $1.6 million, respectively. The fair value at inception of the delay draw credit agreements is equal to the fees and/or warrants received to enter into these agreements, taking into account the remaining terms of the agreements and the counterparties’ credit profile. The unfunded commitment liability reflects the fair value of these future funding commitments and is included in total investments at fair value on the Company’s consolidated statement of assets and liabilities.

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Notes to Consolidated Financial Statements

Note 9. Concentrations of credit risk

The Company’s debt investments consist primarily of loans to development-stage companies at various stages of development in the technology, life science, healthcare information and services and sustainability industries. Many of these companies may have relatively limited operating histories and also may experience variation in operating results. Many of these companies conduct business in regulated industries and could be affected by changes in government regulations. Most of the Company’s borrowers will need additional capital to satisfy their continuing working capital needs and other requirements, and in many instances, to service the interest and principal payments on the loans.

The Company’s largest debt investments may vary from period to period as new debt investments are recorded and existing debt investments are repaid. The Company’s five largest debt investments at cost represented 23% and 22% of total debt investments outstanding as of June 30, 2025 and  December 31, 2024, respectively. The Company’s five largest debt investments at fair value represented 25% and 23% of total debt investments outstanding as of June 30, 2025 and  December 31, 2024, respectively. No single debt investment represented more than 10% of the total debt investments at cost or fair value as of June 30, 2025 and  December 31, 2024. Investment income, consisting of interest and fees, can fluctuate significantly upon repayment of large debt investments. Interest income from the five largest debt investments at cost accounted for 18% and 20% of total interest and fee income on investments for the three months ended June 30, 2025 and 2024, respectively. Interest income from the five largest debt investments at fair value accounted for 22% and 24% of total interest and fee income on investments for the three months ended June 30, 2025 and 2024, respectively. Interest income from the five largest debt investments at cost accounted for 17% and 18% of total interest and fee income on investments for the six months ended June 30, 2025 and 2024, respectively. Interest income from the five largest debt investments at fair value accounted for 20% and 22% of total interest and fee income on investments for the six months ended June 30, 2025 and 2024, respectively

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Notes to Consolidated Financial Statements

Note 10. Distributions

The Company’s distributions are recorded on the declaration date. The following table summarizes the Company’s distribution activity for the six months ended June 30, 2025 and for the year ended December 31, 2024:

DRIP DRIP
Date Amount Cash Shares Share
Declared Record Date Payment Date Per Share Distribution Issued Value
(In thousands, except share and per share data)
Six Months Ended June 30, 2025
April 25, 2025 August 18, 2025 September 16, 2025 $ 0.11 $ — — $ —
April 25, 2025 July 16, 2025 August 15, 2025 0.11 — — —
April 25, 2025 June 16, 2025 July 15, 2025 0.11 4,442 21,896 181
February 28, 2025 May 16, 2025 June 13, 2025 0.11 4,387 27,006 203
February 28, 2025 April 16, 2025 May 15, 2025 0.11 4,257 24,095 182
February 28, 2025 March 17, 2025 April 15, 2025 0.11 4,245 23,001 192
$ 0.66 $ 17,331 95,998 $ 758
Year Ended December 31, 2024
October 25, 2024 February 18, 2025 March 14, 2025 $ 0.11 $ 4,280 16,954 $ 154
October 25, 2024 January 16, 2025 February 14, 2025 0.11 4,226 18,428 179
October 25, 2024 December 16, 2024 January 15, 2025 0.11 4,235 16,428 151
July 26, 2024 November 15, 2024 December 13, 2024 0.11 4,124 15,584 147
July 26, 2024 October 17, 2024 November 14, 2024 0.11 4,022 17,706 165
July 26, 2024 September 16, 2024 October 16, 2024 0.11 3,914 18,539 195
April 26, 2024 August 16, 2024 September 13, 2024 0.11 3,818 17,441 192
April 26, 2024 July 17, 2024 August 15, 2024 0.11 3,775 16,852 192
April 26, 2024 June 17, 2024 July 16, 2024 0.11 3,766 15,860 199
February 23, 2024 May 17, 2024 June 14, 2024 0.11 3,701 16,686 201
February 23, 2024 April 18, 2024 May 15, 2024 0.11 3,654 16,687 199
February 23, 2024 March 19, 2024 April 16, 2024 0.05 1,625 7,598 85
February 23, 2024 March 19, 2024 April 16, 2024 0.11 3,574 16,717 188
$ 1.37 $ 48,714 211,480 $ 2,247

On August 5, 2025, the Board declared monthly distributions per share, payable as set forth in the following table:

Monthly distributions

Ex-Dividend Date Record Date Payment Date Distributions Declared
September 17, 2025 September 17, 2025 October 15, 2025 $ 0.11
October 16, 2025 October 16, 2025 November 14, 2025 $ 0.11
November 17, 2025 November 17, 2025 December 16, 2025 $ 0.11

After paying distributions of $0.33 per share and earning net investment income of $0.28 per share for the three months ended  June 30, 2025, the Company’s undistributed spillover income as of June 30, 2025 was $0.94 per share. Spillover income includes any ordinary income and net capital gains from the preceding tax years that were not distributed during such tax years.

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Notes to Consolidated Financial Statements

Note 11. Earnings Per Share

The following table sets forth the computation of the basic and diluted earnings per common share for the three and six months ended June 30, 2025 and 2024:

Three months ended June 30, Six months ended June 30,
2025 2024 2025 2024
(In thousands, except share and per share data)
Earnings per common share - basic **** **** **** **** **** **** **** **** **** **** **** ****
Numerator for basic earnings per share $ (20,777 ) $ (9,133 ) $ (42,213 ) $ (479 )
Denominator for basic weighted average shares 41,221,283 35,434,761 40,725,094 34,507,252
Loss per common share - basic $ (0.50 ) $ (0.26 ) $ (1.04 ) $ (0.01 )
Earnings per common share - diluted **** **** **** **** **** **** **** **** **** **** **** ****
Numerator for decrease in net assets per share $ (20,777 ) $ (9,133 ) $ (42,213 ) $ (479 )
Adjustment for interest expense and debt issuance costs on 2031 Convertible Notes (1) $ — $ — $ — $ —
Numerator for diluted earnings per share $ (20,777 ) $ (9,133 ) $ (42,213 ) $ (479 )
Denominator for basic weighted average shares 41,221,283 35,434,761 40,725,094 34,507,252
Adjustment for dilutive effect of 2031 Convertible Notes (1) — — — —
Denominator for diluted weighted average shares 41,221,283 35,434,761 40,725,094 34,507,252
Loss per common share - diluted $ (0.50 ) $ (0.26 ) $ (1.04 ) $ (0.01 )
(1) No adjustments for interest or incremental shares were included for the three and six months ended June 30, 2025 because the effect would be antidilutive.  The 2031 Convertible Notes were not outstanding as of  June 30, 2024.
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In certain circumstances, the 2031 Convertible Notes  may be convertible into cash or shares of the Company’s common stock, which can be dilutive to common stockholders. Diluted (loss) earnings available to each share of common stock outstanding during the reporting period included any additional shares of common stock that would be issued if all potentially dilutive securities were exercised. In accordance with ASU 2020-06, the Company is required to disclose diluted EPS using the if-converted method that assumes conversion of convertible securities at the beginning of the reporting period or at the issuance date and is intended to show the maximum dilution effect to common stockholders regardless of how the conversion can occur. The 2031 Convertible Notes convert at the greater of (i) volume-weighted average closing sale price for the five trading days immediately prior to the relevant conversion date, or (ii) the Company’s most recently reported NAV per share immediately prior to the date of issuance. For the three and six months ended June 30, 2025, using the if-converted method, the 2031 Convertible Notes would convert at the volume-weighted average closing sale price for the five trading days immediately prior to the beginning of the period, or $8.94 per share and $8.95 per share, respectively. For the three and six months ended June 30, 2025, the impact of the hypothetical conversion of the 2031 Convertible Notes would have been antidilutive because interest net of tax and nondiscretionary adjustments per common share obtainable on conversion exceeded basic EPS.

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Notes to Consolidated Financial Statements

Note 12. Financial highlights

The following table shows financial highlights for the Company:

Six months ended June 30,
2025 2024
(In thousands, except share and per share data)
Per share data: **** ****
Net asset value at beginning of period $ 8.43 $ 9.71
Net investment income 0.54 0.74
Realized (loss) gain (0.25 ) 0.07
Unrealized depreciation on investments (1.33 ) (0.82 )
Net decrease in net assets resulting from operations (1.04 ) (0.01 )
Distributions declared^(1)^ (0.66 ) (0.71 )
From net investment income (0.66 ) (0.71 )
From net realized gain on investments — —
Return of capital — —
Other ^(2)^ 0.02 0.13
Net asset value at end of period $ 6.75 $ 9.12
Per share market value, beginning of period $ 8.99 $ 13.17
Per share market value, end of period $ 7.20 $ 12.04
Total return based on a market value ^(3)^ (12.6 )% (3.2 )%
Shares outstanding at end of period 42,027,567 36,043,815
Ratios to average net assets: **** ****
Expenses without incentive fee ^(4)^ 16.9 % 15.6 %
Incentive fees ^(4)^ — — %
Net expenses ^(4)^ 16.9 % 15.6 %
Net investment income with incentive fee 14.4 % 15.5 %
Net assets at the end of the period $ 283,795 $ 328,778
Average net asset value $ 308,479 $ 328,293
Average debt per share $ 11.14 $ 13.03
Portfolio turnover ratio 16.2 % ^(5)^ 5.4 % ^(5)^
(1) Distributions are determined based on taxable income calculated in accordance with income tax regulations, which may differ from amounts determined under GAAP due to (i) changes in unrealized appreciation and depreciation, (ii) temporary and permanent differences in income and expense recognition, and (iii) the amount of spillover income carried over from a given tax year for distribution in the following tax year. The final determination of taxable income for each tax year, as well as the tax attributes for distributions in such tax year, will be made after the close of the tax year.
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(2) Includes the impact of the different share amounts as a result of calculating per share data based on the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date. The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of common stock in the Company’s continuous public offering, pursuant to the Company’s distribution reinvestment plan and conversion of the 2031 Convertible Notes to common stock. The issuance of common stock at an offering price, net of sales commissions and dealer manager fees, that is greater than the net asset value per share results in an increase in net asset value per share.
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(3) The total return equals the change in the ending market value over the beginning of period price per share plus distributions paid per share during the period, divided by the beginning price.
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(4) Annualized.
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(5) Calculated by dividing (i) the lesser of purchases or sales of portfolio securities for the fiscal year by (ii) the monthly average of the value of portfolio securities owned by the Company during the fiscal year, with certain securities excluded from the numerator and denominator pursuant to applicable federal securities laws.
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Notes to Consolidated Financial Statements

Note 13. Subsequent Events

On July 1, 2025, the Company received proceeds of $2.7 million from the exercise of its warrants in Kate Farms, Inc.

On July 10, 2025, the holders of a portion of the 2031 Convertible Notes converted $3.75 million in outstanding principal of the 2031 Convertible Notes plus accrued but unpaid interest on such outstanding principal as of the conversion date into 496,256 shares of common stock at a conversion price of $7.57 per share, together with cash in lieu of fractional shares.

On July 18, 2025, Noodle Partners, Inc. (“Noodle”) prepaid its outstanding principal balance of $16.7 million on its venture loan, plus interest, end-of-term payment and prepayment penalty. The Company continues to hold warrants in Noodle.

On July 18, 2025, the Company received a principal paydown of $2.0 million on its venture loans to Tallac Therapeutics, Inc.

On July 29, 2025, Pivot Bio, Inc. (“Pivot Bio”) prepaid its outstanding principal balance of $10.0 million on its venture loan, plus interest, end-of-term payment and prepayment penalty. The Company continues to hold warrants in Pivot Bio.

On July 30, 2025, Native Microbials, Inc. (“Native Microbials”) prepaid its outstanding principal balance of $3.5 million on its venture loan, plus interest, end-of-term payment and prepayment penalty. The Company continues to hold warrants in Native Microbials.

On August 5, 2025, the Board of the Company authorized an increase in the maximum amount of shares of the Company that can be repurchased on the open market or in privately negotiated purchases pursuant to Rule 10b-18 and other applicable provisions of the Securities Exchange Act of 1934, as amended from up to $5,000,000 of shares to up to $10,000,000 of shares, provided such purchases, in the aggregate, do not exceed two percent (2%) of the shares outstanding at the time of purchase and such shares are purchased only when the such shares are trading below 90% of the Company's most recently disclosed net asset value per share.

On August 6, 2025, the Company purchased substantially all of the remaining assets of Powerscourt Investments XXV, LP for $22.5 million. The Company expects the purchase to be accretive to the Company's net asset value when reported in the Company's financial results for the third quarter.

On August 7, 2025, the Company entered into a certain Merger Agreement with Monroe Capital Corporation (“MRCC”; NASDAQ: MRCC) wherein MRCC will merge with and into the Company, subject to the receipt of, among other things, approval by the shareholders of the Company and by the shareholders of MRCC and the satisfaction of other closing conditions.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In this quarterly report on Form 10‑Q, except where the context suggests otherwise, the terms “we,” “us,” “our” and “Horizon Technology Finance” refer to Horizon Technology Finance Corporation and its consolidated subsidiaries. The information contained in this section should be read in conjunction with our consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10‑Q.

Forward-looking statements

This quarterly report on Form 10‑Q, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that constitute forward-looking statements, which relate to future events or our future performance or financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. The forward-looking statements contained in this quarterly report on Form 10‑Q involve risks and uncertainties, including statements as to:

● our future operating results, including the performance of our existing debt investments, warrants and other investments;
● the introduction, withdrawal, success and timing of business initiatives and strategies;
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● general economic and political trends and other external factors, including continuing supply chain disruptions, increased inflation, tariffs and trade disputes with other countries and a general slowdown in economic activity;
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● our business prospects and the prospects of our portfolio companies;
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● the impact of changes in laws or regulations (including the interpretation thereof), including tax laws, governing our operations or the operations of our portfolio companies or the operations of our competitors;
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● the relative and absolute investment performance and operations of our Advisor;
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● the impact of increased competition;
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● the impact of investments we intend to make and future acquisitions and divestitures;
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● the unfavorable resolution of legal proceedings;
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● geopolitical turmoil and the potential for volatility in energy prices and disruptions to global supply chains resulting from such turmoil and its impact on the industries in which we invest;
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● political and regulatory conditions that contribute to uncertainty and market volatility including the impact of the recent U.S. presidential election and legislative, regulatory, trade and policy changes associated with a new administration;
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● the impact, extent and timing of technological changes and the adequacy of intellectual property protection;
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● our regulatory structure and tax status;
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● changes in the general interest rate environment;
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● our ability to qualify and maintain qualification as a RIC and as a BDC;
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● the adequacy of our cash resources and working capital;
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● any losses or operations disruptions caused by us, our Advisor or our portfolio companies holding cash balances at financial institutions that exceed federally insured limits or by disruptions in the financial services industry;
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● the timing of cash flows, if any, from the operations of our portfolio companies, and the resulting effect on our portfolio companies' decisions to make payment-in-kind (“PIK”) interest payments or ability to make end of term payments;
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● the impact of interest rate volatility on our results, particularly if we use leverage as part of our investment strategy;
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● the ability of our portfolio companies to achieve their objective;
● the impact of legislative and regulatory actions and reforms and regulatory supervisory or enforcement actions of government agencies relating to us or our Advisor;
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● our contractual arrangements and relationships with third parties;
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● our ability to access capital and any future financings by us;
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● our use of financial leverage;
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● the ability of our Advisor to attract and retain highly talented professionals;
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● the impact of changes to tax legislation and, generally, our tax position; and
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● our ability to fund unfunded commitments.
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We use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks” and similar expressions to identify forward-looking statements. Undue influence should not be placed on the forward looking statements as our actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors in “Risk Factors” and elsewhere in our annual report on Form 10‑K for the year ended December 31, 2024, and elsewhere in this quarterly report on Form 10‑Q.

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this quarterly report on Form 10‑Q, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the U.S. Securities and Exchange Commission, or the SEC, including periodic reports on Form 10‑Q and Form 10‑K and current reports on Form 8‑K.

You should understand that under Sections 27A(b)(2)(B) and (D) of the Securities Act and Sections 21E(b)(2)(B) and (D) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to statements made in connection with any annual or quarterly reports we file under the Exchange Act.

Overview

We are a specialty finance company that lends to and invests in development-stage companies in the technology, life science, healthcare information and services and sustainability industries, which we refer to as our “Target Industries.” Our investment objective is to maximize our investment portfolio’s total return by generating current income from the debt investments we make and capital appreciation from the warrants we receive when making such debt investments. We are focused on making secured debt investments, which we refer to collectively as “Venture Loans,” to venture capital and private equity backed companies and publicly traded companies in our Target Industries, which we refer to as “Venture Lending.” Our debt investments are typically secured by first liens or first liens behind a secured revolving line of credit, or collectively “Senior Term Loans.” Some of our debt investments may also be subordinated to term debt provided by third parties. As of June 30, 2025, 93.9%, or $543.8 million, of our debt investment portfolio at fair value consisted of Senior Term Loans. Venture Lending is typically characterized by (1) the making of a secured debt investment after a venture capital or equity investment in the portfolio company has been made, which investment provides a source of cash to fund the portfolio company’s debt service obligations under the Venture Loan, (2) the senior priority of the Venture Loan which requires repayment of the Venture Loan prior to the equity investors realizing a return on their capital, (3) the amortization of the Venture Loan and (4) the lender’s receipt of warrants or other success fees with the making of the Venture Loan.

We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, for U.S. federal income tax purposes, we have elected to be treated as a RIC under Subchapter M of the Code. As a BDC, we are required to comply with regulatory requirements, including limitations on our use of debt. We are permitted to, and expect to, finance our investments through borrowings subject to a 150% asset coverage test. As defined in the 1940 Act, asset coverage of 150% means that for every $100 of net assets a BDC holds, it may raise up to $200 from borrowing and issuing senior securities. The amount of leverage that we may employ will depend on our assessment of market conditions and other factors at the time of any proposed borrowing. As a RIC, we generally are not subject to corporate-level income taxes on our investment company taxable income, determined without regard to any deductions for dividends paid, and our net capital gain that we distribute as dividends for U.S. federal income tax purposes to our stockholders as long as we meet certain source-of-income, distribution, asset diversification and other requirements.

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We were formed in March 2010 and completed an initial public offering in October 2010.

Our investment activities, and our day-to-day operations, are managed by our Advisor and supervised by our Board, of which a majority of the members are independent of us. Under the Investment Management Agreement, we have agreed to pay our Advisor a base management fee and an incentive fee for its advisory services to us. We have also entered into the Administration Agreement with our Advisor under which we have agreed to reimburse our Advisor for our allocable portion of overhead and other expenses incurred by our Advisor in performing its obligations under the Administration Agreement.

Portfolio composition and investment activity

The following table shows our portfolio by type of investment as of June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024
Percentage of Percentage of
Number of Fair Total Number of Fair Total
Investments Value Portfolio Investments Value Portfolio
(Dollars in thousands)
Debt investments 46 $ 579,171 93.0 % 52 $ 638,779 91.5 %
Warrants 81 21,629 3.5 85 18,277 2.6
Other investments 7 8,451 1.4 5 14,637 2.1
Equity 18 13,402 2.1 19 26,198 3.8
Total $ 622,653 100.0 % $ 697,891 100.0 %

The following table shows total portfolio investment activity as of and for the three and six months ended June 30, 2025 and 2024:

For the three months ended For the six months ended
June 30, June 30,
2025 2024 2025 2024
(In thousands)
Beginning portfolio $ 689,553 $ 711,116 $ 697,891 $ 709,085
New debt and equity investments 59,869 12,065 162,308 46,634
Less refinanced debt balances (17,500 ) — (46,250 ) (11,250 )
Net new debt and equity investments 42,369 12,065 116,058 35,384
Principal payments received on investments (15,659 ) (11,803 ) (26,830 ) (22,303 )
Early pay-offs and principal paydowns (62,834 ) (44,610 ) (102,408 ) (53,753 )
PIK interest on investments 243 355 528 1,737
Accretion of debt investment fees 1,909 1,735 3,298 2,996
New debt investment fees (700 ) (258 ) (1,504 ) (567 )
Warrants received in settlement of fee income 5 359 10 359
Proceeds from sale of investments (783 ) (47 ) (784 ) (88 )
Net realized (loss) gain on investments (9,294 ) 2,464 (9,293 ) 2,472
Net unrealized depreciation on investments (22,156 ) (24,511 ) (54,313 ) (28,471 )
Other — (3 ) — 11
Ending portfolio $ 622,653 $ 646,862 $ 622,653 $ 646,862

We receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments may fluctuate significantly from period to period.

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The following table shows our debt investments by industry sector as of June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024
Debt Percentage of Debt Percentage of
Investments at Total Investments at Total
Fair Value Portfolio Fair Value Portfolio
(Dollars in thousands)
Life Science
Biotechnology $ 73,945 12.8 % $ 80,988 12.7 %
Medical Device 201,801 34.8 187,562 29.4
Technology
Communications — — 11,193 1.8
Consumer-Related 20,162 3.5 29,695 4.6
Networking — — 9,647 1.5
Software 153,103 26.4 147,815 23.1
Sustainability
Alternative Energy 4,809 0.8
Energy Efficiency 9,809 1.7 9,693 1.5
Other Sustainability 15,026 2.6 57,997 9.1
Healthcare Information and Services
Diagnostics 9,765 1.7 13,671 2.1
Other Healthcare 39,390 6.8 39,349 6.2
Software 51,361 8.9 51,169 8.0
Total $ 579,171 100.0 % $ 638,779 100.0 %

The largest debt investments in our portfolio may vary from period to period as new debt investments are originated and existing debt investments are repaid. Our five largest debt investments at cost represented 23% and 22% of total debt investments outstanding as of June 30, 2025 and December 31, 2024, respectively. Our five largest debt investments at fair value represented 25% and 23% of total debt investments outstanding as of June 30, 2025 and December 31, 2024, respectively. No single debt investment at cost or fair value represented more than 10% of our total debt investments as of June 30, 2025 and December 31, 2024.

Debt investment asset quality

We use an internal credit rating system which rates each debt investment on a scale of 4 to 1, with 4 being the highest credit quality rating and 3 being the rating for a standard level of risk. A rating of 2 represents an increased level of risk and, while no loss is currently anticipated for a 2‑rated debt investment, there is potential for future loss of principal. A rating of 1 represents a deteriorating credit quality and a high degree of risk of loss of principal. Our internal credit rating system is not a national credit rating system. As of June 30, 2025 and December 31, 2024, our debt investments had a weighted average credit rating of 3.0 and 3.1, respectively. The following table shows the classification of our debt investment portfolio by credit rating as of June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024
Debt Percentage Debt Percentage
Number of Investments at of Debt Number of Investments at of Debt
Investments Fair Value Investments Investments Fair Value Investments
(Dollars in thousands)
Credit Rating **** ****
4 5 $ 70,411 12.2 % 11 $ 159,944 25.1 %
3 33 467,726 80.8 30 419,621 65.7
2 3 14,125 2.4 7 48,760 7.6
1 5 26,909 4.6 4 10,454 1.6
Total 46 $ 579,171 100.0 % 52 $ 638,779 100.0 %

As of June 30, 2025, there were five debt investments with an internal credit rating of 1, with an aggregate cost of $74.8 million and an aggregate fair value of $26.9 million and there were three debt investments with an internal credit rating of 2, with an aggregate cost of $23.3 million and an aggregate fair value of $14.1 million. As of December 31, 2024, there were four debt investments with an internal credit rating of 1, with an aggregate cost of $44.8 million and an aggregate fair value of $10.5 million and there were seven debt investments with an internal credit rating of 2, with an aggregate cost of $53.3 million and an aggregate fair value of $48.8 million. The increase in the number of investments with internal credit ratings of 1 or 2 was primarily a result of the increase in the risk of loss of principal caused by the portfolio companies low cash positions and the difficult equity fundraising market and/or the underperformance of such portfolio companies.

Consolidated results of operations

As a BDC and a RIC, we are subject to certain constraints on our operations, including limitations imposed by the 1940 Act and the Code. The consolidated results of operations described below may not be indicative of the results we report in future periods.

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Comparison of the three months ended June 30, 2025 and 2024

The following table shows consolidated results of operations for the three months ended June 30, 2025 and 2024:

For the three months ended
June 30,
2025 2024
(In thousands)
Total investment income $ 24,520 $ 25,678
Total expenses 12,698 12,407
Net investment income before excise tax 11,822 13,271
Provision for excise tax 373 357
Net investment income 11,449 12,914
Net realized (loss) gain (10,070 ) 2,464
Net unrealized depreciation on investments (22,156 ) (24,511 )
Net decrease in net assets resulting from operations $ (20,777 ) $ (9,133 )
Average debt investments, at fair value $ 615,755 $ 642,230
Average earning debt investments $ 611,097 $ 609,755
Average gross assets less cash $ 677,289 $ 694,228
Average borrowings outstanding $ 438,117 $ 442,374

Net decrease in net assets resulting from operations can vary substantially from period to period for various reasons, including, without limitation, the recognition of realized gains and losses and unrealized appreciation and depreciation on investments. As a result, quarterly comparisons of net increase in net assets resulting from operations may not be meaningful.

Investment income

Total investment income decreased by $1.2 million, or 4.5%, to $24.5 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. For the three months ended June 30, 2025, total investment income consisted primarily of (1) $22.6 million in interest income from investments, which included $4.1 million in income from the accretion of origination fees and end of term payments and $0.2 million in PIK interest income and (2) $1.9 million in fee income.

Interest income on debt investments decreased by $2.1 million, or 8.4%, to $22.6 million, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Interest income on debt investments for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 decreased primarily due to a decrease in the Prime Rate which is the base rate for most of our variable rate debt investments. The proportion of total investment income that resulted from the portion of ETPs not received in cash for the three months ended June 30, 2025 and 2024 was 2.8% and 6.6%, respectively. The decrease in the proportion of total investment income that resulted from the portion of ETPs not received in cash was a result of an increase in prepayments for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

PIK interest income decreased by $0.1 million, or 31.4%, to $0.2 for the three months ended June 30, 2025 compared to the three months ended  June 30, 2024. For the three months ended June 30, 2025 and 2024, 1.0% and 1.4%, respectively, of total investment income was attributable to non-cash PIK interest income. The decrease in PIK interest income as a percentage of total investment income was primarily due to a decrease in earning assets that contain a PIK feature for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Fee income, which includes success fee, other fee and prepayment fee income on debt investments, increased by $0.9 million, or 89.3%, to $1.9 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to a higher aggregate amount of principal prepayments for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

The following table shows our dollar-weighted annualized yield for the three months ended June 30, 2025 and 2024:

For the three months ended
June 30,
Investment type: 2025 2024
Debt investments^(1)^ 15.8 % 15.9 %
All investments^(1)^ 14.7 % 15.0 %
(1) We calculate the dollar-weighted annualized yield on average investment type for any period as (1) total related investment income during the period divided by (2) the average of the fair value of the investment type outstanding on (a) the last day of the calendar month immediately preceding the first day of the period and (b) the last day of each calendar month during the period. The dollar-weighted annualized yield on average investment type is higher than what investors will realize because it does not reflect our expenses or any sales load paid by investors.
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Investment income, consisting of interest income and fees on debt investments, can fluctuate significantly upon repayment of large debt investments. Interest income from the five largest debt investments at cost in the aggregate accounted for 18% and 20% of investment income for the three months ended June 30, 2025 and 2024, respectively. Interest income from the five largest debt investments at fair value in the aggregate accounted for 22% and 24% of investment income for the three months ended June 30, 2025 and 2024, respectively.

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Expenses

Total expenses increased by $0.3 million, or 2.3%, to $12.7 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Total expenses for each period consisted of interest expense, base management fee, incentive and administrative fees, professional fees and general and administrative expenses.

Interest expense increased by $0.3 million, or 3.3%, to $8.2 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Interest expense, which includes the amortization of debt issuance costs, increased primarily due to an increase in our effective cost of debt for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 partially offset by a decrease in average borrowings for the three months ended June 30, 2025 of $4.3 million, or 1.0%,  as compared to the three months ended June 30, 2024.

Base management fee expense decreased by $0.1 million, or 2.2%, to $3.0 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Base management fee decreased primarily due to a decrease of $16.9 million, or 2.4%, in average gross assets less cash for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

There was no performance based incentive fee expense for the three months ended June 30, 2025 and 2024. The incentive fee on pre-incentive fee net investment income was subject to an Incentive Fee Cap and Deferral Mechanism in our Investment Management Agreement of $2.3 million for the three months ended June 30, 2025 compared to an Incentive Fee Cap of $2.6 million for the three months ended June 30, 2024. The Incentive Fee Cap and Deferral Mechanism resulted in $2.3 million of reduced incentive fee expense and increased net investment income for the three months ended June 30, 2025. The incentive fee on pre-incentive fee net investment income was subject to the Incentive Fee Cap for the three months ended June 30, 2025 due to the cumulative incentive fees paid exceeding 20% of cumulative pre-incentive fee net return during the applicable quarter and the 11 preceding full calendar quarters.

Administrative fee expense, professional fees and general and administrative expenses were $1.5 million and $1.4 million for the three months ended June 30, 2025 and 2024, respectively.

Net realized gains and losses and net unrealized appreciation and depreciation

Realized gains or losses on investments are measured by the difference between the net proceeds from the repayment or sale and the cost basis of our investments without regard to unrealized appreciation or depreciation previously recognized. Realized gains or losses on investments include investments charged off during the period, net of recoveries. The net change in unrealized appreciation or depreciation on investments primarily reflects the change in portfolio investment fair values during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

During the three months ended June 30, 2025, we realized net losses on investments totaling $9.3 million primarily due to the settlement of two of our debt investments. During the same period, we converted $12.5 million in outstanding principal of the 2031 Convertible Notes which resulted in a realized loss on extinguishment of debt of $0.8 million. For the three months ended June 30, 2024, we realized net gains on investments totaling $2.5 million primarily due to the exercise and conversion to equity of one of our warrant investments.

During the three months ended June 30, 2025, net unrealized depreciation on investments totaled $22.2 million which was primarily due to (1) the unrealized depreciation on seven of our debt investments and (2) the unrealized depreciation on two of our other investments partially offset by (1) the reversal of previously recorded unrealized depreciation from the settlement of two of our debt investments and (2) the unrealized appreciation of two of our warrant investments. During the three months ended June 30, 2024, net unrealized depreciation on investments totaled $24.5 million which was primarily due to (1) the unrealized depreciation on three of our debt investments and one of our equity investments and (2) the reversal of previously recorded unrealized appreciation from the exercise and conversion to equity of one of our warrant investments offset by the unrealized appreciation on two of our debt investments. The difficult equity fundraising market and under performance of certain portfolio companies, among other factors, resulted in us reducing the fair market value of the debt investments in such portfolio companies, thus increasing the unrealized depreciation on such debt investments.

Comparison of the six months ended June 30, 2025 and 2024

The following table shows consolidated results of operations for the six months ended June 30, 2025 and 2024:

For the six months ended
June 30,
2025 2024
(In thousands)
Total investment income $ 49,036 $ 51,807
Total expenses 26,117 25,551
Net investment income before excise tax 22,919 26,256
Provision for excise tax 750 736
Net investment income 22,169 25,520
Net realized (loss) gain (10,069 ) 2,472
Net unrealized depreciation on investments (54,313 ) (28,471 )
Net decrease in net assets resulting from operations $ (42,213 ) $ (479 )
Average debt investments, at fair value $ 631,384 $ 653,464
Average earning debt investments $ 630,348 $ 630,030
Average gross assets less cash $ 704,923 $ 711,157
Average borrowings outstanding $ 453,714 $ 449,681

Net decrease in net assets resulting from operations can vary substantially from period to period for various reasons, including, without limitation, the recognition of realized gains and losses and unrealized appreciation and depreciation on investments. As a result, quarterly comparisons of net increase in net assets resulting from operations may not be meaningful.

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Investment income

Total investment income decreased by $2.8 million, or 5.3%, to $49.0 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. For the six months ended June 30, 2025, total investment income consisted primarily of (1) $46.1 million in interest income from investments, which included $7.6 million in income from the accretion of origination fees and end of term payments and $0.5 million in PIK interest income and (2) $3.0 million in fee income.

Interest income on debt investments decreased by $4.5 million, or 8.8%, to $46.1 million, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Interest income on debt investments for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 decreased primarily due to a decrease in the Prime Rate which is the base rate for most of our variable rate debt investments. The proportion of total investment income that resulted from the portion of ETPs not received in cash for the six months ended June 30, 2025 and 2024 was 3.7% and 6.7%, respectively. The decrease in the proportion of total investment income that resulted from the portion of ETPs not received in cash was a result of an increase in prepayments for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

PIK interest income decreased by $1.2 million, or 69.6%, to $0.5 for the six months ended June 30, 2025 compared to the six months ended  June 30, 2024. For the six months ended June 30, 2025 and 2024, 1.1% and 3.3%, respectively, of total investment income was attributable to non-cash PIK interest income. The decrease in PIK interest income as a percentage of total investment income was primarily due to a decrease in earning assets that contain a PIK feature for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Fee income, which includes success fee, other fee and prepayment fee income on debt investments, increased by $1.7 million, or 132.7%, to $3.0 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to a higher aggregate amount of principal prepayments for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The following table shows our dollar-weighted annualized yield for the six months ended June 30, 2025 and 2024:

For the six months ended
June 30,
Investment type: 2025 2024
Debt investments^(1)^ 15.4 % 15.8 %
All investments^(1)^ 14.2 % 14.9 %
(1) We calculate the dollar-weighted annualized yield on average investment type for any period as (1) total related investment income during the period divided by (2) the average of the fair value of the investment type outstanding on (a) the last day of the calendar month immediately preceding the first day of the period and (b) the last day of each calendar month during the period. The dollar-weighted annualized yield on average investment type is higher than what investors will realize because it does not reflect our expenses or any sales load paid by investors.
--- ---

Investment income, consisting of interest income and fees on debt investments, can fluctuate significantly upon repayment of large debt investments. Interest income from the five largest debt investments at cost in the aggregate accounted for 17% and 18% of investment income for the six months ended June 30, 2025 and 2024, respectively. Interest income from the five largest debt investments at fair value in the aggregate accounted for 20% and 22% of investment income for the six months ended June 30, 2025 and 2024, respectively.

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Expenses

Total expenses increased by $0.6 million, or 2.2%, to $26.1 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. Total expenses for each period consisted of interest expense, base management fee, incentive and administrative fees, professional fees and general and administrative expenses.

Interest expense increased by $0.8 million, or 4.9%, to $16.9 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. Interest expense, which includes the amortization of debt issuance costs, increased primarily due to an increase in average borrowings of $4.0 million, or 0.9%, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 and an increase in our effective cost of debt for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Base management fee expense decreased by $0.05 million, or 0.8%, to $6.1 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. Base management fee decreased primarily due to a decrease of $6.2 million, or 0.9%, in average gross assets less cash for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

There was no performance based incentive fee expense for the six months ended June 30, 2025. Performance based incentive fee expense decreased by $0.3 million, or 100.0% for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. This decrease was due to a decrease of $3.6 million, or 14.1%, in Pre-Incentive Fee Net Investment Income for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 and an Incentive Fee Cap calculated based on the Incentive Fee Cap and Deferral Mechanism in our Investment Management Agreement of $4.4 million for the six months ended June 30, 2025 compared to an Incentive Fee Cap of $4.9 million for the six months ended June 30, 2024. The Incentive Fee Cap and Deferral Mechanism resulted in $4.4 million of reduced incentive fee expense and increased net investment income for the six months ended June 30, 2025. The incentive fee on pre-incentive fee net investment income was subject to the Incentive Fee Cap for the six months ended June 30, 2025 due to the cumulative incentive fees paid exceeding 20% of cumulative pre-incentive fee net return during the applicable quarter and the 11 preceding full calendar quarters.

Administrative fee expense, professional fees and general and administrative expenses were $3.1 million and $3.0 million for the six months ended June 30, 2025 and 2024, respectively.

Net realized gains and losses and net unrealized appreciation and depreciation

Realized gains or losses on investments are measured by the difference between the net proceeds from the repayment or sale and the cost basis of our investments without regard to unrealized appreciation or depreciation previously recognized. Realized gains or losses on investments include investments charged off during the period, net of recoveries. The net change in unrealized appreciation or depreciation on investments primarily reflects the change in portfolio investment fair values during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

During the six months ended June 30, 2025, we realized net losses on investments totaling $9.3 million primarily due to the settlement of two of our debt investments. During the same period, we converted $12.5 million in outstanding principal of the 2031 Convertible Notes which resulted in a realized loss on extinguishment of debt of $0.8 million. During the six months ended June 30, 2024, we realized net gains on investments totaling $2.5 million primarily due to the exercise and conversion to equity of one of our warrant investments.

During the six months ended June 30, 2025, net unrealized depreciation on investments totaled $54.3 million which was primarily due to (1) the unrealized depreciation on seven of our debt investments, (2) the unrealized depreciation on four of our other investments and (3) the unrealized depreciation on two of our equity investments partially offset by (1) the reversal of previously recorded unrealized depreciation from the settlement of one of our debt investments and (2) the unrealized appreciation of two of our warrant investments. During the six months ended June 30, 2024, net unrealized depreciation on investments totaled $28.5 million which was primarily due to (1) the unrealized depreciation on four of our debt investments and one of our equity investments and (2) the reversal of previously recorded unrealized appreciation from the exercise and conversion to equity of one of our warrant investments offset by the unrealized appreciation on one of our debt investments. The difficult equity fundraising market and under performance of certain portfolio companies, among other factors, resulted in us reducing the fair market value of the debt investments in such portfolio companies, thus increasing the unrealized depreciation on such debt investments.

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Liquidity and capital resources

As of June 30, 2025 and December 31, 2024, we had cash and investments in money market funds of $77.9 million and $97.5 million, respectively. Cash and investments in money market funds are available to fund new investments, reduce borrowings, pay expenses, repurchase common stock and pay distributions. In addition, as of June 30, 2025 and December 31, 2024, we had $3.2 million and $3.3 million, respectively, of restricted investments in money market funds. Restricted investments in money market funds may be used to make monthly interest and principal payments on our 2022 Asset-Backed Notes, our NYL Facility or our Nuveen Facility. Our primary sources of capital have been from our public equity offerings, use of our revolving credit facility (the “Key Facility”) with KeyBank National Association (“Key”), the Note Funding Agreement (the “NYL Facility”), with several entities owned or affiliated with New York Life Insurance Company and the Nuveen Note Funding Agreement (the “Nuveen Facility”, together with the Key Facility and the NYL Facility, the “Credit Facilities”) with several entities owned or affiliated with Nuveen Alternative Advisors LLC, and issuance of our public and private debt securities.

On September 22, 2023, we entered into an At-The-Market (or “ATM”) sales agreement (or the “2023 Equity Distribution Agreement”) with Goldman Sachs & Co. LLC and B. Riley FBR, Inc., (each a “Sales Agent” and, collectively, the “Sales Agents”). The 2023 Equity Distribution Agreement provides that we may offer and sell shares of our common stock from time to time through the Sales Agents up to $150.0 million worth of our common stock, in amounts and at times to be determined by us. Sales of our common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market,” as defined in Rule 415 under the Securities Act, including sales made directly on the NASDAQ or similar securities exchange or sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices.

During the three months ended June 30, 2025, the Company did not sell shares of common stock under the 2023 Equity Distribution Agreement.

During the three months ended June 30, 2024, the Company sold 1,516,249 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $17.1 million, including $0.4 million of offering expenses, from these sales.

During the six months ended June 30, 2025, we sold 404,305 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $3.6 million, including $0.2 million of offering expenses, from these sales.

During the six months ended June 30, 2024, we sold 2,570,045 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $29.1 million, including $0.6 million of offering expenses, from these sales.

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On April 25, 2025, our Board extended a previously authorized stock repurchase program which allows us to repurchase up to $5.0 million of our common stock at prices below our net asset value (“NAV”) per share as reported in our most recent consolidated financial statements. Under the repurchase program, we may, but are not obligated to, repurchase shares of our outstanding common stock in the open market or in privately negotiated transactions from time to time. Any repurchases by us intend to comply with the requirements of Rule 10b‑18 under the Exchange Act and any applicable requirements of the 1940 Act. Unless extended by our Board, the repurchase program will terminate on the earlier of June 30, 2026 or the repurchase of $5.0 million of our common stock. During the three and six months ended June 30, 2025 and 2024, we did not make any repurchases of our common stock. From the inception of the stock repurchase program through June 30, 2025, we repurchased 167,465 shares of our common stock at an average price of $11.22 on the open market at a total cost of $1.9 million. From time to time, our Board assesses the size and effectiveness of the stock repurchase program and could elect to increase or decrease the size of the program in the future.

At June 30, 2025 and December 31, 2024 there was no outstanding principal balance under the Key Facility. As of June 30, 2025 and December 31, 2024, we had borrowing capacity under the Key Facility of $150.0 million. At June 30, 2025 and December 31, 2024, $38.3 million and $24.8 million, respectively, was available for borrowing under the Key Facility, subject to existing terms and advance rates.

At June 30, 2025 and December 31, 2024, the outstanding principal balance under the NYL Facility was $181.0 million. As of June 30, 2025 and December 31, 2024, we had borrowing capacity under the NYL Facility of $69.0 million. At June 30, 2025 and December 31, 2024, $0.2 million and $8.4 million, respectively, was available for borrowing under the NYL Facility, subject to existing terms and advance rates.

At June 30, 2025 and December 31, 2024, the outstanding principal balance under the Nuveen Facility was $90.0 million and $75.0 million, respectively. As of June 30, 2025 and December 31, 2024, we had borrowing capacity under the Nuveen Facility of $110.0 million and $25.0 million, respectively. At June 30, 2025 and December 31, 2024, $0.8 million and $9.9 million, respectively, was available for borrowing under the Nuveen Facility, subject to existing terms and advance rates.

On October 17, 2024, the Company entered into a note purchase agreement (the “2031 Note Purchase Agreement”), by and among the Company, and each purchaser named therein, in connection with the issuance and sale of $20.0 million aggregate principal of the Company’s 7.125% convertible notes due 2031 (the “2031 Convertible Notes”). At June 30, 2025 and December 31, 2024, the aggregate outstanding principal balance of the 2031 Convertible Notes was $7.5 million and $20.0 million, respectively. The 2031 Convertible Notes were not outstanding as of June 30, 2024.

Our operating activities provided cash of $36.4 million for the six months ended June 30, 2025, and our financing activities used cash of $56.1 million for the same period. Our operating activities provided cash primarily from principal payments received on our debt investments partially offset by cash used to purchase investments in portfolio companies. Our financing activities used cash primarily to repay our 2022 Asset-Backed Notes and to pay distributions to our stockholders partially offset by an advance on our Nuveen Facility and the sale of shares through our ATM for net proceeds of $3.6 million.

Our operating activities provided cash of $58.3 million for the six months ended June 30, 2024, and our financing activities used cash of $17.2 million for the same period. Our operating activities provided cash from principal payments received on our debt investments partially offset by cash used to purchase investments in portfolio companies. Our financing activities used cash primarily to repay our Key Facility and to pay distributions to our stockholders, partially offset from an advance on our Nuveen Facility and the sale of shares through our ATM for net proceeds of $29.1 million.

Our primary use of available funds is to make debt investments in portfolio companies and for general corporate purposes. We expect to raise additional equity and debt capital opportunistically as needed and, subject to market conditions, to support our future growth to the extent permitted by the 1940 Act.

In order to remain subject to taxation as a RIC, we intend to distribute to our stockholders all or substantially all of our investment company taxable income. In addition, as a BDC, we are required to maintain asset coverage of at least 150%. This requirement limits the amount that we may borrow.

We believe that our current cash, cash generated from operations, and funds available from our Credit Facilities will be sufficient to meet our working capital and capital expenditure commitments for at least the next 12 months.

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Current borrowings

The following table shows our borrowings as of June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024
Total Balance Unused Total Balance Unused
Commitment Outstanding Commitment Commitment Outstanding Commitment
(In thousands)
Key Facility $ 150,000 $ — $ 150,000 $ 150,000 $ — $ 150,000
NYL Facility 250,000 181,000 69,000 250,000 181,000 69,000
Nuveen Facility 200,000 90,000 110,000 100,000 75,000 25,000
2022 Asset-Backed Notes 34,169 34,169 — 81,078 81,078 —
2027 Notes 57,500 57,500 — 57,500 57,500 —
2026 Notes 57,500 57,500 — 57,500 57,500 —
2031 Convertible Notes 7,500 7,500 — 20,000 20,000 —
Total before debt issuance costs 756,669 427,669 329,000 716,078 472,078 244,000
Unamortized debt issuance costs attributable to term borrowings — (2,531 ) — — (4,174 ) —
Total borrowings outstanding, net $ 756,669 $ 425,138 $ 329,000 $ 716,078 $ 467,904 $ 244,000

Credit Facilities

Key Facility

We entered into the Key Facility effective November 4, 2013. On June 20, 2024, we amended the Key Facility, among other things, (i) to extend the date on which we may request advances under the Key Facility to June 20, 2027 and to extend the maturity date to June 20, 2029 and (ii) to amend the interest rate to be based on the rate of interest published in The Wall Street Journal as the prime rate in the United States plus 0.10%, with a prime rate floor of 4.10%. Prior to June 20, 2024, the interest rate on the Key Facility was based on Prime plus 0.25%, with a prime rate floor of 4.25%. The prime rate was 7.50% as of June 30, 2025 and December 31, 2024, respectively. The interest rate in effect was 7.60% as of June 30, 2025 and December 31, 2024. The Key Facility requires the payment of an unused line fee in an amount up to 0.75% of any unborrowed amount available under the facility annually.

On June 29, 2023, we amended the Key Facility to, among other things, increase the commitment amount to $150 million and to increase the amount of the accordion feature which now allows the potential increase in the total commitment amount to $300 million. The Key Facility is collateralized by debt investments held by Credit II and permits an advance rate of up to sixty percent (60%) of eligible debt investments held by Credit II. The Key Facility contains covenants that, among other things, require us to maintain a minimum net worth, to restrict the debt investments securing the Key Facility to certain criteria for qualified debt investments and to comply with portfolio company concentration limits as defined in the related loan agreement. After the period during which we may request advances under the Key Facility (or the “Revolving Period”), we may not request new advances, and we must repay the outstanding advances under the Key Facility as of such date, at such times and in such amounts as are necessary to maintain compliance with the terms and conditions of the Key Facility, particularly the condition that the principal balance of the Key Facility not exceed sixty percent (60%) of the aggregate principal balance of our eligible debt investments to our portfolio companies.

NYL Facility

HFI is a wholly-owned subsidiary of HSLFI. HFI entered into the NYL Facility with the NYL Noteholders for an aggregate purchase price of up to $100.0 million, with an accordion feature of up to $200.0 million at the mutual discretion and agreement of HSLFI and the NYL Noteholders. On June 1, 2018, HSLFI sold or contributed to HFI certain secured loans made to certain portfolio companies pursuant to the Sale and Servicing Agreement. Any notes issued by HFI are collateralized by all investments held by HFI and permit an advance rate of up to 67% of the aggregate principal amount of eligible debt investments. All advances under the NYL Facility are scheduled to mature in June 2030.

On May 24, 2023, we amended the NYL Facility to, among other things, increase the commitment by $50.0 million to enable our wholly-owned subsidiary to issue up to $250.0 million of secured notes. On April 25, 2025, we amended the NYL Facility to, among other things, extend the investment period to June 5, 2027. In addition, the amendment amended the interest rate for advances made after April 25, 2025, fixing the interest rate at the greater of (i) 4.60% and (ii) the Three Year I Curve plus 2.95% with the interest rate to be reset on any advance date.

Under the terms of the NYL Facility, we are required to maintain a reserve cash balance, which may be used to pay monthly interest and principal payments on the NYL Facility. We have segregated these funds and classified them as restricted investments in money market funds. At June 30, 2025 and December 31, 2024, there were approximately $1.4 million of such restricted investments.

There were $181.0 million in notes issued to the NYL Noteholders as of June 30, 2025 and December 31, 2024 at an interest rate of 6.55% and 6.47%, respectively. As of June 30, 2025 and December 31, 2024, we had borrowing capacity under the NYL Facility of $69.0 million. At June 30, 2025 and December 31, 2024, $0.2 million and $8.4 million, respectively, was available for borrowing, subject to existing terms and advance rates.

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Nuveen Facility

HFII entered into the Nuveen Facility with the Nuveen Noteholders for an aggregate purchase price of up to $100.0 million, with an accordion feature of up to $200.0 million at the mutual discretion and agreement us and the Nuveen Noteholders. On June 21, 2024, we sold or contributed to HFII certain secured loans made to certain portfolio companies pursuant to the Sale and Servicing Agreement. Any notes issued by HFII are collateralized by all investments held by HFII and permit an advance rate of up to 67.5% of the aggregate principal amount of eligible debt investments. The Nuveen Facility bore interest, payable monthly, determined at a rate per annum equal to the greater of (i) the yield for the United States Treasury constant maturity 3-year and 5-year in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily) – H.15” interpolated to a 4.88-year weighted average life (the “Pricing Benchmark”) plus 3.15% and (ii) 5.00%.

On May 23, 2025, we amended the Nuveen Facility to, among other things, extend the investment period to June 21, 2028 and the maturity date to June 10, 2034, and increase the commitment by $100.0 million which enables our wholly-owned subsidiary to issue up to $200.0 million of secured notes. In addition, the amendment amended the interest rate for advances made after May 23, 2025, fixing the interest rate at the greater of (i) 5.00% and (ii) the Pricing Benchmark plus 2.95%.

Under the terms of the Nuveen Facility, we are required to maintain a reserve cash balance, which may be used to pay monthly interest and principal payments on the Nuveen Facility. We have segregated these funds and classified them as restricted investments in money market funds. At June 30, 2025 and December 31, 2024, there were approximately $1.1 million and $1.0 million, respectively, of such restricted investments.

There were $90.0 million and $75.0 million in notes issued to the Nuveen Noteholders as of June 30, 2025 and December 31, 2024 at an interest rate of 7.21% and 7.14%, respectively. As of June 30, 2025 and December 31, 2024, we had borrowing capacity under the Nuveen Facility of $110.0 million and $25.0 million. At June 30, 2025 and December 31, 2024, $0.8 million and $9.9 million, respectively, was available for borrowing, subject to existing terms and advance rates.

Securitization

2022 Asset-Backed Notes

On November 9, 2022, the 2022 Asset-Backed Notes were issued by the 2022‑1 Trust pursuant to a note purchase agreement, dated as of November 9, 2022, by and among us and Keybanc Capital Markets Inc. as Initial Purchaser, and are backed by a pool of loans made to certain portfolio companies of ours and secured by certain assets of those portfolio companies and are to be serviced by us. Interest on the 2022 Asset-Backed Notes will be paid, to the extent of funds available, at a fixed rate of 7.56% per annum. The 2022 Asset-Backed Notes have a two-year reinvestment period and a stated maturity of November 15, 2030. The 2022 Asset-Backed Notes were rated A by Morningstar Credit Ratings, LLC on November 9, 2022. There has been no change in the rating since November 9, 2022.

At June 30, 2025 and December 31, 2024, the 2022 Asset-Backed Notes had an outstanding principal balance of $34.2 million and $81.1 million, respectively.

Under the terms of the 2022 Asset-Backed Notes, we are required to maintain a reserve cash balance, funded through proceeds from the sale of the 2022 Asset-Backed Notes, which may be used to pay monthly interest and principal payments on the 2022 Asset-Backed Notes. We have segregated these funds and classified them as restricted investments in money market funds. At June 30, 2025, and December 31, 2024, there were approximately $0.8 million and $1.0 million, respectively, of such restricted investments.

Unsecured Notes

2026 Notes

On March 30, 2021, we issued and sold an aggregate principal amount of $57.5 million of 4.875% notes due in 2026 (or the “2026 Notes”). The amount of 2026 Notes issued and sold included the full exercise by the underwriters of their option to purchase $7.5 million in aggregate principal of additional notes. The 2026 Notes have a stated maturity of March 30, 2026 and may be redeemed in whole or in part at our option at any time or from time to time on or after March 30, 2023 at a redemption price of $25 per security plus accrued and unpaid interest. The 2026 Notes bear interest at a rate of 4.875% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year. The 2026 Notes are our direct unsecured obligations and (i) rank equally in right of payment with our current and future unsecured indebtedness; (ii) are senior in right of payment to any of our future indebtedness that expressly provides it is subordinated to the 2026 Notes; (iii) are effectively subordinated to all of our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness, and (iv) are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries. As of June 30, 2025, we were in material compliance with the terms of the 2026 Notes. The 2026 Notes are listed on the New York Stock Exchange under the symbol “HTFB”.

2027 Notes

On June 15, 2022, we issued and sold an aggregate principal amount of $50.0 million of 6.25% notes due in 2027 and on July 11, 2022, pursuant to the underwriters’ 30 day option to purchase additional notes, we sold an additional $7.5 million of such notes (collectively, the “2027 Notes”). The 2027 Notes have a stated maturity of June 15, 2027 and may be redeemed in whole or in part at our option at any time or from time to time on or after June 15, 2024 at a redemption price of $25 per security plus accrued and unpaid interest. The 2027 Notes bear interest at a rate of 6.25% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year, commencing on September 30, 2022. The 2027 Notes are our direct unsecured obligations and (i) rank equally in right of payment with our current and future unsecured indebtedness; (ii) are senior in right of payment to any of our future indebtedness that expressly provides it is subordinated to the 2027 Notes; (iii) are effectively subordinated to all of our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness, and (iv) are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries. As of June 30, 2025, we were in material compliance with the terms of the 2027 Notes. The 2027 Notes are listed on the New York Stock Exchange under the symbol “HTFC”.

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Convertible Notes

2031 Convertible Notes

On October 17, 2024, we entered into the 2031 Note Purchase Agreement, by and among us and each purchaser named therein, in connection with the issuance and sale of $20.0 million aggregate principal of our 7.125% 2031 Convertible Notes in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. We received net proceeds (before expenses) from the sale of the 2031 Convertible Notes of approximately $18.6 million.

The 2031 Convertible Notes mature on October 17, 2031, unless earlier converted or repurchased in accordance with their terms. The 2031 Convertible Notes bear interest at a rate of 7.125% per year, subject to additional interest or repurchase obligation upon certain events, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on December 31, 2024. If an investment grade rating is not maintained with respect to the 2031 Convertible Notes, additional interest of 1.00% per annum will accrue on the 2031 Convertible Notes until such time as the 2031 Convertible Notes have received an investment grade rating of “BBB-” (or its equivalent) or better. We will also be required to pay additional interest of 2.00% per annum (x) on any overdue payment of interest and (y) during the continuance of an Event of Default (as defined in the 2031 Note Purchase Agreement). In addition, on the occurrence of a Change in Control Repurchase Event (as defined in the 2031 Note Purchase Agreement) or Delisting Event (as defined in the 2031 Note Purchase Agreement), we will generally be required to make an offer to purchase the outstanding 2031 Convertible Notes at a price equal to 100% of the principal amount of such 2031 Convertible Notes plus accrued and unpaid interest to the repurchase date.

At any time on or after April 17, 2025, at our sole option, we may redeem, from time to time, the 2031 Convertible Notes in whole or in part, out of funds legally available for such redemption, at 100% of the principal amount prepaid plus accrued but unpaid interest to but excluding the date of prepayment.

Each holder of a 2031 Convertible Note has the right, at such holder’s option, to convert any such 2031 Convertible Note, at any time on or after April 17, 2025 and prior to the close of business on the business day immediately preceding the maturity date, into such number of shares of common stock of the Company equal to the principal balance of the 2031 Convertible Note being converted on the conversion date plus the accrued but unpaid interest on the 2031 Convertible Note as of the conversion date, divided by the greater of (i) volume-weighted average closing sale price for the five trading days immediately prior to the relevant conversion date, or (ii) the Company’s most recently reported NAV per share immediately prior to the date of exercise.

No holder of 2031 Convertible Notes may exercise its conversion right if upon conversion the holder would receive shares that would cause funds and accounts managed by the investment adviser to such funds and accounts and any person controlled by the parent company of such investment adviser to beneficially own in the aggregate more than 4.99% of the shares outstanding at such time.

The 2031 Convertible Notes are not listed on any exchange and may not be transferred without our consent.

During the three and six months ended June 30, 2025, the holders of a portion of the 2031 Convertible Notes converted $12.5 million in outstanding principal of the 2031 Convertible Notes plus accrued but unpaid interest on such outstanding principal as of the conversion date into 1,621,503 shares of common stock at a weighted average conversion price of $7.79, together with cash in lieu of fractional shares, in accordance with noteholder conversion notice.

As of June 30, 2025 and December 31, 2024, the aggregate outstanding principal balance of the 2031 Convertible Notes was $7.5 million and $20.0 million, respectively.

Other assets

As of June 30, 2025 and December 31, 2024, other assets were $8.7 million and $6.5 million, respectively, which were primarily comprised of debt issuance costs and prepaid expenses.

Contractual obligations and off-balance sheet arrangements

The following table shows our significant contractual payment obligations and off-balance sheet arrangements as of June 30, 2025:

Payments due by period
Less than 1 – 3 3 – 5 After 5
Total 1 year Years Years years
(In thousands)
Borrowings $ 427,669 $ 118,864 $ 204,446 $ 96,859 $ 7,500
Unfunded commitments 149,000 105,500 43,500 — —
Incentive fee deferral 24,603 1,256 23,347 — —
Total $ 601,272 $ 225,620 $ 271,293 $ 96,859 $ 7,500

In the normal course of business, we are party to financial instruments with off-balance sheet risk. These consist primarily of unfunded commitments to extend credit, in the form of loans, to our portfolio companies. Unfunded commitments to provide funds to portfolio companies are not reflected on our balance sheet. Our unfunded commitments may be significant from time to time. As of June 30, 2025, we had unfunded commitments of $149.0 million. This includes $10.0 million of undrawn revolver commitments. These commitments are subject to the same underwriting and ongoing portfolio maintenance requirements as are the financial instruments that we hold on our balance sheet. In addition, these commitments are often subject to financial or non-financial milestones and other conditions to borrowing that must be achieved before the commitment can be drawn. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. We regularly monitor our unfunded commitments and anticipated refinancings, maturities and capital raising, to ensure that we have sufficient liquidity to fund unfunded commitments. As of June 30, 2025, we reasonably believed that our assets would provide adequate financial resources to satisfy all of our unfunded commitments.

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In addition to the Credit Facilities, we have certain commitments pursuant to our Investment Management Agreement entered into with our Advisor. We have agreed to pay a fee for investment advisory and management services consisting of two components (1) a base management fee equal to a percentage of the value of our gross assets less cash or cash equivalents, and (2) a two-part incentive fee. We have also entered into a contract with our Advisor to serve as our administrator. Payments under the Administration Agreement are equal to an amount based upon our allocable portion of our Advisor’s overhead in performing its obligations under the agreement, including rent, fees and other expenses inclusive of our allocable portion of the compensation of our Chief Financial Officer and Chief Compliance Officer and their respective staffs. See Note 3 to our consolidated financial statements for additional information regarding our Investment Management Agreement and our Administration Agreement.

The incentive fee on Pre-Incentive Fee Net Investment Income is subject to a fee cap and deferral mechanism which is determined based upon a look-back period of up to three years and is expensed when incurred. For this purpose, the Incentive Fee Look-back Period includes the relevant calendar quarter and the 11 preceding full calendar quarters. Each quarterly incentive fee payable on Pre-Incentive Fee Net Investment Income is subject to the Incentive Fee Cap and Deferral Mechanism. The Incentive Fee Cap is equal to (a) 20.00% of Cumulative Pre-Incentive Fee Net Return during the Incentive Fee Look-back Period less (b) cumulative incentive fees of any kind paid to our Advisor during the Incentive Fee Look-back Period. To the extent the Incentive Fee Cap is zero or a negative value in any calendar quarter, we will not pay an incentive fee on Pre-Incentive Fee Net Investment Income to our Advisor in that quarter. To the extent that the payment of incentive fees on Pre-Incentive Fee Net Investment Income is limited by the Incentive Fee Cap, the payment of such fees will be deferred and paid in subsequent calendar quarters up to three years after their date of deferment, subject to certain limitations, which are set forth in the Investment Management Agreement. During the three months ended June 30, 2025 and 2024, the Incentive Fee Cap and Deferral Mechanism resulted in deferral of $2.3 million and $2.6 million, respectively, of incentive fee which may become subject to payment up to three years after the date of deferment. During the six months ended June 30, 2025 and 2024, the Incentive Fee Cap and Deferral Mechanism resulted in deferral of $4.4 million and $4.9 million, respectively, of incentive fee which may become subject to payment up to three years after the date of deferment. As of June 30, 2025 and December 31, 2024, the total amount subject to recoupment was $24.6 million and $20.2 million, respectively. Our Advisor agreed to waive the portion of its quarterly income incentive fee, if any, if and to the extent that, after payment of such portion, our net investment income per share for such quarter would be less than the quarterly distribution per share declared in such quarter. The income incentive fee waiver is effective commencing with the quarter ending March 31, 2025 and terminates with the quarter ending December 31, 2025. During the three and six months ended June 30, 2025, our Advisor did not earn an income incentive fee.

Distributions

In order to qualify and be subject to tax as a RIC, we must meet certain source-of-income, asset diversification and annual distribution requirements. Generally, in order to qualify as a RIC, we must derive at least 90% of our gross income for each tax year from dividends, interest, payments with respect to certain securities, loans, gains from the sale or other disposition of stock, securities or foreign currencies, income derived from certain publicly traded partnerships, or other income (including but not limited to gains from options, futures or forward contracts) derived with respect to our business of investing in stock, securities or currencies. We must also meet certain asset diversification requirements at the end of each quarter of each tax year. Failure to meet these diversification requirements on the last day of a quarter may result in us having to dispose of certain investments quickly in order to prevent the loss of RIC status. Any such dispositions could be made at disadvantageous prices or times, and may cause us to incur substantial losses.

In addition, in order to be subject to tax as a RIC and to avoid the imposition of corporate-level tax on the income and gains we distribute to our stockholders in respect of any tax year, we are required under the Code to distribute as dividends to our stockholders out of assets legally available for distribution each tax year an amount generally at least equal to 90% of the sum of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any. Additionally, in order to avoid the imposition of a U.S. federal excise tax, we are required to distribute, in respect of each calendar year, dividends to our stockholders of an amount at least equal to the sum of 98% of our calendar year net ordinary income (taking into account certain deferrals and elections); 98.2% of our capital gain net income (adjusted for certain ordinary losses) for the one year period ending on October 31 of such calendar year; and any net ordinary income and capital gain net income for preceding calendar years that were not distributed during such calendar years and on which we previously did not incur any U.S. federal corporate-level income tax. If we fail to qualify as a RIC for any reason and become subject to corporate-level income tax, the resulting corporate-level income taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and our stockholders. In addition, we could be required to recognize unrealized gains, incur substantial taxes and interest and make substantial distributions in order to re-qualify as a RIC. We cannot assure stockholders that they will receive any distributions.

To the extent our taxable earnings in a tax year fall below the total amount of our distributions made to stockholders in respect of such tax year, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our income or gains. Stockholders should review any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is our ordinary income or gains.

We have adopted an “opt out” dividend reinvestment plan, or DRIP, for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock, net of applicable withholding taxes, unless a stockholder specifically “opts out” of our DRIP. If a stockholder opts out, that stockholder will receive cash distributions. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes, stockholders participating in our DRIP will not receive any corresponding cash distributions with which to pay any such applicable taxes. If our common stock is trading above NAV, a stockholder receiving distributions in the form of additional shares of our common stock will be treated as receiving a distribution of an amount equal to the fair market value of such shares of our common stock. We may use newly issued shares to implement the DRIP, or we may purchase shares in the open market in connection with our obligations under the DRIP.

Related party transactions

We have entered into the Investment Management Agreement with our Advisor. Our Advisor is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. Our investment activities are managed by our Advisor and supervised by our Board, the majority of whom are independent directors. Under the Investment Management Agreement, we have agreed to pay our Advisor a base management fee as well as an incentive fee. During the three months ended June 30, 2025 and 2024, our Advisor earned $3.0 million pursuant to the Investment Management Agreement. During the six months ended June 30, 2025 and 2024, our Advisor earned $6.1 million and $6.5 million, respectively, pursuant to the Investment Management Agreement.

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On March 31, 2025, Monroe closed a transaction pursuant to which Momentum US Bidco LLC, an affiliate of Wendel SE, acquired 75% of the outstanding equity interests of Monroe Capital Intermediate Holdings, LLC, the indirect parent company of the Advisor, and certain other affiliates of Monroe (or the “Transaction”). The closing of the Transaction resulted in a change in control of the Advisor (the “Advisor Change in Control”). The Advisor Change in Control did not substantially or adversely affect us.

We have also entered into the Administration Agreement with our Advisor. Under the Administration Agreement, we have agreed to reimburse our Advisor for our allocable portion of overhead and other expenses incurred by our Advisor in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Financial Officer and Chief Compliance Officer and their respective staffs. In addition, pursuant to the terms of the Administration Agreement our Advisor provides us with the office facilities and administrative services necessary to conduct our day-to-day operations. During the three months ended June 30, 2025 and 2024, our Advisor earned $0.4 million pursuant to the Administration Agreement. During the six months ended June 30, 2025 and 2024, our Advisor earned $0.8 million and $0.9 million, respectively, pursuant to the Administration Agreement.

Our Advisor has granted us a non-exclusive, royalty-free license to use the service mark “Horizon Technology Finance.”

We believe that we derive substantial benefits from our relationship with our Advisor. Our Advisor and its affiliates may manage other investment vehicles with similar or overlapping investment strategies as us. Our Advisor may provide us with an opportunity to co-invest with other investment vehicles managed by our Advisor, Monroe and/or their affiliates. Under the 1940 Act, absent receipt of exemptive relief from the SEC, we and our affiliates are precluded from co-investing in negotiated investments with other funds and accounts sponsored or managed by our Advisor, Monroe and their affiliates. Since June 30, 2023, we and our Advisor have relied on exemptive relief from the SEC granted to certain affiliates of Monroe on October 15, 2014, as amended on January 10, 2023. The exemptive relief affords our Advisor greater flexibility to negotiate the terms of co-investments if our Board determines that it would be advantageous for us to co-invest with other accounts sponsored or managed by our Advisor, Monroe or their affiliates in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors.

Critical accounting policies

The discussion of our financial condition and results of operation is based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. In addition to the discussion below, we describe our significant accounting policies in the notes to our consolidated financial statements.

We have identified the following items as critical accounting policies.

Valuation of investments

Investments are recorded at fair value. Prior to July 30, 2022, our Board determined the fair value of our investments. Pursuant to the amended SEC Rule 2a-5 of the 1940 Act, on July 29, 2022, our Board designated our Advisor as the “valuation designee.” Our Board is responsible for oversight of the valuation designee. The valuation designee has established a Valuation Committee to determine in good faith the fair value of our investments, based on input of our Advisor’s management and personnel and independent valuation firms which are engaged at the direction of the Valuation Committee to assist in the valuation of certain portfolio investments lacking a readily available market quotation at least once during a trailing twelve-month period. The Valuation Committee determines fair values pursuant to a valuation policy approved by our Board and pursuant to a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter, with at least 25% (based on fair value) of our valuation of portfolio companies lacking readily available market quotations subject to review by an independent valuation firm. We apply fair value to substantially all of our investments in accordance with Topic 820, Fair Value Measurement, of the Financial Accounting Standards Board’s, or FASB’s, Accounting Standards Codification as amended, or ASC, which establishes a framework used to measure fair value and requires disclosures for fair value measurements. We have categorized our investments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity specific measure. Therefore, when market assumptions are not readily available, our own assumptions are set to reflect those that we believe market participants would use in pricing the financial instrument at the measurement date.

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The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market conditions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. The three categories within the hierarchy are as follows:

Level 1 Quoted prices in active markets for identical assets and liabilities.
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active and model-based valuation techniques for which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
--- ---
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
--- ---

Income recognition

Interest on debt investments is accrued and included in income based on contractual rates applied to principal amounts outstanding. Interest income is determined using a method that results in a level rate of return on principal amounts outstanding. Generally, when a debt investment becomes 90 days or more past due, or if we otherwise do not expect to receive interest and principal repayments, the debt investment is placed on non-accrual status and the recognition of interest income may be discontinued. Interest payments received on non-accrual debt investments may be recognized as income, on a cash basis, or applied to principal depending upon management’s judgment at the time the debt investment is placed on non-accrual status. For the three and six months ended June 30, 2025, we recognized in interest income $0.2 million from debt investments while on nonaccrual status. For the three and six months ended June 30, 2024, we did not recognize any interest income from debt investments on non-accrual status.

We receive a variety of fees from borrowers in the ordinary course of conducting our business, including advisory fees, commitment fees, amendment fees, non-utilization fees, success fees and prepayment fees. In a limited number of cases, we may also receive a non-refundable deposit earned upon the termination of a transaction. Debt investment origination fees, net of certain direct origination costs, are deferred, and along with unearned income, are amortized as a level yield adjustment over the respective term of the debt investment. All other income is recorded into income when earned. Fees for counterparty debt investment commitments with multiple debt investments are allocated to each debt investment based upon each debt investment’s relative fair value. When a debt investment is placed on non-accrual status, the amortization of the related fees and unearned income is discontinued until the debt investment is returned to accrual status.

Certain debt investment agreements also require the borrower to make an ETP that is accrued into income over the life of the debt investment to the extent such amounts are expected to be collected. We will generally cease accruing the income if there is insufficient value to support the accrual or if we do not expect the borrower to be able to pay the ETP due.

In connection with substantially all lending arrangements, we receive warrants to purchase shares of stock from the borrower. We record the warrants as assets at estimated fair value on the grant date using the Black-Scholes valuation model. We consider the warrants as loan fees and record them as unearned income on the grant date. The unearned income is recognized as interest income over the contractual life of the related debt investment in accordance with our income recognition policy. Subsequent to origination, the warrants are also measured at fair value using the Black-Scholes valuation model. Any adjustment to fair value is recorded through earnings as net unrealized gain or loss on investments. Gains and losses from the disposition of the warrants or stock acquired from the exercise of warrants are recognized as realized gains and losses on investments.

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Realized gains or losses on the sale of investments, or upon the determination that an investment balance, or portion thereof, is not recoverable, are calculated using the specific identification method. We measure realized gains or losses by calculating the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment. Net change in unrealized appreciation or depreciation reflects the change in the fair values of our portfolio investments during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Income taxes

We have elected to be treated as a RIC under Subchapter M of the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify as a RIC and to avoid the imposition of corporate-level U.S. federal income tax on the amounts we distribute to our stockholders, among other things, we are required to meet certain source of income and asset diversification requirements, and we must timely distribute dividends to our stockholders out of assets legally available for distribution each tax year of an amount generally equal to at least 90% of our investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid. We, among other things, have made and intend to continue to make the requisite distributions to our stockholders, which will generally relieve us from incurring any material liability for U.S. federal income taxes.

Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and incur a 4% excise tax on such income, as required. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year distributions, we will accrue excise tax, if any, on estimated excess taxable income as taxable income is earned.

We evaluate tax positions taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority in accordance with ASC Topic 740, Income Taxes, as modified by ASC Topic 946, Financial Services — Investment Companies. Tax benefits of positions not deemed to meet the more-likely-than-not threshold, or uncertain tax positions, are recorded as a tax expense in the current year. It is our policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. We had no material uncertain tax positions at June 30, 2025 and December 31, 2024.

Recent developments

On July 1, 2025, we received proceeds of $2.7 million from the exercise of our warrants in Kate Farms, Inc.

On July 10, 2025, the holders of a portion of the 2031 Convertible Notes converted $3.75 million in outstanding principal of the 2031 Convertible Notes plus accrued but unpaid interest on such outstanding principal as of the conversion date into 496,256 shares of common stock at a conversion price of $7.57 per share, together with cash in lieu of fractional shares.

On July 18, 2025, Noodle Partners, Inc. (“Noodle”) prepaid its outstanding principal balance of $16.7 million on its venture loan, plus interest, end-of-term payment and prepayment penalty. We continue to hold warrants in Noodle.

On July 18, 2025, we received a principal paydown of $2.0 million on its venture loans to Tallac Therapeutics, Inc.

On July 29, 2025, Pivot Bio, Inc. (“Pivot Bio”) prepaid its outstanding principal balance of $10.0 million on its venture loan, plus interest, end-of-term payment and prepayment penalty. We continue to hold warrants in Pivot Bio.

On July 30, 2025, Native Microbials, Inc. (“Native Microbials”) prepaid its outstanding principal balance of $3.5 million on its venture loan, plus interest, end-of-term payment and prepayment penalty. We continue to hold warrants in Native Microbials.

On August 5, 2025, our Board authorized an increase in the maximum amount of our shares that can be repurchased on the open market or in privately negotiated purchases pursuant to Rule 10b-18 and other applicable provisions of the Securities Exchange Act of 1934, as amended from up to $5,000,000 of shares to up to $10,000,000 of shares, provided such purchases, in the aggregate, do not exceed two percent (2%) of the shares outstanding at the time of purchase and such shares are purchased only when the such shares are trading below 90% of our most recently disclosed net asset value per share.

On August 6, 2025, we purchased substantially all of the remaining assets of Powerscourt Investments XXV, LP for $22.5 million. We expect the purchase to be accretive to our net asset value when reported in our financial results for the third quarter.

On August 7, 2025, we entered into a certain Merger Agreement with Monroe Capital Corporation (“MRCC”; NASDAQ: MRCC) wherein MRCC will merge with and into us, subject to the receipt of, among other things, approval by our shareholders and by the shareholders of MRCC and the satisfaction of other closing conditions.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. During the periods covered by our financial statements, the interest rates on the debt investments within our portfolio were primarily at floating rates. We expect that our debt investments in the future will primarily have floating interest rates. As of June 30, 2025 and December 31, 2024, 99% of the outstanding principal amount of our debt investments bore interest at floating rates. Contractual interest rates on our commitments to lend to our portfolio companies are typically based on the Prime Rate as published in the Wall Street Journal.

Based on our June 30, 2025 consolidated statement of assets and liabilities (without adjustment for potential changes in the credit market, credit quality, size and composition of assets on the consolidated statement of assets and liabilities or other business developments that could affect net income) and the base index rates at June 30, 2025, the following table shows the annual impact on the change in net assets resulting from operations of changes in interest rates, which assumes no changes in our investments and borrowings:

Investment Interest Change in Net
Change in basis points Income Expense Assets(1)
(In thousands)
Up 300 basis points $ 15,941 $ — $ 15,941
Up 200 basis points $ 10,043 $ — $ 10,043
Up 100 basis points $ 4,145 $ — $ 4,145
Down 300 basis points $ (3,726 ) $ — $ (3,726 )
Down 200 basis points $ (2,813 ) $ — $ (2,813 )
Down 100 basis points $ (1,709 ) $ — $ (1,709 )
(1) Excludes the impact of incentive fees based on Pre-Incentive Fee Net Investment Income.
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While our 2027 Notes, our 2026 Notes, our 2031 Convertible Notes and our 2022 Asset-Backed Notes bear interest at a fixed rate, our Credit Facilities have floating interest rate provisions. The Key Facility is subject to an interest rate floor of 0.10% per annum, based on a prime rate index which resets monthly. The interest payable on the NYL Facility is based on the Three Year I Curve rate plus a margin of 2.95% with an interest rate floor and resets on any advance date. The interest payable on the Nuveen Facility is based on the United States Treasury constant maturity 3-year and 5-year rates plus a margin of 2.95% with an interest rate floor and resets on any advance date. Any other credit facilities into which we enter in the future may have floating interest rate provisions. We have used hedging instruments in the past to protect us against interest rate fluctuations, and we may use them in the future. Such instruments may include caps, swaps, futures, options and forward contracts. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio with fixed interest rates. Engaging in commodity interest transactions such as swap transactions or futures contracts on our behalf may cause our Advisor to fall within the definition of “commodity pool operator” under the Commodity Exchange Act (the “CEA”), and related Commodity Futures Trading Commission (the “CFTC”), regulations. On January 31, 2020, our Advisor claimed an exclusion from the definition of the term “commodity pool operator” under the CEA and the CFTC regulations in connection with its management of us and, therefore, is not subject to CFTC registration or regulation under the CEA as a commodity pool operator with respect to its management of us.

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Because we currently fund, and expect to continue to fund, our investments with borrowings, our net income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest the funds borrowed. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net income. In periods of elevated interest rates, our cost of funds could increase, which would reduce our net investment income.

Inflation, Market Volatility and Supply Chain Risk

Economic activity has continued to accelerate across sectors and regions. Nevertheless, due to global supply chain issues, geopolitical events, a rise in energy prices and strong consumer demand as economies continue to reopen, inflation accelerated in the United States and globally before falling to lower levels at the end of 2023. Inflation may revive in the near to medium-term, particularly in the United States, with the advent of significant trade tariffs at the federal level, and monetary policy may tighten in response.  Persistent inflationary pressures, foreign currency exchange volatility, volatility in global capital markets and concerns over actual and potential tariffs and sanctions could affect our portfolio companies’ profit margins.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

As of June 30, 2025, we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a‑15(e) under the Exchange Act). Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

(b) Changes in internal controls over financial reporting.

There have been no material changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) during our most recently completed fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1: Legal Proceedings.

We are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of any such future legal or regulatory proceedings cannot be predicted with certainty, we do not expect that any such future proceedings will have a material effect upon our financial condition or results of operations.

Item 1A: Risk Factors.

In addition to other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors set forth in “Item 1A Risk Factors” in our annual report on Form 10‑K for the year ended December 31, 2024, which could materially affect our business, financial condition and/or operating results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or operating results. There have been no material changes during the six months ended June 30, 2025 to the risk factors set forth in “Item 1A. Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2024.

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Horizon Technology Finance Corporation and Subsidiaries

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3: Defaults Upon Senior Securities

None.

Item 4: Mine Safety Disclosures

Not applicable

Item 5: Other Information

Rule 10b5-1 Trading Plans

During the fiscal quarter ended June 30, 2025, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement”.

Item 6: Exhibits

EXHIBIT INDEX

Exhibit <br> No. Description
10.1 Amendment No. 6 to Sale and Servicing Agreement, dated as of April 25, 2025, by and among Horizon Funding I, LLC, the issuer, Horizon Secured Loan Fund I LLC, the originator and seller, Horizon Technology Finance Corporation, the servicer, U.S. Bank Trust Company, National Association and U.S. Bank National Association (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed on April 28, 2025)
10.2 Fifth Supplemental Indenture, dated as of April 25, 2025, by and among Horizon Funding I, LLC, the issuer, and U.S. Bank Trust Company, National Association (Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, filed on April 28, 2025)
10.3 First Supplemental Indenture, dated as of May 23, 2025, by and among Horizon Funding II, LLC, the issuer, and U.S. Bank Trust Company, National Association, the trustee (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed on May 27, 2025)
10.4 Amended and Restated Note Funding Agreement, dated as of May 23, 2025, by and among Horizon Funding II, LLC, the issuer, and the Initial Purchasers (as defined therein) (Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed on May 27, 2025)
10.5 Amendment No. 1 to Sale and Servicing Agreement, dated as of May 23, 2025, by and among Horizon Funding II, LLC, the issuer, Horizon Technology Finance Corporation, the seller, originator and servicer, U.S. Bank Trust Company, National Association, the trustee, and U.S. Bank National Association, the backup servicer, custodian, lockbox and securities intermediary (Incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K, filed on May 27, 2025)
14* Code of Ethics of the Company
31.1* Certifications by Chief Executive Officer pursuant to Exchange Act Rule 13a‑14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended
31.2* Certifications by Chief Financial Officer pursuant to Exchange Act Rule 13a‑14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended
32.1* Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended
32.2* Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended
101.INS Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*         Filed herewith

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Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Quarterly Report on Form 10‑Q to be signed on its behalf by the undersigned, thereunto duly authorized.

HORIZON TECHNOLOGY FINANCE CORPORATION
Date: August 7, 2025 By: /s/ Michael P. Balkin
Name: Michael P. Balkin
Title: Chief Executive Officer
Date: August 7, 2025 By: /s/ Daniel R. Trolio
Name: Daniel R. Trolio
Title: Chief Financial Officer

76

ex_844870.htm

Exhibit 14

cover.jpg

TABLE OF CONTENTS

JOINT CODE OF ETHICS 2
A. Statement of General Fiduciary Principles 2
B. Definitions 3
C. Objective and General Prohibitions 5
D. Prohibited Transactions 6
E. Reports By Access Persons 7
F. Conflicts of Interest and Additional Prohibitions 9
G. Pay-to-Play Restrictions 15
H. Lobbying Activities 18
I. Prohibition Against Insider Trading 19
J. Annual Certification 29
K. Sanctions 29
L. Administration and Construction 29

Note: Access Persons (as defined in B below) are required to use the Compliance Platform for all self-reporting and pre-clearance purposes contemplated by this Code. The Compliance Platform is maintained for availability twenty-four (24) hours a day, seven (7) days a week for pre-clearance and self-reporting needs, including certifications and disclosures. The Company will provide each Access Person with a username and password to access the Compliance Platform via the internet.

Access Persons who are unable to self-report or pre-clear through the Compliance Platform (e.g., due to internet connectivity issues) should contact the CCO, or designee of the CCO, for assistance. Please keep in mind that assistance with self-reporting and pre-clearance requests may be limited or delayed on days or during hours when the Company’s office is closed.

1

FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

JOINT CODE OF ETHICS

FOR

MONROE CAPITAL CORPORATION;

MONROE CAPITAL INCOME PLUS CORPORATION;

MONROE CAPITAL BDC ADVISORS, LLC;

MONROE CAPITAL MANAGEMENT ADVISORS, LLC

HORIZON TECHNOLOGY FINANCE MANAGEMENT, LLC;

AND

HORIZON TECHNOLOGY FINANCE CORPORATION

A. Statement of General Fiduciary Principles

This Joint Code of Ethics (the “Code”) has been adopted by each of Monroe Capital Corporation (the “MC Corporation”), Monroe Capital Income Plus Corporation (“MC Income Plus” and, together with MC Corporation, the “BDC Funds”), Monroe Capital BDC Advisors, LLC, the BDC Funds’ investment adviser (“MC Advisors”), Horizon Technology Finance Management, LLC (“Horizon”), Horizon Technology Finance Corporation (the “Horizon BDC”) and Monroe Capital Management Advisors, LLC, the affiliated investment adviser (“MC Management” and, together with MC Advisors and Horizon, the “Company” or the “Firm”), in compliance with Rule 17j-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) and Section 204A of the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The purpose of the Code is to establish standards and procedures for the detection and prevention of activities by which persons having knowledge of the investments and investment intentions of the BDC Funds, the Horizon BDC and other advisory clients of the Company (collectively, the “Funds” or the “Clients”)^1^ may violate their fiduciary duty to the Funds, and otherwise to deal with the types of conflict of interest situations to which Rule 17j-1 is addressed in respect of the BDC Funds and the Horizon BDC. As it relates to Section 204A of the Advisers Act, the purpose of this Code is to establish procedures that, taking into consideration the nature of the Company’s business, are reasonably designed to prevent misuse of material, non-public information in violation of the federal securities laws by persons associated with the Company. Certain provisions of this Code apply both to Access Persons and to family members of Access Persons.

The Code is based on the principle that the directors and officers of the Funds and the managers, partners, officers and employees of the Company, who provide services respectively to the Funds, owe a fiduciary duty to the Funds to conduct their personal securities transactions in a manner that does not interfere with the Funds’ transactions or otherwise take unfair advantage of their relationship with the Funds. All Access Persons (as defined below) are expected to adhere to this general principle as well as to comply with the specific provisions of this Code that are applicable to them. Any Access Person who is a supervised person of another entity that is a registered investment adviser is, in addition, expected to comply with the provisions of the code of ethics that has been adopted by such other investment adviser.

^1^ MC Advisors is the investment adviser to the BDC Funds, Horizon is the investment adviser to the Horizon BDC, MC Management is the investment adviser to collateralized loan obligations fund (“CLO Funds”), private investment funds, single investor funds and other U.S. and non-U.S. structured investment vehicles and Horizon may in the future adviser other private funds (collectively, all such private investment funds, single investor funds, other US and non- US structured investment vehicles and similar investment vehicles advised by Horizon, the “Private Funds”). The CLO Funds, the Private Funds, the BDC Funds and the Horizon BDC are collectively referred to herein as the “Funds” or the “Clients”.

2

FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

Technical compliance with the Code will not automatically insulate any Access Person from scrutiny of transactions that show a pattern of compromise or abuse of the individual’s fiduciary duty to the Funds. Accordingly, all Access Persons must seek to avoid any actual or potential conflicts between their personal interests and the interests of the Funds and their respective investors or shareholders. In sum, all Access Persons must serve in the best interest of the relevant Clients and not place their own interest ahead of the interests of the Clients.

All Access Persons must read and retain this Code.

B. Definitions

“Access Person” means any partner, director, officer, general partner (or other person occupying a similar status or performing similar functions), employee, or Advisory Person (as defined below) of the Funds or the Company as well as any other person who provides investment advice on behalf of the Company and is subject to the supervision and Control of the Company.

An “Advisory Person” of the Funds or the Company means: (i) any director, officer, general partner or employee of the Funds or the Company, or any company in a Control (as defined below) relationship to the Funds or the Company, who in connection with his or her regular functions or duties makes, participates in, or obtains information regarding the purchase or sale of any Covered Security (as defined below) by the Funds, or whose functions relate to the making of any recommendations with respect to such purchases or sales; (ii) any natural person in a Control relationship to the Funds or the Company, who obtains information concerning recommendations made to the Funds with regard to the purchase or sale of any Covered Security by the Funds; and

(iii) any other person deemed to be an Advisory Person by the Chief Compliance Officer.

“Automatic Investment Plan” means a program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. An Automatic Investment Plan includes (a) a dividend reinvestment plan and (b) a written plan for trading securities as contemplated by Rule 10b5- 1(c)(1)(i)(A)(3) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and approved by the Chief Compliance Officer.

“Beneficial Ownership” is interpreted in the same manner as it would be under Rule 16a-1(a)(2) under the Exchange Act in determining whether a person is a beneficial owner of a security for purposes of Section 16 of the Exchange Act and the rules and regulations thereunder. This means that Access Persons should generally consider themselves to have Beneficial Ownership in any securities in which each has or shares, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, a direct or indirect pecuniary interest, which includes securities held by Access Person’s immediate family members sharing the same household.

“Chief Compliance Officer” or “CCO” means the Monroe CCO and the Horizon CCO, as applicable. Any and all references to the “Chief Compliance Officer” or “CCO” in this Code shall include designee(s) of the Chief Compliance Officer who can act and/or carry out responsibilities on behalf of the CCO.

3

FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

“Compliance Platform” – an online financial regulatory compliance solution, which the Company uses for the management of its compliance program.

“Control” shall have the same meaning as that set forth in Section 2(a)(9) of the 1940 Act and means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. Any person who owns beneficially, either directly or indirectly through one or more controlled companies, more than 25% of the voting securities of a company shall be presumed to control such company. Any person who does not own beneficially, either directly or indirectly through one or more controlled companies, more than 25% of the voting securities of a company shall be presumed not to control such company.

“Covered Accounts” means a personal investment or trading account of an Access Person and certain other related accounts. Specifically, Covered Accounts includes: (i) trusts for which an Access Person acts as a trustee, executor, fund custodian or discretionary manager; (ii) accounts for the benefit of the Access Person’s spouse or minor child; (iii) accounts for the benefit of a relative living with the Access Person; and (iv) accounts for the benefit of any person to whom the Access Person provides material financial support. A Covered Account may also include an investment or trading account over which an Access Person exercises control or provides investment advice or a proprietary investment or trading account maintained for the Company or its Access Persons.

“Covered Security” means a security as defined in Section 2(a)(36) of the 1940 Act and Section 202(a)(18) of the Advisers Act, which includes: any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit- sharing agreement, collateral-trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

Except that “Covered Security” does not include: (i) direct obligations of the Government of the United States; (ii) bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements; and (iii) shares issued by open-end investment companies registered under the 1940 Act. References to a Covered Security in this Code (e.g., a prohibition or requirement applicable to the purchase or sale of a Covered Security) shall be deemed to refer to and to include any warrant for, option in, or security immediately convertible into that Covered Security, and shall also include any instrument that has an investment return or value that is based, in whole or in part, on that Covered Security (collectively, “Derivatives”). Therefore, except as otherwise specifically provided by this Code: (i) any prohibition or requirement of this Code applicable to the purchase or sale of a Covered Security shall also be applicable to the purchase or sale of a Derivative relating to that Covered Security; and (ii) any prohibition or requirement of this Code applicable to the purchase or sale of a Derivative shall also be applicable to the purchase or sale of a Covered Security relating to that Derivative.

4

FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

“Family Member” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships.

“Horizon CCO” means the Chief Compliance Officer of the Horizon BDC, who also serves as the Chief Compliance Officer of Horizon.

“Independent Director” means a director of a BDC Fund or the Horizon BDC who is not an “interested person” of the BDC Fund or Horizon BDC, respectively, within the meaning of Section 2(a)(19) of the 1940 Act.

“Initial Public Offering” means an offering of securities registered under the Securities Act of 1933, as amended (the “Securities Act”), the issuer of which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act.

“Limited Offering” means an offering that is exempt from registration under the Securities Act pursuant to Section 4(a)(2) or Section 4(a)(5) thereof or pursuant to Rule 504 or Rule 506 thereunder.

“Monroe CCO” **** means the Chief Compliance Officer of the BDC Funds, who also serves as the Chief Compliance Officer of MC Advisors and MC Management.

“Security Held or to be Acquired” by the Funds means: (i) any Covered Security which, within the most recent 15 days: (a) is or has been held by the Fund(s); or (b) is being or has been considered by the Fund(s) or the Company for purchase by the Fund(s); and (ii) any option to purchase or sell, and any security convertible into or exchangeable for, a Covered Security.

“17j-1 Organization” means the BDC Funds, the Horizon BDC or the Company, as the context requires.

C. Objective and General Prohibitions

Access Persons may not engage in any investment transaction under circumstances in which the Access Person places its own interests ahead of those of any fund or interferes with the purchase or sale of Covered Securities by the Funds. In addition, Access Persons may not use information concerning such investments or investment intentions related thereto of the Funds, or their ability to influence such investment intentions, for personal gain or in a manner detrimental to the interests of the Funds.

Access Persons may not engage in conduct that is deceitful, fraudulent or manipulative, or that involves false or misleading statements, in connection with the purchase or sale of investments by the Funds.

5

FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

In this regard, Access Persons should recognize that Rule 17j-1 makes it unlawful for any affiliated person of the Fund(s) or any affiliated person of an investment adviser for the BDC Fund(s) or the Horizon BDC, in connection with the purchase or sale, directly or indirectly, by the person of a Security Held or to be Acquired by the BDC Fund(s) or the Horizon BDC to:

● employ any device, scheme or artifice to defraud the BDC Fund(s) or the Horizon BDC;
● make any untrue statement of a material fact to the BDC Fund(s) or the Horizon BDC or omit to state to the Fund(s) a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;
--- ---
● engage in any act, practice or course of business that operates or would operate as a fraud or deceit upon the BDC Fund(s) or the Horizon BDC; or
--- ---
● engage in any manipulative practice with respect to the BDC Fund(s) or the Horizon BDC.
--- ---

Access Persons should also recognize that a violation of this Code or of Rule 17j-1 may result in the imposition of: (1) sanctions as provided by Section K below; or (2) administrative, civil and, in certain cases, criminal fines, sanctions or penalties.

D. Prohibited Transactions

Other than securities purchased or acquired by the BDC Funds, the Horizon BDC or a Fund affiliated with the BDC Funds or the Horizon BDC and pursuant to an exemptive order under Section 57(i) of the 1940 Act permitting certain types of co-investments, an Access Person may not purchase or otherwise acquire direct or indirect Beneficial Ownership of any Covered Security, and may not sell or otherwise dispose of any Covered Security in which he or she has direct or indirect Beneficial Ownership, if he or she knows or should know at the time of entering into the transaction that: (1) the BDC Fund(s) or the Horizon BDC have purchased or sold the Covered Security within the last 15 calendar days, or is purchasing or selling or intends to purchase or sell the Covered Security in the next 15 calendar days; or (2) the Company has within the last 15 calendar days considered purchasing or selling the Covered Security for the BDC Fund(s) or Horizon BDC or within the next 15 calendar days intends to consider purchasing or selling the Covered Security for the BDC Fund(s) or the Horizon BDC.

Every Access Person of the Fund(s) or the Company must obtain approval from the Chief Compliance Officer, before directly or indirectly acquiring Beneficial Ownership in any Covered Security as well as in any securities in an Initial Public Offering or in a Limited Offering, except when such securities are acquired by the BDC Funds, the Horizon BDC or a Fund affiliated with the BDC Funds or the Horizon BDC and pursuant to an exemptive order under Section 57(i) of the 1940 Act permitting certain types of co-investments. Such approval must be obtained from the Chief Compliance Officer, unless he or she is the person seeking such approval, in which case it must be obtained from the Chief Operating Officer of the 17j-1 Organization. A record of such approval (or denial) by the CCO and a brief description of the reasoning supporting such decision will be maintained in accordance with the recordkeeping requirements of the Advisers Act and the 1940 Act.

6

FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

No Access Person shall recommend any transaction in any Covered Securities by the Fund(s) without having disclosed to the Chief Compliance Officer his or her interest, if any, in such Covered Securities or the issuer thereof, including: the Access Person’s Beneficial Ownership of any Covered Securities of such issuer, except when such securities transactions are to be made by a BDC Fund, the Horizon BDC or a Fund affiliated with the BDC Funds or the Horizon BDC and pursuant to an exemptive order under Section 57(i) of the 1940 Act permitting certain types of co- investments; any contemplated transaction by the Access Person in such Covered Securities; any position the Access Person has with such issuer; and any present or proposed business relationship between such issuer and the Access Person (or a party in which the Access Person has a significant interest).

All Access Persons are prohibited from buying or selling shares issued by MC Corporation or the Horizon BDC except during an open trading window announced by the Monroe CCO or the Horizon CCO as applicable. Except with the express written consent of the Monroe CCO or the Horizon CCO, as applicable, all Access Persons are prohibited from buying or selling options on, or futures or other derivatives related to, shares issued by MC Corporation or the Horizon BDC, and are likewise prohibited from selling short shares of MC Corporation or the Horizon BDC.

1. Exceptions

The prohibitions set forth in Sections C. and D. above shall not apply to any of the following:

(a) Transactions in Covered Securities effected in any account over which the Access Person has no direct or indirect influence or control.
(b) Purchases or sales of Covered Securities that are non-volitional on the part of either the Access Person or the Fund(s).
--- ---
(c) Transactions that are part of an Automatic Investment Plan.
--- ---
(d) Purchases of Covered Securities effected upon the exercise of registered rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired.
--- ---
(e) To the extent not otherwise restricted by policies of the Fund(s) or applicable law, securities issued by the Fund(s) that are closed-end private funds.
--- ---
E. Reports By Access Persons
--- ---
1. Initial and Annual Personal Securities Holdings Reports
--- ---

All Access Persons shall within 10 days of the date on which they become Access Persons, and thereafter within 30 days after the end of each calendar year, disclose the title, number of shares and principal amount of all Covered Securities in Covered Accounts as of the date the person became an Access Person, in the case of such person’s initial report, and as of the last day of the year, as to annual reports. Such holdings report is hereinafter called a “Personal Securities **** Holdings Report”. Each Personal Securities Holdings Report must also disclose the name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person or as of the last day of the year, as the case may be. Each Personal Securities Holdings Report shall state the date it is being submitted. Personal trading by a new Access Person is restricted until the initial Personal Securities Holdings Report has been submitted through the Compliance Platform.

7

FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

2. Quarterly Securities Transaction Reports

Within 30 days after the end of each calendar quarter, each Access Person shall make a written report to the Chief Compliance Officer of all transactions occurring in the quarter in a Covered Security in which he or she had any Beneficial Ownership, which is hereinafter called a “Quarterly **** Securities Transaction Report”.

A Quarterly Securities Transaction Report shall be in the form approved by the Chief Compliance Officer and must contain the following information with respect to each reportable transaction:

● Date and nature of the transaction (purchase, sale or any other type of acquisition or disposition);
● Title, interest rate and maturity date (if applicable), number of shares, and principal amount of each Covered Security involved and the price of the Covered Security at which the transaction was effected;
--- ---
● Name of the broker, dealer or bank with or through whom the transaction was effected; and
--- ---
● The date the report is submitted by the Access Person.
--- ---
3. Independent Directors
--- ---

Notwithstanding the reporting requirements set forth in this Section E., an Independent Director who would be required to make a report under this Section E. solely by reason of being a director of a BDC Fund or the Horizon BDC is not required to file a Personal Securities Holdings Report upon becoming a director of a BDC Fund or the Horizon BDC or an annual Personal Securities Holdings Report. Such an Independent Director also need not file a Quarterly Securities Transaction Report unless such director knew or, in the ordinary course of fulfilling his or her official duties as a director of a BDC Fund or the Horizon BDC, should have known that such Covered Security is a Security Held or to be Acquired (i.e., that, generally, during the 15-day period immediately preceding or after the date of the transaction in a Covered Security by the director such Covered Security is or was purchased or sold by a BDC Fund or the Horizon BDC or a BDC Fund or the Horizon BDC or the Company considered purchasing or selling such Covered Security).

8

FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

4. New Brokerage Accounts and Electronic Feeds or Statements

Access Persons, except Independent Directors, must promptly report any newly established brokerage accounts through the Compliance Platform by submitting a “Broker Account” pre- clearance request. Personal trading in such newly established reportable account is restricted until such account has been approved through the Compliance Platform by the CCO or appointed designee.

In addition, Access Persons, except Independent Directors, shall connect any new brokerage account to an electronic online feed through the Compliance Platform or, alternatively, obtain and provide account statements to the Chief Compliance Officer or appointed designee or instruct the brokers, dealers or banks with whom they maintain such an account to provide duplicate account statements to the Chief Compliance Officer or appointed designee. Upon request, the Chief Compliance Officer can provide a copy of a form request letter to direct duplicate account statements.

5. Form of Reports

A Quarterly Securities Transaction Report or a Personal Securities Holdings Report may consist of electronic data feeds, or broker statements or other statements that provide a list of all personal Covered Securities holdings and transactions in the time period covered by the report and contain the information required in a Quarterly Securities Transaction Report or a Personal Securities Holdings Report.

6. Responsibility to Report

It is the responsibility of each Access Person to comply with the requirements of this Section E. Any effort by the Fund(s) or by the Company and its affiliates, to facilitate the reporting process does not change or alter that responsibility. A person need not make a report hereunder with respect to transactions effected for, and Covered Securities held in, any account over which the person has no direct or indirect influence or control. All Quarterly Securities Transaction Reports and Personal Securities Holdings Reports must be filed with the Chief Compliance Officer through the Compliance Platform.

7. Disclaimers

Any report required by this Section E. may contain a statement that the report will not be construed as an admission that the person making the report has any direct or indirect Beneficial Ownership in the Covered Security to which the report relates.

F. Conflicts of Interest and Additional Prohibitions
1. Confidentiality of the BDC Funds’and the Horizon BDC’s Transactions
--- ---

Until disclosed in a public report to shareholders or contained in a public report made to the U.S. Securities and Exchange Commission (the “SEC”) in the normal course (i.e. Form 13F filing), all information concerning the securities “being considered for purchase or sale” by the Firm shall be kept confidential by all Access Persons and disclosed by them only on a “need to know” basis. The Firm will also follow the portfolio holdings disclosure policy for the BDC Funds and the Horizon BDC. It shall be the responsibility of the Chief Compliance Officer to report any inadequacy found in this regard to the directors of the BDC Funds and the Horizon BDC, respectively.

9

FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

2. Conflicts of Interest –General

Under Section 206 of the Advisers Act, the duty of the Company to refrain from fraudulent conduct includes an obligation to disclose material facts whenever the failure to do so would operate as a fraud on any current or prospective Client. The Company’s duty to disclose material facts is particularly pertinent whenever the Company is in a situation involving a conflict or potential conflict of interest with a current or prospective Client. The type of disclosure required by the Company in such a situation will depend upon all the facts and circumstances, but as a general matter, the Company must disclose all material facts regarding the potential conflict of interest so that current or prospective Clients can make informed decisions whether to enter into or continue an advisory relationship with the Company or whether to take some action to protect themselves against the specific conflict of interest involved.

From time to time, subject to the applicable company agreement (or analogous organizational document), management agreement, subscription agreement, side letters, and other governing documents of the Clients, the Company and its related entities can engage in a broad range of activities, including investment activities for their own account and for the account of the Funds, in addition to providing transaction-related, investment advisory, management, and other services to the Clients. In the ordinary course of conducting its activities, the interests of a Client will, from time to time conflict with the interests of the Company, other Clients, and their respective affiliates. The material conflicts of interest typically encountered by the Clients are included in the Company’s Form ADV. Certain Client agreements (such as limited partnership agreements) may provide advance waivers of additional conflicts of interest or may provide for waiver by advisory committees of unanticipated conflicts of interest not previously disclosed in Form ADV or in the Client agreements. In determining whether such language may be relied upon, Access Persons should consult the Conflicts Committee (as defined and described below).

In the case of all conflicts of interest, the Company’s determination as to which factors are relevant, and the resolution of such conflicts, will be made using the Company’s good faith and best judgment. In resolving conflicts, the Company will consider various factors, including the interests of the applicable Funds with respect to the immediate issue or with respect to their longer- term courses of dealing. When conflicts arise, the following factors generally mitigate conflicts of interest:

● A Fund will not make an investment unless the Company believes that such investment is an appropriate investment considered from the viewpoint of such Fund;
● Many important conflicts of interest will generally be resolved by set procedures, restrictions, or other provisions contained in the governing documents of the Funds;
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Monroe Capital Management Advisors, LLC

● The Company may consult with the advisory committee of a Fund as to certain potential conflicts of interest;
● Where the Company deems appropriate, unaffiliated third parties may be used to help resolve conflicts; and
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● Prior to subscribing for interests in a Fund, each investor receives information relating to significant potential conflicts of interest arising from the proposed activities of such Fund.
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More detailed procedures for resolving specific conflicts of interest are set forth in the governing documents of the applicable Fund and certain provisions of a Fund’s governing documents are designed to protect the interests of investors in situations where certain conflicts exist. The Fund governing documents, however, cannot and do not fully anticipate and address all situations, developments, scenarios, investment opportunities, investment considerations, and investment structures as the foregoing can vary on a case-by-case basis depending on a variety of facts and circumstances. In certain instances, some of such conflicts of interest may be resolved by the Company in a manner adverse to a Fund and its ability to achieve its investment objectives.

The Company shall establish a Conflicts Committee (the “Conflicts Committee”) tasked with reviewing and making all determinations with respect to potential conflicts of interest referred to the committee. In each instance of a suspected actual or potential conflict of interest, it is the obligation of the Access Persons to refer such conflicts of interest, including any of the circumstances set out below, to the Conflicts Committee. The Conflicts Committee will evaluate any potential transaction that has one or more of the following characteristics:

● Any investment by the Company or any of its affiliates and/or supervised persons in a Fund’s portfolio company;
● Any investment by a Client in a portfolio company in which the Company or any of its affiliates is an investor, with the exception of transactions between a Company-affiliated vehicle serving as a “warehouse” and a Client when such transaction has received consent either implicitly (i.e., via governing documents terms) or explicitly (i.e., via consent letter);
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● Any investment made by a Client in which other Clients are investors on a basis that is not pari passu with all other Clients, with the exception of non-pari passu transactions consented to by all Clients making such investments (i.e., via governing documents terms).
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The Conflicts Committee shall be chaired by one of its members, as designated by the voting members of committee from time to time. The voting members of the Conflicts Committee shall consist of the Chief Operating Officer, the General Counsel, the Vice Chairman & Chief Credit Officer, and the Chief Compliance Officer. Each of these members of the Conflicts Committee may designate an alternate to represent them if their personal attendance is impractical or recuse themselves from voting on any conflict if the remaining members of the Conflicts Committee determine that to be the appropriate course of action.

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Monroe Capital Management Advisors, LLC

3. Investment Conflicts

Access Persons who are planning to invest in or make a recommendation to invest in a security for any Client, and who have a material interest in the security, a related security or the transaction more generally, must first disclose such interest to the CCO. The CCO shall conduct an independent review of the recommendation to purchase or sell the security for Clients and written evidence of such review shall be maintained by the CCO. Access Persons shall not fail to timely recommend a suitable security to, or purchase or sell a suitable security for, a Client to avoid an actual or apparent conflict with a personal transaction in a security.

4. Prohibited Conduct with Clients

It is a violation of an Access Person’s duty of loyalty to the Company and its Clients for any Access Person, without the prior written consent of the CCO, to:

● rebate, directly or indirectly, to any person, firm, corporation or association, other than the Company, compensation of any nature as a bonus, commission, fee, gratuity, or other consideration in connection with any transaction on behalf of the Company or a Client account;
● accept, directly or indirectly, from any person, firm, corporation or association, other than the Company, compensation of any nature as a bonus, commission, fee, gratuity, or other consideration in connection with any transaction on behalf of the Company or a Client account;
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● own any stock or have, directly or indirectly, any financial interest in any other organization engaged in any securities, financial, or related business, except for a minority stock ownership or other financial interest in any business which is publicly owned; or
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● borrow money from any of the Company’s suppliers or Clients; provided, however, that (i) the receipt of credit on customary terms in connection with the purchase of goods or services is not considered to be a borrowing within the foregoing prohibition and (ii) the acceptance of loans from banks or other financial institutions on customary terms to finance proper and usual activities, such as home mortgage loans, is permitted except where prohibited by law.
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5. Outside Business Activities and Directorships
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Access Persons may not engage in any outside business activities that may give rise to conflicts of interest or jeopardize the integrity or reputation of the Company or the Fund(s). Similarly, no such outside business activities may be inconsistent with the interests of the Company or the Fund(s). All directorships of public or private companies held by Access Persons shall be pre-cleared with and reported to the Chief Compliance Officer.

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Monroe Capital Management Advisors, LLC

Any Access Person wishing to engage in business activities outside of the Company, regardless of the nature or type of business and regardless of the level of compensation, must pre-clear such outside business activity with the CCO through the Compliance Platform in advance of engaging in such outside business activity. Outside business activities are interpreted broadly and include by way of example and not limitation: (i) serving as a director, manager, member, trustee, general or managing partner or officer of, or as a consultant to, any outside business corporation, partnership, or organization, including family owned businesses and charitable, non-profit, and political organizations; (ii) activities involving a substantial time commitment; or (iii) employment, teaching assignments, lectures, public speaking, publication of articles, or radio or television appearances. The CCO may require full details concerning the proposed outside activity including the number of hours involved and the compensation to be received. In addition, in connection with any approval of an outside business activity, such approval may, at the discretion of the CCO, be subject to certain conditions deemed necessary or appropriate to protect the interests of the Company or any Client. The Company reserves the right to modify or withdraw approval at any time at its sole discretion if it determines that a previously approved relationship may result in an actual conflict of interest or the appearance of an actual or potential conflict of interest in the future.

Once an outside activity has been approved by the CCO, an Access Person may engage in such activity and nothing contained herein should be deemed to restrict or otherwise impair such Access Person’s ability to perform services related to such outside activity (other than any express restrictions placed on such activity as a condition to approval); provided, however, the Access Person remains subject to the policies and procedures set forth herein to the extent that any of Access Person’s approved outside activities (or any duties or services associated herewith) relate to the Company and/or its Clients and to the extent that any actual or potential conflicts of interest arise from such activity.

6. Gifts and Entertainment

The overriding principle concerning gifts and entertainment is: Access Persons should not accept inappropriate gifts, favors, entertainment, special accommodations, or other things of material value that could influence their decision-making or make them feel beholden, in any way, to a person or firm that seeks to do or is currently doing business with the Company.

Access Persons are generally prohibited from receiving any gift, gratuity, hospitality or other offering of more than de minimis value from any person or entity doing business with the Company or the Funds (de minimis is described as $250). Access Persons may accept gifts or entertainment (other than those prohibited by this Subsection 6) provided: (i) Access Persons must confirm through the Compliance Platform on a quarterly basis that they have not accepted individual gifts or entertainment valued over $250 and (ii) each gift or entertainment valued $250 or more is pre- cleared through the Compliance Platform prior to acceptance of such gift or entertainment.

Any Covered Person who intends to give, directly or indirectly, a gift or entertainment to any person or entity that does or seeks to do business with or on behalf of the Company or the Funds must (x) self-report through the Compliance Platform any such gift or entertainment valued under

$250 within ten (10) days of giving such gift or entertainment and (y) pre-clear through the Compliance Platform any such gift or entertainment valued $250 or more prior to giving such gift or entertainment.

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Monroe Capital Management Advisors, LLC

Any Access Person who offers a business courtesy^2^ must assure that it cannot reasonably be interpreted as an attempt to gain an unfair business advantage or otherwise reflect negatively upon the Company. Additionally, no Access Person should obtain any material personal benefits or favors because of his or her position with the Company. An Access Person may never use personal funds or resources to do something that cannot be done with Company resources. Furthermore, Access Persons are strictly prohibited from soliciting gifts, entertainment events, gratuities, or business courtesies for their own benefit or the benefit of any family member or friend.

General requirements applicable to gifts and entertainment:

● Receipt and giving of gifts in the form of cash or a cash equivalent (i.e., gift certificates or vouchers) is prohibited.
● Gifts or entertainment events should not be offered to municipal, state, or other governmental pension plans or their representatives, public officials^3^ or government representatives, or politicians or political parties, without the prior approval of the CCO or appointed designee.
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● The Company requires all Access Persons to exercise great care when interacting with municipal, state, or other governmental pension plans or their representatives, public officials, covered officials or government entities and demands that they act with the highest level of integrity. Accordingly, pre-approval must be obtained from the CCO or appointed designee via the Compliance Platform for the making of any gift and/or entertainment event, regardless of value, to a municipal, state, or other governmental pension plan or its representative, public official, covered official or government entity;
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● Access Persons may not request or solicit gifts or particular entertainment events; and
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● Items such as pens, coffee mugs or clothing items with a counterparty’s logo are generally excluded.
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Pursuant to this policy, the provision or receipt of gifts or entertainment involving the CCO shall be subject to the approval of the Chief Operating Officer.

^2^ A business courtesy may include, but is not limited to, a gift, hospitality, or favor for which fair market value is not paid by the recipient.

^3^ The term “public official” includes any officer or employee of any government or any government’s department, agency, or branch of any government-controlled enterprise, any political party, party official or candidate for political office, or an employee of a public international organization, and any person acting on behalf of one of these persons.

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Monroe Capital Management Advisors, LLC

7. SPAC-Related Conflict Procedures

The Company has caused, and in the future may cause, Clients to invest in special purpose acquisition companies (“SPACs”), which are companies formed for the purpose of effecting a merger, share exchange, asset acquisition, share repurchase, reorganization or similar business combination with one or more businesses. SPAC-related investments by Clients may include SPACs that are sponsored by certain employees, principals and affiliates of the Company and employees of the Company may act as officers or directors of, or provided other services to, SPACs. Investments in SPACs can create potential or actual conflicts of interest between Clients and the Company or its affiliates. The following procedures will apply to any potential or actual SPAC-related investment by Clients and will be overseen by the Conflicts Committee:

● The Company shall consult with the Limited Partner Advisory Committee (or any similar independent representation) (the “LPAC”) for each Client with respect to any potential SPAC-related investment.
● The Company shall fully and fairly disclose all conflicts or interest related to SPAC investments by Clients prior to making such investments. Such disclosure will be made to the LPAC for each such Client (or to the relevant limited partner if a Client is a fund-of- one).
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● Prior to causing any Client to make a SPAC-related investment, each participating Client’s LPAC (or similar independent Client representation) must waive any such conflict of interest or prescribe standards or procedures with respect to the SPAC-related investment with which the Company will comply.
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● After any SPAC investment is made, the Company has adopted the following procedures:
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o If the Company and its affiliates and/or supervised persons, on the one hand, and Clients, on the other hand, both own shares in a SPAC-related company, then the Company and its affiliates and/or supervised persons shall not sell their shares unless (1) such a sale takes place no sooner than 15 days after Clients have sold their shares and (2) the percentage of shares sold by the Company and its affiliates and/or supervised person does not exceed the percentage of shares sold by Clients.
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o Monroe portfolio managers for each Client, independent from the Company’s Chief Executive Officer, shall be responsible from determining the rationale and timing of any sale of shares by Clients. The Company’s Chief Executive Officer will be responsible for determining the rationale and timing of any sale of shares by the Company and its affiliates and/or supervised persons.
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o The Company’s portfolio managers will prepare an investment memorandum describing the rationale and timing for any proposed sale of SPAC-related shares. Such investment memorandum will be made available to the LPAC (or similar independent Client representation) of each Client.
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G. Pay-to-Play Restrictions
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1. Company Contributions
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Company funds or gifts may not be furnished, directly or indirectly, to a government official, government employee or politician for the purpose of obtaining or maintaining business on behalf of the Company. Such conduct is illegal and may violate federal and state criminal laws. Assistance or entertainment provided to any government office should never, in form or substance, compromise the Company’s arms-length business relationship with the government agency or official involved.

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Monroe Capital Management Advisors, LLC

2. Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act (the “FCPA”) prohibits the direct or indirect giving of, or a promise to give, “things of value” to corruptly obtain a business benefit from an officer, employee, or other “instrumentality” of a foreign government. Companies that are owned, even partly, by a foreign government may be considered an “instrumentality” of that government. In particular, government investments in foreign financial institutions may make the FCPA applicable to those institutions. Individuals acting in an official capacity on behalf of a foreign government or a foreign political party may also be “instrumentalities” of a foreign government.

The FCPA includes provisions that may permit the giving of gifts and entertainment under certain circumstances, including certain gifts and entertainment that are lawful under the written laws and regulations of the recipient’s country, as well as bona fide travel costs for certain legitimate business purposes. However, the availability of these exceptions is limited and is dependent on the relevant facts and circumstances. Civil and criminal penalties for violating the FCPA can be severe. The Company and its Access Persons must comply with the spirit and the letter of the FCPA at all times.

To ensure compliance with the FCPA, Access Persons are prohibited from directly or indirectly paying or giving, offering or promising to pay, give or authorize, or approving such offer or payment, of any funds, gifts, services or anything else of any value, no matter how small or seemingly insignificant, to any Foreign Covered Person(s) for any business or Company-related reasons. For purposes of this Code, a “Foreign Covered Person” is any foreign official including, without limitation, any officer or employee of any foreign government or any governmental department, agency or instrumentality (e.g., a central bank) or any government-owned or controlled enterprise (e.g., sovereign wealth fund) or any person acting in an official capacity for or on behalf of any such government, department, agency, instrumentality or enterprise. It also includes any foreign political party, party official or candidate for political office.

Access Persons must obtain written pre-clearance from the CCO or appointed designee prior to giving anything of value that might be subject to the FCPA by submitting a Foreign Person Gift and Entertainment Pre-Clearance Form via the Compliance Platform.

3. Political Contributions
i. Background
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SEC Rule 206(4)-5 prohibits “pay-to-play” practices by investment advisers that seek to provide investment advisory services to government entities (i.e., any state or political subdivision of a state, including: any agency, authority or instrumentality of the state, a pool of assets sponsored or established by the state, a plan or program of a government entity; and officers, agents, or employees of the state acting in their official capacity). The rule applies to government assets managed by the Company, whether in a separate account or a pooled investment vehicle. The rule also prohibits acts done indirectly, which, if done directly, would result in a violation of the rule.

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ii. Definitions

The term “contribution” means any gift, subscription, loan, advance, or deposit of money or anything of value made for: (i) the purpose of influencing any election for federal, state or local office; (ii) payment of debt incurred in connection with any such election; or (iii) transition or inaugural expenses of the successful candidate for state or local office.

The term “government entity” means any state or political subdivision of a state (i.e., local government), including: (i) any agency or authority, or instrumentality of the state or political subdivision; (ii) a pool of assets sponsored or established by the state or political subdivision or any agency, authority or instrumentality thereof, including, but not limited to a “defined benefit plan” or state general fund, (iii) a plan or program of a government entity, and (iv) officers, agents or employees of the state or political subdivision or any agency, authority or instrumentality thereof, acting in their official capacity.

The term “covered official” means any person (including such person’s election committee) who was, at the time of the contribution, an incumbent, candidate, or successful candidate for elective office of a government entity, if the office: (i) is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity; or (ii) has authority to appoint any person who is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity. In some circumstances, a contribution to a local political party or a political action committee may be deemed to be a contribution to an individual covered official or officials. Note, this definition applies to any incumbent covered official who is a candidate for an elective office of the federal government, and vice versa.

iii. Compliance Procedures

The following procedures will apply to political contributions by the Company and its Access Persons:

● all contemplated contributions to a covered official (including federal, state, local political candidates or political action committees) by any Access Person will require pre-clearance from the CCO or appointed designee by submitting a Pay-To-Play Acknowledgement and Pre-Clearance Form via the Compliance Platform;
● coordination of, or solicitation by, the Company of political contributions to a covered official, or payment to a political party of a state or locality, will not be permitted;
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● applicants for employment (or if not addressed during the application process, newly hired Access Persons) are required to disclose any political contributions made in the past two (2) years to determine if the look back provisions will apply by completing and submitting a New Access Person Political Contribution Declaration Form via the Compliance Platform; and
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● any new relationships with third-party solicitors will require pre-approval from the CCO or appointed designee.
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In addition, the CCO may require periodic certifications from Access Persons that they have not made any political contributions in violation of the Company’s policy.

Furthermore, the CCO or designee must on a routine basis, but in no case less than once in a calendar quarter, conduct searches through public databases for any undisclosed political contributions made by Access Persons.

H. Lobbying Activities
1. General
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States have enacted legislation that requires individuals and entities who communicate with public pension officials, their staffs, and certain other government officials on behalf of an investment manager to register as “lobbyists.” In some instances, this requirement applies to Access Persons (and their family members) as well as outside third parties engaged by the Company.

Registration as a lobbyist would require the Company and the affected Access Persons to complete lobbyist registration forms, submit periodic disclosures to the government, and become subject to other regulations, including limitations on contingent compensation. Violations of these laws expose the Company and the affected Access Person to potential civil, administrative, and criminal fines and penalties, and may result in disciplinary action against the Access Person up to and including termination of employment. Thus, it is imperative that the Company be informed of its Access Persons and their family members’ past and present communications to and with elected officials and public pension systems.

2. Definitions

“Communication” is generally defined broadly in these lobbying statutes (and regulations), and may include activities such as the following:

● speaking in person or by telephone;
● corresponding by letter, email, or other means;
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● responding to questions/inquiries from a government official;
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● testifying or appearing before a governmental agency, commission, authority, or other entity in connection with an investment placement, contract, bid, or other economic transaction with a governmental agency and/or public pension fund;
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● communicating in order to retain or expand business with an existing governmental agency and/or public pension fund client;
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● any other attempt to influence the decision-making of a government official in connection with a placement, investment, or legislative action beneficial to the Company; or
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● conducting any of these activities through an agent or other third party.
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“Government officials”, depending on the state, municipality or agency, may include not only elected officials but also candidates for political office, staff members of elected officials or candidates, managers, employees, staff or personnel and those with the authority to directly or indirectly hire an investment adviser, influence the hiring decision, or appoint other officials who can hire the adviser or influence such decision.

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3. Compliance Requirements and Procedures

Any Access Person who wishes to engage in communication with a government official must seek, in writing, pre-authorization from the CCO. Such communication may proceed only upon written confirmation from the CCO.

If a determination is made that an Access Person must be registered as a lobbyist in a particular jurisdiction, that Access Person may thereafter engage in communications with government officials so long as the Access Person is a registered lobbyist in good standing in that jurisdiction. The Access Person must also comply with all government regulations and additional Company requirements that apply to a registered lobbyist. Information regarding such regulations and requirements will be provided by the CCO to the affected Access Person as needed.

Any Access Person who has engaged in communication with a government official on behalf of the Company that was not pre-authorized in writing pursuant to this policy must immediately contact the CCO and is subject to sanctions under this Code. Access Persons should consider if activities of a family member that would be considered lobbying activities under this Code raise conflicts of interest for the Company. Any potential conflicts of interest arising from the potential lobbying activities of family members should be reported to the CCO.

I. Prohibition Against Insider Trading
1. Background
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This Section I. is intended to satisfy the requirements of Section 204A of the Advisers Act, which is applicable to the Company and requires that the Company establish and enforce procedures designed to prevent the misuse of material, non-public information by its associated persons. This Section I. applies to all Access Persons. Trading securities while in possession of material, non- public information, or improperly communicating that information to others, may expose an Access Person to severe penalties. Criminal sanctions may include a fine of up to $1,000,000 and/or ten years imprisonment. The SEC can recover the profits gained or losses avoided through improper trading, impose a penalty of up to three times the illicit windfall, and permanently bar an Access Person from the securities industry. In addition, an Access Person may be sued by investors seeking to recover damages for insider trading violations. Finally, insider trading laws provide for penalties for “controlling persons” of individuals who commit insider trading. Accordingly, under certain circumstances, a supervisor of an Access Person who is found liable for insider trading may also be subject to penalties.

No Access Person may trade a security, either personally or on behalf of any other person or account (including any Fund), while in possession of material, non-public information concerning that security or the issuer thereof, nor may any Access Person communicate material, non-public information to others in violation of the law.

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Information is “material” where there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions. Generally, this includes any information the disclosure of which will have a substantial effect on the price of a security. No simple test exists to determine when information is material; assessments of materiality involve a highly fact-specific inquiry. For this reason, an Access Person should direct any questions about whether information is material to the Chief Compliance Officer. Material information often relates to a company’s results and operations, including, for example, dividend changes, earnings results, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidation problems, and extraordinary management developments. Material information may also relate to the market for a company’s securities. Information about a significant order to purchase or sell securities may, in some contexts, be material. Pre-publication information regarding reports in the financial press may also be material.

Information is “public” when it has been disseminated broadly to investors in the marketplace. For example, information is public after it has become available to the general public through a public filing with the SEC or some other government agency, the Dow Jones “tape” or The Wall Street Journal or some other publication of general circulation, and after sufficient time has passed so that the information has been disseminated widely.

2. Specific Sources of Material, Non-Public Information

Below is a list of potential sources of material, non-public information that Access Persons of the Company may periodically access. If an Access Person accesses or utilizes any of these sources of information, whether in connection with their employment duties or otherwise, they should be particularly sensitive to the possibility of receiving material, non-public information about a publicly-traded company and immediately notify the CCO if they feel that they have received material, non-public information. This list is provided for general guidance and is not a fully inclusive list of all possible sources of material, non-public information.

i. Contacts with Public Companies

Contacts with public companies will sometimes be a part of the Company’s research efforts. Persons providing investment advisory services to the Funds may make investment decisions on the basis of conclusions formed through such contacts and analysis of publicly available information. Difficult legal issues arise, however, when, in the course of these contacts, an Access Person becomes aware of material, non-public information. This could happen, for example, if a company’s chief financial officer prematurely discloses quarterly results to an analyst, or an investor relations representative makes selective disclosure of adverse news to a handful of investors. In such situations, the Company must make a judgment as to its further conduct. To protect themselves, Clients and the Company, Access Persons should contact the Chief Compliance Officer immediately if they believe that they may have received material, non-public information.

ii. Contacts with Research Consultants

Access Persons may wish to engage the services of third-party research firms (a “Consulting **** Service”), to assist in their research efforts. Generally, such Consulting Services provide access to experts (each a “Consultant”) across a variety of industries and disciplines. Access Persons must be especially alert to the potential for access to material non-public or confidential information during such contacts.

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Any engagement of a new Consulting Service or Consultant must be pre-approved by the CCO or appointed designee via the Compliance Platform. The CCO or appointed designee will maintain a list of all Company contacts with Consultants.

The following guidelines apply to all Access Person contacts with Consulting Services and Consultants:

● Prior to any conversation with a Consultant, an Access Person must remind or inform such Consultant that neither the Company nor such Access Person wish to receive any material, non-public information or confidential information that the Consultant is under a duty, legal or otherwise, not to disclose;
● The Consultant must acknowledge that he or she is unaware of any conflict with any law, regulation or duty owed to any person or entity that may arise by providing the Company or its Access Persons with his or her services, or inform the Access Person or the Company otherwise;
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● If a Consultant inadvertently discloses material, non-public information regarding any company, the Access Person must contact the CCO immediately, who will determine if the company must be added to the Restricted List;
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● The CCO may chaperone calls with Consultants;
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● Access Persons may not discuss any company (public or private) with which a Consultant is affiliated, including but not limited to a director, trustee, officer, employee or any other known affiliation;
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● Access Persons are reminded of their non-disclosure obligations regarding Company information.
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iii. Tender Offers
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Tender offers represent a particular concern in the law of insider trading for two reasons. First, tender offer activity often produces extraordinary volatility in the price of the target company’s securities. Trading during this time period is more likely to attract regulatory attention (and produces a disproportionate percentage of insider trading cases). Second, the SEC has adopted a rule that expressly forbids trading and “tipping” while in possession of material, non-public information regarding a tender offer received from the tender offeror, the target company, or anyone acting on behalf of either. In light of these rules, it is the Company’s general policy, which is applicable to all Access Persons that any Access Person in possession of material, non-public information regarding a tender offer is prohibited from trading the tender offer issuer or the target issuer in any Client or personal account and is prohibited from “tipping” others about such information. Any Access Persons in possession of material, non-public information regarding a tender offer must report it immediately to the CCO.

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iv. Debt Securities

The Company may wish to invest in certain debt securities of a public issuer. Investors in debt securities may often be privy to material non-public information provided to lenders and investors. Should an Access Person decide they need to access private information of a public issuer to debt securities, they should notify the CCO immediately. Access Persons are prohibited from accessing non-public information of a public issuer to debt securities on any debt tracking systems (i.e., Intralinks, SyndTrak Online, or any other data room or data site) without the approval of the CCO. Even if they decide to not access such information, they should exercise caution as there is a heightened risk of inadvertent exposure to private information when investing in debt securities. Any Access Person in possession of material, non-public information regarding debt securities must report it immediately to the CCO.

Notwithstanding the fact that certain investment instruments being considered for purchase by the Company may not be deemed securities, there may be instances where Access Persons receive information that is not generally known by other institutional investors – even those institutional investors who may be similarly situated (e.g., lenders that are privy to non-public information and have access to bank-level information or primary lender meetings). In situations where the Company has access to material, non-public information to which other potential investors/counterparties may not have access, Access Persons should consult with the Company’s General Counsel or the CCO, as appropriate, as to whether any proposed purchase or sale of an instrument should be made, and, if made, should include the use of a “Big Boy” letter, or, if the instrument is a loan, should be made by means of a form such as the standard LSTA form which includes disclosure concerning the possibility of asymmetry in access to such information. In such cases the General Counsel or the CCO, in consultation with the Senior Management Team, shall make that determination and prepare an appropriate disclosure letter. A log of transactions in which “Big Boy” letters or provisions are used and copies of any executed “Big Boy” letters shall be maintained by the CCO or appointed designee.

v. Directorships and Creditors’Committee Memberships

Access Persons may not serve on the board of any company whose securities are publicly traded or of any company in which the Company or any Client account owns securities without the prior approval of the CCO. Additionally, an Access Person may not be a member of the board of directors, creditor’s committee or similar committee, group or informal organization of credit holders, or have similar status with a public issuer without the prior approval of the CCO.

When joining the board of directors, becoming a board observer or being appointed to a creditors’ committee or other similar position that is likely to result in the receipt of information not available to other market participants with respect to an issuer which is or may become a portfolio company, Access Persons assume certain duties limiting the use of confidential information they may receive. Access Persons are required to give notice to the CCO and to Senior Management Team prior to entering into these relationships and to cooperate with the CCO and the appointed designees in order to maintain the outside business activities log and abide by the corresponding policy and procedures. Any issuers (e.g., portfolio companies) for which the Company has a board seat or board observer rights should be reported to the CCO and the CCO will maintain a log of such board seats and observer rights.

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Monroe Capital Management Advisors, LLC

All outside activities conducted by an Access Person must be approved prior to participation by the CCO by completing Outside Business Activities Questionnaire via the Compliance Platform. Please see Section F.5. of this Code for additional information regarding outside activities of Access Persons.

The Company may not effect transactions in the securities of any issuer in which Access Persons are serving on the board of directors, creditors’ or steering committee, or engaged in any capacity set forth above, without the prior approval of the CCO. Please note the following:

● Clients may be “frozen” into certain positions. For example, if an Access Person is appointed to an issuer’s board of directors (or gains board observation rights) subsequent to an investment made by a Client, that Client may not sell securities in that issuer without prior CCO approval.
● Subject to the possibility of being “frozen” into positions for an indefinite time as described immediately above, Clients may participate on an “allocation” basis in buy/long trades with other Clients which have received permission from the CCO to invest in such an issuer. They may not, however, sell without prior CCO approval.
--- ---
● These restrictions apply to secondary market trading in the securities of issuers on the outside business activities log. They do not generally apply to the sale of securities held in a portfolio company when such sales are part of a sale of securities of the company pursuant to an offering memorandum, or to a purchase, redemption, sale, or transfer directly to or from the issuer. The CCO should be consulted in cases in which there is uncertainty as to whether this restriction applies to a given transaction.
--- ---
vi. Confidentiality Agreements
--- ---

In order to gain important information as part of the investment consideration process, the Company frequently enters into confidentiality agreements with third parties (e.g., prospective portfolio companies, financial advisers, bank syndicate members or other primary or secondary lenders). Such confidentiality agreements sometimes specifically restrict the Company’s investment activity in identified issuers (i.e., contractually prohibit trading in any security of the issuer and certain affiliates), but usually simply raise the possibility that material, non-public information may be conveyed to the Company. Additionally, many issuers, their agents, or other counterparties specifically require that potential investors agree to be bound by a confidentiality agreement before they will be provided access to investment-related information via electronic workspaces (e.g., Intralinks and SyndTrak). Access Persons should be particularly sensitive to information they receive pursuant to a confidentiality agreement as such information is likely to be material, non-public information. Access Persons should also be knowledgeable regarding any restrictions or representations with respect to such information contained in a confidentiality agreement so as to avoid a breach thereunder. If an Access Person is uncertain as to their rights and obligations under a confidentiality agreement, they should contact the CCO.

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FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

Upon execution of any confidentiality agreement, the signed agreement must be provided promptly, either directly or through an online portal, to the CCO or appointed designee who will retain all confidentiality agreements for access and monitoring.

After execution of a confidentiality agreement, the issuer will be added to the Company’s confidentiality agreement log and the Restricted List (defined below), in each case as the CCO or appointed designee may deem to be appropriate. Note that in the case of issuers who have no publicly traded securities (or other readily tradable instruments that could be traded without the prior knowledge of the CCO), or who have bank debt which trades under the standard LSTA (or similar) documentation, the CCO or appointed designee may determine not to add the name to the Restricted List.

Entry into a confidentiality agreement can (and Access Persons must assume that it will) cause information received by any Access Person that is protected by that confidentiality agreement to constitute material, non-public information which in turn is subject to this Code (and the federal securities laws).

All trades in instruments of issuers that are subject to confidentiality agreements must be discussed beforehand with the CCO, except for trades of bank debt when the relevant confidentiality agreement pertains to information made available to other lenders in the same class or when the trade is to be effected using standard LSTA (or similar) documentation.

vii. Electronic Workspace Access

Electronic workspaces such as Intralinks and SyndTrak require users to make “Public” or “Private” declarations in most issuer workspaces. Access Persons that make a “Private” declaration in an Intralinks workspace for a particular issuer that is a public company (known as “Going Private”) may be permitted to view material, non-public information and, in addition, typically may subject the Company or a Fund to certain confidentiality obligations similar in effect to the written confidentiality agreements described above. As in the case of written confidentiality agreements, Access Persons must notify the CCO or appointed designee whenever a declaration of “Private” is selected for a public company so the CCO or appointed designee can check for conflicts and avoid the possibility of inadvertently subjecting any advisory Client to a trading restriction or other obligation before steps can be taken to mitigate such restrictions by, for example, the implementation of a “Firewall”, or amending the agreement.

When Intralinks does not give the user the ability to make a “Public” or “Private” declaration, Access Persons are responsible for determining, in consultation with the CCO or appointed designee, whether the information in the workspace constitutes material, non-public information and whether the issuer should be placed on the Company’s Restricted List.

As the CCO or appointed designee deems appropriate, the issuer will be added to the Company’s confidentiality agreement log and Restricted List.

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FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

viii. Big Boy Letters

In situations where the Company may have access to certain investment-related information to which potential counterparties may not have access, consideration should be given as to whether the use of a “Big Boy” letter is advisable as part of any contemplated trade. The General Counsel shall make that determination and draft the appropriate disclosures for use in the proposed transaction documents. A log of transactions in which “Big Boy” letters or provisions are used and copy of any executed “Big Boy” letters that the Company enters into shall be maintained by the CCO or appointed designee.

Access Persons do not have the authority to sign Big Boy Letters until the General Counsel, in consultation with the CCO, as appropriate, has reviewed the specific circumstances surrounding the proposed transaction. In cases of actual or apparent asymmetrical access to information, the General Counsel, in consultation with outside legal counsel as appropriate, will determine what terms are appropriate based on the particular facts and circumstances. Access Persons with a title of Managing Director may sign “Big Boy” letters only with the prior approval of the General Counsel or appointed designee.

Current drafts of approved forms of “Big Boy” letters are available upon request from the General Counsel.

ix. “PIPE”Transactions

Private investments in public companies (“PIPEs”) involve the issuance of unregistered securities in publicly traded companies. Before PIPE investors can publicly trade the unregistered securities, the issuer must file, and the SEC must declare effective, a resale registration statement. To compensate investors for this temporary illiquidity, PIPE issuers customarily offer the securities at a discount to market price. Advance news of a PIPE offering may be material, non-public information since the announcement typically precipitates a decline in the price of a PIPE issuer’s securities due to the dilutive effect of the offering and the PIPE shares being issued at a discount to the then prevailing market price of the issuer’s stock. Access Persons should notify the CCO immediately and exercise particular caution any time they become aware of material, non-public information relating to a PIPE offering.

x. Strategic Partnerships

The Company, through one of its affiliates, has entered into and may in the future enter into strategic partnerships with third-party asset managers (together with their funds or other affiliates, “Strategic Partners”). As a result of these strategic partnerships, both the Company and the Strategic Partners as well as their respective affiliates may potentially be exposed to material, non- public information. Accordingly, the Company and the Strategic Partners will implement certain information barriers in the form of compliance policies and procedures, as further discussed in this Section I., to prevent sharing of material, non-public information among the Company, the Strategic Partners, and their respective affiliates.

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3. Compliance Procedures

An Access Person, before executing any trade for himself or herself, or others, including the Funds or other accounts managed by the Company or by a stockholder of the Company, or any affiliate of the stockholder, must determine whether he or she has material, non-public information.

Access Persons should ask themselves the following questions:

● Is the information material?
● Is this information that an investor would consider important in making his or her investment decisions?
--- ---
● Is this information that would substantially affect the market price of the securities if disclosed?
--- ---
● Is the information non-public?
--- ---
● To whom has this information been provided?
--- ---
● Has the information been effectively communicated to the marketplace by appearing in publications of general circulation?
--- ---
● Is the information already available to a significant number of other traders in the market?
--- ---

Any Access Person who believes he or she is in possession of material, non-public information or who has any questions as to whether the information is material and non-public must take the following steps:

● Report the information and proposed trade immediately to the Chief Compliance Officer.
● Do not purchase or sell the securities on behalf of anyone, including Client accounts.
--- ---
● Do not communicate the information to any person, other than to the Chief Compliance Officer.
--- ---

After the CCO has reviewed the issue, the CCO will determine whether the information is material and non-public and, if so, what action the Access Person should take, including completion of a Restricted List Addition Form through the Compliance Platform. An Access Person must consult with the Chief Compliance Officer before taking any further action. This degree of caution will protect the Access Person and the Company.

4. Restricted and Watch Lists

Receipt by the Company or an Access Person of material, non-public information, as well as certain transactions in which the Company may engage, may require, for either business or legal reasons, that Client accounts or personal accounts of Access Persons do not trade in the subject securities for specified time periods. Any such security will be designated as “restricted.” The CCO or duly appointed designee will determine which securities are restricted, will maintain a list (the “Restricted List”) of such securities, and will deny permission to effect transactions in Client or Access Person accounts in securities on the Restricted List. The CCO will periodically disseminate the Restricted List to all Access Persons as it is updated. No Access Person may engage in any trading activity, whether for a Client account or a personal account, with respect to a security while it is on the Restricted List. Restrictions regarding designated securities are also considered to extend to options, rights, or warrants relating to those securities and any securities convertible into those securities. No conclusion should be drawn from the addition of an issuer to the Restricted List.

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FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

At times, an Access Person may have possession of material, non-public information on a specific company as a result of his or her being behind a firewall. In such cases, the CCO or appointed designee will create a specialized Restricted List for the Access Person behind the wall in order to prevent trading in the company’s securities until such time as the CCO has deemed the information in the Access Person’s possession to be in the public domain or no longer material.

If a security is added to either the Company’s firm-wide Restricted List or an individual or group Access Person Restricted List, Access Persons will be restricted from purchasing or selling all securities related to that issuer until such time as the security is removed from the applicable Restricted List. The Compliance Platform has the information necessary to deny pre-clearance if these situations apply.

The CCO will be responsible for determining whether to remove a particular company from the Restricted List. The Access Person requesting the removal of an issuer from the Restricted List shall complete a Restricted List Deletion Form via the Compliance Platform.

In addition, with respect to strategic partnerships between the Company and any Strategic Partners, the Company and its affiliates are prohibited from making loans to, or other investments in, any company in which the Strategic Partners are invested in (or intend to invest in). To that end, each Strategic Partner will provide the Company’s CCO with a “restricted list” of companies (each, a “Watch List”) that each Strategic Partner is currently invested in or is considering investing in on behalf of themselves or their funds. Each Watch List will be updated each time specific names are added or removed. The CCO will be responsible for maintaining, updating, and disseminating each Watch List to the Company’s legal and compliance personnel who will be the only Access Persons with access to the Watch List. To implement this policy, Monroe’s CCO may confer with each Strategic Partner’s Chief Compliance Officer (or other senior personnel responsible for compliance for each Strategic Partner).

The Restricted List and the Watch List are confidential, proprietary information which must not be distributed outside of the Company.

5. Confidentiality of Material and Non-Public Information
i. Communications and Information Handling
--- ---

Information in Access Persons’ possession that they identify as material and non-public may not be communicated to anyone, including any person within the Company other than the CCO and those persons who “need to know” such information in order to perform their job responsibilities at the Company.

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FOIA Confidential Treatment Requested by

Monroe Capital Management Advisors, LLC

Care should be taken so that material, non-public information is secure. For example, files containing material, non-public information should be sealed or locked and access to computer files containing material, nonpublic information should be restricted. As a general matter, materials containing such information should not be removed from the Company’s premises without approval of the CCO and, if they are, appropriate measures should be maintained to protect the materials from loss or disclosure. Among other things, Access Persons should:

● distribute materials containing material, non-public information only on a “need-to-know” basis;
● take care so that telephone conversations cannot be overhead when discussing matters involving material, non-public information (e.g., speaker telephones should generally be used in a way so those outsiders who might be in the Company’s offices are not inadvertently exposed to this information);
--- ---
● limit access to offices and conference rooms when these rooms contain materials that contain material, non-public information; and
--- ---
● take care not to leave materials containing material, non-public information displayed on the computer viewing screen when they leave their computers unattended.
--- ---

Access Persons should take all appropriate actions to safeguard any material, non-public information in their possession. Care should be taken that such information is secure at all times. For example, Access Persons should not leave documents or papers containing material, non- public information on their desks or otherwise for people to see; access to files containing material, non-public information and computer files containing such information should be restricted; and conversations containing such information, if appropriate at all, should be conducted in private.

An Access Person may not make unauthorized copies of material, non-public information. Additionally, Access Persons must ensure the disposal of any material, non-public information in their possession is authorized (for example, material, non-public information obtained pursuant to a confidentiality agreement may be required to be returned in certain circumstances). Upon termination of their employment with the Company, Access Persons must permanently delete any material, non-public information (and all copies thereof in any media) in their possession or under their control.

ii. Information Wall with Strategic Partners

All Access Persons of the Company are (1) strictly prohibited from providing any Strategic Partner with any information relating to borrowers and/or potential borrowers of the Company and its affiliates and (2) required to keep all of the Company’s and its affiliates’ portfolio company data (including without limitation, decisions to lend, to not lend, waiver of events of default and/or to enforce loan terms) confidential and to not disclose such information to any Strategic Partner, in each case, unless otherwise permitted in writing by the CCO. In order to implement this policy, the CCO may confer with each Strategic Partner’s Chief Compliance Officer (or other senior personnel responsible for compliance for each Strategic Partner).

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J. Annual Certification
1. Access Persons
--- ---

All Access Persons shall be required to certify annually that they have read this Code and that they understand it and recognize that they are subject to it. Further, such Access Persons shall be required to certify annually that they have complied with the requirements of this Code.

2. Board Review

No less frequently than annually, the BDC Funds and the Company must furnish to the BDC Funds’ board of directors, and the respective board must consider, a written report that: (1) describes any issues arising under this Code or procedures since the last report to the board, including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to material violations; and (2) certifies that the BDC Fund or the Company, as applicable, has adopted procedures reasonably necessary to prevent Access Persons from violating the Code. Similarly, no less frequently than annually, the Horizon BDC and the Company must furnish to the Horizon BDC’s board of directors, and the respective board must consider, a written report that: (1) describes any issues arising under this Code or procedures since the last report to the board, including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to material violations; and (2) certifies that the Horizon BDC or the Company, as applicable, has adopted procedures reasonably necessary to prevent Access Persons from violating the Code

K. Sanctions

Any violation of this Code shall be subject to the imposition of such sanctions by the 17j-1 Organization as may be deemed appropriate under the circumstances to achieve the purposes of Rule 17j-1 and this Code. The sanctions to be imposed shall be determined by the board of directors, including a majority of the Independent Directors; provided, however, that with respect to violations by persons who are directors, managers, officers or employees of the Company (or of a company that controls the Company), the sanctions to be imposed shall be determined by the Company (or the controlling person thereof). Sanctions may include, but are not limited to, suspension or termination of employment, a letter of censure and/or restitution of an amount equal to the difference between the price paid or received by the Funds and the more advantageous price paid or received by the offending person.

L. Administration and Construction

The administration of this Code shall be the responsibility of the Chief Compliance Officer. The duties of the Chief Compliance Officer are as follows:

● Continuous maintenance of a current list of the names of all Access Persons with an appropriate description of their title or employment, including a notation of any directorships held by Access Persons who are officers or employees of the Company or of

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FOIA Confidential Treatment Requested by

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any company that controls the Company, and informing all Access Persons of their reporting obligations hereunder;

● On an annual basis, providing all Access Persons a copy of this Code and informing such persons of their duties and obligations hereunder including any supplemental training that may be required from time to time;
● Maintaining or supervising the maintenance of all records and reports required by this Code;
--- ---
● Reviewing all Personal Securities Holdings Reports and Quarterly Securities Transaction Reports;
--- ---
● Preparing listings of all transactions effected by Access Persons who are subject to the requirement to file Quarterly Securities Transaction Reports and reviewing such transactions against a listing of all transactions effected by the Funds;
--- ---
● Issuance, either personally or with the assistance of counsel as may be appropriate, of any interpretation of this Code that may appear consistent with the objectives of Rule 17j-1 and this Code;
--- ---
● Conduct such inspections or investigations as shall reasonably be required to detect and report, with recommendations, any apparent violations of this Code to the board of directors of the BDC Funds or the Horizon BDC, as applicable; and
--- ---
● Submission of a written report to the board of directors of the BDC Funds and the Horizon BDC no less frequently than annually, that describes any issues arising under the Code since the last such report, including but not limited to the information described in this Section J.
--- ---

The Chief Compliance Officer shall maintain and cause to be maintained in an easily accessible place at the principal place of business of the 17j-1 Organization, the following records and must make these records available to the SEC at any time and from time to time for periodic, special, or other examinations:

● A copy of all codes of ethics adopted by the BDC Funds, the Horizon BDC or the Company and its affiliates, as the case may be, pursuant to Rule 17j-1 that have been in effect at any time during the past five years;
● A record of each violation of such codes of ethics and of any action taken as a result of such violation for at least five years after the end of the fiscal year in which the violation occurs;
--- ---
● A copy of each report made by an Access Person for at least two years after the end of the fiscal year in which the report is made, and for an additional three years in a place that need not be easily accessible;
--- ---
● A copy of each report made by the Chief Compliance Officer to the board of directors of the BDC Funds and the Horizon BDC for two years from the end of the fiscal year of the BDC Funds in which such report is made or issued and for an additional three years in a place that need not be easily accessible;
--- ---

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● A list of all persons who are, or within the past five years have been, required to make reports pursuant to Rule 17j-1 and this Code of Ethics, or who are or were responsible for reviewing such reports;
● A copy of each report required by this Section J. for at least two years after the end of the fiscal year in which it is made, and for an additional three years in a place that need not be easily accessible; and
--- ---
● A record of any decision, and the reasons supporting the decision, to approve the purchase by an Access Person of securities in an Initial Public Offering or Limited Offering for at least five years after the end of the fiscal year in which the approval is granted.
--- ---

This Code may not be amended or modified except in a written form that is specifically approved by majority vote of the Independent Directors.

This Joint Code of Ethics, originally adopted in its amended form on [●], is annually reviewed and approved by the Board of Directors of each BDC Fund and the Horizon BDC, including a majority, respectively, of the Independent Directors of the BDC Funds and the Horizon BDC, respectively.

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FOIA Confidential Treatment Requested

by Monroe Capital Management Advisors, LLC

ex_809581.htm

EXHIBIT 31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT

RULES 13a-14 AND 15d-14, AS ADOPTED PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Michael P. Balkin, as Chief Executive Officer of Horizon Technology Finance Corporation, certify that:

  1. I have reviewed this Quarterly Report on Form 10-Q of Horizon Technology Finance Corporation;

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

  1. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2025

By: /s/ Michael P. Balkin
Chief Executive Officer

ex_809582.htm

EXHIBIT 31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT

RULES 13a-14 AND 15d-14, AS ADOPTED PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Daniel R. Trolio, as Chief Financial Officer of Horizon Technology Finance Corporation, certify that:

  1. I have reviewed this Quarterly Report on Form 10-Q of Horizon Technology Finance Corporation;

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

  1. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2025

By: /s/ Daniel R. Trolio
Daniel R. Trolio
Chief Financial Officer

ex_809583.htm

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

In connection with the Quarterly Report on Form 10-Q of Horizon Technology Finance Corporation (the “Company”) for the quarterly period ended June 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael P. Balkin, as Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002, as amended, that to my knowledge:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael P. Balkin
Name: Michael P. Balkin
Title: Chief Executive Officer
Date: August 7, 2025

ex_809584.htm

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

In connection with the Quarterly Report on Form 10-Q of Horizon Technology Finance Corporation (the “Company”) for the quarterly period ended June 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel R. Trolio, as Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002, as amended, that to my knowledge:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Daniel R. Trolio
Name: Daniel R. Trolio
Title: Chief Financial Officer
Date: August 7, 2025

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