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Operator: Greetings, and welcome to the Horizon Technology Finance First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Megan Bacon, Director of Investor Relations and Marketing. Please go ahead.

Megan Bacon: Thank you, and welcome to Horizon Technology Finance Corporation’s First Quarter 2026 Conference Call. Representing the company today are Mike Balkin, Chief Executive Officer; Paul Seitz, Chief Investment Officer; and Dan Trolio, Chief Financial Officer. I would like to point out that the Q1 earnings press release and Form 10-Q are available on the company’s website at horizontechfinance.com. Before we begin our formal remarks, I need to remind everyone that during this conference call, the company will make certain forward-looking statements, including statements with regard to the future performance of the company. Words such as believes, expects, anticipates, intends or similar expressions are used to identify forward-looking statements.

These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements, and some of these factors are detailed in the risk factor discussion in the company’s filings with the Securities and Exchange Commission, including the company’s Form 10-K for the year ended December 31, 2025. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. At this time, I would like to turn the call over to Horizon’s CEO, Mike Balkin.

Michael Balkin: Thank you, Megan, and welcome, everyone, and thank you for your interest in Horizon. Today, we will update you on our quarterly performance and the current operating environment. Paul Seitz, our Chief Investment Officer, will take us through recent business and portfolio developments as well as the current status of the venture lending market; and Dan Trolio, our Chief Financial Officer, will detail our operating performance and financial condition. We will then take questions. It has certainly been a very newsworthy and exciting couple of months for Horizon. In March, we were pleased to form RoHo, a new joint venture with Roth Capital, which will provide growth financing solutions to small and microcap public companies.

Then in April, we successfully completed our merger with Monroe Capital Corp. or MRCC, officially embarking on an exciting growth path for the combined new Horizon. The merger provided us with significant increase in Horizon’s equity capital available for investment in earning assets. This larger capital base affords us greater economies of scale to compete for larger cutting-edge early and later-stage venture capital deals backed by some of the leading venture capital and private equity funds. We are also increasing our lending to small-cap public companies as evidenced by some of our latest announced transactions. Aided by the full support and backing of Monroe, we are taking the Horizon platform to the next level and are well positioned to succeed over the longer term.

Turning to our specific results for the quarter. We grew our portfolio for the second consecutive quarter, funding 5 investments totaling $120 million and bringing our total portfolio size to almost $700 million. We generated net investment income of $0.19 per share, exceeding our distributions, while our NAV per share ended the quarter at $6.98. Based on our outlook and our undistributed spillover income, our Board declared regular monthly distributions of $0.06 per share payable in July, August and September of 2026. Consistent with our announcement prior to the closing of the merger, our Board also declared special monthly distributions of $0.03 per share payable in July, August and September 2026. As we prudently work to deploy the incremental capital from the merger and move to our target leverage, it remains our goal to deliver NII at or above our declared distributions over time.

We achieved a portfolio yield on debt investments of over 15% for the first quarter, once again at or near the top of the BDC industry. We finished the quarter with a committed and approved backlog of $180 million. And finally, we continue to close attractive venture debt and small-cap public company investments, while our pipeline of loan opportunities continue to grow. Moving forward, we believe we are stronger than we have been in years and are excited for the long-term growth path we see ahead. To that end, given the dislocation between our stock price and the current net asset value, we intend to utilize our $10 million stock repurchase program in the near term. Again, we appreciate your continued interest and support in the Horizon Technology Finance platform.

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

Paul Seitz: Thanks, Mike, and good morning to everyone. I want to echo Mike’s remarks about our excitement at closing the merger with MRCC. With the additional capital from the merger as well as our new joint venture with Roth, we now have more size and scale as well as products to originate venture and growth loans to growing public and private companies. We believe this positions us well to continue growing our portfolio and NII over time. At the end of the quarter, our current portfolio stood at $696 million as we produced our second consecutive quarter of portfolio growth. In the first quarter, we funded 5 life science debt investments, including refinancing of an existing investment, totaling $120 million. We also made further progress in building our pipeline, including larger venture loan opportunities in our target sectors.

One of those pipeline opportunities, Stellar Cyber closed in April. In Q1, we increased our committed backlog by $26 million from the end of Q4, which positions us well to further grow our portfolio in the quarters ahead. In Q2, we expect to further grow our portfolio, driven by our current pipeline. Along with Stellar Cyber, since the end of the quarter, we have been awarded 5 new venture loan transactions, representing $90 million in total commitments. It goes without saying that we will always be disciplined in originating and underwriting new loans. During the first quarter, we experienced 1 loan prepayment and refinancing totaling $63 million in prepaid principal. Our onboarding debt investment yield of 12% during the first quarter remained consistent with our historic levels.

We expect to continue to generate strong onboarding yields with our current pipeline of opportunities, which we believe will generate strong net investment income over time. Our debt portfolio yield of 15.2% for the quarter was once again among the highest yielding debt portfolios in the BDC industry. Our ability to generate industry-leading yields continues to be a testament to our venture lending strategy and our execution of such strategy across various market cycles and interest rate environments. As of March 31, we held warrants, equity and other investments in 99 portfolio companies with a fair value of $50 million. Structuring investments with warrants and equity rights is a key component of our venture debt strategy and a potential generator of shareholder value.

As mentioned, we ended the quarter with a committed and approved backlog of $180 million compared to $154 million at the end of the fourth quarter. We believe our pipeline of investment opportunities, combined with our committed backlog with most of our funding commitments subject to companies achieving certain key milestones provides a solid base to prudently grow our portfolio over time. As of quarter end, 88% of the fair value of our debt portfolio consisted of 3 and 4 rated debt investments, while 12% of the fair value of our portfolio was rated 2 or 1, which is a modest improvement from our levels at the end of the fourth quarter. We continue to collaborate with all of our portfolio companies and utilizing a variety of strategies to optimize returns and create future value.

Turning to the venture capital environment. According to PitchBook, approximately $267 billion was invested in VC-backed companies in the first quarter, which by itself exceeded all full year totals for investment except for 2021 and 2025. However, this record performance was completely due to large investments in AI. In fact, the top 5 investments accounted for $196 billion of that amount. Venture capital dollars are flowing again. However, there is a significant bifurcation in the marketplace as only the companies at the very top are receiving the lion’s share of capital. A similar story is playing out in the exit markets. While exit value of nearly $350 billion puts 2026 on pace to smash records by June, 72% of that value is due to SpaceX’s acquisition of xAI.

Still excluding that acquisition, exit value of $97 billion was the largest quarter since the fourth quarter of 2021, driven primarily by AI acquisitions. The IPO market, however, remains muted with only 15 VC-backed IPOs during the quarter. Given the current geopolitical and macro uncertainty, we believe the IPO market will remain somewhat muted in the near term. Nonetheless, we believe the limited life science IPO market creates more opportunities for venture loan originations as evidenced by our fundings in the quarter. On the tech side, though we see the IPO market is muted, we see considerable optimism for tech IPOs, while we continue to conduct deep due diligence, particularly in AI and defense technology to determine the best types of opportunities for future investments.

We continue to believe that venture debt remains a compelling option for these high-quality companies to access additional capital. As we move through 2026, we are excited for the new horizon and have been hard at work in identifying and targeting larger venture loan opportunities for both private and small cap public companies given our substantially enhanced capacity profile. Additionally, we continue to work diligently on optimizing outcomes with respect to our current portfolio. We remain confident that we are on the right path to expand our portfolio over the longer term and continue to lead in the venture lending space. We expect this will lead to increased NII over time and ultimately, additional value for shareholders. With that, I will now turn the call over to our Chief Financial Officer, Dan Trolio.

Daniel Trolio: Thanks, Paul, and good morning, everyone. As Mike mentioned, we’re excited to have completed the merger with MRCC, which significantly strengthened our balance sheet upon closing with $141 million of additional capital. With the merger complete and with us exiting our blackout period, we expect to begin tapping our $10 million repurchase program given the dislocation between our current valuation and our confidence in the near- and long-term outlook of Horizon. In addition, we continue to diligently work with all of our portfolio companies to optimize outcomes for our investments and improve our credit quality. As such, we believe we are well positioned to grow our portfolio in the coming quarters and create additional value for our shareholders moving forward.

As of March 31, we had $105 million in available liquidity, consisting of $73 million in cash and $32 million in funds available to be drawn under our existing credit facilities. As of March 31, we had $45 million outstanding under our $150 million KeyBank credit facility, $181 million outstanding on our $250 million New York Life credit facility and $90 million outstanding on our $200 million Nuveen credit facility, leaving us with ample capacity to grow our portfolio of debt investments. Post-merger, we paid down the full amount outstanding under the KeyBank facility. Our debt-to-equity ratio stood at 1.35:1 as of March 31 and netting out cash on our balance sheet, our net leverage was 1.13:1, below our target leverage. Based on our cash position and our borrowing capacity on our credit facilities, our potential new investment capacity as of March 31 was $357 million.

Post-merger, our new investment capacity has increased by $141 million of additional capital. Turning to our operating results. For the first quarter, we earned investment income of $24 million compared to $25 million in the prior year period, primarily due to lower fee-related income on our debt investment portfolio. Our debt investment portfolio on a net cost basis stood at $655 million as of March 31, up 9% compared to $602 million as of December 31, 2025. For the first quarter of ’26, we achieved onboarding yields of 12%, in line with what we achieved in the fourth quarter of ’25. Our loan portfolio yield was 15.2% for the first quarter compared to 15% for last year’s first quarter. Total expenses for the quarter were $14.8 million compared to $13.4 million in the first quarter of ’25.

Our interest expense of $8.2 million was $0.5 million lower than last year’s first quarter, while our base management fee was $3.1 million, in line with prior year period. We received $1.8 million of performance-based incentive fees in the first quarter. But as a reminder, our adviser agreed to waive up to $4 million of fees or $1 million a quarter post merger starting in Q3 of ’26. Net investment income for the first quarter of ’26 was $0.19 per share compared to $0.18 per share in the fourth quarter of ’25 and $0.27 per share for the first quarter of ’25. We continue to expect prepayment activity will remain modest in the near term. And for the second quarter, we expect to record a nonrecurring onetime transaction expense of $4.3 million related to the completion of the merger.

The company’s undistributed spillover income as of March 31 was $0.52 per share. Based upon our outlook and undistributed spillover income, our Board declared monthly distributions of $0.06 per share for July, August and September 2026. In concert with the completion of the MRCC merger, our Board also declared $0.03 per share special distributions payable in July, August and September of 2026. We anticipate with our expanded capital base and available leverage, our expectation for growth and our predictive pricing strategy will enable us to generate NII that covers our distribution over time. To summarize our portfolio activity for the first quarter, new originations totaled $120 million, which were offset by $5 million in scheduled principal payments and $63 million in principal prepayments, refinancings and partial paydowns.

We ended the quarter with a total investment portfolio of $696 million. At March 31, the portfolio consisted of debt investments in 41 companies with an aggregate fair value of $646 million and a portfolio of warrant, equity and other investments in 99 companies with an aggregate fair value of $50 million. Our NAV as of March 31 was $6.98 per share comparable with where it stood on December 31 and compared to $7.57 as of March 31, 2025. The stable NAV on a quarterly basis was primarily due to NII exceeding our distributions and a shift in when we account for monthly distributions. Moving forward, we’re accounting for distributions on the ex-dividend date, which is more aligned with when most BDCs report their distributions. As we’ve consistently noted, nearly 100% of the outstanding principal amount of our debt investments bear interest at floating rates.

Of those investments, approximately 71% are already at their interest rate floors, which should mitigate the impact of decreasing interest rates. This concludes opening remarks. We’ll be happy to take questions you may have at this time.

Operator: [Operator Instructions] And our first question, we will hear from Cory Johnson with UBS.

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Cory Johnson: I was wondering, could you actually just — on the last point that you had just touched on regarding, I guess, like the NAV bridge, could you help me, I guess, to maybe understand that because I don’t know if maybe I wasn’t getting it correctly. But I thought NAV was flat this quarter. And obviously, there were some of the unrealized losses and such. So my understanding is correctly that the dividends that were used for the first quarter were actually the $0.18 rather than the $0.33. Is that correct?

Daniel Trolio: Yes. So every quarter, we will accrue the distribution that is declared in that quarter. So normally, it would be the $0.18. There’s 2 accounting guidances that public BDCs can follow. The first is related to recording your distribution on the declaration date, which would be in the quarter. And the second is recording your distribution on the ex-dividend date. And so this quarter, because of the merger and the different shareholders at different periods of time, we adjusted our policy to record the distribution on the ex-dividend date. So 1 of the 3 distributions that were declared is accrued this quarter. So the impact is $0.06 instead of the $0.18. And so that bridge you from where you’re looking at the — from the unrealized. I was just giving you a little more information to help you bridge from the unrealized to the NAV.

Cory Johnson: And then just a follow-up. So you do, I guess, have now all this additional capital on hand. But I was just wondering like what is, I guess, the environment like for you to be able to deploy that capital? Like how aggressive do you think you’ll be able to be? Are the quality of deals that you’re seeing strong enough to allow you to be able to deploy that? If you can maybe just give a little bit of background on that.

Paul Seitz: Yes. Thanks for that question. This is Paul Seitz. So one is, I think the market is pretty active right now. It’s pretty evidenced by the — some of the larger funds moving down market in terms of the activity with the venture ecosystem, it’s just getting — it’s picking up quite a bit. So our focus is to obviously deploy capital, but we need to be resilient and unrelenting on credit quality. And the way we structure our deals is critically important and the way we approach the risk-adjusted return profile of each company is critically important. So while it’s active, we remain very diligent on structuring our deals and only doing the deals that are the highest of quality.

Operator: [Operator Instructions] Next, we’ll move to Sean-Paul Adams with B. Riley.

Sean-Paul Adams: It looks like you guys have actually had a pretty good quarter as far as credit quality. It looks like a good amount of non-accruals fell off the portfolio as well as your watch list also decreased. Can you provide a little bit of color on the remaining 2 names kind of on non-accrual? It looks like you guys actually experienced a write-up on Provivi. And just a little bit more color on how you’re able to move so many names previously on non-accrual back to accrual.

Daniel Trolio: So yes, we — I guess if you look quarter-over-quarter on our schedule of investments, we had 3 names last quarter and 3 names this quarter. So they were Vesta, Provivi and [indiscernible]. For the previous quarter, Q3 to Q4, we were able to drop off some non-accruals and because we’re able to work through some transaction and maximize those returns. And then this quarter related to Provivi, specifically and the change, like we say, we’re working on each one of the deals, and we’re trying to maximize returns. We were able to receive some paydown related to Provivi as we continue to work through that account.

Operator: There are no further questions at this time. I would like to turn the floor back to Mike Balkin for closing remarks.

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

Operator: Thank you. This does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time.

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