Horizon Technology Finance — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net investment income (NII) was $12.3 million ($0.19 per basic share) for the quarter ended September 30, 2026, compared to $14.0 million ($0.32 per basic share) in the prior-year period.
• Total investment income was $24.1 million for the quarter, down from $26.3 million in the prior-year period, primarily due to lower interest income on debt investments.
• Net expenses were $11.5 million for the quarter, compared to $12.0 million in the prior-year period, driven by a $0.7 million decrease in base management fees and a $0.1 million decrease in interest expense, partially offset by a $0.3 million increase in professional fees.
• Net realized loss on investments was $11.3 million ($0.17 per basic share) for the quarter, compared to a net realized loss of $22.5 million ($0.52 per basic share) in the prior-year period.
• Net unrealized depreciation on investments was $29.1 million ($0.44 per basic share) for the quarter, compared to net unrealized appreciation of $40.5 million ($0.94 per basic share) in the prior-year period.
• Net decrease in net assets resulting from operations was $28.2 million ($0.43 per basic share) for the quarter, compared to a net increase of $30.7 million ($0.71 per basic share) in the prior-year period.
• Total investment portfolio fair value was $650.3 million as of September 30, 2026.
• Net asset value (NAV) was $362.1 million, or $5.56 per share, as of September 30, 2026, compared to $7.12 per share as of September 30, 2025.
• Annualized portfolio yield on debt investments was 14.7% for the quarter, down from 18.6% in the prior-year period.
• Total debt portfolio consisted of 42 secured loans with an aggregate fair value of $621.2 million.
• Warrant, equity, and other investments in 95 portfolio companies and the joint venture had an aggregate fair value of $29.1 million.
• Cash and money market funds totaled $107.8 million as of September 30, 2026.
• Net debt to equity leverage ratio was 82% as of September 30, 2026, below the 120% targeted leverage.
• Asset coverage ratio for borrowed amounts was 189% as of September 30, 2026.

Guidance and Future Outlook:

• Management stated the company is in an "excellent position" to further grow its portfolio and drive long-term value creation for shareholders as it closes out 2026.
• The company highlighted a "meaningful increase in our pipeline from the prior quarter-end" reflecting strength in sourcing high-quality debt investment opportunities.
• Subsequent to the quarter end, the company declared monthly distributions of $0.06 per share payable in January, February, and March 2027.
• The company remains focused on rigorously managing stressed debt investments which continued to impact NAV per share in the quarter.

Business Segments and Product Lines:

• Funded nine loans totaling $98.4 million during the quarter.
• Experienced liquidity events from six portfolio companies, including principal repayments and warrant/redemption proceeds.
• Specific liquidity events included:
  • Two portfolio companies paid outstanding principal balances of $10.0 million and $14.0 million respectively, plus interest and penalties.
  • One portfolio company was acquired, paying a $15.0 million principal balance plus fees, with HRZN receiving $1.5 million in equity from warrant redemption.
  • One portfolio company paid a $10.0 million principal balance plus fees, with HRZN receiving $0.5 million from warrant redemption.
  • One portfolio company paid an $11.8 million principal balance plus interest.
  • One portfolio company made a partial paydown of $15.5 million plus a prepayment fee, with HRZN receiving $0.5 million in equity.
• Held a portfolio of warrant and equity positions in 87 companies as of September 30, 2026.
• Undistributed spillover income was $0.24 per share as of September 30, 2026.

Market and Competitive Landscape:

• Horizon's Advisor changed its internal credit rating scale effective June 30, 2026, from a 4-to-1 scale to a 1-to-5 scale to align with the wider Monroe Capital platform.
• Under the updated 1-to-5 scale, the weighted average credit rating of debt investments was 2.3 as of September 30, 2026.
• As of September 30, 2026, 85.8% of debt investments were rated 2 (performing as expected), 2.4% were rated 3 (below expectations), 8.8% were rated 4 (deteriorating), and 3.0% were rated 5 (deteriorating).
• Seven debt investments held a credit rating of 5 with an aggregate fair value of $18.8 million.
• Four debt investments held a credit rating of 4 with an aggregate fair value of $54.9 million.

Risks and Challenges:

• Stressed debt investments continued to impact NAV per share during the quarter.
• The dollar-weighted annualized yield on average debt investments decreased primarily due to the recognition and capitalization of accrued interest income in connection with the settlement of two debt investments previously on non-accrual status during the prior-year period.
• There is no assurance that additional lenders will make commitments under the Key Facility or that the market price of shares will increase as a result of share repurchases.

Management Commentary and Tone:

• Mike Balkin, CEO, stated the company was pleased to grow its debt investment portfolio for the fourth consecutive quarter and deliver NII that covered regular distributions.
• Management attributed the increase in pipeline to the strength in sourcing opportunities and the benefits of the relationship with Monroe Capital.
• To support growth efforts, the company created the new role of Chief Growth and Strategy Officer at Horizon's Advisor and appointed Manuel Henriquez to the position.
• The tone was confident regarding the company's strong balance sheet and robust pipeline despite NAV pressure from stressed assets.

Other Key Points:

• The Company repurchased 2,033,991 shares of common stock at a weighted-average price of $4.90 per share for a total cost of $10.0 million during the quarter.
• From the inception of the stock repurchase program through September 30, 2026, the Company has repurchased 3,566,678 shares at a weighted average price of $5.06 for a total cost of $18.1 million.
• The Board extended the stock repurchase program through June 30, 2027, and increased the total repurchase authorization to $20 million.
• Horizon's Advisor waived $1.0 million of base management fees for the quarter as part of a Fee Waiver agreement related to the merger with Monroe Capital Corporation, effective through the second quarter of 2027.
• The Company amended its $250.0 million senior secured credit facility to add a second class of notes and extend the legal final maturity date to June 2034.
• The Company amended another senior secured credit facility to decrease the commitment by $50.0 million, add a second class of notes, and extend the legal final maturity date to December 2035.
• Outstanding principal balances included $166.5 million in Class A Notes (6.72% interest), $14.5 million in Class B Notes (7.86% interest), and $90.0 million in another senior secured facility (7.21% interest).
• Outstanding balances for convertible notes included $2.8 million of 7.125% notes due 2031 and $16.5 million of 5.50% notes due 2030.
• Subsequent to the quarter end, the Company funded a $10.0 million debt investment to Pelthos Therapeutics, Inc. and a $0.1 million investment to Volt Bidco, Inc.
• Subsequent liquidity events included a $7.5 million prepayment by Glass Routes, LLC and a $3.5 million principal repayment by Hometeam Technologies, Inc.