Horizon Technology Finance Corp

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 the1940 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 of1986, as amended (the “Code”). As a RIC, the Company generally isnot 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”.

On* April 14, 2026,the Company completed its previously announced merger with Monroe Capital Corporation (“MRCC”), HMMS, Inc. (“Merger Sub”), Monroe Capital BDC Advisors, LLC, and Horizon Technology Finance Management LLC (the “Advisor”), pursuant to the Agreement and Plan of Merger, dated as of August 7, 2025 (*the “Merger Agreement”). Pursuant to the Merger Agreement, immediately following the Asset Sale (as defined below) and at the effective time of the Merger (the “Effective Time”), Merger Sub merged with and into MRCC, with MRCC continuing as the surviving company and as a wholly owned subsidiary of the Company, and, immediately thereafter, MRCC merged into the Company, with the Company continuing as the surviving company (collectively, the “Mergers”). MRCC also entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Monroe Capital Income Plus Corporation (“MCIP”), and MC Advisors, pursuant to which, MCIP acquired all of MRCC’s investment assets and liabilities at fair value, for cash (the “Asset Sale” and together with the Merger, the “Transactions”).

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 arenot 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 arenot* 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.

Horizon Funding II, LLC (“HFII”) was formed as a Delaware limited liability company on* May 13,2024,* 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 arenot 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 a former 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 was 70% owned by the Company and 30% owned by athird-party co-lender. On* August 6, 2025,the Company purchased its co-lender’s interest in HIMV LLC. As of August 6, 2025,the Company owns 100% of HIMV LLC and HIMV LLC is consolidated in the financial statements of the Company. The Company dissolved HIMV LLC on January 27, 2026.*

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 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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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 Form10‑Q and Articles6 and10 of Regulation S-X (“Regulation S-X”) under the Securities Act of1933, 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 arenot necessarily indicative of results that ultimately* maybe 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, 2025*.

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. The Company doesnot consolidate its non-controlling interest in the RoHo Joint Venture.

Assets related to transactions that donot meet Accounting Standards Codification (“ASC”) Topic860, Transfers and Servicingrequirements 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 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 arenot 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 athree-level fair value hierarchy as more fully described in Note6. 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 arenot 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 Level3.

See Note6 for additional information regarding fair value.

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, Chief Financial Officer and Chief Investment 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 distributions to be made to the Company’s stockholders and the Board makes the determination of the amount of distributions to be made 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.

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Investments

Investments are recorded at fair value. Pursuant to the amended SEC Rule2a-5 of the1940 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 becomes90 days or more past due, or if the Company otherwise doesnot expect to receive interest and principal repayments, the debt investment is placed on non-accrual status and the recognition of interest income* maybe discontinued. Interest payments received on non-accrual debt investments maybe 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 September 30, 2026*, there weresix investments on nonaccrual status with a cost of $64.9 million and a fair value of $18.8 million. As of* December 31, 2025*, there werethree investments on non-accrual status with a cost of $32.8 million and a fair value of $24.5 million. For thethree months ended* September 30, 2026and2025*, the Company recognized $0.05 million and $0.04 million, respectively, of interest income from debt investments while on non-accrual status. Fornine months ended* September 30, 2026and2025*, $0.1 million and $0.3 million, respectively, of interest income from debt investments while on non-accrual status.

From time to time, the Company* mayhave 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 September 30, 2026* and* December 31, 2025*, there wereeight andsix, respectively, investments with PIK provisions. For thethree months ended* September 30, 2026and2025*, PIK interest income totaled $0.8 million and $0.7 million, respectively. For thethree months ended* September 30, 2026and2025*,3.4% and 2.5%, respectively, of the Company’s total investment income was attributable to non-cash PIK interest. For thenine months ended* September 30, 2026and2025*, PIK interest income totaled $3.7 million and $1.2 million, respectively. For thenine months ended* September 30, 2026and2025*,5.0% and 1.6%, 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 doesnot expect the portfolio company to be able to pay all principal and interest due. For thethree months ended* September 30, 2026and2025*, there wereno debt investments which had accrued PIK interest into income placed on nonaccrual status as of* September 30, 2026and2025*, respectively. For thenine months ended* September 30, 2026*,two debt investments, which had accrued PIK interest into income of $1.3 million during thenine months ended* September 30, 2026* placed on nonaccrual status as of* September 30, 2026*. For thenine months ended* September 30, 2025*,one debt investment, which had accrued PIK interest into income of $0.2 million during thenine months ended* September 30, 2025* was placed on nonaccrual status as of* September 30, 2025*.

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 doesnot 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 ETPsnot received in cash for thethree months ended* September 30, 2026and2025* was 1.5% and 3.5%, respectively. The proportion of the Company’s total investment income that resulted from the portion of ETPsnot received in cash for thenine months ended* September 30, 2026and2025* was 4.0% and 3.6%, 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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The Company determines, at the time the RoHo Joint Venture makes distributions to the Company, whether the distributions should be recorded by the Company as dividend income or a return of capital. Generally, the Company willnot record distributions from the RoHo Joint Venture as dividend income unless there are sufficient accumulated tax-basis earnings and profit in the RoHo Joint Venture prior to distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. For thethree months ended* September 30, 2026* and the period* March 18, 2026 (the commencement of the RoHo Joint Venture’s operations) through September 30, 2026*, the RoHo Joint Venture didnot distribute dividend income to the Company.

Realized gains or losses on the sale of investments, or upon the determination that an investment balance, or portion thereof, isnot 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 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* September 30, 2026* and* December 31, 2025* was $8.7 million and $10.6 million, respectively. 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* September 30, 2026* and* December 31, 2025* were $8.7 million and $8.9 million, respectively. The amortization expense for thethree months ended* September 30, 2026and2025* was $0.5 million and $0.6 million, respectively. The amortization expense for thenine months ended* September 30, 2026and2025* was $1.7 million and $2.0 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 to90% 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 Topic946, 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 haveno impact on total net assets.

Depending on the level of taxable income earned in a tax year, the Company* maychoose 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 thethree* months ended* September 30, 2026and2025*, $0.3 and $0.4 million, respectively, was accrued for U.S. federal excise tax. For thenine months ended* September 30, 2026and2025*, $0.8 and $1.1 million, respectively, was accrued for U.S. federal excise tax.

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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 Topic740, Income Taxes, as modified by ASC Topic946. Tax benefits of positionsnot 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 hadno material uncertain tax positions at* September 30, 2026* and* December 31, 2025*. The Company’s income tax returns for the2026, 2025 and 2024 tax years remain subject to examination by U.S. federal and state tax authorities.

Distributions

Prior to* January 1, 2026,the Company recorded distributions to common stockholders on the date the distribution was declared by the Board. On and after January 1, 2026,the Company records distributions to common stockholders on the ex-dividend date for such distribution. 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, maybe 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 havenot “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”). The2023 Equity Distribution Agreement provides that the Company* mayoffer and sell its 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, maybe made in negotiated transactions or transactions that are deemed to be “at-the-market,” as defined in Rule415* 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 thethree andnine months ended* September 30, 2026*, the Company didnot sell shares of common stock under the2023 Equity Distribution Agreement.

During thethree months ended* September 30, 2025*, the Company sold 1,570,248 shares of common stock under the2023 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $10.6 million, including $0.3 million of offering expenses, from these sales.

During thenine months ended* September 30, 2025*, the Company sold 1,974,553 shares of common stock under the2023 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $14.2 million, including $0.5 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* September 30, 2026*, shares representing approximately $64.3 million of its common stock remain available for issuance and sale under the2023 Equity Distribution Agreement.

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Stock Repurchase Program

On* August 3, 2026,the Board extended a previously authorized stock repurchase program which allows the Company to repurchase up to $20.0 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, provided such purchases, in the aggregate, donot* exceedtwo 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. Under the repurchase program, the Company* may,but isnot* obligated to, repurchase shares of its outstanding common stock in the open market or in privately negotiated transactions from time to time. It is the intention of the Company that any repurchases of common stock will comply with the requirements of Rule10b‑18 under the Securities Exchange Act of1934, as amended (the “Exchange Act”), and any applicable requirements of the1940 Act. Unless extended by the Board, the repurchase program will terminate on the earlier of* June**30,* 2027 or the repurchase of $20.0 million of the Company’s common stock. During thethree months ended* September 30, 2026*, the Company repurchased 2,033,991 shares of its common stock at an average price of $4.90 on the open market at a total cost of $10.0 million. For thenine months ended* September 30, 2026*, the Company repurchased 3,399,213 shares of its common stock at an average price of $4.76 on the open market at a total cost of $16.2 million. During thethree andnine months ended* September 30, 2025*, the Company didnot make any repurchases of its common stock under its stock repurchase program. From the date of the inception of the Company’s stock repurchase program through* September 30, 2026*, the Company repurchased 3,566,678 shares of its common stock at an average price of $5.06 on the open market at a total cost of $18.1 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 donot meet the requirements under ASC Topic860, Transfers and Servicingfor 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 arenot 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 doesnot 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.

Recently issued accounting pronouncements

In* November 2024,the FASB issued Accounting Standards Update (“ASU”)No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic220*-40). ASUNo. 2024-03 requires disaggregated disclosure of certain costs and expenses, including purchase of inventory, employee compensation, depreciation, amortization and depletion, within relevant income statement captions. ASU2024-03 is effective for years beginning after* December 15, 2026,and interim periods beginning after December 15, 2027.Early adoption and retrospective application are permitted. The Company is currently evaluating the impact ASUNo.* 2024-03.

In* December 2025,the FASB issued ASU2025*-11, Interim Reporting (Topic270): Narrow-Scope Improvements, which clarifies interim reporting disclosure requirements and enhances the organization of interim reporting guidance. ASU2025-11 is effective for interim reporting periods within fiscal years beginning after* December 15, 2027.Early adoption is permitted. The Company is currently evaluating the impact ASUNo.* 2025-11.

In* September 2026,the FASB issued ASU2026*-03, Fair Value Measurement (Topic820): Investment Companies with Equity Securities Subject to Contractual Sale Restrictions, which amends the fair value measurement guidance for investment companies to require that a contractual restriction prohibiting the sale of an equity security be considered in measuring the fair value of the security. The amendments also require additional disclosure of the discount attributable to the contractual sale restriction that is incorporated into the fair value measurement. ASU2026-03 is effective for fiscal years beginning after* December 15, 2027,including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact ASUNo.* 2026-03.

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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 fortwo* years from the date of approval and then was required to be annually reapproved by the Board for aone-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, 2024for aone*-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 constituted 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 arenot exclusive to the Company, and the Advisor is free to furnish similar services to other entities so long as its services to the Company arenot 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 oftwo components, a base management fee and an incentive fee.

In connection with entry into the Merger Agreement with MRCC, HMMS, Inc., a Maryland corporation and wholly owned subsidiary of the Company, Monroe Capital BDC Advisors, LLC, an investment adviser to MRCC, and the Advisor, the Advisor agreed to waive $4.0 million of base management fees and/or incentive fees (the “Fee Waiver”) due and payable to the Advisor pursuant to the terms of the Investment Management Agreement at the rate of $1.0 million per quarter commencing with the Company’sthird fiscal quarter of2026. The Fee Waiver is in effect until the end of the Company’ssecond fiscal quarter of2027 and, for each applicable fiscal quarter, willnot exceed the total amount of base management fees and incentive fees earned by the Advisor during such fiscal quarter. Duringthree andnine months ended* September 30, 2026*, the Company waived $1.0 million of base management fee in connection with the Fee Waiver.

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* September 30, 2026* and* December 31, 2025* was $1.0 million. The base management fee expense, net of the Fee Waiver, was $2.0 million and $2.7 million for thethree months ended* September 30, 2026and2025*, respectively. The base management fee expense, net of the Fee Waiver, was $8.3 million and $8.9 million for thenine months ended* September 30, 2026and2025*, respectively.

The incentive fee hastwo parts, as follows:

Thefirst 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 andzero coupon securities), accrued income the Company hasnot 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 receivesno incentive fee until the Pre-Incentive Fee Net Investment Income equals the hurdle rate of1.75%, 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 exceeds2.1875% in any calendar quarter, the Advisor will receive20.00% of the Pre-Incentive Fee Net Investment Income as if the hurdle rate didnot apply.

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Pre-Incentive Fee Net Investment Income doesnot 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* maypay 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 the2.00%* base management fee. These calculations are appropriately prorated for any period of less thanthree 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 tothree 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 the11 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* mayrecoup 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 iszero* or a negative value in any calendar quarter, the Company willnot 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 tothree 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.

Thesecond 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 equals20.00% 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 isnot permitted to be considered in calculating the fee actually payable under the Investment Management Agreement.

There wasno performance based incentive fee expense for thethree months ended* September 30, 2026and2025*. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap and Deferral Mechanism for thethree months ended* September 30, 2026and2025*, which resulted in $2.5 million and $2.8 million, respectively, of reduced expense and additional net investment income. The performance based incentive fee expense was $1.8 million for thenine months ended* September 30, 2026*. There wasno performance based incentive fee expense for thenine months ended* September 30, 2025*. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap and Deferral Mechanism for thenine months ended* September 30, 2026and2025*, which resulted in $3.2 million and $7.2 million, respectively, of reduced expense and additional net investment income. This deferral represents a contingent future liability and isnot accrued until the amount can be reasonably estimated and payment is probable. The remaining deferred amount* maybe paid up tothree* years after the date of deferment. There wasno performance based incentive fee payable as of* September 30, 2026* and* December 31, 2025*.

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 was effective commencing with the quarter ending* March 31, 2025and terminated with the quarter ending December 31, 2025.During thethree* andnine months ended* September 30, 2025*, no income incentive fee was earned.

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During thethree andnine months ended* September 30, 2026*, $3.5 million and $6.8 million, respectively, of the incentive fee deferred under the Incentive Fee Cap and Deferral Mechanism expired. The following table provides the expiration dates of the Company’s Incentive Fee Cap and Deferral Mechanism contingent future liability as of* September 30, 2026*:

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 thethree months ended* September 30, 2026and2025*. The administrative fee expense was $1.5 million and $1.2 million for thenine months ended* September 30, 2026and2025*, respectively. The administrative fee payable at* September 30, 2026* and* December 31, 2025* was $0.4 million and $0.3 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* mayprovide the Company with an opportunity to co-invest with other investment vehicles managed by the Advisor, Monroe and/or their affiliates. Under the1940* 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. On* December 17, 2025,*the SEC granted Monroe and its affiliates, the Advisor, and the Company exemptive relief for co-investments for the Company, the Advisor, Monroe and its affiliates. The Company is required to comply with all terms and conditions required therein. 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.

Note 4. Investments

The following table shows the Company’s investments as of* September 30, 2026* and* December 31, 2025*:

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The following table shows the Company’s investments by industry sector as of* September 30, 2026* and* December 31, 2025*:

RoHo Capital Opportunity LLC

On* March 18, 2026,*the Company and CRFH entered into the LLC Agreement to form the RoHo Joint Venture. The RoHo Joint Venture is intended to enhance the investment strategy of the Company by providing growth capital financing solutions to small and micro-cap public companies.

The Company has committed to invest up to $87.5 million in the RoHo Joint Venture and CRFH has committed to invest up to $12.5 million in the RoHo Joint Venture. Investments by each of the Company and CRFH in the RoHo Joint Venture will be made in the form of membership interests. As of* September 30, 2026*, $79.0 of the Company’s commitment was unfunded.

All investments by the RoHo Joint Venture must be approved by the unanimous vote of the RoHo Joint Venture’s investment committee, which is comprised of an equal number of representatives designated by each of the Company and CRFH. Further, all other decisions regarding the management of the RoHo Joint Venture require the approval of the majority of the RoHo Joint Venture’s board of directors, which is comprised of an equal number of representatives from each of the Company and CRFH.

The RoHo Joint Venture isnot consolidated by either the Company or CRFH for financial reporting purposes. Investments held by the RoHo Joint Venture are measured at fair value using the same valuation methodology as described in Note6. As of* September 30, 2026*, the RoHo Joint Venture had total assets of $9.1 million. The RoHo Joint Venture’s portfolio consisted of a debt investment inone portfolio company as of* September 30, 2026* with an aggregate principal amount was $10.0 million. As of* September 30, 2026*, The RoHo Joint Venture hadno investments on non-accrual status. The RoHo Joint Venture invests in portfolio companies in the same industries in which the Company* may*directly invest.

During thethree months ended* September 30, 2026* and for the period* March 18, 2026 (the commencement of the RoHo Joint Venture’s operations) through September 30, 2026*, there wereno distributions from the RoHo Joint Venture.

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The following table shows the RoHo Joint Venture’s investments as of* September 30, 2026*:

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The following tables show certain summarized financial information for the RoHo Joint Venture as of* September 30, 2026* and for thethree months ended* September 30, 2026* and for the period* March 18, 2026 (the commencement of the RoHo Joint Venture’s operations) through September 30, 2026*:

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Note 5. Transactions with affiliated companies

A non-controlled affiliated company is generally a portfolio company in which the Company owns5% or more of such portfolio company’s voting securities butnot more than25% of such portfolio company’s voting securities.

Transactions related to investments in non-controlled affiliated companies for thethree months ended* September 30, 2026* were as follows:

Transactions related to investments in non-controlled affiliated companies for thethree months ended* September 30, 2025* were as follows:

Transactions related to investments in non-controlled affiliated companies for thenine months ended* September 30, 2026* were as follows:

Transactions related to investments in non-controlled affiliated companies for thenine months ended* September 30, 2025* were as follows:

A controlled affiliated company is generally a portfolio company in which the Company owns more than25% 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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Transactions related to investments in controlled affiliated companies for thethree months ended* September 30, 2026*.

Transactions related to investments in controlled affiliated companies for thethree months ended* September 30, 2025* were as follows:

Transactions related to investments in controlled affiliated companies for thenine months ended* September 30, 2026*.

Transactions related to investments in controlled affiliated companies for thenine months ended* September 30, 2025* were as follows:

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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 Rule2a*-5 of the1940 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 trailingtwelve*-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 areno quoted market prices for certain assets or liabilities. In cases where quoted market prices arenot 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 Topic820, 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. Thethree categories within the hierarchy are as follows:

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Due to the inherent uncertainty of determining the fair value of investments that donot have a readily available market value, the fair value of the Company’s investments* mayfluctuate from period to period. Additionally, the fair value of the Company’s investments maydiffer significantly from the values that would have been used had a ready market existed for such investments and maydiffer 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 arenot recorded at fair value on a recurring basis and are categorized as Level1 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 Level1 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 Level3 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:

Under certain circumstances the Company* mayuse 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.

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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 Level2 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 Level3 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 newthird-party round of equity financing. The Company* maymake 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 Level3* 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 Level1 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 Level3 within the fair value hierarchy described above. These other investments are recorded at fair value on a recurring basis.

Transfers between levels are recognized as of the date of the event or change in circumstances that caused the transfer, based on changes in the observability or significance of valuation inputs.

The following tables detail the assets that are carried at fair value and measured at fair value on a recurring basis as of* September 30, 2026* and* December 31, 2025* and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

The following tables provide a summary of quantitative information about the Company’s Level3 fair value measurements of the Company’s investments as of* September 30, 2026* and* December 31, 2025*. 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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The following table isnot intended to be all-inclusive, but rather provides information on the significant Level3 inputs as they relate to the Company’s fair value measurements as of* September 30, 2026*:

The following table isnot intended to be all-inclusive, but rather provides information on the significant Level3 inputs as they relate to the Company’s fair value measurements as of* December 31, 2025*:

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Borrowings: The Credit Facilities approximate fair value due to the variable interest rate of the facilities and are categorized as Level2 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-rate2027 Notes (as defined in Note7) is based on the closing public share price on the date of measurement. On* September 30, 2026*, the closing price of the2027 Notes on the New York Stock Exchange was $24.90 per note, and the2027 Notes had an aggregate fair value of $57.3 million. Therefore, the Company has categorized the 2027 Notes as Level1 within the fair value hierarchy described above. Based on market yields on* September 30, 2026*, the fair value of the2028 Notes (as defined in Note7) was $56.0 million. The 2028 Notes are categorized as Level3 within the fair value hierarchy described above. Based on market yields on* September 30, 2026*, the fair value of the2031 Convertible Notes (as defined in Note7) was $2.6 million. The2031 Convertible Notes are categorized as Level3 within the fair value hierarchy described above. Based on market yields on* September 30, 2026*, the fair value of the2030 Convertible Notes (as defined in Note7) was $15.7 million. The2030 Convertible Notes are categorized as Level3 within the fair value hierarchy described above. These borrowings arenot 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 Level3 within the fair value hierarchy described above.

The following table shows a reconciliation of the beginning and ending balances for Level3 assets measured at fair value on a recurring basis for thethree months ended* September 30, 2026*:

During thethree months ended* September 30, 2026*, there wasone transfer out of Level3. One transfer out of Level3 related to warrants held inone portfolio company with an aggregate fair value of $1.5 million that was transferred to Level2 upon the portfolio company being acquired by a public company. During thethree months ended* September 30, 2026*, there wereno transfers into Level3.

The following table shows a reconciliation of the beginning and ending balances for Level3 assets measured at fair value on a recurring basis for thethree months ended* September 30, 2025*:

During thethree months ended* September 30, 2025*, there weretwo transfers out of Level3. Warrants held in a portfolio company with an aggregate fair value of $2.6 million were transferred to Level1 from Level3 upon the conversion of privately held preferred shares of stock into common stock of a public company. An other investment held in a portfolio company with an aggregate fair value of $0.02 million was transferred to Level1 from Level3 upon the conversion of the other investment to common stock of a public entity. During thethree months ended* September 30, 2025*, there wereno transfers into Level3.

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The following table shows a reconciliation of the beginning and ending balances for Level3 assets measured at fair value on a recurring basis for thenine months ended* September 30, 2026*:

During thenine months ended* September 30, 2026*, there weretwo transfers out of Level3. One transfer out of Level3 related to warrants held inone portfolio company with an aggregate fair value of $1.5 million that was transferred to Level2 upon the portfolio company being acquired by a public company. One transfer out of Level3 related to warrants held inone portfolio company with an aggregate fair value of $0.1 million that was transferred to Level2 upon the portfolio company becoming a public company. During thenine months ended* September 30, 2026*, there wereno transfers into Level3.

The change in unrealized depreciation included in the consolidated statement of operations attributable to Level3 investments still held at* September 30, 2026* includes $60.0 million in unrealized depreciation on debt and other investments, $5.7 million in unrealized depreciation on equity investments and $2.7 million in unrealized depreciation on warrant investments.

The following table shows a reconciliation of the beginning and ending balances for Level3 assets measured at fair value on a recurring basis for thenine months ended* September 30, 2025*:

During thenine months ended* September 30, 2025*, there weretwo transfers out of Level3. Warrants held in a portfolio company with an aggregate fair value of $2.6 million were transferred to Level1 from Level3 upon the conversion of privately held preferred shares of stock into common stock of a public company. An other investment held in a portfolio company with an aggregate fair value of $0.02 million was transferred to Level1 from Level3 upon the conversion of the other investment to common stock of a public entity. During thenine months ended* September 30, 2025*, there wereno transfers into Level3.

The change in unrealized depreciation included in the consolidated statement of operations attributable to Level3 investments still held at* September 30, 2025* includes $10.1 million in unrealized depreciation on debt and other investments, $9.7 million in unrealized depreciation on equity investments and $0.6 million in unrealized depreciation on warrant investments.

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The Company discloses fair value information about financial instruments, whether ornot 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 donot represent the underlying value of the Company.

The fair value amounts have been measured as of the reporting date and havenot 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* September 30, 2026* and* December 31, 2025*, 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* September 30, 2026* and* December 31, 2025*:

As of* September 30, 2026*, 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 the1940 Act, was at least 150% after such borrowings. In accordance with GAAP, any borrowings of the RoHo Joint Venture arenot included in the asset coverage calculation. As of* September 30, 2026*, the asset coverage for borrowed amounts was 189%.

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Credit Facilities

Key Facility

The Company entered into the Key Facility with Key effective* November**4,* 2013. On* February 26, 2026,the Company amended the Key Facility, among other things, (i) to make Michael P. Balkin and Paul G. Seitz each an “Authorized Person”, (ii) to amend certain requirements to make a debt investment eligible for the borrowing base and (ii) to amend certain concentration limits. On June 20, 2024,the Company amended the Key Facility, among other things, (i) to extend the date on which the Company mayrequest advances under the Key Facility to June 20, 2027and to extend the maturity date to June 20, 2029and (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 an interest 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. As of September 30, 2026*, the Company was in material compliance with the terms of the Key Facility. The prime rate was 7.00% and 6.75% on* September 30, 2026* and* December 31, 2025*, respectively. The average interest rate on the Key Facility for thethree months ended* September 30, 2026and2025* was 6.89% and 7.56%, respectively. The average interest rate on the Key Facility for thenine months ended* September 30, 2026and2025* was 6.86% and 7.59%, 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* September 30, 2026* and* December 31, 2025*, the Company had borrowing capacity under the Key Facility of $150.0 million. At* September 30, 2026* and* December 31, 2025*, $86.8 million and $49.6 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.

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.

On* July 29, 2026,the Company amended the NYL Facility to, among other things, to (i) add asecond* class of notes and (ii) extend the legal final maturity date to* June 2034.The interest rate for advances made on thesecond* class of notes is fixed at 3.50% plus the Three Year I Curve, 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* September 30, 2026*, including $166.5 million on the NYL Class A Notes and $14.5 million on the NYL Class B Notes. There were$181.0 million in advances made by the NYL Noteholders* December 31, 2025*. The interest rate on the NYL Class A Notes was 6.72% as of* September 30, 2026*. The interest rate on the NYL Class B Notes was 7.86% as of* September 30, 2026*. The interest rate was 6.57% as of* September 30, 2025*. As of* September 30, 2026* and* December 31, 2025*, the Company had borrowing capacity under the NYL Facility of $69.0 million. At* September 30, 2026* and* December 31, 2025*, $15.2 million and $1.9 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* maybe 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 September 30, 2026* and* December 31, 2025*, there were approximately $1.4 million of such restricted investments.

As of* September 30, 2026*, the Company was in material compliance with the terms of the NYL Facility.

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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 of HFII and the Nuveen Noteholders. On* June 21, 2024,*the Company sold or contributed to HFII 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 an 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, 2028and the maturity date to June 10, 2034and 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%.

On* July 17, 2026,*the Company amended its Nuveen Facility to decrease the commitment by $50.0 million in connection with secured notes previously issued by HFII.

On* September 2, 2026,the Company amended the Nuveen Facility to, among other things, to (i) extend the date through which the Company mayrequest advances under the Nuveen Facility to July**21,* 2027 (ii) add asecond class of notes and (iii) extend the legal final maturity date to* December 10, 2035.The interest rate for advances made on thesecond* class of notes is fixed at 3.50% plus the Three Year I Curve, with the interest rate to be reset quarterly.

There were $90.0 million in advances made by the Nuveen Noteholders as of* September 30, 2026*, including $90.0 million on the Nuveen Class A Notes. There were$90.0 million in advances made by the Nuveen Noteholders as of* December 31, 2025*. The interest rate as of* September 30, 2026and2025* was 7.21%. As of* September 30, 2026* and* December 31, 2025*, the Company had borrowing capacity under the Nuveen Facility of $60.0 million and $110.0 million, respectively. At* September 30, 2026* and* December 31, 2025*, $21.5 million and $12.1 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* maybe 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 September 30, 2026* and* December 31, 2025* there were approximately $1.3 million and $1.1 million, respectively, of such restricted investments.

As of* September 30, 2026*, the Company was in material compliance with the terms of the Nuveen Facility.

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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 in2026* (the*“2026* Notes”). The amount of2026 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. The2026 Notes had a stated maturity of* March 30, 2026and could have been redeemed in whole or in part at the Company’s option at any time or from time to time on or after March 30, 2023at a redemption price of $25 per security plus accrued and unpaid interest. The2026* Notes bore interest at a rate of 4.875% per year, payable quarterly on* March 30,** June 30,** September 30and December 30of each year. The2026* Notes were the Company’s direct unsecured obligations and (i) ranked equally in right of payment with the Company’s current and future unsecured indebtedness; (ii) were senior in right of payment to any of the Company’s future indebtedness that expressly provides it is subordinated to the2026 Notes; (iii) were 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) were structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries. The2026 Notes were listed on the New York Stock Exchange under the symbol “HTFB”. On* January 28, 2026,the Company redeemed all of the outstanding principal balance of the2026* Notes plus accrued interest. The Company accelerated $0.1 million of unamortized debt issuance costs related to the2026 Notes.

2027 Notes

On* June 15, 2022,the Company issued and sold an aggregate principal amount of $50.0 million of 6.25% notes due in2027* 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”). The2027 Notes have a stated maturity of* June 15, 2027and maybe redeemed in whole or in part at the Company’s option at any time or from time to time on or after June 15, 2024at a redemption price of $25 per security plus accrued and unpaid interest. The2027* Notes bear interest at a rate of 6.25% per year, payable quarterly on* March 30,** June 30,** September 30and December 30of each year, commencing on September 30, 2022.The2027* 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 the2027 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* September 30, 2026*, the Company was in material compliance with the terms of the2027 Notes. The2027 Notes are listed on the New York Stock Exchange under the symbol “HTFC”.

2028 Notes

On* December 15, 2025,the Company issued and sold an aggregate principal amount of $57.5 million of 7.00% notes due in2028* (the*“2028* Notes”) in a private transaction. The2028 Notes have a stated maturity of* December 15, 2028and maybe redeemed in whole or in part at the Company’s option at any time or from time to time on or prior to June 15, 2028,at a redemption price equal to the greater of: (1)(a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semi-annual basis at the Treasury Rate plus 50 basis points less (b) interest accrued to the date of redemption, and (2)100% of the principal amount of the2028* Notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to, butnot including, the redemption date. On or after* June 15, 2028,the Company mayredeem the2028* Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the2028 Notes being redeemed plus accrued and unpaid interest there onto the date of redemption. The2028 Notes bear interest at a rate of 7.00% per year, payable semi-annually on* June 15and December 15of each year, commencing on June 15, 2026.The2028* 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 the2028 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* September 30, 2026*, the Company was in material compliance with the terms of the2028 Notes.

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Convertible Notes

2030 Convertible Notes

On* September 4, 2025,the Company entered into a note purchase agreement (the“2030* Note Purchase Agreement”), by and among the Company and each purchaser named therein, in connection with the issuance and sale of $40.0 million aggregate principal of the Company’s 5.50% convertible notes due2030 (the*“2030* Convertible Notes”) in a transaction exempt from registration pursuant to Section4(a)(2) of the Securities Act of1933, as amended. The Company received net proceeds (before expenses) from the sale of the2030 Convertible Notes of approximately $36.6 million.

The2030 Convertible Notes mature on* September 4, 2030,unless earlier converted or repurchased in accordance with their terms. The2030* Convertible Notes bear interest at a rate of 5.50% per year, payable monthly in arrears on the last day of each calendar month, beginning on* September 30, 2025.*

The2030 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 isnot subordinated in right of payment to the2030 Convertible Notes; (ii) senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the2030 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 the2030 Convertible Notes.

At any time on or after* October 4, 2025,at the Company’s sole option, the Company mayredeem, from time to time, the2030* 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 a2030 Convertible Note has the right, at such holder’s option, to convert any such2030 Convertible Note, at any time on or after* October 4, 2025and prior to the close of business on the business day immediately preceding the maturity date, once or more times per calendar month, into such number of shares of common stock of the Company equal to the principal balance of the2030* Convertible Note being converted on the conversion date plus the accrued but unpaid interest on the2030 Convertible Note as of the conversion date, divided by the greater of (i) volume-weighted average closing sale price for thefive 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 the notice of such exercise. If the2030 Convertible Notes were converted as of* September 30, 2026*,2,640,449 shares would have been issued based on the Company’s most recently reported NAV per share immediately prior to* September 30, 2026* of $6.23. The last reported price for the Company’s common stock on* September 30, 2026* was $4.59 per share.

No holder of2030 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.

The2030 Convertible Notes arenot listed on any exchange and* may**not* be transferred without the consent of the Company.

The2030 Convertible Notes are recorded at their contractual amounts. At issuance, the Company determined that the embedded conversion option in the2030 Convertible Notes isnot required to be separately accounted for as a derivative under ASC815, Derivatives and Hedging.

During thethree months ended* September 30, 2026*, the holders of the2030 Convertible Notes didnot convert any of the2030 Convertible Notes.

During thenine months ended* September 30, 2026*, the holders of a portion of the2030 Convertible Notes converted $15.1 million in outstanding principal of the2030 Convertible Notes plus accrued but unpaid interest on such outstanding principal as of the conversion date into 2,118,250 shares of common stock at a weighted average conversion price of $7.12 together with cash in lieu of fractional shares, in accordance with noteholder conversion notice. The Company accelerated $1.3 million of unamortized debt issuance costs related to the2030 Convertible Notes during thenine months ended* September 30, 2026*.

As of* September 30, 2026* and* December 31, 2025*, the aggregate outstanding principal balance of the2030 Convertible Notes was $16.5 million and $31.5 million, respectively.

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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 due2031 (the*“2031* Convertible Notes” and collectively with the2030 Convertible Notes, the “Convertible Notes”), in a transaction exempt from registration pursuant to Section4(a)(2) of the Securities Act of1933, as amended. The Company received net proceeds (before expenses) from the sale of the2031 Convertible Notes of approximately $18.6 million.

The2031 Convertible Notes mature on* October 17, 2031,unless earlier converted or repurchased in accordance with their terms. The2031* 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 30and December 31of each year, beginning on December 31, 2024.If an investment grade rating isnot* maintained with respect to the2031 Convertible Notes, additional interest of 1.00% per annum will accrue on the2031 Convertible Notes until such time as the2031 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 the2031 Note Purchase Agreement). In addition, on the occurrence of a Change in Control Repurchase Event (as defined in the2031 Note Purchase Agreement) or Delisting Event (as defined in the2031 Note Purchase Agreement), the Company will generally be required to make an offer to purchase the outstanding2031 Convertible Notes at a price equal to 100% of the principal amount of such2031 Convertible Notes plus accrued and unpaid interest to the repurchase date.

The2031 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 isnot subordinated in right of payment to the2031 Convertible Notes; (ii) senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the2031 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 the2031 Convertible Notes.

At any time on or after* April 17, 2025,at the Company’s sole option, the Company mayredeem, from time to time, the2031* 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 a2031 Convertible Note has the right, at such holder’s option, to convert any such2031 Convertible Note, at any time on or after* April 17, 2025and 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 the2031* Convertible Note being converted on the conversion date plus the accrued but unpaid interest on the2031 Convertible Note as of the conversion date, divided by the greater of (i) volume-weighted average closing sale price for thefive 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. If the2031 Convertible Notes were converted as of* September 30, 2026*,441,413 shares would have been issued based on the Company’s most recently reported NAV per share immediately prior to* September 30, 2026* of $6.23. The last reported price for the Company’s common stock on* September 30, 2026* was $4.59 per share.

No holder of2031 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.

The2031 Convertible Notes arenot listed on any exchange and* may**not* be transferred without the consent of the Company.

The2031 Convertible Notes are recorded at their contractual amounts. At issuance, the Company determined that the embedded conversion option in the2031 Convertible Notes isnot required to be separately accounted for as a derivative under ASC815, Derivatives and Hedging.

During thethree andnine months ended* September 30, 2026*, the holders of the2031 Convertible Notes didnot convert any of the2031 Convertible Notes.

During thethree andnine months ended* September 30, 2025*, the holders of a portion of the2031 Convertible Notes converted $4.8 million and $17.3 million, respectively, in outstanding principal of the2031 Convertible Notes plus accrued but unpaid interest on such outstanding principal as of the conversion date into 643,043 and 2,264,546 shares of common stock, respectively, at a weighted average conversion price of $7.43 and $7.69, respectively, together with cash in lieu of fractional shares, in accordance with noteholder conversion notice. The Company accelerated $0.4 million and $1.2 million, respectively, of unamortized debt issuance costs related to the2031 Convertible Notes.

As of* September 30, 2026* and* December 31, 2025*, the aggregate outstanding principal balance of the2031 Convertible Notes was $2.8 million.

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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 $136.1 million and $104.0 million as of* September 30, 2026* and* December 31, 2025*, 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* mayexpire without being drawn upon, the total commitment amounts donot* necessarily represent future cash requirements.

The following table provides the Company’s unfunded commitments by portfolio company as of* September 30, 2026* and* December 31, 2025*:

The table above also provides the fair value of the Company’s unfunded commitment liability as of* September 30, 2026* and* December 31, 2025*, which totaled $1.3 million and $0.8 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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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* mayhave 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* mayvary from period to period as new debt investments are recorded and existing debt investments are repaid. The Company’sfive* largest debt investments at cost represented 24% and 26% of total debt investments outstanding as of* September 30, 2026* and* December 31, 2025*, respectively. The Company’sfive largest debt investments at fair value represented 27% and 26% of total debt investments outstanding as of* September 30, 2026* and* December 31, 2025*, respectively.No single debt investment represented more than10% of the total debt investments at cost or fair value as of* September 30, 2026* and* December 31, 2025*. Investment income, consisting of interest and fees, can fluctuate significantly upon repayment of large debt investments. Interest income from thefive largest debt investments at cost accounted for 26% and 17% of total interest and fee income on investments for thethree months ended* September 30, 2026and2025*, respectively. Interest income from thefive largest debt investments at fair value accounted for 26% and 21% of total interest and fee income on investments for thethree months ended* September 30, 2026and2025*, respectively. Investment income, consisting of interest and fees, can fluctuate significantly upon repayment of large debt investments. Interest income from thefive largest debt investments at cost accounted for 25% and 17% of total interest and fee income on investments for thenine months ended* September 30, 2026and2025*, respectively. Interest income from thefive largest debt investments at fair value accounted for 25% and 20% of total interest and fee income on investments for thenine months ended* September 30, 2026and2025*, respectively.

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Note 10. Distributions

Prior to* January 1, 2026,the Company recorded distributions to common stockholders on the date the distribution was declared by the Board. On and after January 1, 2026,the Company records distributions to common stockholders on the ex-dividend date for such distribution. The following table summarizes the Company’s distribution activity for thenine* months ended* September 30, 2026* and for the year ended* December 31, 2025*:

On* October 29, 2026,*the Board declared monthly cash distributions per share, payable as set forth in the following table:

Monthly distributions

After paying distributions of $0.27 per share and earning net investment income of $0.19 per share for thethree months ended* September 30, 2026*, the Company’s per share undistributed spillover income as of* September 30, 2026* was $0.24. Spillover income includes any ordinary income and net capital gains from the preceding tax years that werenot distributed during such tax years.

The Board sets the level of distributions for each quarter based on its results of operations, spillover income and longer-term outlook.

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Note 11. Earnings Per Share

The following table sets forth the computation of the basic and diluted earnings per common share for thethree andnine months ended* September 30, 2026and2025*:

In certain circumstances, the Convertible Notes* maybe convertible into cash or shares of the Company’s common stock, which can be dilutive to common stockholders. Diluted earnings (loss) 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 ASU2020*-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 Convertible Notes convert at the greater of (i) volume-weighted average closing sale price for thefive 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. For thethree andnine months ended* September 30, 2026*, using the if-converted method, the Convertible Notes would convert at the Company’s most recently reported NAV per share immediately prior to the beginning of the period, or $6.98 per share and $7.12 per share, respectively. For thethree andnine months ended* September 30, 2025*, using the if-converted method, the2031 Convertible Notes would convert at the volume-weighted average closing sale price for thefive trading days immediately prior to the beginning of the period, or $7.21 per share and $8.94 per share, respectively. For thethree andnine months ended* September 30, 2025*, using the if-converted method, the2030 Convertible Notes would convert at the volume-weighted average closing sale price for thefive trading days immediately prior to the issuance of the2030 Convertible Notes, or $6.92 per share. For thethree andnine months ended* September 30, 2026* and thenine months ended* September 30, 2025*, the impact of the hypothetical conversion of the 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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Note 12. Financial highlights

The following table shows financial highlights for the Company:

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Note 13. MRCC Merger

On* April 14, 2026,*in connection with the closing of the Merger, the Company received approximately $141.3 million in cash and issued 20,370,645 shares of its common stock in the aggregate, or 0.9402 shares of its common stock for each share of MRCC common stock, to MRCC stockholders (and payment of cash in lieu of fractional shares). Former MRCC stockholders and legacy stockholders of the Company own 29.86% and 70.14% of the combined company, respectively, immediately following the closing of the Merger.

The Merger was accounted for in accordance with the asset acquisition method of accounting as detailed in ASC Topic805. The assets acquired from MRCC consisted of cash and cash equivalents, interest receivable and accrued expenses, which were recorded at fair value and equal to the purchase price.No gain or loss or premium or discount was recorded in connection with the Merger. Transaction costs directly attributable to the Merger of $4.5 million were recorded as an expense.

The Merger was considered a tax-free reorganization, and the Company elected to carry forward the historical cost basis of the MRCC investments for tax purposes.

In connection with the completion of the Mergers, the Company and the Advisor entered into the Letter Agreement, pursuant to which HRZN Advisor agreed to waive an aggregate of $4.0 million in base management fees and/or incentive fees (each as defined in the Investment Management Agreement) due and payable to the Advisor pursuant to the terms of the Investment Management Agreement at the rate of $1.0 million per fiscal quarter commencing with the quarter ending* September 30, 2026.The Fee Waiver is in effect until the end of the fiscal quarter ending June 30, 2027and, for each applicable fiscal quarter, willnot* exceed the total amount of Base Management Fees and Incentive Fees earned by the Advisor during such fiscal quarter. Duringthree andnine months ended* September 30, 2026*, the Company waived $1.0 million of base management fee in connection with the Fee Waiver.

Note14. Subsequent events

On* October 13, 2026,*Glass Routes, LLC prepaid its outstanding principal balance of $7.5 million on its venture loan, plus interest, and prepayment penalty.

On* October 20, 2026,*Hometeam Technologies, Inc. repaid $3.5 million of the outstanding principal balance on its venture loan.

On* October 30, 2026,*the Company funded a $10.0 million debt investment to an existing portfolio company, Pelthos Therapeutics, Inc.

On* October 30, 2026,*the Company funded a $0.1 million debt investment to an existing portfolio company Volt Bidco, Inc.

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