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  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 4/14/06  Horizon Technology Funding CO LLC N-2/A                  2:122                                    Merrill Corp/New/- FA

Document/Exhibit                   Description                      Pages   Size 

 1: N-2/A       Pre-Effective Amendment to Registration Statement   HTML    850K 
                          of a Closed-End Investment Company                     
 2: EX-99.N.5   Miscellaneous Exhibit                               HTML      6K 

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TABLE OF CONTENTS
Horizon Technology Finance, LLC Index to Combined Financial Statements

As filed with the Securities and Exchange Commission on April 14, 2006

Registration No. 333-130555

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-2
(Check appropriate box or boxes)

HORIZON TECHNOLOGY FUNDING COMPANY LLC
(Exact Name of Registrant as Specified in Charter)

Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration Statement.

        If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box.    o

        It is proposed that this filing will become effective (check appropriate box):

        If appropriate, check the following box:

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

(1)

Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

(2)

$16,050 of which was previously paid.

        The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

             Shares

Horizon Technology Finance Corporation

Common Stock

        We are offering            shares of our common stock, and the selling stockholders are offering            shares of common stock. We will not receive any proceeds from the sale of shares by selling stockholders. It is anticipated that the initial public offering price will be between $                  and $                  per share.

        We are a venture debt finance company that offers senior and subordinated working capital loans, senior revolving loans, bridge loans and equipment loans to emerging companies in the information technology and life science industries. We primarily finance privately held, development-stage companies backed by established venture capital firms. Prior to the completion of this offering, we will be an internally managed, closed-end, non-diversified management investment company that has filed an N-54A election to be treated as a business development company under the Investment Company Act of 1940. Our investment objective is to maximize our portfolio's total return by generating current income and capital appreciation from our loans and warrants. We intend to borrow funds, which we refer to as leverage, to make investments.

        The selling stockholders hold a majority of our stock, but no selling stockholder is a member of our management team.

        This is our initial public offering, and no public market currently exists for our shares. Shares of closed-end management investment companies frequently trade at a discount to their net asset value. If our shares trade at a discount to our net asset value, it may increase the risk of loss for purchasers in this initial public offering. Purchasers in this initial offering will experience immediate dilution. See "Dilution" for more information.

        We have reserved the symbol "HRZN" for the quotation of our common stock on The Nasdaq National Market.

        This prospectus contains important information you should know before investing in our common stock. Please read it before you invest and keep it for future reference. Upon completion of this offering, we will file annual, quarterly and current reports, proxy statements and other information about us with the Securities and Exchange Commission. This information will be available free of charge by contacting us at 76 Batterson Park Road, Farmington, Connecticut 06032, by telephone at (860) 676-8654 or on our website at www.horizontechfinance.com. The Securities and Exchange Commission also maintains a website at www.sec.gov that contains such information.

        Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 16.

(1)

We and the selling stockholders have granted the underwriters the right to purchase up to an additional            and            shares of common stock, respectively, at the offering price less the sales load, to cover any over-allotments. The underwriters can exercise this right at any time within forty-five days from the date of the final prospectus. If the over-allotment option is exercised in full, the total offering price will be $                  , the total sales load will be $                  and the offering proceeds to us would be $                  , before deducting expenses payable by us.

(2)

We estimate that we will incur $            in expenses in connection with this offering, $      of which are attributable to the selling stockholders. We will pay all offering expenses incident to the sale of shares of our common stock in this offering by the selling stockholders.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        The underwriters expect to deliver the shares of common stock to investors on                        , 2006.

                        , 2006

        Horizon Technology Finance Corporation, our logo and other trademarks of Horizon Technology Finance Corporation mentioned in this prospectus are the property of Horizon Technology Finance Corporation. All other trademarks or trade names referred to in this prospectus are the property of their respective owners.

        This prospectus contains third-party estimates and data regarding valuations of venture capital-backed companies. Dow Jones/Venture One, Thomson Venture Economics, National Venture Capital Association, Ernst & Young Biotechnology Report 2005 and PricewaterhouseCoopers were the primary sources for third-party industry data and forecasts. Although we have not independently verified any such data, we believe that the industry information contained in such releases and data tables and included in this prospectus is reliable.

        Certain industry estimates presented in this prospectus have been compiled by us from internally generated information and data, which, while believed by us to be reliable, have not been verified by any independent sources. These estimates are based on a number of assumptions, including increasing investment in venture capital and private equity-backed companies. Actual results may differ from projections and estimates, and this market may not grow at the rates projected, or at all. The failure of this market to grow at projected rates could have a material adverse effect on our business and the market price of our common stock.

        Except as otherwise noted, all information in this prospectus assumes no exercise of the underwriters' over-allotment option.

2

        You should rely only on the information contained in this prospectus. Neither we, the selling stockholders nor the underwriters has authorized any dealer, salesperson or other person to provide you with different information or to make representations as to matters not stated in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus is not an offer to sell, or a solicitation of an offer to buy, any shares of common stock by any person in any jurisdiction where it is unlawful for that person to make such an offer or solicitation or to any person in any jurisdiction to whom it is unlawful to make such an offer or solicitation. The information in this prospectus is accurate only as of its date, and under no circumstances should the delivery of this prospectus or the sale of any common stock imply that the information in this prospectus is accurate as of any later date or that the affairs of Horizon Technology Finance Corporation have not changed since the date hereof. We will update the information in this prospectus to reflect material changes occurring prior to the completion of this offering.

 
TABLE OF CONTENTS

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SUMMARY

        This summary highlights some of the information in this prospectus and does not contain all of the information that is important to you in making an investment decision. You should read carefully the more detailed information set forth under "Risk Factors" and the other information included in this prospectus. The following summary is qualified in its entirety by reference to the more detailed information and financial statements appearing elsewhere in this prospectus. In this prospectus, unless the context otherwise requires, the "company," "Horizon," "we," "us" and "our" refer to Horizon Technology Funding Company LLC, Horizon Technology Finance, LLC, Horizon Technology Funding Company II LLC, Horizon Technology Funding Company III LLC and Horizon Technology Funding Company IIIB LLC immediately prior to the consummation of the Restructuring, as described below in "—The Restructuring," and to Horizon Technology Finance Corporation and its wholly owned subsidiaries on and after the consummation of the Restructuring.

   
Our Company

        We are an internally managed venture debt finance company that offers senior and subordinated working capital loans, senior revolving loans, bridge loans and equipment loans to emerging companies in the information technology and life science industries. In conjunction with making our loans, we typically receive warrants to purchase stock and often obtain rights to purchase stock in subsequent equity financings, which we refer to as equity participation rights. We primarily finance privately held, development-stage technology companies backed by established venture capital firms. To a limited extent, we also selectively finance publicly traded companies, typically life science companies. Our investment objective is to maximize our portfolio's total return by generating current income and capital appreciation from our loans and warrants.

        We typically lend to private companies following or in connection with their receipt of a round of venture capital equity financing. Our current investments are primarily senior and subordinated working capital loans, senior revolving loans and bridge loans that are typically secured by all or a portion of the tangible and intangible assets of the portfolio company. As of December 31, 2005, senior secured loans, senior secured revolving loans, subordinated loans, equity investments, and warrants comprised 58.9%, 6.6%, 31.6%, 0.8%, and 2.1%, respectively, of our investment portfolio at fair value. Of our total investment portfolio, we classified 13.7% as senior secured loans, although such loans were subject by their terms to potential future subordination.

        As of December 31, 2005, our loans had an original committed principal amount of between $1.5 million and $18 million, repayment terms of between six and 48 months and bore interest at an annual interest rate of 8.5% to 13.0%. Through December 31, 2005, the dollar-weighted average yield on all of our debt investments was approximately 11.9%. In conjunction with our venture debt investments, we typically receive warrants in an amount between 5% and 20% of the committed loan amount. These warrants generally permit us to purchase stock in the portfolio company of the same type and at the same price per share as paid by investors in the portfolio company's most recent round of equity financing. To a lesser extent, we may also receive equity participation rights in a later round of equity financing of the portfolio company. We target annualized total returns on invested capital of between 15% and 20% over the life of our investments, including interest income on loans and proceeds, if any, derived from our exercise of warrants or sales of other equity interests received in connection with such loans. We can offer no assurance, however, that we will receive all scheduled interest payments or that we will realize any returns on related equity interests.

        We formed the company in May 2003 and commenced investment operations in April 2004. Through December 31, 2005, we had funded 46 portfolio companies and had invested $234.9 million in loans and equity. See "—Investment Summary." As of December 31, 2005, we had outstanding debt investments in 43 companies with an aggregate fair value of $214.5 million, held warrants to purchase

4

stock in 46 of our portfolio companies and had equity participation rights in 25 of our portfolio companies. See "Portfolio Companies." As of March 31, 2006, we have exercised equity participation rights in seven of our portfolio companies for an aggregate purchase price of approximately $2.3 million.

        As of December 31, 2005, we had outstanding loan commitments to 13 companies, representing $65.9 million. In addition to our portfolio companies having discretion whether to draw down such commitments, in some cases, the right of a company to draw down its commitment is subject to the company achieving specific milestones (e.g., an additional capital issuance or the completion of a clinical trial), as well as other funding conditions typical of any other commercial loans (e.g., no event of default). Consequently, these commitments may not result in funded investments.

        We seek to invest, under normal circumstances, at least 80% of the value of our net assets, plus the amount of any borrowings for investment purposes, in emerging companies in the information technology and life science industries.

        Each of our co-founders, Robert D. Pomeroy, Jr., our Chairman and Chief Executive Officer, and Gerald A. Michaud, our President and Chief Operating Officer, has over 15 years of experience in the venture lending industry. Christopher M. Mathieu, our Chief Financial Officer, has over 13 years of experience in the venture lending industry. We have an additional nine professionals who have an average of over seven years of experience in the venture lending industry, including marketing, legal, accounting and portfolio management.

        Prior to the completion of this offering, we will be an internally managed, non-diversified closed-end management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, or the 1940 Act, and we intend to elect to be treated as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code, for our first taxable year. As a business development company we will be required to meet regulatory tests, including the requirement to invest at least 70% of our total assets in certain qualifying assets. See "Regulation." As a RIC, we generally will not have to pay corporate-level taxes on any income or gains that we distribute to our stockholders, provided we meet specified source-of-income and asset diversification requirements and distribute annually at least 90% of the sum of our net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses. See "Certain United States Federal Income Tax Considerations—Taxation as a Regulated Investment Company." We expect to use leverage to increase our funds available for investments.

   
Recent Developments

        During the three months ended March 31, 2006, we funded additional investments to 14 companies totaling $54.9 million. As of March 31, 2006, we had executed non-binding term sheets with six prospective portfolio companies, representing $30.0 million. These proposed investments are subject to the completion of our due diligence and approval process, as well as negotiation of definitive documentation with the prospective portfolio companies and, as a result, may not result in completed investments. In addition, as of March 31, 2006, we had issued non-binding term sheets to 30 companies representing $215.2 million in potential loans. There is no guarantee that we will enter into any of these transactions.

5

   
Our Business Strategy

        Our investment objective is to maximize our portfolio's total return by generating current income and capital appreciation from our loans and warrants. To meet this objective we apply our expertise in venture debt product development and transaction sourcing, our knowledge of the information technology and life science industries, and our disciplined underwriting process to add value to our customers' businesses and thereby obtain returns that we believe exceed those returns that can be obtained in traditional commercial finance products. To implement our business strategy, we employ the following venture lending practices:

•

Direct Origination.  We typically originate our transactions directly from information technology and life science companies. These transactions are sourced from referrals from venture capital firms, information technology and life science management teams, and legal and accounting firms that represent information technology and life science companies. Our management team has worked on numerous transactions with many of these sources over a 15-year venture lending history.



•

Creative Products with Attractive Risk-Adjusted Pricing.  We use creative debt product solutions to meet customer and market demand based on expertise and knowledge gained by our management team in providing venture debt products to over 375 venture capital-backed technology companies over a 15-year period. We have developed pricing tools, structuring techniques and valuation metrics designed to maximize returns on each investment. We also obtain warrants in conjunction with our loans and endeavor to obtain commitment fees, pre-payment and non-utilization fees and equity participation rights to enhance our loan and investment portfolio returns.



•

"Enterprise-value" Lending.  We take an "enterprise-value" approach to our loan structuring and underwriting process. We typically secure a senior or subordinated lien position against the enterprise value of a company and seek to obtain pricing enhancements in the form of warrants that we anticipate will build long-term asset appreciation and other "success-based" fees. We believe these methods reduce the downside risk of venture lending. When we do not get a lien on the portfolio company's intellectual property, we typically obtain a covenant that such company will not grant a lien on such intellectual property to anyone else. We believe that our in-depth understanding of how private venture capital-backed technology companies grow, their financing needs, the various business cycles they experience, the value of their intellectual property and their product development and commercialization efforts allows us to carefully analyze the companies to which we lend. We believe the experience that our management team possesses gives us enhanced capabilities in making these qualitative "enterprise-value" evaluations, which we believe provides for a high quality venture loan portfolio and value-added returns.



•

Disciplined Underwriting Process.  We use a disciplined underwriting process that includes redundant validation of information, extensive knowledge of our industries, outside expert consultation, comparable industry valuation metrics, sophisticated financial analysis related to development-stage companies and other quantitative and qualitative measures.



•

Customized Loan Documentation Process.  We have employed an internally managed documentation process that assures that each loan transaction is documented using our specifically tailored "enterprise-value" venture loan documents. We use experienced in-house senior legal counsel to oversee the documentation and negotiation of each of our transactions.



•

Active Portfolio Management.  Because we expect most of our loan portfolio customers to be privately held, venture capital-backed, development-stage technology companies, we apply a "hands on" approach to our portfolio management processes and procedures. We require our

6

private portfolio companies to provide monthly financial information, and we typically participate in quarterly discussions with management and investors of our loan portfolio companies. We also generally conduct annual visits to our portfolio companies' offices. Internally, we require monthly management reporting to our senior management team on each portfolio company, and we internally rate our portfolio companies based on the changing dynamics of each company, and engage our senior management in any loan transaction that may be potentially impaired.

•

Portfolio Composition.  We view the monitoring of the composition of our portfolio as an important part of our overall growth and portfolio management strategy. We regularly monitor our loan portfolio to avoid undue focus in any sub-industry, stage of development or geographic area. By constantly monitoring our loan portfolio for these factors we attempt to reduce the risk of down market cycles associated with any particular industry, development stage or geographic area.

   
Our Market Opportunity

Venture Lending

        We believe that venture lenders have the potential to achieve enhanced returns in exchange for the increased level of risk associated with lending to development-stage companies. Potential benefits to venture lenders include the following:

•

interest rates that typically exceed rates available in traditional commercial financing transactions;



•

the support of venture capital equity investors;



•

relatively rapid amortization of loans;



•

senior ranking to equity and collateralization of loans to minimize loss of capital; and



•

potential equity appreciation through warrant interests.

        We believe that venture lending also provides an attractive financing source for borrowers, their management teams and their venture capital investors, as it:

•

allows borrowers to match cash sources with uses;



•

is typically less dilutive to the equityholders than additional venture equity financing; and



•

extends the time period during which a borrower can operate before seeking additional equity financing or pursuing a sale transaction or other liquidity event.

        We believe that current market dynamics favor venture lending. First, the level of venture capital investment has stabilized since the rise and fall of technology stocks in 1999-2002. Although the current level of venture capital investing is lower than in the peak year of 2000, the level of venture capital investing has been relatively stable since 2003. According to Ernst & Young/VentureOne Venture Capital Report for the fourth quarter of 2005, venture capital investment in 2003, 2004 and 2005 was approximately $19.2 billion, $21.5 billion and $22.2 billion, respectively. Current venture capital investing compares favorably to the similar normalized venture capital investing periods of 1997 (approximately $13.0 billion) and 1998 (approximately $17.7 billion). Since 2003, valuations of venture capital-backed development-stage technology companies have been steadily increasing. According to Ernst & Young/VentureOne Venture Capital Report for the fourth quarter of 2005, the median valuation for venture capital-backed companies increased from approximately $10 million in 2003, to approximately $13 million in 2004 and to approximately $15.0 million in 2005. We believe that valuations will continue to increase as venture capital-backed technology companies continue to develop

7

their products and bring them to market. As a result, we believe investors, including venture debt lenders who hold equity stakes in these companies, stand to gain economic benefits through valuation appreciation over the coming years. In the case of venture lenders, the increase in valuations would also provide for additional downside risk protection if loan-to-value ratios continue to improve during the term of their loans to venture capital-backed technology companies. We believe that the combination of the increase in venture capital equity financing transactions, improvement in the relative quality of companies being supported by venture capital investments, lower valuations of development-stage companies as compared with 1999-2002 levels and greater awareness of and demand for venture debt financing make the venture debt market attractive for new investment.

Emerging Information Technology and Life Science Industries

        We focus our investments primarily in two key segments of the emerging technology market: information technology and life science. The information technology industry has numerous sub-industries that we specifically target, including communications, networking, wireless communications, data storage, software, semiconductor, internet and media and consumer-related technologies. We also target certain sub-industries of the life science industry, including the biotechnology, drug delivery, bioinformatics, diagnostics and medical devices segments.

8

   
Investment Summary

        The following table summarizes our original funded investments in each of our portfolio companies as of December 31, 2005. The general terms of our loans and other investments are described in "Business—General."

9

   
The Restructuring

        Since we commenced investment operations in 2004, we have operated our business as a limited liability company through Horizon Technology Finance, LLC, or Finance LLC, and its wholly owned subsidiary Horizon Technology Funding Company LLC, or Funding LLC, as well as two limited liability companies in which Finance LLC maintains a 0.5% capital interest, Horizon Technology Funding Company II LLC, or Funding II, and Horizon Technology Funding Company III LLC, or Funding III. Commencing in June 2005, we also began operating part of our business through Horizon Technology Funding Company IIIB LLC, or Funding IIIB, which is also a limited liability company in which Finance LLC maintains a 0.5% capital interest. In this prospectus, we refer to Funding II, Funding III and Funding IIIB as the Funding Subsidiaries.

        Each of the three Funding Subsidiaries is financed by a different investor as follows:

•

Drawbridge Special Opportunities Fund L.P., or Drawbridge, maintains a 99.5% capital interest in Funding II.



•

Certain funds and other accounts managed by D.B. Zwirn & Co., L.P., collectively with such funds and managed accounts, D.B. Zwirn, together maintain an aggregate 99.5% capital interest in Funding III.



•

LeMoyne Avenue Investors, LLC, or LeMoyne, a wholly owned subsidiary of D.B. Zwirn Special Opportunities Fund, Ltd., an affiliate of D.B. Zwirn, maintains a 99.5% capital interest in Funding IIIB.



•

Each of Drawbridge and D.B. Zwirn committed to contribute up to $150.0 million of capital to Funding II and Funding III, respectively, approximately $117.0 million and approximately $118.1 million of which had been funded by Drawbridge and D.B. Zwirn, respectively, as of December 31, 2005. We expect that they will make additional contributions prior to the Restructuring.

        Finance LLC has been responsible for sourcing our loans. As we closed each loan, Funding LLC initially funded the loan and simultaneously participated 100% of its interest in that loan to Funding II and Funding III based on their respective election to participate in such loan. Funding III participated a portion of its interest in certain of the loans to Funding IIIB at a later date.

        The Restructuring will consist of the following transactions:

•

Prior to the completion of this offering, each of the Funding Subsidiaries will liquidate and distribute all of its assets and liabilities to its members (i.e., Drawbridge, D.B. Zwirn, LeMoyne and Finance LLC).



•

Immediately thereafter, each of the members will contribute all of the assets and liabilities received in those liquidations to Funding LLC, and Finance LLC will contribute its operating assets to Funding LLC, all in exchange for 100% of the ownership interests in Funding LLC. Of that 100%, it is expected that approximately 3.4% will be held by Finance LLC, approximately 48.0% will be held by Drawbridge, approximately 38.9% will be held by D.B. Zwirn and approximately 9.7% will be held by LeMoyne.



•

Subsequently, but prior to the completion of this offering, Funding LLC, simultaneously with its election to be treated as a business development company, will convert into a Delaware corporation and will be renamed Horizon Technology Finance Corporation, or Finance Corporation. In connection with that conversion, Drawbridge, D.B. Zwirn, LeMoyne and Finance LLC's membership interests in Funding LLC will be converted into            ,            ,             and            shares, respectively, of common stock of Finance Corporation, representing

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the same percentage interests in Finance Corporation as they held in Funding LLC immediately before the conversion.

•

Thereafter and prior to the completion of this offering, Finance LLC, which at that point will have no assets other than shares of Finance Corporation, will merge into Finance Corporation and, in connection therewith, Messrs. Pomeroy and Michaud will each receive in respect of their interests in Finance LLC            shares of Finance Corporation's common stock and certain other employees of Finance LLC will receive in respect of their interests in Finance LLC an aggregate of            shares.



•

In addition, prior to the completion of this offering, Finance Corporation will make two grants to each of Messrs. Pomeroy and Michaud and other employees of Finance Corporation of options to purchase an aggregate of            shares and            shares of Finance Corporation's common stock at exercise prices of $        and $        per share, respectively.

        The above transactions are referred to in this prospectus as the Restructuring.

        Drawbridge, D.B. Zwirn, LeMoyne, Messrs. Pomeroy and Michaud and the other employees of Finance LLC that will receive shares of Finance Corporation are referred to in this prospectus as the Holders. Despite their ownership interest in us, we are not managed or sponsored by Drawbridge (or its affiliate, Fortress Investment Group), D.B. Zwirn or LeMoyne.

   
General Information

        Our principal executive offices are located at 76 Batterson Park Road, Farmington, Connecticut 06032, and our telephone number is (860) 676-8654. We also have offices in Pleasant Hill, California. We maintain a website on the Internet at www.horizontechfinance.com. Information contained in our website is not incorporated by reference into this prospectus, and you should not consider that information to be part of this prospectus.

11

   
The Offering

(1)

Excludes             shares of common stock issuable upon the exercise of options to be granted concurrently with the completion of this offering.

12

13

   
FEES AND EXPENSES

        The following table is intended to assist you in understanding the various costs and expenses that an investor in our common stock will bear directly or indirectly. However, we caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by "you," "us" or "Horizon" or that "we" will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in Horizon Technology Finance Corporation.

(1)

The sales load with respect to our common stock sold in this offering, which is a one-time fee paid to the underwriters, is the only sales load paid in connection with this offering.

(2)

The percentage reflects estimated offering expenses of the company of approximately $                  , including the portion of such expenses attributable to the selling stockholders.

(3)

The expenses associated with the administration of our dividend reinvestment plan are included in "Operating expenses." The participants in our dividend reinvestment plan will pay a pro rata share of brokerage commissions incurred with respect to open market purchases, if any, made by the administrator under the plan. For more details about the plan, see "Dividend Reinvestment Plan."

(4)

The total annual expenses are the sum of salaries and benefits, professional fees and general and administrative expenses. We may borrow money to leverage our net assets and increase our total assets. The SEC requires that the "Total annual expenses" percentage be calculated as a percentage of net assets, rather than total assets, which includes assets that have been funded with borrowed money. Because we did not have any borrowings outstanding at            , if the "Total annual expenses" percentage were calculated instead as a percentage of total assets, our "Total annual expenses" would continue to be    % of total assets.

(5)

We do not have an investment adviser and are internally managed by our executive officers under the supervision of our board of directors. As a result, we do not pay investment advisory fees, but instead we pay all of our operating costs, which include costs associated with employing investment management professionals.

Example

        The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. These amounts are based upon our payment of annual operating expenses at the levels set forth in the table above and assume no additional leverage and that you would pay a sales load of    % (the underwriting discounts and commissions to be paid by us with respect to common stock sold by us in this offering).

        This example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses (including the cost of debt, if any, and other expenses) may be greater or lesser than those shown. Moreover, while the example assumes, as required by the applicable rules of the SEC, a 5% annual return, our performance will vary and may result in a return greater or lesser than 5%. In addition, while the example assumes reinvestment of all dividends and distributions at net asset value, participants in our dividend reinvestment plan may receive shares valued at the market price in effect at that time. This price may be at, above or below net asset value. See "Dividend Reinvestment Plan" for additional information regarding our dividend reinvestment plan.

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SELECTED COMBINED FINANCIAL AND OTHER DATA

        The selected combined financial and other data set forth below reflects the combined operations of Finance LLC, Funding LLC and the Funding Subsidiaries prior to the Restructuring. See "Reorganization; Election to be Regulated as a Business Development Company and a Regulated Investment Company." The Selected Combined Financial and Other Data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the combined financial statements and related notes included elsewhere in this prospectus. The selected combined balance sheet data as of December 31, 2005 and 2004 and the selected combined statement of operations data for fiscal 2005, 2004 and the period from May 2, 2003 (date of inception) to December 31, 2003 presented below have been derived from our audited financial statements included elsewhere herein, which have been audited by Grant Thornton LLP, an independent registered public accounting firm. The historical data are not necessarily indicative of results to be expected for any future period.