UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 10-Q

 

 

(Mark One)

 

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018
     
    OR
     
¨   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION PERIOD FROM                            TO                     

 

COMMISSION FILE NUMBER: 814-00802

 

 

 

HORIZON TECHNOLOGY FINANCE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

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

 

(860) 676-8654
(Registrant’s telephone number, including area code)

 

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

 

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

 

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

 

Large accelerated filer ¨ Accelerated filer x
       
Non-accelerated filer ¨   Smaller reporting company ¨
       
Emerging growth company ¨    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act        ¨

 

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

 

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of October 30, 2018 was 11,532,652.

 

 

 

 

 

HORIZON TECHNOLOGY FINANCE CORPORATION

 

FORM 10-Q

TABLE OF CONTENTS

 

    Page
     
  PART I  
Item 1. Consolidated Financial Statements 3
     
  Consolidated Statements of Assets and Liabilities as of September 30, 2018 and December 31, 2017 (unaudited) 3
  Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2017 (unaudited) 4
  Consolidated Statements of Changes in Net Assets for the nine months ended September 30, 2018 and 2017 (unaudited) 5
  Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017 (unaudited) 6
  Consolidated Schedules of Investments as of September 30, 2018 and December 31, 2017 (unaudited) 7
  Notes to the Consolidated Financial Statements (unaudited) 17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 42
Item 3. Quantitative and Qualitative Disclosures About Market Risk 60
Item 4. Controls and Procedures 60
     
PART II
     
Item 1. Legal Proceedings 62
Item 1A. Risk Factors 62
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 66
Item 3. Defaults Upon Senior Securities 66
Item 4. Mine Safety Disclosures 66
Item 5. Other Information 66
Item 6. Exhibits 66
  Signatures 67
     
EX-31.1    
EX-31.2    
EX-32.1    
EX-32.2    

 

 2 

 

 

 

PART I: FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Statements of Assets and Liabilities (Unaudited)

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

 

   September 30,
2018
   December 31,
2017
 
         
Assets          
Non-affiliate investments at fair value (cost of $228,313 and $219,303, respectively)  $227,813   $218,600 
Non-controlled affiliate investments at fair value (cost of $7,882 and $3,774, respectively) (Note 5)   7,531    3,499 
Controlled affiliate investments at fair value (cost of $4,413 and $0, respectively) (Note 5)   4,413     
Total investments at fair value (cost of $240,608 and $223,077, respectively) (Note 4)   239,757    222,099 
Cash   5,909    6,594 
Interest receivable   4,765    3,986 
Other assets   1,731    1,467 
Total assets  $252,162   $234,146 
           
Liabilities          
Borrowings (Note 7)  $112,284   $94,075 
Distributions payable   3,459    3,456 
Base management fee payable (Note 3)   410    379 
Incentive fee payable (Note 3)   851    541 
Other accrued expenses   702    620 
Total liabilities   117,706    99,071 
           
Commitments and Contingencies (Note 8)          
           
Net assets          
Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, zero shares issued and outstanding as of September 30, 2018 and December 31, 2017        
Common stock, par value $0.001 per share, 100,000,000 shares authorized, 11,698,864 and 11,687,871 shares issued and 11,531,399 and 11,520,406 shares outstanding as of September 30, 2018 and December 31, 2017, respectively   12    12 
Paid-in capital in excess of par   179,606    179,641 
Distributions in excess of net investment income   (2,372)   (1,898)
Net unrealized depreciation on investments   (851)   (978)
Net realized loss on investments   (41,939)   (41,702)
Total net assets   134,456    135,075 
Total liabilities and net assets  $252,162   $234,146 
Net asset value per common share  $11.66   $11.72 

 

See Notes to Consolidated Financial Statements

 

 3 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Statements of Operations (Unaudited)

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

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2018   2017   2018   2017 
Investment income                    
Interest income on investments                    
Interest income on non-affiliate investments  $7,094   $6,164   $20,385   $17,861 
Interest income on non-controlled affiliate investments   193    81    528    81 
Total interest income on investments   7,287    6,245    20,913    17,942 
Fee income                    
Prepayment fee income on non-affiliate investments   102    399    414    1,187 
Fee income on non-affiliate investments   325    130    875    485 
Total fee income   427    529    1,289    1,672 
Dividend income                    
Dividend income on affiliate investments   83        83     
Total dividend income   83        83     
Total investment income   7,797    6,774    22,285    19,614 
Expenses                    
Interest expense   1,681    1,140    4,616    3,540 
Base management fee (Note 3)   1,197    921    3,399    2,783 
Performance based incentive fee (Note 3)   1,297    258    2,823    1,094 
Administrative fee (Note 3)   162    194    517    575 
Professional fees   289    275    997    1,105 
General and administrative   215    189    636    600 
Total expenses   4,841    2,977    12,988    9,697 
Performance based incentive fee waived (Note 3)   (446)       (605)    
Net expenses   4,395    2,977    12,383    9,697 
Net investment income   3,402    3,797    9,902    9,917 
Net realized and unrealized gain (loss) on investments                    
Net realized gain (loss) on non-affiliate investments   66    (429)   (237)   (11,098)
Net realized gain (loss) on investments   66    (429)   (237)   (11,098)
Net unrealized appreciation (depreciation) on non-affiliate investments   761    (640)   202    8,295 
Net unrealized appreciation (depreciation) on non-controlled affiliate investments   30    (19)   (75)   (19)
Net unrealized appreciation (depreciation) on investments   791    (659)   127    8,276 
Net realized and unrealized gain (loss) on investments   857    (1,088)   (110)   (2,822)
Net increase in net assets resulting from operations  $4,259   $2,709   $9,792   $7,095 
Net investment income per common share  $0.30   $0.33   $0.86   $0.86 
Net increase in net assets per common share  $0.37   $0.24   $0.85   $0.62 
Distributions declared per share  $0.30   $0.30   $0.90   $0.90 
Weighted average shares outstanding   11,529,611    11,518,552    11,525,906    11,516,246 

 

See Notes to Consolidated Financial Statements

 

 4 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Statements of Changes in Net Assets (Unaudited)

(Dollars in thousands, except share data)

 

   Common Stock  

Paid-In

Capital in

Excess of

  

Distributions

in Excess of

Net

Investment

  

Net Unrealized

Depreciation

on

  

Net Realized

Loss on

   Total Net 
   Shares   Amount   Par   Income   Investments   Investments   Assets 
Balance at December 31, 2016   11,510,424   $12   $179,551   $(397)  $(19,463)  $(20,511)  $139,192 
Net increase in net assets resulting from operations               9,917    8,276    (11,098)   7,095 
Issuance of common stock under dividend reinvestment plan   12,278        134                134 
Repurchases of common stock   (5,923)       (59)               (59)
Distributions declared               (10,366)           (10,366)
Balance at September 30, 2017   11,516,779   $12   $179,626   $(846)  $(11,187)  $(31,609)  $135,996 
                                    
Balance at December 31, 2017   11,520,406   $12   $179,641   $(1,898)  $(978)  $(41,702)  $135,075 
Net increase in net assets resulting from operations               9,902    127    (237)   9,792 
Financing costs           (155)               (155)
Issuance of common stock under dividend reinvestment plan   10,993        120                120 
Distributions declared               (10,376)           (10,376)
Balance at September 30, 2018   11,531,399   $12   $179,606   $(2,372)  $(851)  $(41,939)  $134,456 

 

See Notes to Consolidated Financial Statements

 

 5 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

 

   For the Nine Months Ended 
   September 30, 
   2018   2017 
Cash flows from operating activities:          
Net increase in net assets resulting from operations  $9,792   $7,095 
Adjustments to reconcile net increase in net assets resulting from operations to net cash (used in) provided by operating activities:          
Amortization of debt issuance costs   420    383 
Net realized loss on investments   237    11,098 
Net unrealized appreciation on investments   (127)   (8,276)
Purchase of investments   (62,246)   (66,311)
Principal payments received on investments   46,503    80,062 
Investments in controlled affiliate investments   (4,413)    
Proceeds from sale of investments   3,360    1,572 
Equity received in settlement of fee income   (299)    
Warrants received in settlement of fee income   (161)    
Changes in assets and liabilities:          
(Increase) decrease in interest receivable   (48)   253 
(Increase) decrease in end-of-term payments   (731)   1,008 
Decrease in unearned income   (512)   (437)
Decrease in other assets   72    423 
Increase in other accrued expenses   82    22 
Increase (decrease) in base management fee payable   31    (33)
Increase in incentive fee payable   310    258 
Net cash (used in) provided by operating activities   (7,730)   27,117 
Cash flows from financing activities:          
Proceeds from issuance of 2022 Notes       32,500 
Advances on credit facility   28,000    34,000 
Repayment of credit facility   (10,000)   (97,000)
Distributions paid   (10,253)   (10,230)
Repurchase of common stock       (59)
Debt issuance costs   (547)   (1,137)
Financing costs   (155)    
Net cash provided by (used in) financing activities   7,045    (41,926)
Net decrease in cash   (685)   (14,809)
Cash:          
Beginning of period   6,594    37,135 
End of period  $5,909   $22,326 
Supplemental disclosure of cash flow information:          
Cash paid for interest  $4,085   $3,242 
Supplemental non-cash investing and financing activities:          
Warrant investments received and recorded as unearned income  $1,007   $1,482 
Distributions payable  $3,459   $3,455 
End-of-term payments receivable  $3,667   $3,657 
Receivable resulting from sale of investment  $59   $ 

 

See Notes to Consolidated Financial Statements

 

 6 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

September 30, 2018

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
Non-Affiliate Investments — 169.4% (8)               
Non-Affiliate Debt Investments — 155.1% (8)               
Non-Affiliate Debt Investments — Life Science — 53.0% (8)               
Celsion Corporation (2)(5)(12)  Biotechnology  Term Loan (9.73% cash (Libor + 7.63%; Floor  $2,500   $2,446   $2,446 
      9.63%), 4.00% ETP, Due 7/1/22)               
      Term Loan (9.73% cash (Libor + 7.63%; Floor   2,500    2,446    2,446 
      9.63%), 4.00% ETP, Due 7/1/22)               
      Term Loan (9.73% cash (Libor + 7.63%; Floor   2,500    2,446    2,446 
      9.63%), 4.00% ETP, Due 7/1/22)               
      Term Loan (9.73% cash (Libor + 7.63%; Floor   2,500    2,446    2,446 
      9.63%), 4.00% ETP, Due 7/1/22)               
Espero BioPharma, Inc. (2)(12)  Biotechnology  Term Loan (12.00% cash (Libor + 9.9%; Floor   5,000    4,689    4,689 
      12.00%), 4.00% ETP, Due 6/30/19)               
Palatin Technologies, Inc. (2)(5)(12)  Biotechnology  Term Loan (10.60% cash (Libor + 8.50%; Floor   500    495    495 
      9.00%), 5.00% ETP, Due 1/1/19)               
      Term Loan (10.60% cash (Libor + 8.50%; Floor   500    500    500 
      9.00%), 3.44% ETP, Due 1/1/19)               
      Term Loan (10.60% cash (Libor + 8.50%; Floor   1,667    1,652    1,652 
      9.00%), 5.00% ETP, Due 8/1/19)               
      Term Loan (10.60% cash (Libor + 8.50%; Floor   1,667    1,667    1,667 
      9.00%), 3.27% ETP, Due 8/1/19)               
vTv Therapeutics Inc. (2)(5)(12)  Biotechnology  Term Loan (12.10% cash (Libor + 10.00%; Floor   4,948    4,912    4,912 
      10.50%), 6.00% ETP, Due 5/1/20)               
      Term Loan (12.10% cash (Libor + 10.00%; Floor   3,750    3,714    3,714 
      10.50%), 6.00% ETP, Due 10/1/20)               
Titan Pharmaceuticals, Inc. (2)(5)(12)  Drug Delivery  Term Loan (10.50% cash (Libor + 8.40%; Floor   1,600    1,484    1,484 
      9.50%), 5.00% ETP, Due 6/1/21)               
Aerin Medical, Inc. (2)(12)  Medical Device  Term Loan (9.55% cash (Libor + 7.45%; Floor   4,000    3,887    3,887 
      8.75%), 4.00% ETP, Due 1/1/22)               
      Term Loan (9.55% cash (Libor + 7.45%; Floor   3,000    2,963    2,963 
      8.75%), 4.00% ETP, Due 1/1/22)               
      Term Loan (9.55% cash (Libor + 7.45%; Floor   3,000    2,963    2,963 
      8.75%), 4.00% ETP, Due 1/1/22)               
Conventus Orthopaedics, Inc. (2)(12)  Medical Device  Term Loan (10.10% cash (Libor + 8.00%; Floor   4,000    3,944    3,944 
      9.25%), 6.00% ETP, Due 6/1/21)               
      Term Loan (10.10% cash (Libor + 8.00%; Floor   4,000    3,944    3,944 
      9.25%), 6.00% ETP, Due 6/1/21)               
      Term Loan (10.10% cash (Libor + 8.00%; Floor   4,000    3,944    3,944 
      9.25%), 6.00% ETP, Due 6/1/21)               
CSA Medical, Inc. (12)  Medical Device  Term Loan (10.14% cash (Libor + 7.93%; Floor   6,000    5,761    5,761 
      10.00%), 5.00% ETP, Due 10/1/22)               
Lantos Technologies, Inc. (2)(12)  Medical Device  Term Loan (10.53% cash (Libor + 8.43%; Floor   4,000    3,522    3,522 
      10.00%), 6.00% ETP, Due 9/1/21)               
MacuLogix, Inc. (2)(12)  Medical Device  Term Loan (9.78% cash (Libor + 7.68%; Floor   3,750    3,525    3,525 
      9.50%), 4.00% ETP, Due 8/1/22)               
VERO Biotech LLC (2)(12)  Medical Device  Term Loan (10.10% cash (Libor + 8.00%; Floor   4,000    3,946    3,946 
      9.25%), 5.00% ETP, Due 1/1/22)               
      Term Loan (10.10% cash (Libor + 8.00%; Floor   4,000    3,946    3,946 
      9.25%), 5.00% ETP, Due 1/1/22)               
Total Non-Affiliate Debt Investments — Life Science        71,242    71,242 
Non-Affiliate Debt Investments — Technology — 84.7% (8)               
Audacy Corporation (2)(12)  Communications  Term Loan (10.00% cash (Libor + 7.90%; Floor   4,000    3,932    3,932 
      9.50%), 5.00% ETP, Due 7/1/22)               
Intelepeer Holdings, Inc. (2)(12)  Communications  Term Loan (12.05% cash (Libor + 9.95%; Floor   4,000    3,942    3,942 
      11.25%), 2.50% ETP, Due 7/1/21)               
      Term Loan (12.05% cash (Libor + 9.95%; Floor   4,000    3,942    3,942 
      11.25%), 2.50% ETP, Due 7/1/21)               
      Term Loan (12.05% cash (Libor + 9.95%; Floor   4,000    3,942    3,942 
      11.25%), 2.50% ETP, Due 7/1/21)               
      Term Loan (12.05% cash (Libor + 9.95%; Floor   3,000    2,952    2,952 
      11.25%), 2.50% ETP, Due 2/1/22)               
PebblePost, Inc. (2) (12)  Communications  Term Loan (11.36% cash (Libor + 9.26%; Floor   4,000    3,947    3,947 
      10.25%), 4.00% ETP, Due 7/1/21)               

 

See Notes to Consolidated Financial Statements

 

 7 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

September 30, 2018

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
      Term Loan (11.36% cash (Libor + 9.26%; Floor   4,000    3,947    3,947 
      10.25%), 4.00% ETP, Due 7/1/21)               
IgnitionOne, Inc. (2)(12)  Internet and Media  Term Loan (12.33% cash (Libor + 10.23%; Floor   3,000    2,861    2,861 
      10.23%), 2.00% ETP, Due 4/1/22)               
      Term Loan (12.33% cash (Libor + 10.23%; Floor   3,000    2,861    2,861 
      10.23%), 2.00% ETP, Due 4/1/22)               
      Term Loan (12.33% cash (Libor + 10.23%; Floor   3,000    2,861    2,861 
      10.23%), 2.00% ETP, Due 4/1/22)               
      Term Loan (12.33% cash (Libor + 10.23%; Floor   3,000    2,861    2,861 
      10.23%), 2.00% ETP, Due 4/1/22)               
Jump Ramp Games, Inc. (2)(12)  Internet and Media  Term Loan (11.83% cash (Libor + 9.73%),   4,000    3,956    3,851 
      3.00% ETP, Due 4/1/21)               
Kixeye, Inc. (2)(12)  Internet and Media  Term Loan (11.70% cash (Libor + 9.60%; Floor   2,750    2,658    2,658 
      10.75%), 2.00% ETP, Due 5/1/21)               
      Term Loan (11.70% cash (Libor + 9.60%; Floor   2,750    2,707    2,707 
      10.75%), 2.00% ETP, Due 5/1/21)               
Rocket Lawyer Incorporated (2)(12)  Internet and Media  Term Loan (11.50% cash (Libor + 9.40%; Floor   4,000    3,947    3,947 
      10.50%), 3.00% ETP, Due 7/1/21)               
      Term Loan (11.50% cash (Libor + 9.40%; Floor   4,000    3,947    3,947 
      10.50%), 3.00% ETP, Due 7/1/21)               
      Term Loan (11.50% cash (Libor + 9.40%; Floor   2,000    1,971    1,971 
      10.50%), 3.00% ETP, Due 11/1/21)               
Verve Wireless, Inc. (2)(12)  Internet and Media  Term Loan (10.90% cash (Libor + 8.80%; Floor   3,600    3,460    3,460 
      10.80%), 3.33% ETP, Due 9/1/21)               
Zinio Holdings, LLC (2)(12)  Internet and Media  Term Loan (13.35% cash (Libor + 11.25%; Floor   3,400    3,386    3,386 
      11.75%), 6.00% ETP, Due 2/1/20)               
The NanoSteel Company, Inc. (2)(12)  Materials  Term Loan (11.60% cash (Libor + 9.50%; Floor   3,959    3,891    3,891 
      10.00%), 7.20% ETP, Due 5/1/20)               
      Term Loan (11.60% cash (Libor + 9.50%; Floor   1,980    1,955    1,955 
      10.00%), 6.45% ETP, Due 5/1/20)               
      Term Loan (11.60% cash (Libor + 9.50%; Floor   2,188    2,159    2,159 
      10.00%), 5.85% ETP, Due 7/1/20)               
Powerhouse Dynamics, Inc. (2)(12)  Power Management  Term Loan (12.80% cash (Libor + 10.70%; Floor   700    682    682 
      11.20%), 3.32% ETP, Due 9/1/19)               
Luxtera, Inc. (12)  Semiconductors  Term Loan (12.00% cash (Prime + 6.75%),   2,000    1,934    1,934 
      Due 3/28/20)               
      Term Loan (12.00% cash (Prime + 6.75%),   1,500    1,462    1,462 
      Due 3/28/20)               
Bridge2 Solutions, LLC. (2)(12)  Software  Term Loan (11.35% cash (Libor + 9.25%; Floor   5,000    4,821    4,821 
      10.50%), 2.00% ETP, Due 11/1/21)               
      Term Loan (11.35% cash (Libor + 9.25%; Floor   5,000    4,821    4,821 
      10.50%), 2.00% ETP, Due 11/1/21)               
Education Elements, Inc. (2)(12)  Software  Term Loan (12.10% cash (Libor + 10.00%; Floor   200    197    197 
      10.50%), 4.00% ETP, Due 1/1/19)               
      Term Loan (12.10% cash (Libor + 10.00%; Floor   500    493    493 
      10.50%), 4.00% ETP, Due 8/1/19)               
New Signature US, Inc. (2)(12)(13)  Software  Term Loan (10.60% cash (Libor + 8.50%; Floor   2,750    2,697    2,697 
      10.50%), 3.50% ETP, Due 7/1/22)               
ShopKeep.com, Inc. (2)(12)  Software  Term Loan (12.05% cash (Libor + 9.95%; Floor   4,900    4,825    4,825 
      10.45%), 4.08% ETP, Due 10/1/20)               
      Term Loan (12.05% cash (Libor + 9.95%; Floor   3,600    3,542    3,542 
      10.45%), 3.55% ETP, Due 2/1/21)               
SIGNiX, Inc. (12)  Software  Term Loan (13.10% cash (Libor + 11.00%; Floor   1,995    1,927    1,605 
      11.50%), 6.17% ETP, Due 2/1/20)               
xAd, Inc. (2)(12)  Software  Term Loan (10.80% cash (Libor + 8.70%; Floor   5,000    4,916    4,916 
      10.00%), 4.75% ETP, Due 11/1/21)               
      Term Loan (10.80% cash (Libor + 8.70%; Floor   5,000    4,916    4,916 
      10.00%), 4.75% ETP, Due 11/1/21)               
      Term Loan (10.80% cash (Libor + 8.70%; Floor   3,000    2,950    2,950 
      10.00%), 4.75% ETP, Due 11/1/21)               
      Term Loan (10.80% cash (Libor + 8.70%; Floor   2,000    1,966    1,966 

 

See Notes to Consolidated Financial Statements

 

 8 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

September 30, 2018

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
      10.00%), 4.75% ETP, Due 11/1/21)               
Total Non-Affiliate Debt Investments — Technology        114,234    113,807 
Non-Affiliate Debt Investments — Healthcare information and services — 17.4% (8)          
Catasys, Inc. (2)(5)(12)  Software  Term Loan (9.85% cash (Libor + 7.75%;   2,500    2,477    2,477 
      Floor 9.75%), 6.00% ETP, Due 3/1/22)               
      Term Loan (9.85% cash (Libor + 7.75%;   2,500    2,477    2,477 
      Floor 9.75%), 6.00% ETP, Due 3/1/22)               
      Term Loan (9.85% cash (Libor + 7.75%;   2,500    2,476    2,476 
      Floor 9.75%), 6.00% ETP, Due 3/1/22)               
HealthEdge Software, Inc. (2)(12)  Software  Term Loan (10.35% cash (Libor + 8.25%;   5,000    4,905    4,905 
      Floor 9.25%), 3.00% ETP, Due 7/1/22)               
      Term Loan (10.35% cash (Libor + 8.25%;   3,750    3,701    3,701 
      Floor 9.25%), 3.00% ETP, Due 1/1/23)               
      Term Loan (10.35% cash (Libor + 8.25%;   3,750    3,698    3,698 
      Floor 9.25%), 3.00% ETP, Due 4/1/23)               
      Term Loan (10.46% cash (Libor + 8.25%;   3,750    3,696    3,696 
      Floor 9.25%), 3.00% ETP, Due 10/1/23)               
Total Non-Affiliate Debt Investments — Healthcare information and services        23,430    23,430 
Total Non- Affiliate Debt Investments        208,906    208,479 
                      
Non-Affiliate Warrant Investments — 7.7% (8)               
Non-Affiliate Warrants — Life Science — 1.7% (8)               
ACT Biotech Corporation  Biotechnology  130,872 Preferred Stock Warrants        12     
Alpine Immune Sciences, Inc. (5)(12)  Biotechnology  4,634 Common Stock Warrants        122     
Argos Therapeutics, Inc. (2)(5)(12)  Biotechnology  3,656 Common Stock Warrants        33     
Celsion Corporation (2)(5)(12)  Biotechnology  190,522 Common Stock Warrants        145    107 
Espero BioPharma, Inc. (2)(5)(12)  Biotechnology  833,792 Common Stock Warrants        184    184 
Rocket Pharmaceuticals Corporation (5)(12)  Biotechnology  1,763 Common Stock Warrants        17     
Palatin Technologies, Inc. (2)(5)(12)  Biotechnology  608,058 Common Stock Warrants        51    153 
Revance Therapeutics, Inc. (5)(12)  Biotechnology  34,113 Common Stock Warrants        68    367 
Sample6, Inc. (2)(12)  Biotechnology  661,956 Preferred Stock Warrants        53    26 
Strongbridge U.S. Inc. (2)(5)(12)  Biotechnology  160,714 Common Stock Warrants        72    419 
Sunesis Pharmaceuticals, Inc. (5)(12)  Biotechnology  2,050 Common Stock Warrants        5     
vTv Therapeutics Inc. (2)(5)(12)  Biotechnology  95,293 Common Stock Warrants        44     
Titan Pharmaceuticals, Inc. (2)(5)(12)  Drug Delivery  320,612 Common Stock Warrants        95     
AccuVein Inc. (2)(12)  Medical Device  1,174,881 Preferred Stock Warrants        24    29 
Aerin Medical, Inc. (2)(12)  Medical Device  1,818,182 Preferred Stock Warrants        66    71 
Conventus Orthopaedics, Inc. (2)(12)  Medical Device  720,000 Preferred Stock Warrants        95    102 
CSA Medical, Inc. (12)  Medical Device  1,569,577 Preferred Stock Warrants        89    89 
Lantos Technologies, Inc. (2)(12)  Medical Device  1,715,926 Common Stock Warrants        253    285 
MacuLogix, Inc. (2)(12)  Medical Device  158,451 Preferred Stock Warrants        156    156 
Mitralign, Inc. (2)(12)  Medical Device  64,190 Common Stock Warrants        52    1 
NinePoint Medical, Inc. (2)(12)  Medical Device  29,102 Preferred Stock Warrants        33     
ReShape Lifesciences Inc. (5)(12)  Medical Device  134 Common Stock Warrants        347     
Tryton Medical, Inc. (2)(12)  Medical Device  122,362 Preferred Stock Warrants        15    13 
VERO Biotech LLC (2)(12)  Medical Device  800 Common Stock Warrants        53    334 
ViOptix, Inc. (12)  Medical Device  375,763 Preferred Stock Warrants        13     
Total Non-Affiliate Warrants — Life Science        2,097    2,336 
Non-Affiliate Warrants — Technology — 5.4% (8)               
Audacy Corporation (2)(12)  Communications  1,017,173 Preferred Stock Warrants        194    195 
Ekahau, Inc. (2)(12)  Communications  978,261 Preferred Stock Warrants        33    899 
Intelepeer Holdings, Inc. (2)(12)  Communications  2,451,549 Preferred Stock Warrants        160    128 
PebblePost, Inc. (2)(12)  Communications  598,850 Preferred Stock Warrants        92    163 
Additech, Inc. (2)(12)  Consumer-related Technologies  150,000 Preferred Stock Warrants        32     
Gwynnie Bee, Inc. (2)(12)  Consumer-related Technologies  268,591 Preferred Stock Warrants        68    823 
Le Tote, Inc. (2)(12)  Consumer-related Technologies  202,974 Preferred Stock Warrants        63    373 
Rhapsody International Inc. (2)(12)  Consumer-related Technologies  852,273 Common Stock Warrants        164     
IgnitionOne, Inc. (2)(12)  Internet and Media  262,910 Preferred Stock Warrants        672    666 
Jump Ramp Games, Inc. (2)(12)  Internet and Media  159,766 Preferred Stock Warrants        32    8 
Kixeye, Inc. (2)(12)  Internet and Media  791,251 Preferred Stock Warrants        75    62 
Rocket Lawyer Incorporated (2)(12)  Internet and Media  261,721 Preferred Stock Warrants        92    78 
Verve Wireless, Inc. (2)(12)  Internet and Media  112,805 Common Stock Warrants        120    120 

 

See Notes to Consolidated Financial Statements

 

 9 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

September 30, 2018

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
                      
The NanoSteel Company, Inc. (2)(12)  Materials  379,360 Preferred Stock Warrants        187    528 
Powerhouse Dynamics, Inc. (2)(12)  Power Management  348,838 Preferred Stock Warrants        33    34 
Avalanche Technology, Inc. (2)(12)  Semiconductors  202,602 Preferred Stock Warrants        101    38 
Kaminario, Inc. (12)  Semiconductors  4,800,000 Preferred Stock Warrants        59    97 
Luxtera, Inc.(2)(12)  Semiconductors  3,546,553 Preferred Stock Warrants        213    401 
Soraa, Inc. (2)(12)  Semiconductors  203,616 Preferred Stock Warrants        80    430 
Bolt Solutions Inc. (2)(12)  Software  202,892 Preferred Stock Warrants        113    106 
Bridge2 Solutions, Inc. (2)(12)  Software  125,458 Common Stock Warrants        432    767 
BSI Platform Holdings, LLC (2)(12)(13)  Software  137,500 Preferred Stock Warrants        19    19 
Clarabridge, Inc. (12)  Software  53,486 Preferred Stock Warrants        14    106 
Education Elements, Inc. (2)(12)  Software  238,121 Preferred Stock Warrants        28    30 
Lotame Solutions, Inc. (2)(12)  Software  288,115 Preferred Stock Warrants        22    289 
Metricly, Inc. (12)  Software  41,569 Common Stock Warrants        48     
Riv Data Corp. (2)(12)  Software  321,428 Preferred Stock Warrants        12    37 
ShopKeep.com, Inc. (2)(12)  Software  193,962 Preferred Stock Warrants        118    117 
SIGNiX, Inc. (12)  Software  133,560 Preferred Stock Warrants        225    36 
Skyword, Inc. (12)  Software  301,056 Preferred Stock Warrants        48    3 
Sys-Tech Solutions, Inc. (2)(12)  Software  375,000 Preferred Stock Warrants        242    444 
Weblinc Corporation (2)(12)  Software  195,122 Preferred Stock Warrants        42     
xAd, Inc. (2)(12)  Software  4,343,350 Preferred Stock Warrants        177    299 
Total Non-Affiliate Warrants — Technology        4,010    7,296 
Non-Affiliate Warrants — Cleantech — 0.1% (8)               
Renmatix, Inc. (2)(12)  Alternative Energy  53,022 Preferred Stock Warrants        68     
Tigo Energy, Inc. (2)(12)  Energy Efficiency  804,604 Preferred Stock Warrants        100    113 
Total Non-Affiliate Warrants — Cleantech        168    113 
Non-Affiliate Warrants — Healthcare information and services — 0.5% (8)               
LifePrint Group, Inc. (2)(12)  Diagnostics  49,000 Preferred Stock Warrants        29    2 
ProterixBio, Inc. (2)(12)  Diagnostics  2,676 Common Stock Warrants        42     
Singulex, Inc. (12)  Other Healthcare  294,231 Preferred Stock Warrants        44    46 
Verity Solutions Group, Inc. (12)  Other Healthcare  300,360 Preferred Stock Warrants        100    67 
Watermark Medical, Inc. (2)(12)  Other Healthcare  27,373 Preferred Stock Warrants        74    63 
HealthEdge Software, Inc. (2)(12)  Software  205,481 Preferred Stock Warrants        83    72 
Medsphere Systems Corporation (2)(12)  Software  7,097,792 Preferred Stock Warrants        60    216 
Recondo Technology, Inc. (2)(12)  Software  556,796 Preferred Stock Warrants        95    215 
Total Non-Affiliate Warrants — Healthcare information and services        527    681 
Total Non-Affiliate Warrants              6,802    10,426 
                      
Non-Affiliate Other Investments — 5.7% (8)               
Espero Pharmaceuticals, Inc. (12)  Biotechnology  Royalty Agreement        5,300    4,700 
ZetrOZ, Inc. (12)  Medical Device  Royalty Agreement        179    700 
Vette Technology, LLC (12)  Data Storage  Royalty Agreement Due 4/18/2019        4,183    60 
Triple Double Holdings, LLC (12)  Software  License Agreement        2,200    2,200 
Total Non-Affiliate Other Investments        11,862    7,660 
                      
Non-Affiliate Equity — 0.9% (8)               
Insmed Incorporated (5)  Biotechnology  33,208 Common Stock        238    671 
Revance Therapeutics, Inc.(5)  Biotechnology  5,125 Common Stock        73    127 
Sunesis Pharmaceuticals, Inc. (5)  Biotechnology  13,082 Common Stock        83    27 
SnagAJob.com, Inc. (12)  Consumer-related Technologies  82,974 Common Stock        9    83 
Verve Wireless, Inc. (2)(12)  Internet and Media  100,598 Preferred Stock        225    225 
Formetrix, Inc. (2)(12)  Materials  74,286 Common Stock        74    74 
TruSignal, Inc. (12)  Software  32,637 Common Stock        41    41 
Total Non-Affiliate Equity              743    1,248 
Total Non-Affiliate Portfolio Investment Assets       $228,313   $227,813 
                      
Non-controlled Affiliate Investments — 5.6% (8)               
Non-controlled Affiliate Debt Investments — Technology — 5.0% (8)               
Decisyon, Inc. (12)  Software  Term Loan (14.408% cash (Libor + 12.308%; Floor  $1,523   $1,522   $1,449 
      12.50%), 8.00% ETP, Due 12/1/20)               
      Term Loan (14.408% cash (Libor + 12.308%; Floor   833    790    752 
      12.50%), 8.00% ETP, Due 12/1/20)               
      Term Loan (12.02% cash, Due 12/31/19)   250    250    238 

 

See Notes to Consolidated Financial Statements

 

 10 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

September 30, 2018

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
      Term Loan (12.03% cash, Due 12/31/19)   250    250    238 
      Term Loan (12.24% cash, Due 12/31/19)   750    750    714 
      Term Loan (13.08% cash, Due 12/31/19)   300    300    286 
      Term Loan (13.10% cash, Due 12/31/19)   200    200    190 
StereoVision Imaging, Inc. (12)  Software  Term Loan (9.13% PIK (Libor + 7.03%; Floor   3,200    2,798    2,798 
      8.50%), 8.50% ETP, Due 9/1/21) (11)               
Total Non-controlled Affiliate Debt Investments — Technology        6,860    6,665 
                       
Non-controlled Affiliate Warrants — Technology — 0.0% (8)               
Decisyon, Inc. (12)  Software  82,967 Common Stock Warrants        46     
Total Non-controlled Affiliate Warrants — Technology        46     
                      
Non-controlled Affiliate Equity — Technology — 0.6% (8)               
Decisyon, Inc. (12)  Software  45,365,936 Common Stock        185    75 
StereoVision Imaging, Inc. (12)  Software  1,943,572 Common Stock        791    791 
Total Non-controlled Affiliate Equity              976    866 
Total Non-controlled Affiliate Portfolio Investment Assets      $7,882   $7,531 
                      
                      
Controlled Affiliate Investments — 3.3% (8)               
Controlled Affiliate Equity — Financial — 3.3% (8)               
Horizon Secured Loan Fund I LLC (12)(14)  Investment funds          $4,413   $4,413 
Total Controlled Affiliate Equity              4,413    4,413 
Total Controlled Affiliate Portfolio Investment Assets       $4,413   $4,413 
                      
Total Portfolio Investment Assets — 178.3%(8)      $240,608   $239,757  

 

 
(1)   All investments of the Company are in entities which are organized under the laws of the United States and have a principal place of business in the United States.
     
(2)   Has been pledged as collateral under the Key Facility.
     
(3)   All non-affiliate investments are investments in which the Company owns less than 5% of the voting securities of the portfolio company. All non-controlled affiliate investments are investments in which the Company owns 5% or more of the voting securities of the portfolio company but not more than 25% of the voting securities of the portfolio company. All controlled affiliate investments are investments in which the Company owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement).
     
(4)   All interest is payable in cash due monthly in arrears, unless otherwise indicated, and applies only to the Company’s debt investments. Interest rate is the annual interest rate on the debt investment and does not include end-of-term payments (“ETPs”) and any additional fees related to the investments, such as deferred interest, commitment fees or prepayment fees. Debt investments are at variable rates for the term of the debt investment, unless otherwise indicated. All debt investments based on the London InterBank Offered Rate (“LIBOR”) are based on one-month LIBOR. For each debt investment, the current interest rate in effect as of September 30, 2018 is provided.
     
(5)   Portfolio company is a public company.
     
(6)   For debt investments, represents principal balance less unearned income.
     
(7)   Warrants, Equity and Other Investments are non-income producing.
     
(8)   Value as a percent of net assets.
     
(9)   As of September 30, 2018, 1.8% of the Company’s total investments on a cost and fair value basis are in non-qualifying assets. Under the Investment Company Act of 1940, as amended (the “1940 Act”), the Company may not acquire any non-qualifying assets unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets.
     
(10)  

ETPs are contractual fixed-interest payments due in cash at the maturity date of the applicable debt investment, including upon any prepayment, and are a fixed percentage of the original principal balance of the debt investments unless otherwise noted. Interest will accrue during the life of the debt investment on each ETP and will be recognized as non-cash income until it is actually paid. Therefore, a portion of the incentive fee the Company may pay its Advisor will be based on income that the Company has not yet received in cash.

     
(11)   Debt investment has a payment-in-kind (“PIK”) feature.
     
(12)   The fair value of the investment was valued using significant unobservable inputs.
     
(13)   New Signature US, Inc. is a subsidiary of BSI Platform Holdings, LLC.
     
(14)   On June 1, 2018, the Company entered into an agreement with Arena Sunset SPV, LLC (“Arena”) to co-invest through Horizon Secured Loan Fund I (“HSLFI”), a joint venture, which is expected to make investments, either directly or indirectly through subsidiaries, primarily in the form of secured loans to development-stage companies in the technology, life science, healthcare information and services and cleantech industries. All HSLFI investment decisions require unanimous approval of a quorum of HSLFI’s board of managers. Although the Company owns more than 25% of the voting securities of HSLFI, the Company does not believe it controls HSLFI for purposes of the 1940 Act or otherwise.

 

See Notes to Consolidated Financial Statements

 11 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

December 31, 2017

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
Non-Affiliate Investments — 161.8% (8)               
Non-Affiliate Debt Investments — 148.4% (8)               
Non-Affiliate Debt Investments — Life Science — 43.0% (8)               
Palatin Technologies, Inc. (2)(5)(14)  Biotechnology  Term Loan (9.87% cash (Libor + 8.50%; Floor  $2,000   $1,980   $1,980 
      9.00%), 5.00% ETP, Due 1/1/19)               
      Term Loan (9.87% cash (Libor + 8.50%; Floor   3,167    3,139    3,139 
      9.00%), 5.00% ETP, Due 8/1/19)               
vTv Therapeutics Inc. (2)(5)(14)  Biotechnology  Term Loan (11.37% cash (Libor + 10.00%; Floor   6,250    6,196    6,196 
      10.50%), 6.00% ETP, Due 5/1/20)               
      Term Loan (11.37% cash (Libor + 10.00%; Floor   3,750    3,700    3,700 
      10.50%), 6.00% ETP, Due 10/1/20)               
Titan Pharmaceuticals, Inc. (2)(5)(14)  Drug Delivery  Term Loan (9.77% cash (Libor + 8.40%; Floor   3,500    3,400    3,400 
      9.50%), 5.00% ETP, Due 6/1/21)               
      Term Loan (9.77% cash (Libor + 8.40%; Floor   3,500    3,430    3,430 
      9.50%), 5.00% ETP, Due 6/1/21)               
Aerin Medical, Inc. (2)(14)  Medical Device  Term Loan (8.85% cash (Libor + 7.45%; Floor   4,000    3,876    3,876 
      8.75%), 4.00% ETP, Due 1/1/22)               
      Term Loan (8.85% cash (Libor + 7.45%; Floor   3,000    2,954    2,954 
      8.75%), 4.00% ETP, Due 1/1/22)               
      Term Loan (8.85% cash (Libor + 7.45%; Floor   3,000    2,954    2,954 
      8.75%), 4.00% ETP, Due 1/1/22)               
Conventus Orthopaedics, Inc. (2)(14)  Medical Device  Term Loan (9.49% cash (Libor + 8.00%; Floor   4,000    3,928    3,928 
      9.25%), 6.00% ETP, Due 6/1/21)               
      Term Loan (9.49% cash (Libor + 8.00%; Floor   4,000    3,928    3,928 
      9.25%), 6.00% ETP, Due 6/1/21)               
      Term Loan (9.49% cash (Libor + 8.00%; Floor   4,000    3,928    3,928 
      9.25%), 6.00% ETP, Due 6/1/21)               
Lantos Technologies, Inc. (2)(14)  Medical Device  Term Loan (11.87% PIK (Libor + 10.50%; Floor   2,479    2,466    2,466 
      11.50%), 8.91% ETP, Due 5/1/19) (13)               
Mederi Therapeutics, Inc. (2)(14)  Medical Device  Term Loan (13.01% cash (Libor + 11.82%; Floor   173    173    163 
      12.00%), 6.00% ETP, Due 12/1/17)               
      Term Loan (13.01% cash (Libor + 11.82%; Floor   173    173    163 
      12.00%), 6.00% ETP, Due 12/1/17)               
NinePoint Medical, Inc. (2)(14)  Medical Device  Term Loan (10.12% cash (Libor + 8.75%; Floor   2,667    2,645    2,645 
      9.25%), 4.50% ETP, Due 3/1/19)               
      Term Loan (10.12% cash (Libor + 8.75%; Floor   1,333    1,320    1,320 
      9.25%), 4.50% ETP, Due 3/1/19)               
VERO Biotech LLC (2)(14)  Medical Device  Term Loan (9.33% cash (Libor + 8.00%; Floor   4,000    3,914    3,914 
      9.25%), 5.00% ETP, Due 1/1/22)               
      Term Loan (9.33% cash (Libor + 8.00%; Floor   4,000    3,934    3,934 
      9.25%), 5.00% ETP, Due 1/1/22)               
Total Non-Affiliate Debt Investments — Life Science       58,038    58,018 
Non-Affiliate Debt Investments — Technology — 99.1% (8)               
Intelepeer Holdings, Inc. (14)  Communications  Term Loan (11.39% cash (Libor + 9.95%; Floor   4,000    3,888    3,888 
      11.25%), 2.50% ETP, Due 7/1/21)               
      Term Loan (11.39% cash (Libor + 9.95%; Floor   4,000    3,927    3,927 
      11.25%), 2.50% ETP, Due 7/1/21)               
      Term Loan (11.39% cash (Libor + 9.95%; Floor   4,000    3,927    3,927 
      11.25%), 2.50% ETP, Due 7/1/21)               
PebblePost, Inc. (2)(14)  Communications  Term Loan (10.63% cash (Libor + 9.26%; Floor   4,000    3,874    3,874 
      10.25%), 4.00% ETP, Due 7/1/21)               
      Term Loan (10.63% cash (Libor + 9.26%; Floor   4,000    3,933    3,933 
      10.25%), 4.00% ETP, Due 7/1/21)               
Le Tote, Inc. (2)(14)  Consumer-related Technologies  Term Loan (11.02% cash (Libor + 9.65%; Floor   4,000    3,960    3,960 
      10.15%), 5.00% ETP, Due 3/1/20)               
      Term Loan (11.02% cash (Libor + 9.65%; Floor   3,000    2,969    2,969 
      10.15%), 5.00% ETP, Due 3/1/20)               
SavingStar, Inc. (2)(14)  Consumer-related Technologies  Term Loan (11.77% cash (Libor + 10.40%; Floor   2,167    2,140    2,140 
      10.90%), 4.25% ETP, Due 6/1/20)               
      Term Loan (11.77% cash (Libor + 10.40%; Floor   1,911    1,849    1,849 
      10.90%), 3.80% ETP, Due 11/1/20)               
IgnitionOne, Inc. (2)(14)  Internet and Media  Term Loan (11.60% cash (Libor + 10.23%; Floor   3,000    2,832    2,832 

 

See Notes to Consolidated Financial Statements

 

 12 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

December 31, 2017

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
      10.23%), 2.00% ETP, Due 4/1/22)               
      Term Loan (11.60% cash (Libor + 10.23%; Floor   3,000    2,832    2,832 
      10.23%), 2.00% ETP, Due 4/1/22)               
      Term Loan (11.60% cash (Libor + 10.23%; Floor   3,000    2,832    2,832 
      10.23%), 2.00% ETP, Due 4/1/22)               
      Term Loan (11.60% cash (Libor + 10.23%; Floor   3,000    2,832    2,832 
      10.23%), 2.00% ETP, Due 4/1/22)               
Jump Ramp Games, Inc. (2)(14)  Internet and Media  Term Loan (11.10% cash (Libor + 9.73%),   4,000    3,942    3,942 
      3.00% ETP, Due 4/1/21)               
Kixeye, Inc. (2)(14)  Internet and Media  Term Loan (10.97% cash (Libor + 9.60%; Floor   3,000    2,900    2,900 
      10.75%), 2.00% ETP, Due 9/1/21)               
      Term Loan (10.97% cash (Libor + 9.60%; Floor   3,000    2,945    2,945 
      10.75%), 2.00% ETP, Due 9/1/21)               
MediaBrix, Inc. (2)(14)  Internet and Media  Term Loan (12.37% cash (Libor + 11.00%; Floor   4,000    3,977    3,977 
      11.50%), 3.00% ETP, Due 1/1/20)               
Rocket Lawyer Incorporated (2)(14)  Internet and Media  Term Loan (10.77% cash (Libor + 9.40%; Floor   4,000    3,933    3,933 
      10.50%), 3.00% ETP, Due 7/1/21)               
      Term Loan (10.77% cash (Libor + 9.40%; Floor   4,000    3,933    3,933 
      10.50%), 3.00% ETP, Due 7/1/21)               
      Term Loan (10.77% cash (Libor + 9.40%; Floor   2,000    1,963    1,963 
      10.50%), 3.00% ETP, Due 11/1/21)               
Zinio Holdings, LLC (2)(14)  Internet and Media  Term Loan (12.62% cash (Libor + 11.25%; Floor   4,000    3,978    3,978 
      11.75%), 6.00% ETP, Due 2/1/20)               
The NanoSteel Company, Inc. (2)(14)  Materials  Term Loan (10.87% cash (Libor + 9.50%; Floor   4,653    4,578    4,578 
      10.00%), 7.20% ETP, Due 1/1/20)               
      Term Loan (10.87% cash (Libor + 9.50%; Floor   2,327    2,289    2,289 
      10.00%), 6.45% ETP, Due 1/1/20)               
      Term Loan (10.87% cash (Libor + 9.50%; Floor   2,500    2,457    2,457 
      10.00%), 5.85% ETP, Due 3/1/20)               
Powerhouse Dynamics, Inc. (2)(14)  Power Management  Term Loan (12.07% cash (Libor + 10.70%; Floor   1,250    1,234    1,234 
      11.20%), 3.00% ETP, Due 3/1/19)               
Luxtera, Inc. (14)  Semiconductors  Term Loan (11.25% cash (Prime + 6.75%),   2,000    1,902    1,902 
      Due 3/28/20)               
      Term Loan (11.25% cash (Prime + 6.75%),   1,500    1,443    1,443 
      Due 3/28/20)               
Bridge2 Solutions, LLC. (2)(14)  Software  Term Loan (10.62% cash (Libor + 9.25%; Floor   5,000    4,777    4,777 
      10.50%), 2.00% ETP, Due 11/1/21)               
      Term Loan (10.62% cash (Libor + 9.25%; Floor   5,000    4,777    4,777 
      10.50%), 2.00% ETP, Due 11/1/21)               
Digital Signal Corporation (11)(12)(14)  Software  Term Loan (11.62% cash (Libor + 10.25%; Floor   1,290    1,256    1,210 
      10.43%), 5.00% ETP, Due 7/1/19)               
      Term Loan (11.62% cash (Libor + 10.25%; Floor   1,290    1,256    1,210 
      10.43%), 5.00% ETP, Due 7/1/19)               
      Term Loan (10.00% cash, Due 12/31/17)   501    501    483 
Education Elements, Inc. (2)(14)  Software  Term Loan (11.37% cash (Libor + 10.00%; Floor   800    789    789 
      10.50%), 4.00% ETP, Due 1/1/19)               
      Term Loan (11.37% cash (Libor + 10.00%; Floor   950    937    937 
      10.50%), 4.00% ETP, Due 8/1/19)               
Metricly, Inc. (14)  Software  Term Loan (13.62% cash (Libor + 12.25%; Floor   184    184    184 
      12.50%), 3.33% ETP, Due 9/1/18)               
ShopKeep.com, Inc. (2)(14)  Software  Term Loan (11.32% cash (Libor + 9.95%; Floor   6,000    5,897    5,897 
      10.45%), 4.08% ETP, Due 10/1/20)               
      Term Loan (11.32% cash (Libor + 9.95%; Floor   4,000    3,924    3,924 
      10.45%), 3.55% ETP, Due 2/1/21)               
SIGNiX, Inc. (14)  Software  Term Loan (12.37% cash (Libor + 11.00%; Floor   2,180    2,073    1,930 
      11.50%), 5.33% ETP, Due 2/1/20)               
SilkRoad Technology, Inc. (2)(14)  Software  Term Loan (11.72% cash (Libor + 10.35%; Floor   7,000    6,904    6,904 
      10.85%; Ceiling 12.85%), 5.00% ETP, Due 6/1/20)               
Weblinc Corporation (2)(14)  Software  Term Loan (11.62% cash (Libor + 10.25%; Floor   3,000    2,913    2,913 
      11.25%), 3.00% ETP, Due 3/1/21)               
xAd, Inc. (2)(14)  Software  Term Loan (10.07% cash (Libor + 8.70%; Floor   5,000    4,895    4,895 
      10.00%), 4.75% ETP, Due 11/1/21)               
      Term Loan (10.07% cash (Libor + 8.70%; Floor   5,000    4,895    4,895 
      10.00%), 4.75% ETP, Due 11/1/21)               

 

See Notes to Consolidated Financial Statements

 

 13 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

December 31, 2017

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
      Term Loan (10.07% cash (Libor + 8.70%; Floor   3,000    2,937    2,937 
      10.00%), 4.75% ETP, Due 11/1/21)               
      Term Loan (10.07% cash (Libor + 8.70%; Floor   2,000    1,958    1,958 
      10.00%), 4.75% ETP, Due 11/1/21)               
Total Non-Affiliate Debt Investments — Technology       134,142     133,889 
Non-Affiliate Debt Investments — Healthcare information and services — 6.3% (8)               
HealthEdge Software, Inc. (2)(14)  Software  Term Loan (9.62% cash (Libor + 8.25%;   5,000    4,819    4,819 
      Floor 9.25%), 3.00% ETP, Due 7/1/22)               
      Term Loan (9.68% cash (Libor + 8.25%;   3,750    3,693    3,693 
      Floor 9.25%), 3.00% ETP, Due 1/1/23)               
Total Non-Affiliate Debt Investments — Healthcare information and services         8,512    8,512 
Total Non- Affiliate Debt Investments        200,692    200,419 
                      
Non-Affiliate Warrant Investments — 6.7% (8)               
Non-Affiliate Warrants — Life Science — 1.6% (8)               
ACT Biotech Corporation (14)  Biotechnology  604,038 Preferred Stock Warrants        60     
Alpine Immune Sciences, Inc. (5)(14)  Biotechnology  4,634 Common Stock Warrants        122     
Argos Therapeutics, Inc. (2)(5)(14)  Biotechnology  73,112 Common Stock Warrants        33     
Celsion Corporation (5)(14)  Biotechnology  408 Common Stock Warrants        15     
Rocket Pharmaceuticals Corporation (5)(14)  Biotechnology  7,051 Common Stock Warrants        17     
Palatin Technologies, Inc. (2)(5)(14)  Biotechnology  608,058 Common Stock Warrants        51    82 
Revance Therapeutics, Inc. (5)(14)  Biotechnology  34,113 Common Stock Warrants        68    729 
Sample6, Inc. (2)(14)  Biotechnology  661,956 Preferred Stock Warrants        53    25 
Strongbridge U.S. Inc. (5)(14)  Biotechnology  160,714 Common Stock Warrants        72    794 
Sunesis Pharmaceuticals, Inc. (5)(14)  Biotechnology  2,050 Common Stock Warrants        5     
vTv Therapeutics Inc. (2)(5)(14)  Biotechnology  95,293 Common Stock Warrants        44    82 
Titan Pharmaceuticals, Inc. (2)(5)(14)  Drug Delivery  280,612 Common Stock Warrants        88    30 
AccuVein Inc. (2)(14)  Medical Device  75,769 Preferred Stock Warrants        24    27 
Aerin Medical, Inc. (2)(14)  Medical Device  1,818,182 Preferred Stock Warrants        66    66 
Conventus Orthopaedics, Inc. (2)(14)  Medical Device  720,000 Preferred Stock Warrants        95    95 
IntegenX, Inc. (2)(14)  Medical Device  170,646 Preferred Stock Warrants        35    32 
Lantos Technologies, Inc. (2)(14)  Medical Device  471,979 Common Stock Warrants        39    145 
Mederi Therapeutics, Inc. (2)(14)  Medical Device  248,736 Preferred Stock Warrants        26     
Mitralign, Inc. (2)(14)  Medical Device  64,190 Common Stock Warrants        52    1 
NinePoint Medical, Inc. (2)(14)  Medical Device  29,102 Preferred Stock Warrants        33    2 
OraMetrix, Inc. (2)(14)  Medical Device  812,348 Preferred Stock Warrants        78     
ReShape Lifesciences Inc. (5)(14)  Medical Device  134 Common Stock Warrants        347     
Tryton Medical, Inc. (2)(14)  Medical Device  122,362 Preferred Stock Warrants        15    12 
VERO Biotech LLC (2)(14)  Medical Device  800,000 Common Stock Warrants        53    53 
ViOptix, Inc. (14)  Medical Device  375,763 Preferred Stock Warrants        13     
Total Non-Affiliate Warrants — Life Science        1,504    2,175 
Non-Affiliate Warrants — Technology — 4.6% (8)                  
Ekahau, Inc. (2)(14)  Communications  978,261 Preferred Stock Warrants        32    22 
Intelepeer Holdings, Inc. (14)  Communications  2,256,549 Preferred Stock Warrants        149    110 
PebblePost, Inc. (2)(14)  Communications  598,850 Preferred Stock Warrants        92    92 
Additech, Inc. (2)(14)  Consumer-related Technologies  150,000 Preferred Stock Warrants        33    31 
Gwynnie Bee, Inc. (2)(14)  Consumer-related Technologies  268,591 Preferred Stock Warrants        68    816 
Le Tote, Inc. (2)(14)  Consumer-related Technologies  202,974 Preferred Stock Warrants        63    363 
Rhapsody International Inc. (2)(14)  Consumer-related Technologies  852,273 Common Stock Warrants        164     
SavingStar, Inc. (2)(14)  Consumer-related Technologies  850,439 Preferred Stock Warrants        104    103 
IgnitionOne, Inc. (2)(14)  Internet and Media  262,910 Preferred Stock Warrants        672    668 
Jump Ramp Games, Inc. (2)(14)  Internet and Media  159,766 Preferred Stock Warrants        31    31 
Kixeye, Inc. (2)(14)  Internet and Media  791,251 Preferred Stock Warrants        75    74 
Rocket Lawyer Incorporated (2)(14)  Internet and Media  261,721 Preferred Stock Warrants        91    91 
The NanoSteel Company, Inc. (2)(14)  Materials  379,360 Preferred Stock Warrants        187    448 
Nanocomp Technologies, Inc. (2)(14)  Networking  1,440,489 Preferred Stock Warrants        67     
Powerhouse Dynamics, Inc. (2)(14)  Power Management  290,698 Preferred Stock Warrants        28    26 
Avalanche Technology, Inc. (2)(14)  Semiconductors  202,602 Preferred Stock Warrants        101    40 
eASIC Corporation (2)(14)  Semiconductors  40,445 Preferred Stock Warrants        25    28 
Kaminario, Inc.(14)  Semiconductors  1,087,203 Preferred Stock Warrants        59    44 
Luxtera, Inc.(2)(14)  Semiconductors  3,546,553 Preferred Stock Warrants        213    361 

 

See Notes to Consolidated Financial Statements

 

 14 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

December 31, 2017

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
Soraa, Inc. (2)(14)  Semiconductors  203,616 Preferred Stock Warrants        80    438 
Bolt Solutions Inc. (2)(14)  Software  202,892 Preferred Stock Warrants        113    99 
Bridge2 Solutions, Inc. (2)(14)  Software  125,458 Common Stock Warrants        433    760 
Clarabridge, Inc. (14)  Software  53,486 Preferred Stock Warrants        14    82 
Digital Signal Corporation (14)  Software  125,116 Common Stock Warrants        32     
Education Elements, Inc. (2)(14)  Software  238,121 Preferred Stock Warrants        28    28 
Lotame Solutions, Inc. (2)(14)  Software  288,115 Preferred Stock Warrants        22    281 
Metricly, Inc. (14)  Software  41,569 Common Stock Warrants        48     
Riv Data Corp. (2)(14)  Software  321,428 Preferred Stock Warrants        12    38 
ShopKeep.com, Inc. (2)(14)  Software  193,962 Preferred Stock Warrants        118    138 
SIGNiX, Inc. (14)  Software  133,560 Preferred Stock Warrants        225    109 
Skyword, Inc. (14)  Software  301,056 Preferred Stock Warrants        48    32 
SpringCM, Inc. (2)(14)  Software  2,385,686 Preferred Stock Warrants        55    132 
Sys-Tech Solutions, Inc. (14)  Software  375,000 Preferred Stock Warrants        242    464 
Visage Mobile, Inc. (14)  Software  1,692,047 Preferred Stock Warrants        19    2 
Weblinc Corporation (2)(14)  Software  195,122 Preferred Stock Warrants        42    42 
xAd, Inc. (2)(14)  Software  4,343,350 Preferred Stock Warrants        177    177 
Total Non-Affiliate Warrants — Technology        3,962    6,170 
Non-Affiliate Warrants — Cleantech — 0.1% (8)               
Renmatix, Inc. (14)  Alternative Energy  53,022 Preferred Stock Warrants        68     
Tigo Energy, Inc. (2)(14)  Energy Efficiency  804,604 Preferred Stock Warrants        100    117 
Total Non-Affiliate Warrants — Cleantech        168    117 
Non-Affiliate Warrants — Healthcare information and services — 0.4% (8)               
LifePrint Group, Inc. (2)(14)  Diagnostics  49,000 Preferred Stock Warrants        29    2 
ProterixBio, Inc. (2)(14)  Diagnostics  3,156 Common Stock Warrants        54     
Singulex, Inc. (14)  Other Healthcare  294,231 Preferred Stock Warrants        44    44 
Verity Solutions Group, Inc. (14)  Other Healthcare  300,360 Preferred Stock Warrants        100    62 
Watermark Medical, Inc. (2)(14)  Other Healthcare  27,373 Preferred Stock Warrants        74    59 
HealthEdge Software, Inc. (2)(14)  Software  110,644 Preferred Stock Warrants        46    46 
Medsphere Systems Corporation (2)(14)  Software  7,097,792 Preferred Stock Warrants        60    208 
Recondo Technology, Inc. (2)(14)  Software  556,796 Preferred Stock Warrants        95    207 
Total Non-Affiliate Warrants — Healthcare information and services        502    628  
Total Non-Affiliate Warrants              6,136    9,090 
                      
Non-Affiliate Other Investments — 5.7% (8)               
Espero Pharmaceuticals, Inc. (14)  Biotechnology  Royalty Agreement        5,300    4,700 
ZetrOZ, Inc. (14)  Medical Device  Royalty Agreement        305    700 
Vette Technology, LLC (14)  Data Storage  Royalty Agreement Due 4/18/2019        4,226    100 
Triple Double Holdings, LLC (14)  Software  License Agreement        2,200    2,200 
Total Non-Affiliate Other Investments              12,031    7,700 
                      
Non-Affiliate Equity — 1.0% (8)                     
Insmed Incorporated (5)  Biotechnology  33,208 Common Stock        238    1,035 
Revance Therapeutics, Inc.(5)  Biotechnology  5,125 Common Stock        73    183 
Sunesis Pharmaceuticals, Inc. (5)  Biotechnology  13,082 Common Stock        83    49 
SnagAJob.com, Inc. (14)  Consumer-related Technologies  82,974 Common Stock        9    83 
TruSignal, Inc. (14)  Software  32,637 Common Stock        41    41 
Total Non-Affiliate Equity              444    1,391 
Total Non-Affiliate Portfolio Investment Assets      $219,303   $218,600  
                      
Affiliate Investments — 2.6% (8)                     
Affiliate Debt Investments — Technology — 2.5% (8)               
Decisyon, Inc. (14)  Software  Term Loan (13.678% cash (Libor + 12.308%; Floor  $1,523   $1,522   $1,449 
      12.50%), 8.00% ETP, Due 1/1/20)               
      Term Loan (13.678% cash (Libor + 12.308%; Floor   833    771    735 
      12.50%), 8.00% ETP, Due 1/1/20)               
      Term Loan (12.02% PIK, Due 4/15/19) (13)   250    250    238 
      Term Loan (12.03% PIK, Due 4/15/19) (13)   250    250    238 
      Term Loan (12.24% PIK, Due 4/15/19) (13)   750    750    714 
Total Affiliate Debt Investments — Technology               3,543    3,374  

 

See Notes to Consolidated Financial Statements

 

 15 

 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

December 31, 2017

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
Affiliate Warrants — Technology — 0.0% (8)               
Decisyon, Inc. (14)  Software  82,967 Common Stock Warrants        46     
Total Affiliate Warrants — Technology              46     
                      
Affiliate Equity — Technology — 0.1% (8)          
Decisyon, Inc. (14)  Software  45,365,936 Common Stock        185    125