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, 2019
   
  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 traded under the symbol “HRZN” on the Nasdaq Global Select Market, $0.001 par value per share, outstanding as of October 29, 2019 was 14,571,322.

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Ticker symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.001 per share   HRZN   The Nasdaq Stock Market LLC
6.25% Notes due 2022   HTFA   The New York Stock Exchange

 

 

 

 

 

 

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, 2019 (unaudited) and December 31, 2018   3
  Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018 (unaudited)   4
  Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2019 and 2018 (unaudited)   5
  Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (unaudited)   6
  Consolidated Schedules of Investments as of September 30, 2019 (unaudited) and December 31, 2018   7
  Notes to the Consolidated Financial Statements (unaudited)   18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   46
Item 3. Quantitative and Qualitative Disclosures About Market Risk   67
Item 4. Controls and Procedures   68
       
PART II    
Item 1. Legal Proceedings   69
Item 1A. Risk Factors   69
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   69
Item 3. Defaults Upon Senior Securities   69
Item 4. Mine Safety Disclosures   69
Item 5. Other Information   70
Item 6. Exhibits   70
  Signatures   71
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

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

 

  

September 30,

2019

   December 31,
2018
 
   (Unaudited)     
Assets          
Non-affiliate investments at fair value (cost of $259,778 and $229,772, respectively)  $258,249   $227,624 
Non-controlled affiliate investments at fair value (cost of $7,241 and $7,887, respectively) (Note 5)   8,947    7,574 
Controlled affiliate investments at fair value (cost of $14,358 and $13,262, respectively) (Note 5)   14,323    13,243 
Total investments at fair value (cost of $281,377 and $250,921, respectively) (Note 4)   281,519    248,441 
Cash   16,958    12,591 
Investments in money market funds   18,199     
Restricted investments in money market funds   1,201     
Interest receivable   4,966    3,966 
Other assets   2,108    1,751 
Total assets  $324,951   $266,749 
           
Liabilities          
Borrowings (Note 7)  $149,920   $126,853 
Distributions payable   4,324    3,461 
Base management fee payable (Note 3)   470    422 
Incentive fee payable (Note 3)   1,443    991 
Other accrued expenses   650    765 
Total liabilities   156,807    132,492 
           
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, 2019 and December 31, 2019        
Common stock, par value $0.001 per share, 100,000,000 shares authorized, 14,579,940 and 11,702,594 shares issued and 14,412,475 and 11,535,129 shares outstanding as of September 30, 2019 and December 31, 2018, respectively   15    12 
Paid-in capital in excess of par   213,007    179,616 
Distributable earnings   (44,878)   (45,371)
Total net assets   168,144    134,257 
Total liabilities and net assets  $324,951   $266,749 
Net asset value per common share  $11.67   $11.64 

 

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, 
   2019   2018   2019   2018 
Investment income                    
Interest income on investments                    
Interest income on non-affiliate investments  $8,974   $7,094   $25,429   $20,385 
Interest income on affiliate investments   210    193    645    528 
Total interest income on investments   9,184    7,287    26,074    20,913 
Fee income                    
Fee income on non-affiliate investments   37    315    382    865 
Fee income on affiliate investments   4        18     
Prepayment fee income on non-affiliate investments   639    102    1,373    414 
Revenue based payments on non-affiliate investments 1   1,050    10    1,080    10 
Total fee income   1,730    427    2,853    1,289 
Dividend income                    
Dividend income on controlled affiliate investments   461    83    1,223    83 
Total dividend income   461    83    1,223    83 
Total investment income   11,375    7,797    30,150    22,285 
Expenses                    
Interest expense   2,046    1,681    6,209    4,616 
Base management fee (Note 3)   1,394    1,197    4,055    3,399 
Performance based incentive fee (Note 3)   1,443    1,297    5,352    2,823 
Administrative fee (Note 3)   212    162    631    517 
Professional fees   279    289    1,045    997 
General and administrative   228    215    688    636 
Total expenses   5,602    4,841    17,980    12,988 
Performance based incentive fee waived (Note 3)       (446)   (1,848)   (605)
Net expenses   5,602    4,395    16,132    12,383 
Net investment income   5,773    3,402    14,018    9,902 
Net realized and unrealized (loss) gain on investments                    
Net realized (loss) gain on non-affiliate investments   (424)   66    (3,871)   (237)
Net realized (loss) gain on investments   (424)   66    (3,871)   (237)
Net unrealized (depreciation) appreciation on non-affiliate investments   (129)   761    620    202 
Net unrealized appreciation (depreciation) on non-controlled affiliate investments       30    2,019    (75)
Net unrealized depreciation on controlled affiliate investments   (14)       (17)    
Net unrealized (depreciation) appreciation on investments   (143)   791    2,622    127 
Net realized and unrealized (loss) gain on investments   (567)   857    (1,249)   (110)
Net increase in net assets resulting from operations  $5,206   $4,259   $12,769   $9,792 
Net investment income per common share  $0.42   $0.30   $1.08   $0.86 
Net increase in net assets per common share  $0.38   $0.37   $0.98   $0.85 
Distributions declared per share  $0.30   $0.30   $0.90   $0.90 
Weighted average shares outstanding   13,816,082    11,529,611    13,016,839    11,525,906 

 

 

1 Revenue Based Payments consist of payments made to the Company by a portfolio company based upon a percentage of such portfolio company’s revenue. Such payments were made in addition to the portfolio company’s regularly scheduled payments of principal and interest.

 

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   Distributable   Total Net 
   Shares   Amount   Par  

Earnings

   Assets 
Balance at June 30, 2018   11,527,764   $12   $179,720   $(45,961)  $133,771 
Net increase in net assets resulting from operations, net of excise tax:                         
Net investment income, net of excise tax               3,402    3,402 
Net realized gain on investments               66    66 
Net unrealized appreciation on investments               791    791 
Financing costs           (155)       (155)
Issuance of common stock under dividend reinvestment plan   3,635        41        41 
Distributions declared               (3,460)   (3,460)
Balance at September 30, 2018   11,531,399    12    179,606    (45,162)   134,456 
                          
Balance at June 30, 2019   13,542,873    14    202,855    (45,733)   157,136 
Issuance of common stock, net of offering costs   865,728    1    10,106        10,107 
Net increase in net assets resulting from operations, net of excise tax:                         
Net investment income, net of excise tax               5,773    5,773 
Net realized loss on investments               (424)   (424)
Net unrealized depreciation on investments               (143)   (143)
Issuance of common stock under dividend reinvestment plan   3,874        46        46 
Distributions declared               (4,351)   (4,351)
Balance at September 30, 2019   14,412,475   $15   $213,007   $(44,878)  $168,144 

 

   Common Stock   Paid-In Capital in Excess of   Distributable   Total Net 
   Shares   Amount   Par  

Earnings

   Assets 
Balance at December 31, 2017   11,520,406   $12   $179,641   $(44,578)  $135,075 
Net increase in net assets resulting from operations, net of excise tax:                         
Net investment income, net of excise tax               9,902    9,902 
Net realized loss on investments               (237)   (237)
Net unrealized appreciation on investments               127    127 
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    (45,162)   134,456 
                          
Balance at December 31, 2018   11,535,129    12    179,616    (45,371)   134,257 
Issuance of common stock, net of offering costs   2,865,728    3    33,251        33,254 
Net increase in net assets resulting from operations, net of excise tax:                         
Net investment income, net of excise tax               14,018    14,018 
Net realized loss on investments               (3,871)   (3,871)
Net unrealized appreciation on investments               2,622    2,622 
Issuance of common stock under dividend reinvestment plan   11,618        140        140 
Distributions declared               (12,276)   (12,276)
Balance at September 30, 2019   14,412,475   $15   $213,007   $(44,878)  $168,144 

 

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, 
   2019   2018 
Cash flows from operating activities:          
Net increase in net assets resulting from operations  $12,769   $9,792 
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:          
Amortization of debt issuance costs   522    420 
Net realized loss on investments   3,871    237 
Net unrealized appreciation on investments   (2,622)   (127)
Purchase of investments   (135,284)   (62,246)
Principal payments received on investments   101,117    46,503 
Proceeds from sale of investments   2,439    3,360 
Investment in controlled affiliate investments   (589)   (4,413)
Distributions from controlled affiliate investment   715     
Dividends from controlled affiliate investment   (1,223)    
Equity received in settlement of fee income       (299)
Warrants received in settlement of fee income       (161)
Changes in assets and liabilities:          
Increase in money market funds   (18,199)    
Increase in restricted account   (1,201)    
Increase in interest receivable   (507)   (48)
Increase in end-of-term payments   (493)   (731)
Decrease in unearned income   (1,491)   (512)
(Increase) decrease in other assets   (516)   72 
(Decrease) increase in other accrued expenses   (115)   82 
Increase in base management fee payable   48    31 
Increase in incentive fee payable   452    310 
Net cash used in operating activities   (40,307)   (7,730)
Cash flows from financing activities:          
Proceeds from issuance of common stock, net of offering costs   33,254     
Proceeds from Asset-Backed Notes   100,000     
Advances on credit facility   49,500    28,000 
Repayment of credit facility   (125,000)   (10,000)
Debt issuance costs   (1,808)   (547)
Distributions paid   (11,272)   (10,253)
Financing costs       (155)
Net cash provided by financing activities   44,674    7,045 
Net increase(decrease) in cash   4,367    (685)
Cash:          
Beginning of period   12,591    6,594 
End of period  $16,958   $5,909 
Supplemental disclosure of cash flow information:          
Cash paid for interest  $5,801   $4,085 
Supplemental non-cash investing and financing activities:          
Warrant investments received and recorded as unearned income  $1,675   $1,007 
Distributions payable  $4,324   $3,459 
End-of-term payments receivable  $3,508   $3,667 
Receivable resulting from sale of investment  $500   $59 

 

See Notes to Consolidated Financial Statements

 

 6 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

September 30, 2019

(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 — 153.6% (8)                     
Non-Affiliate Debt Investments — 146.9% (8)                     
Non-Affiliate Debt Investments — Life Science — 66.6% (8)                     
Celsion Corporation (2)(5)(12)  Biotechnology  Term Loan (9.73% cash (Libor + 7.63%; Floor 9.63%), 4.00%    ETP, Due 7/1/22)  $2,500   $2,460   $2,460 
                      
      Term Loan (9.73% cash (Libor + 7.63%; Floor 9.63%), 4.00%   ETP, Due 7/1/22)   2,500    2,460    2,460 
Encore Dermatology, Inc. (2)(12)  Biotechnology  Term Loan (10.00% cash (Libor + 7.50%; Floor 10.00%), 3.00%   ETP, Due 4/1/23)   5,000    4,835    4,835 
      Term Loan (10.00% cash (Libor + 7.50%; Floor 10.00%), 3.00%   ETP, Due 4/1/23)   5,000    4,923    4,923 
Espero BioPharma, Inc. (2)(12)  Biotechnology  Term Loan (12.00% cash (Libor + 9.90%; Floor 12.00%), 4.00%   ETP, Due 6/30/19) (11)   5,053    5,053    5,053 
      Term Loan (12.00% cash (Libor + 9.90%; Floor 12.00%), 4.00%   ETP, Due 12/31/19) (11)   4,727    4,727    4,727 
LogicBio, Inc.(2)(5)(12)  Biotechnology  Term Loan (8.75% cash (Libor + 6.25%; Floor 8.75%), 4.50%   ETP, Due 6/1/24   5,000    4,968    4,968 
Mustang Bio, Inc. (2)(5)(12)  Biotechnology  Term Loan (9.00% cash (Libor + 6.50%; Floor 9.00%), 5.00%   ETP, Due 10/1/22)   5,000    4,821    4,821 
      Term Loan (9.00% cash (Libor + 6.50%; Floor 9.00%), 5.00%   ETP, Due 10/1/22)   5,000    4,917    4,917 
vTv Therapeutics Inc. (2)(5)(12)  Biotechnology  Term Loan (12.10% cash (Libor + 10.00%; Floor 10.50%), 6.00%   ETP, Due 5/1/20)   1,823    1,810    1,810 
      Term Loan (12.10% cash (Libor + 10.00%; Floor 10.50%), 6.00%   ETP, Due 10/1/20)   1,875    1,857    1,857 
Titan Pharmaceuticals, Inc. (2)(5)(12)  Drug Delivery  Term Loan (10.50% cash (Libor + 8.40%; Floor 9.50%), 5.00%   ETP, Due 6/1/22)   1,600    1,526    1,526 
Conventus Orthopaedics, Inc. (2)(12)  Medical Device  Revolving Loan (10.10% cash (Libor + 8.00%; Floor 9.25%), 6.00%   ETP, Due 7/1/21)   10,621    10,445    10,445 
CSA Medical, Inc. (2)(12)  Medical Device  Term Loan (10.03% cash (Libor + 7.93%; Floor 10.00%), 5.00%   ETP, Due 10/1/22)   6,000    5,874    5,874 
      Term Loan (10.03% cash (Libor + 7.93%; Floor 10.00%), 5.00%   ETP, Due 7/1/23)   6,000    5,898    5,898 
Lantos Technologies, Inc. (2)(12)  Medical Device  Term Loan (10.53% cash (Libor + 8.43%; Floor 10.00%), 10.00%   ETP, Due 9/1/21)   3,750    3,416    3,416 
MacuLogix, Inc. (2)(12)  Medical Device  Term Loan (10.08% cash (Libor + 7.68%; Floor 10.08%), 4.00%   ETP, Due 10/1/23)   7,500    7,386    7,386 
      Term Loan (10.08% cash (Libor + 7.68%; Floor 10.08%), 4.00%   ETP, Due 10/1/23)   4,050    3,989    3,989 
Meditrina, Inc. (12)  Medical Device  Term Loan (9.70% cash (Libor + 7.10%; Floor 9.70%), 4.00%   ETP, Due 5/1/20)   3,000    2,903    2,903 
VERO Biotech LLC (2)(12)  Medical Device  Term Loan (10.10% cash (Libor + 8.00%; Floor 9.25%), 5.00%   ETP, Due 1/1/22)   4,000    3,963    3,963 
      Term Loan (10.10% cash (Libor + 8.00%; Floor 9.25%), 5.00%   ETP, Due 1/1/22)   4,000    3,963    3,963 
CVRx, Inc. (2)(12)  Medical Device  Term Loan (10.00% cash (Libor + 8.80%; Floor 10.00%), 3.50%   ETP, Due 4/1/23)   5,000    4,931    4,931 
      Term Loan (10.00% cash (Libor + 8.80%; Floor 10.00%), 3.50%   ETP, Due 4/1/23)   5,000    4,931    4,931 
      Term Loan (10.00% cash (Libor + 8.80%; Floor 10.00%), 3.50%   ETP, Due 4/1/23)   5,000    4,931    4,931 
      Term Loan (10.00% cash (Libor + 8.80%; Floor 10.00%), 3.50%   ETP, Due 4/1/23)   5,000    4,931    4,931 
               111,918    111,918 
Total Non-Affiliate Debt Investments — Life Science                     
Non-Affiliate Debt Investments — Technology — 71.4% (8)                     
Audacy Corporation (2)(12)(15)  Communications  Term Loan (10.00% cash (Libor + 7.90%; Floor 9.50%), 5.00%   ETP, Due 7/1/22)   3,137    3,137    1,274 
      Term Loan (10.00% cash (Libor + 7.90%; Floor 9.50%), 0.00%   ETP, Due 2/1/20)   550    550    226 
Intelepeer Holdings, Inc. (2)(12)  Communications  Term Loan (12.05% cash (Libor + 9.95%; Floor 11.25%), 2.50%   ETP, Due 7/1/21)   4,000    3,942    3,942 
      Term Loan (12.05% cash (Libor + 9.95%; Floor 11.25%), 2.50%   ETP, Due 2/1/22)   3,000    2,952    2,952 

  

See Notes to Consolidated Financial Statements

 

 7 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

September 30, 2019

(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 (12.45% cash (Libor + 9.95%; Floor 12.45%), 2.50%   ETP, Due 10/1/22)   1,073    1,056    1,056 
      Term Loan (12.45% cash (Libor + 9.95%; Floor 12.45%), 2.50%   ETP, Due 04/1/23)   1,440    1,414    1,414 
      Term Loan (12.45% cash (Libor + 9.95%; Floor 12.45%), 2.86%   ETP, Due 04/1/23)   1,260    1,237    1,237 
Betabrand Corporation (2)(12)  Consumer-related Technologies  Term Loan (10.05% cash (Libor + 7.50%; Floor 10.05%), 4.50%  ETP, Due 9/1/23)   4,250    4,111    4,111 
      Term Loan (10.05% cash (Libor + 7.50%; Floor 10.05%), 4.50%  ETP, Due 9/1/23)   4,250    4,177    4,177 
Mohawk Group Holdings, Inc. (2)(5)(12)  Consumer-related Technologies  Term Loan (9.90% cash (Libor + 7.40%; Floor 9.90%), 4.00%  ETP, Due 1/1/23)   5,000    4,907    4,907 
      Term Loan (9.90% cash (Libor + 7.40%; Floor 9.90%), 4.00%  ETP, Due 1/1/23)   5,000    4,907    4,907 
      Term Loan (9.90% cash (Libor + 7.40%; Floor 9.90%), 4.00%  ETP, Due 1/1/23)   5,000    4,907    4,907 
Canara, Inc. (2)(12)  Data Storage  Term Loan (11.00% cash (Libor + 8.60%; Floor 11.00%), 1.00%  ETP, Due 2/1/23)   5,000    4,858    4,858 
      Term Loan (11.00% cash (Libor + 8.60%; Floor 11.00%), 1.00%  ETP, Due 2/1/23)   5,000    4,858    4,858 
Kaminario, Inc. (2)(12)  Data Storage  Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 3.00%  ETP, Due 1/1/23)   5,000    4,933    4,933 
      Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 3.00%  ETP, Due 1/1/23)   5,000    4,933    4,933 
IgnitionOne, Inc. (2)(12)  Internet and Media  Term Loan (12.33% cash (Libor + 10.23%; Floor 10.23%), 4.00%  ETP, Due 4/1/22)   3,000    2,901    2,901 
      Term Loan (12.33% cash (Libor + 10.23%; Floor 10.23%), 4.00%  ETP, Due 4/1/22)   3,000    2,901    2,901 
      Term Loan (12.33% cash (Libor + 10.23%; Floor 10.23%), 4.00%  ETP, Due 4/1/22)   3,000    2,676    2,676 
      Term Loan (12.33% cash (Libor + 10.23%; Floor 10.23%), 4.00%  ETP, Due 4/1/22)   3,000    2,901    2,901 
Verve Wireless, Inc. (2)(12)  Internet and Media  Term Loan (10.80% cash (Libor + 8.80%; Floor 10.80%), 3.33%  ETP, Due 9/1/21)   2,308    2,308    2,308 
The NanoSteel Company, Inc. (2)(12)  Materials  Term Loan (11.00% cash (Libor + 8.50%; Floor 11.00%), 4.00%  ETP, Due 6/1/22)   4,250    4,200    4,200 
      Term Loan (11.00% cash (Libor + 8.50%; Floor 11.00%), 4.00%  ETP, Due 6/1/22)   4,250    4,200    4,200 
Bridge2 Solutions, LLC. (2)(12)  Software  Term Loan (11.00% cash (Libor + 8.40%; Floor 11.00%), 2.00%  ETP, Due 6/1/23)   6,250    6,111    6,111 
      Term Loan (11.00% cash (Libor + 8.40%; Floor 11.00%), 2.00%  ETP, Due 6/1/23)   6,250    6,111    6,111 
      Term Loan (11.00% cash (Libor + 8.40%; Floor 11.00%), 2.00%  ETP, Due 6/1/23)   2,500    2,401    2,401 
New Signature US, Inc. (2)(12)(13)  Software  Term Loan (10.60% cash (Libor + 8.50%; Floor 10.50%), 3.50%  ETP, Due 7/1/22)   2,750    2,718    2,718 
      Term Loan (10.60% cash (Libor + 8.50%; Floor 10.50%), 3.50%  ETP, Due 2/1/23)   1,000    986    986 
SIGNiX, Inc. (12)  Software  Term Loan (13.10% cash (Libor + 11.00%; Floor 11.50%), 8.67%  ETP, Due 2/1/20)   1,554    1,554    1,447 
OutboundEngine, Inc. (2)(12)  Software  Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.00%  ETP, Due 7/1/23)   4,000    3,924    3,924 
      Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.00%  ETP, Due 7/1/23)   4,000    3,924    3,924 
Revinate, Inc. (2)(12)  Software  Term Loan (9.50% cash (Libor + 7.00%; Floor 9.50%), 4.00%  ETP, Due 6/1/23)   1,000    866    866 
xAd, Inc. (2)(12)  Software  Term Loan (10.80% cash (Libor + 8.70%; Floor 10.00%), 4.75%  ETP, Due 11/1/21)   5,000    4,943    4,943 
      Term Loan (10.80% cash (Libor + 8.70%; Floor 10.00%), 4.75%  ETP, Due 11/1/21)   5,000    4,943    4,943 
      Term Loan (10.80% cash (Libor + 8.70%; Floor 10.00%), 4.75%  ETP, Due 11/1/21)   3,000    2,966    2,966 

 

See Notes to Consolidated Financial Statements

 

 8 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

September 30, 2019

(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 (10.80% cash (Libor + 8.70%; Floor 10.00%), 4.75%  ETP, Due 11/1/21)   2,000    1,977    1,977 
               122,390    120,096 
Total Non-Affiliate Debt Investments — Technology                     
Non-Affiliate Debt Investments — Healthcare information and services — 8.9% (8)                     
HealthEdge Software, Inc. (2)(12)  Software  Term Loan (10.35% cash (Libor + 8.25%; Floor 9.25%), 3.00%  ETP, Due 7/1/22)   4,048    4,006    4,006 
      Term Loan (10.35% cash (Libor + 8.25%; Floor 9.25%), 3.00%  ETP, Due 1/1/23)   3,571    3,534    3,534 
      Term Loan (10.35% cash (Libor + 8.25%; Floor 9.25%), 3.00%  ETP, Due 4/1/23)   3,750    3,709    3,709 
      Term Loan (10.35% cash (Libor + 8.25%; Floor 9.25%), 3.00%  ETP, Due 1/1/24)   3,750    3,704    3,704 
Total Non-Affiliate Debt Investments — Healthcare information and services              14,953    14,953 
Total Non- Affiliate Debt Investments              249,261    246,967 
                      
Non-Affiliate Warrant Investments — 5.9% (8)                     
Non-Affiliate Warrants — Life Science — 1.2% (8)                     
                      
ACT Biotech Corporation  Biotechnology  130,872 Preferred Stock Warrants             
Alpine Immune Sciences, Inc. (5)(12)  Biotechnology  4,634 Common Stock Warrants        122     
Celsion Corporation (2)(5)(12)  Biotechnology  95,057 Common Stock Warrants        65    2 
Corvium, Inc. (2)(12)  Biotechnology  661,956 Preferred Stock Warrants        53    24 
Encore Dermatology, Inc. (2)(12)  Biotechnology  1,510,878 Preferred Stock Warrants        113    111 
Espero BioPharma, Inc. (2)(5)(12)  Biotechnology  1,507,917 Common Stock Warrants        184     
Mustang Bio, Inc. (2)(5)(12)  Biotechnology  216,138 Common Stock Warrants        140    112 
LogicBio, Inc. (2)(5)(12)  Biotechnology  7,843 Common Stock Warrants        8    8 
Rocket Pharmaceuticals Corporation (5)(12)  Biotechnology  7,051 Common Stock Warrants        17     
Palatin Technologies, Inc. (2)(5)(12)  Biotechnology  608,058 Common Stock Warrants        51    102 
Revance Therapeutics, Inc. (5)(12)  Biotechnology  34,113 Common Stock Warrants        68    31 
Strongbridge U.S. Inc. (2)(5)(12)  Biotechnology  160,714 Common Stock Warrants        72    144 
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  373,333 Common Stock Warrants        95     
AccuVein Inc. (2)(12)  Medical Device  1,174,881 Preferred Stock Warrants        24    27 
Aerin Medical, Inc. (2)(12)  Medical Device  1,818,182 Preferred Stock Warrants        66    63 
Conventus Orthopaedics, Inc. (2)(12)  Medical Device  1,145,000 Preferred Stock Warrants        149    145 
CSA Medical, Inc. (12)  Medical Device  958,580 Preferred Stock Warrants        112    103 
CVRx, Inc.(2)(12)  Medical Device  750,000 Preferred Stock Warrants        76    76 
Lantos Technologies, Inc. (2)(12)  Medical Device  1,715,926 Common Stock Warrants        253    80 
MacuLogix, Inc. (2)(12)  Medical Device  454,460 Preferred Stock Warrants        238    143 
Meditrina, Inc. (12)  Medical Device  243,391 Preferred Stock Warrants        83    109 
NinePoint Medical, Inc. (2)(12)  Medical Device  29,102 Preferred Stock Warrants        33    6 
Tryton Medical, Inc. (2)(12)  Medical Device  122,362 Preferred Stock Warrants        15     
VERO Biotech LLC (2)(12)  Medical Device  800 Common Stock Warrants        53    323 
Total Non-Affiliate Warrants — Life Science              2,139    1,609 
Non-Affiliate Warrants — Technology — 3.3% (8)                     
Audacy Corporation (2)(12)  Communications  1,545,575 Preferred Stock Warrants        194     
Intelepeer Holdings, Inc. (2)(12)  Communications  1,993,068 Preferred Stock Warrants        144    102 
PebblePost, Inc. (2)(12)  Communications  598,850 Preferred Stock Warrants        92    149 
Betabrand Corporation (2)(12)  Consumer-related Technologies  248,210 Preferred Stock Warrants        101    95 
Caastle, Inc. (2)(12)  Consumer-related Technologies  268,591 Preferred Stock Warrants        68    832 
Le Tote, Inc. (2)(12)  Consumer-related Technologies  202,974 Preferred Stock Warrants        63    359 
Mohawk Group Holdings, Inc. (2)(5)(12)  Consumer-related Technologies  76,923 Common Stock Warrants        195    8 
Rhapsody International Inc. (2)(12)  Consumer-related Technologies  852,273 Common Stock Warrants        164     
Canara, Inc. (2)(12)  Data Storage  500,000 Preferred Stock Warrants        242    234 
Kaminario, Inc. (2)(12)  Data Storage  9,981,346 Preferred Stock Warrants        124    152 
Global Worldwide LLC (2)(12)  Internet and Media  245,810 Preferred Stock Warrants        75    9 
IgnitionOne, Inc. (2)(12)  Internet and Media  262,910 Preferred Stock Warrants        672    78 
Rocket Lawyer Incorporated (2)(12)  Internet and Media  261,721 Preferred Stock Warrants        92    71 
Verve Wireless, Inc. (2)(12)  Internet and Media  112,805 Common Stock Warrants        120    30 
The NanoSteel Company, Inc. (2)(12)  Materials  467,277 Preferred Stock Warrants        233    524 

 

See Notes to Consolidated Financial Statements

 

 9 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

September 30, 2019

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
Avalanche Technology, Inc. (2)(12)  Semiconductors  202,602 Preferred Stock Warrants        101    170 
Soraa, Inc. (2)(12)  Semiconductors  203,616 Preferred Stock Warrants        80     
Bridge2 Solutions, Inc. (2)(12)  Software  162,958 Common Stock Warrants        788    1,107 
BSI Platform Holdings, LLC (2)(12)(13)  Software  187,500 Preferred Stock Warrants        26    19 
Clarabridge, Inc. (12)  Software  53,486 Preferred Stock Warrants        14    105 
Education Elements, Inc. (2)(12)  Software  238,121 Preferred Stock Warrants        28    21 
Lotame Solutions, Inc. (2)(12)  Software  288,115 Preferred Stock Warrants        22    278 
OutboundEngine, Inc. (2)(12)  Software  640,000 Preferred Stock Warrants        82    81 
Revinate, Inc. (2)(12)  Software  324,544 Preferred Stock Warrants        25    24 
Riv Data Corp. (2)(12)  Software  321,428 Preferred Stock Warrants        12    253 
ShopKeep.com, Inc. (2)(12)  Software  193,962 Preferred Stock Warrants        118    107 
SIGNiX, Inc. (12)  Software  133,560 Preferred Stock Warrants        225    35 
Skyword, Inc. (12)  Software  301,056 Preferred Stock Warrants        48    3 
Sys-Tech Solutions, Inc. (2)(12)  Software  375,000 Preferred Stock Warrants        242    534 
Weblinc Corporation (2)(12)  Software  195,122 Preferred Stock Warrants        42     
xAd, Inc. (2)(12)  Software  4,343,350 Preferred Stock Warrants        177    239 
Total Non-Affiliate Warrants — Technology              4,609    5,619 
Non-Affiliate Warrants — Sustainability — 0.1% (8)                     
Tigo Energy, Inc. (2)(12)  Energy Efficiency  804,604 Preferred Stock Warrants        100    109 
Total Non-Affiliate Warrants — Sustainability              100    109 
Non-Affiliate Warrants — Healthcare information and services — 1.5% (8)                     
LifePrint Group, Inc. (2)(12)  Diagnostics  49,000 Preferred Stock Warrants        29     
ProterixBio, Inc. (2)(12)  Diagnostics  2,676 Common Stock Warrants        42     
Verity Solutions Group, Inc. (12)  Other Healthcare  300,360 Preferred Stock Warrants        100    1,678 
Watermark Medical, Inc. (2)(12)  Other Healthcare  27,373 Preferred Stock Warrants        74    58 
Catasys, Inc. (2)(5)(12)  Software  51,188 Common Stock Warrants        193    289 
HealthEdge Software, Inc. (2)(12)  Software  205,481 Preferred Stock Warrants        83    66 
Medsphere Systems Corporation (2)(12)  Software  7,097,792 Preferred Stock Warrants        60    196 
Recondo Technology, Inc. (2)(12)  Software  556,796 Preferred Stock Warrants        95    206 
Total Non-Affiliate Warrants — Healthcare information and services              676    2,493 
Total Non-Affiliate Warrants              7,524    9,830 
                      
Non-Affiliate Other Investments — 0.5% (8)                     
ZetrOZ, Inc. (12)  Medical Device  Royalty Agreement        90    700 
Triple Double Holdings, LLC (12)  Software  License Agreement        2,200    188 
Total Non-Affiliate Other Investments              2,290    888 
                      
Non-Affiliate Equity — 0.3% (8)                     
Revance Therapeutics, Inc.(5)  Biotechnology  5,125 Common Stock        73    66 
Zeta Global Holdings Corp.  Internet and Media  18,405 Common Stock        240    240 
Sunesis Pharmaceuticals, Inc. (5)  Biotechnology  13,082 Common Stock        83    10 
SnagAJob.com, Inc. (12)  Consumer-related Technologies  82,974 Common Stock        8    82 
Verve Wireless, Inc. (2)(12)  Internet and Media  100,598 Preferred Stock        225    92 
Formetrix, Inc. (2)(12)  Materials  74,286 Common Stock        74    74 
Total Non-Affiliate Equity              703    564 
Total Non-Affiliate Portfolio Investment Assets             $259,778   $258,249 
                      
Non-controlled Affiliate Investments — 5.3% (8)                     
Non-controlled Affiliate Debt Investments — Technology — 3.7% (8)                     
Decisyon, Inc. (12)  Software  Term Loan (14.41% cash (Libor + 12.31%; Floor 12.50%), 8.00%  ETP, Due 12/1/20)  $1,237   $1,237   $1,237 
      Term Loan (14.41% cash (Libor + 12.31%; Floor 12.50%), 8.00%  ETP, Due 12/1/20)   653    653    653 
      Term Loan (12.02% cash, Due 12/31/19)   242    242    242 
      Term Loan (12.03% cash, Due 12/31/19)   242    242    242 
      Term Loan (12.24% cash, Due 12/31/19)   727    727    727 
      Term Loan (13.08% cash, Due 12/31/19)   292    292    292 
      Term Loan (13.10% cash, Due 12/31/19)   194    194    194 
StereoVision Imaging, Inc. (12)  Software  Term Loan (9.13% Cash (Libor + 7.03%; Floor   3,033    2,632    2,632 
      8.50%), 8.50%  ETP, Due 9/1/21) (11)               
Total Non-controlled Affiliate Debt Investments — Technology              6,219    6,219 

 

See Notes to Consolidated Financial Statements

 

 10 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

September 30, 2019

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
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 — 1.6% (8)                     
Decisyon, Inc. (12)  Software  45,365,936 Common Stock        185    75 
StereoVision Imaging, Inc. (12)  Software  1,943,572 Common Stock        791    2,653 
Total Non-controlled Affiliate Equity              976    2,728 
Total Non-controlled Affiliate Portfolio Investment Assets             $7,241   $8,947 
                      
Controlled Affiliate Investments — 8.5% (8)                     
Controlled Affiliate Equity — Financial — 8.5% (8)                     
                      
Horizon Secured Loan Fund I LLC (12)(14)             $14,358   $14,323 
Total Controlled Affiliate Equity              14,358    14,323 
Total Controlled Affiliate Portfolio Investment Assets             $14,358   $14,323 
                      
Total Portfolio Investment Assets — 167.4%(8)             $281,377   $281,519 
                      
Short Term Investments — Unrestricted Investments — 10.8% (8)                     
US Bank Money Market Deposit Account             $18,199   $18,199 
Total Short Term Investments —Unrestricted Investments             $18,199   $18,199 
                      
Short Term Investments — Restricted Investments—0.7% (8)                     
US Bank Money Market Deposit Account             $1,201   $1,201 
Total Short Term Investments — Restricted Investments             $1,201   $1,201 

 

 

(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 revolving credit facility with KeyBank National Association (the “Key Facility”) and/or our Asset-Backed Notes.
(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, 2019 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, 2019, 4.4% of the Company’s total assets 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.

 

See Notes to Consolidated Financial Statements

 

 11 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments (Unaudited)

September 30, 2019

(Dollars in thousands)

 

(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 sustainability industries.  All HSLFI investment decisions require unanimous approval of a quorum of HSLFI’s board of managers, which consists of two representatives of the Company and Arena. Although the Company owns more than 25% of the voting securities of HSLFI, the Company does not have sole control over significant actions of HSLFI for purposes of the 1940 Act or otherwise.
(15)   Debt investment is on non-accrual status as of September 30, 2019.

 

See Notes to Consolidated Financial Statements

 

 12 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments

December 31, 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 — 169.6% (8)                  
Non-Affiliate Debt Investments — 156.3% (8)                  
Non-Affiliate Debt Investments — Life Science — 49.9% (8)                  
Celsion Corporation (2)(5)(12)  Biotechnology  Term Loan (9.98% cash (Libor + 7.63%; Floor 9.63%), 4.00% ETP, Due 7/1/22)  $2,500   $2,450   $2,450 
      Term Loan (9.98% cash (Libor + 7.63%; Floor 9.63%), 4.00% ETP, Due 7/1/22)   2,500    2,450    2,450 
Espero BioPharma, Inc. (2)(12)  Biotechnology  Term Loan (12.25% cash (Libor + 9.9%; Floor 12.00%), 4.00% ETP, Due 6/30/19)   5,000    4,760    4,760 
Palatin Technologies, Inc. (2)(5)(12)  Biotechnology  Term Loan (10.85% cash (Libor + 8.50%; Floor 9.00%), 5.00% ETP, Due 8/1/19)   1,167    1,156    1,156 
      Term Loan (10.85% cash (Libor + 8.50%; Floor 9.00%), 3.27% ETP, Due 8/1/19)   1,167    1,167    1,167 
vTv Therapeutics Inc. (2)(5)(12)  Biotechnology  Term Loan (12.35% cash (Libor + 10.00%; Floor10.50%), 6.00% ETP, Due 5/1/20)   4,167    4,136    4,136 
      Term Loan (12.35% cash (Libor + 10.00%; Floor 10.50%), 6.00% ETP, Due 10/1/20)   3,281    3,250    3,250 
Titan Pharmaceuticals, Inc. (2)(5)(12)  Drug Delivery  Term Loan (10.75% cash (Libor + 8.40%; Floor 9.50%), 5.00% ETP, Due 6/1/21)   1,600    1,495    1,495 
Aerin Medical, Inc. (2)(12)  Medical Device  Term Loan (9.80% cash (Libor + 7.45%; Floor 8.75%), 4.00% ETP, Due 1/1/22)   4,000    3,891    3,891 
      Term Loan (9.80% cash (Libor + 7.45%; Floor 8.75%), 4.00% ETP, Due 1/1/22)   3,000    2,966    2,966 
      Term Loan (9.80% cash (Libor + 7.45%; Floor 8.75%), 4.00% ETP, Due 1/1/22)   3,000    2,966    2,966 
Conventus Orthopaedics, Inc. (2)(12)  Medical Device  Term Loan (10.35% cash (Libor + 8.00%; Floor 9.25%), 6.00% ETP, Due 6/1/21)   4,000    3,949    3,949 
      Term Loan (10.35% cash (Libor + 8.00%; Floor 9.25%), 6.00% ETP, Due 6/1/21)   4,000    3,949    3,949 
      Term Loan (10.35% cash (Libor + 8.00%; Floor 9.25%), 6.00% ETP, Due 6/1/21)   4,000    3,949    3,949 
CSA Medical, Inc. (2)(12)  Medical Device  Term Loan (10.28% cash (Libor + 7.93%; Floor 10.00%), 5.00% ETP, Due 10/1/22)   6,000    5,768    5,768 
Lantos Technologies, Inc. (2)(12)  Medical Device  Term Loan (10.78% cash (Libor + 8.43%; Floor 10.00%), 6.00% ETP, Due 9/1/21)   4,000    3,563    3,563 
MacuLogix, Inc. (2)(12)  Medical Device  Term Loan (10.02% cash (Libor + 7.68%; Floor 9.50%), 4.00% ETP, Due 8/1/22)   3,750    3,623    3,623 
      Term Loan (10.14% cash (Libor + 7.68%; Floor 9.50%), 4.00% ETP, Due 8/1/22)   3,750    3,638    3,638 
VERO Biotech LLC (2)(12)  Medical Device  Term Loan (10.35% cash (Libor + 8.00%; Floor 9.25%), 5.00% ETP, Due 1/1/22)   4,000    3,950    3,950 
      Term Loan (10.35% cash (Libor + 8.00%; Floor 9.25%), 5.00% ETP, Due 1/1/22)   4,000    3,950    3,950 
Total Non-Affiliate Debt Investments — Life Science           67,026    67,026 
Non-Affiliate Debt Investments — Technology — 88.9% (8)                  
Audacy Corporation (2)(12)  Communications  Term Loan (10.25% cash (Libor + 7.90%; Floor 9.50%), 5.00% ETP, Due 7/1/22)   4,000    3,936    3,636 
Intelepeer Holdings, Inc. (2)(12)  Communications  Term Loan (12.30% cash (Libor + 9.95%; Floor 11.25%), 2.50% ETP, Due 7/1/21)   4,000    3,948    3,948 
      Term Loan (12.30% cash (Libor + 9.95%; Floor 11.25%), 2.50% ETP, Due 2/1/21)   3,000    2,955    2,955 
Food52, Inc. (2)(12)  Consumer-related Technologies  Term Loan (10.90% cash (Libor + 8.40%; Floor 10.90%), 3.00% ETP, Due 1/1/23)   3,000    2,918    2,918 
      Term Loan (10.90% cash (Libor + 8.40%; Floor 10.90%), 3.00% ETP, Due 1/1/23)   3,000    2,918    2,918 
Mohawk Group Holdings, Inc. (2)(12)  Consumer-related Technologies  Term Loan (9.90% cash (Libor + 7.40%; Floor 9.90%), 4.00% ETP, Due 1/1/23)   5,000    4,885    4,885 
      Term Loan (9.90% cash (Libor + 7.40%; Floor 9.90%), 4.00% ETP, Due 1/1/23)   5,000    4,885    4,885 
      Term Loan (9.90% cash (Libor + 7.40%; Floor 9.90%), 4.00% ETP, Due 1/1/23)   5,000    4,885    4,885 
Kaminario, Inc. (2)(12)  Data Storage  Term Loan (10.87% cash (Libor + 8.40%; Floor 10.65%), 3.00% ETP, Due 1/1/23)   5,000    4,918    4,918 

 

See Notes to Consolidated Financial Statements

 

 13 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments

December 31, 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 (10.87% cash (Libor + 8.40%; Floor 10.65%), 3.00% ETP, Due 1/1/23)   5,000    4,917    4,917 
IgnitionOne, Inc. (2)(12)  Internet and Media  Term Loan (12.58% cash (Libor + 10.23%; Floor  10.23%), 2.00% ETP, Due 4/1/22)   3,000    2,871    2,871 
      Term Loan (12.58% cash (Libor + 10.23%; Floor 10.23%), 2.00% ETP, Due 4/1/22)   3,000    2,871    2,871 
      Term Loan (12.58% cash (Libor + 10.23%; Floor 10.23%), 2.00% ETP, Due 4/1/22)   3,000    2,871    2,871 
      Term Loan (12.58% cash (Libor + 10.23%; Floor 10.23%), 2.00% ETP, Due 4/1/22)   3,000    2,871    2,871 
Jump Ramp Games, Inc. (2)(12)  Internet and Media  Term Loan (12.08% cash (Libor + 9.73%), 3.00% ETP, Due 4/1/21)   4,000    3,960    3,960 
Kixeye, Inc. (2)(12)  Internet and Media  Term Loan (11.95% cash (Libor + 9.60%; Floor 10.75%), 2.00% ETP, Due 5/1/21)   2,700    2,617    2,617 
      Term Loan (11.95% cash (Libor + 9.60%; Floor 10.75%), 2.00% ETP, Due 5/1/21)   2,700    2,661    2,661 
Rocket Lawyer Incorporated (2)(12)  Internet and Media  Term Loan (11.75% cash (Libor + 9.40%; Floor 10.50%), 3.00% ETP, Due 7/1/21)   4,000    3,952    3,952 
      Term Loan (11.75% cash (Libor + 9.40%; Floor 10.50%), 3.00% ETP, Due 7/1/21)   4,000    3,952    3,952 
      Term Loan (11.75% cash (Libor + 9.40%; Floor 10.50%), 3.00% ETP, Due 11/1/21)   2,000    1,973    1,973 
Verve Wireless, Inc. (2)(12)  Internet and Media  Term Loan (11.15% cash (Libor + 8.80%; Floor 10.80%), 3.33% ETP, Due 9/1/21)   3,300    3,172    3,172 
Zinio Holdings, LLC (2)(12)  Internet and Media  Term Loan (13.60% cash (Libor + 11.25%; Floor 11.75%), 6.00% ETP, Due 2/1/20)   3,225    3,213    3,213 
The NanoSteel Company, Inc. (2)(12)  Materials  Term Loan (11.00% cash (Libor + 8.50%; Floor 11.00%), 4.0% ETP, Due 6/1/22)   4,250    4,186    4,186 
      Term Loan (11.00% cash (Libor + 8.50%; Floor 11.00%), 4.0% ETP, Due 6/1/22)   4,250    4,186    4,186 
Powerhouse Dynamics, Inc. (2)(12)  Power Management  Term Loan (13.05% cash (Libor + 10.70%; Floor 11.20%), 3.32% ETP, Due 9/1/19)   525    512    512 
Luxtera, Inc. (12)  Semiconductors  Term Loan (12.00% cash (Prime + 6.75%), Due 3/28/20)   2,000    1,945    1,945 
      Term Loan (12.00% cash (Prime + 6.75%), Due 3/28/20)   1,500    1,468    1,468 
Bridge2 Solutions, LLC. (2)(12)  Software  Term Loan (11.60% cash (Libor + 9.25%; Floor 10.50%), 2.00% ETP, Due 11/1/21)   5,000    4,835    4,835 
      Term Loan (11.60% cash (Libor + 9.25%; Floor 10.50%), 2.00% ETP, Due 11/1/21)   5,000    4,835    4,835 
Education Elements, Inc. (2)(12)  Software  Term Loan (12.35% cash (Libor + 10.00%; Floor 10.50%), 4.00% ETP, Due 8/1/19)   350    346    346 
New Signature US, Inc. (2)(12)(13)  Software  Term Loan (10.85% cash (Libor + 8.50%; Floor 10.50%), 3.50% ETP, Due 7/1/22)   2,750    2,699    2,699 
SIGNiX, Inc. (12)  Software  Term Loan (13.35% cash (Libor + 11.00%; Floor 11.50%), 8.67% ETP, Due 2/1/20)   1,845    1,790    1,555 
xAd, Inc. (2)(12)  Software  Term Loan (11.05% cash (Libor + 8.70%; Floor 10.00%), 4.75% ETP, Due 11/1/21)   5,000    4,923    4,923 
      Term Loan (11.05% cash (Libor + 8.70%; Floor 10.00%), 4.75% ETP, Due 11/1/21)   5,000    4,923    4,923 
      Term Loan (11.05% cash (Libor + 8.70%; Floor 10.00%), 4.75% ETP, Due 11/1/21)   3,000    2,954    2,954 
      Term Loan (11.05% cash (Libor + 8.70%; Floor 10.00%), 4.75% ETP, Due 11/1/21)   2,000    1,969    1,969 
Total Non-Affiliate Debt Investments — Technology           119,720    119,185 
Non-Affiliate Debt Investments — Healthcare information and services — 17.5% (8)                  
Catasys, Inc. (2)(5)(12)  Software  Term Loan (10.10% cash (Libor + 7.75%; Floor 9.75%), 6.00% ETP, Due 3/1/22)   2,500    2,478    2,478 
      Term Loan (10.10% cash (Libor + 7.75%; Floor 9.75%), 6.00% ETP, Due 3/1/22)   2,500    2,478    2,478 
      Term Loan (10.10% cash (Libor + 7.75%; Floor 9.75%), 6.00% ETP, Due 3/1/22)   2,500    2,477    2,477 

 

 

See Notes to Consolidated Financial Statements

 

 14 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments

December 31, 2018

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
HealthEdge Software, Inc. (2)(12)  Software  Term Loan (10.60% cash (Libor + 8.25%; Floor 9.25%), 3.00% ETP, Due 7/1/22)   5,000    4,948    4,948 
      Term Loan (10.60% cash (Libor + 8.25%; Floor 9.25%), 3.00% ETP, Due 1/1/23)   3,750    3,704    3,704 
      Term Loan (10.60% cash (Libor + 8.25%; Floor 9.25%), 3.00% ETP, Due 4/1/23)   3,750    3,701    3,701 
      Term Loan (10.69% cash (Libor + 8.25%; Floor 9.25%), 3.00% ETP, Due 1/1/24)   3,750    3,696    3,696 
Total Non-Affiliate Debt Investments — Healthcare information and services           23,482    23,482 
Total Non- Affiliate Debt Investments           210,228    209,693 
                      
Non-Affiliate Warrant Investments — 6.9% (8)                  
Non-Affiliate Warrants — Life Science — 1.5% (8)                     
ACT Biotech Corporation  Biotechnology  130,872 Preferred Stock Warrants        12     
Alpine Immune Sciences, Inc. (5)(12)  Biotechnology  4,634 Common Stock Warrants        122     
Celsion Corporation (2)(5)(12)  Biotechnology  95,465 Common Stock Warrants        79    1 
Espero BioPharma, Inc. (2)(5)(12)  Biotechnology  1,506,937 Common Stock Warrants        184    185 
Rocket Pharmaceuticals Corporation (5)(12)  Biotechnology  7,051 Common Stock Warrants        17     
Palatin Technologies, Inc. (2)(5)(12)  Biotechnology  608,058 Common Stock Warrants        51    34 
Revance Therapeutics, Inc. (5)(12)  Biotechnology  34,113 Common Stock Warrants        68    210 
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    356 
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    1 
Titan Pharmaceuticals, Inc. (2)(5)(12)  Drug Delivery  2,240,000 Common Stock Warrants        95    89 
AccuVein Inc. (2)(12)  Medical Device  1,174,881 Preferred Stock Warrants        24    28 
Aerin Medical, Inc. (2)(12)  Medical Device  1,818,182 Preferred Stock Warrants        66    68 
Conventus Orthopaedics, Inc. (2)(12)  Medical Device  720,000 Preferred Stock Warrants        95    99 
CSA Medical, Inc. (12)  Medical Device  745,562 Preferred Stock Warrants        89    86 
Lantos Technologies, Inc. (2)(12)  Medical Device  1,715,926 Common Stock Warrants        253    285 
MacuLogix, Inc. (2)(12)  Medical Device  234,742 Preferred Stock Warrants        179    90 
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    6 
ReShape Lifesciences Inc. (5)(12)  Medical Device  121 Common Stock Warrants        341     
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    331 
Total Non-Affiliate Warrants — Life Science              2,002    1,909 
Non-Affiliate Warrants — Technology — 4.8% (8)                     
Audacy Corporation (2)(12)  Communications  1,545,575 Preferred Stock Warrants        194     
Intelepeer Holdings, Inc. (2)(12)  Communications  1,171,549 Preferred Stock Warrants        94    57 
PebblePost, Inc. (2)(12)  Communications  598,850 Preferred Stock Warrants        92    158 
Food52, Inc. (2)(12)  Consumer-related Technologies  102,941 Preferred Stock Warrants        104    104 
Gwynnie Bee, Inc. (2)(12)  Consumer-related Technologies  268,591 Preferred Stock Warrants        68    820 
Le Tote, Inc. (2)(12)  Consumer-related Technologies  202,974 Preferred Stock Warrants        63    368 
Mohawk Group Holdings, Inc. (2)(12)  Consumer-related Technologies  300,000 Common Stock Warrants        195    195 
Rhapsody International Inc. (2)(12)  Consumer-related Technologies  852,273 Common Stock Warrants        164     
Kaminario, Inc. (2)(12)  Data Storage  9,981,346 Preferred Stock Warrants        124    161 
IgnitionOne, Inc. (2)(12)  Internet and Media  262,910 Preferred Stock Warrants        672    665 
Jump Ramp Games, Inc. (2)(12)  Internet and Media  159,766 Preferred Stock Warrants        32    1 
Kixeye, Inc. (2)(12)  Internet and Media  791,251 Preferred Stock Warrants        75    61 
Rocket Lawyer Incorporated (2)(12)  Internet and Media  261,721 Preferred Stock Warrants        92    76 
Verve Wireless, Inc. (2)(12)  Internet and Media  112,805 Common Stock Warrants        120    120 
The NanoSteel Company, Inc. (2)(12)  Materials  467,277 Preferred Stock Warrants        233    567 
Powerhouse Dynamics, Inc. (2)(12)  Power Management  348,838 Preferred Stock Warrants        33     
Avalanche Technology, Inc. (2)(12)  Semiconductors  202,602 Preferred Stock Warrants        101    53 
Luxtera, Inc. (2)(12)  Semiconductors  3,546,553 Preferred Stock Warrants        213    744 
Soraa, Inc. (2)(12)  Semiconductors  203,616 Preferred Stock Warrants        80    426 
Bolt Solutions Inc. (2)(12)  Software  202,892 Preferred Stock Warrants        113     
Bridge2 Solutions, Inc. (2)(12)  Software  125,458 Common Stock Warrants        432    756 
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    23 

 

See Notes to Consolidated Financial Statements

 

 15 

 

 

Horizon Technology Finance Corporation and Subsidiaries

 

Consolidated Schedule of Investments

December 31, 2018

(Dollars in thousands)

 

         Principal   Cost of   Fair 
Portfolio Company (1)(3)  Sector  Type of Investment (4)(7)(9)(10)  Amount   Investments (6)   Value 
Lotame Solutions, Inc. (2)(12)  Software  288,115 Preferred Stock Warrants        22    286 
Metricly, Inc. (12)  Software  41,569 Common Stock Warrants        48     
Riv Data Corp. (2)(12)  Software  321,428 Preferred Stock Warrants        12    36 
ShopKeep.com, Inc. (2)(12)  Software  193,962 Preferred Stock Warrants        118    114 
SIGNiX, Inc. (12)  Software  133,560 Preferred Stock Warrants        225    35 
Skyword, Inc. (12)  Software  301,056 Preferred Stock Warrants        48    3 
Sys-Tech Solutions, Inc. (2)(12)  Software  375,000 Preferred Stock Warrants        242    429 
Weblinc Corporation (2)(12)  Software  195,122 Preferred Stock Warrants        42     
xAd, Inc. (2)(12)  Software  4,343,350 Preferred Stock Warrants        177    251 
Total Non-Affiliate Warrants — Technology           4,289    6,634 
Non-Affiliate Warrants — Sustainability — 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    112 
Total Non-Affiliate Warrants — Sustainability              168    112 
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    45 
Verity Solutions Group, Inc. (12)  Other Healthcare  300,360 Preferred Stock Warrants        100    65 
Watermark Medical, Inc. (2)(12)  Other Healthcare  27,373 Preferred Stock Warrants        74    62 
HealthEdge Software, Inc. (2)(12)  Software  205,481 Preferred Stock Warrants        83    71 
Medsphere Systems Corporation (2)(12)  Software  7,097,792 Preferred Stock Warrants        60    212 
Recondo Technology, Inc. (2)(12)  Software  556,796 Preferred Stock Warrants        95    212 
Total Non-Affiliate Warrants — Healthcare information and services              527    669 
Total Non-Affiliate Warrants              6,986    9,324 
                      
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        142    700 
Vette Technology, LLC (12)  Data Storage  Royalty Agreement Due 4/18/2019        4,173    40 
Triple Double Holdings, LLC (12)  Software  License Agreement        2,200    2,200 
Total Non-Affiliate Other Investments              11,815    7,640 
                      
Non-Affiliate Equity — 0.7% (8)                     
Insmed Incorporated (5)  Biotechnology  33,208 Common Stock        238    436 
Revance Therapeutics, Inc.(5)  Biotechnology  5,125 Common Stock        73    103 
Sunesis Pharmaceuticals, Inc. (5)  Biotechnology  13,082 Common Stock        83    5 
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    967 
Total Non-Affiliate Portfolio Investment Assets          $229,772   $227,624 
Non-controlled Affiliate Investments — 5.6% (8)                  
Non-controlled Affiliate Debt Investments — Technology — 5.0% (8)                  
Decisyon, Inc. (12)  Software  Term Loan (14.66% cash (Libor + 12.31%; Floor 12.50%), 8.00% ETP, Due 12/1/20)  $1,523   $1,522   $1,464 
      Term Loan (14.66% cash (Libor + 12.31%; Floor 12.50%), 8.00% ETP, Due 12/1/20)   833    795    764 
      Term Loan (12.02% cash, Due 12/31/19)   250    250    240 
      Term Loan (12.03% cash, Due 12/31/19)