Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-Q


(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020

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 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

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

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 July 28, 2020 was 17,293,480.

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


Table of Contents

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 June 30, 2020 (unaudited) and December 31, 2019

3

Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019 (unaudited)

4

Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2020 and 2019 (unaudited)

5

Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (unaudited)

6

Consolidated Schedules of Investments as of June 30, 2020 (unaudited) and December 31, 2019

7

Notes to the Consolidated Financial Statements (unaudited)

18

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

45

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

66

Item 4.

Controls and Procedures

67

PART II

67

Item 1.

Legal Proceedings

67

Item 1A.

Risk Factors

67

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

68

Item 3.

Defaults Upon Senior Securities

69

Item 4.

Mine Safety Disclosures

69

Item 5.

Other Information

69

Item 6.

Exhibits

69

Signatures

70

EX-31.1

EX-31.2

EX-32.1

EX-32.2

2


Table of Contents

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)

June 30, 

December 31, 

    

2020

    

2019

Assets

 

(Unaudited)

 

  

Non-affiliate investments at fair value (cost of $354,879 and $295,256, respectively)

$

348,834

$

294,304

Non-controlled affiliate investments at fair value (cost of $6,819 and $6,891, respectively) (Note 5)

 

7,046

 

8,597

Controlled affiliate investments at fair value (cost of $16,684) (Note 5)

 

 

16,650

Total investments at fair value (cost of $361,698 and $318,831, respectively) (Note 4)

 

355,880

 

319,551

Cash

 

22,837

 

6,465

Investments in money market funds

 

14,499

 

9,787

Restricted investments in money market funds

 

1,189

 

1,133

Interest receivable

 

6,678

 

5,530

Other assets

 

2,186

 

1,535

Total assets

$

403,269

$

344,001

Liabilities

 

  

 

  

Borrowings (Note 7)

$

193,559

$

152,050

Distributions payable

 

5,188

 

4,669

Base management fee payable (Note 3)

 

567

 

519

Incentive fee payable (Note 3)

 

1,676

 

1,613

Other accrued expenses

 

1,047

 

1,095

Total liabilities

 

202,037

 

159,946

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 June 30, 2020 and December 31, 2019

 

 

Common stock, par value $0.001 per share, 100,000,000 shares authorized, 17,459,235 and 15,730,755 shares issued and 17,291,770 and 15,563,290 shares outstanding as of June 30, 2020 and December 31, 2019, respectively

 

17

 

16

Paid-in capital in excess of par

 

247,924

 

226,660

Distributable earnings

 

(46,709)

 

(42,621)

Total net assets

 

201,232

 

184,055

Total liabilities and net assets

$

403,269

$

344,001

Net asset value per common share

$

11.64

$

11.83

See Notes to Consolidated Financial Statements

3


Table of Contents

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 Six Months Ended

June 30, 

June 30, 

    

2020

    

2019

    

2020

    

2019

    

Investment income

 

  

 

  

 

  

 

  

 

Interest income on investments

 

  

 

  

 

  

 

  

 

Interest income on non-affiliate investments

$

11,918

$

9,018

$

21,312

$

16,452

Interest income on affiliate investments

 

176

 

216

 

357

 

438

Total interest income on investments

 

12,094

 

9,234

 

21,669

 

16,890

Fee income

 

  

 

  

 

  

 

  

Amendment fee income on non-affiliate investments

 

1,028

 

126

 

1,064

 

130

Prepayment fee income on non-affiliate investments

711

439

756

734

Fee income on non-affiliate investments

 

 

235

 

24

 

250

Fee income on affiliate investments

 

3

 

5

 

7

 

10

Total fee income

 

1,742

 

805

 

1,851

 

1,124

Dividend (expense) income

 

  

 

  

 

  

 

  

Dividend (expense) income on controlled affiliate investments

 

(312)

 

431

 

118

 

761

Total dividend (expense) income

 

(312)

 

431

 

118

 

761

Total investment income

 

13,524

 

10,470

 

23,638

 

18,775

Expenses

 

  

 

  

 

  

 

  

Interest expense

 

2,561

 

2,115

 

4,723

 

4,163

Base management fee (Note 3)

 

1,668

 

1,365

 

3,249

 

2,662

Performance based incentive fee (Note 3)

 

1,676

 

1,961

 

2,747

 

3,909

Administrative fee (Note 3)

 

254

 

208

 

507

 

419

Professional fees

 

346

 

274

 

848

 

765

General and administrative

 

313

 

243

 

575

 

460

Total expenses

 

6,818

 

6,166

 

12,649

 

12,378

Performance based incentive fee waived (Note 3)

 

 

(708)

 

 

(1,848)

Net expenses

 

6,818

 

5,458

 

12,649

 

10,530

Net investment income

 

6,706

 

5,012

 

10,989

 

8,245

Net realized and unrealized gain (loss) on investments

 

  

 

  

 

  

 

  

Net realized (loss) gain on non-affiliate investments

 

(701)

 

(4,598)

 

2,778

 

(3,447)

Net realized loss on controlled affiliate investments

(24)

(12)

Net realized (loss) gain on investments

 

(725)

 

(4,598)

 

2,766

 

(3,447)

Net unrealized appreciation (depreciation) on non-affiliate investments

 

2,985

 

2,264

 

(4,806)

 

749

Net unrealized (depreciation) appreciation on non-controlled affiliate investments

 

(932)

 

1,867

 

(1,475)

 

2,019

Net unrealized depreciation on controlled affiliate investments

 

(109)

 

(7)

 

(258)

 

(3)

Net unrealized appreciation (depreciation) on investments

 

1,944

 

4,124

 

(6,539)

 

2,765

Net realized and unrealized gain (loss) on investments

 

1,219

 

(474)

 

(3,773)

 

(682)

Net increase in net assets resulting from operations

$

7,925

$

4,538

$

7,216

$

7,563

Net investment income per common share

$

0.40

$

0.37

$

0.65

$

0.65

Net increase in net assets per common share

$

0.47

$

0.34

$

0.43

$

0.60

Distributions declared per share

$

0.30

$

0.30

$

0.65

$

0.60

Weighted average shares outstanding

 

16,943,155

 

13,540,657

 

16,829,821

 

12,610,593

See Notes to Consolidated Financial Statements

4


Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Statements of Changes in Net Assets (Unaudited)

(Dollars in thousands, except share data)

Paid-In Capital

Common Stock

in Excess of

Distributable

Total Net

    

Shares

    

Amount

    

Par

    

Earnings

    

Assets

Balance at March 31, 2019

 

13,538,481

$

14

$

202,818

$

(46,408)

$

156,424

Issuance of common stock, net of offering costs

(15)

(15)

Net increase in net assets resulting from operations, net of excise tax:

 

  

 

  

 

  

 

  

 

  

Net investment income, net of excise tax

 

 

 

 

5,012

 

5,012

Net realized loss on investments

 

 

 

 

(4,598)

 

(4,598)

Net unrealized appreciation on investments

 

 

 

 

4,124

 

4,124

Issuance of common stock under dividend reinvestment plan

 

4,392

 

 

52

 

 

52

Distributions declared

 

 

 

 

(3,863)

 

(3,863)

Balance at June 30, 2019

 

13,542,873

14

202,855

(45,733)

157,136

Balance at March 31, 2020

16,852,610

17

242,886

(49,446)

193,457

Issuance of common stock, net of offering costs

 

432,491

 

 

4,971

 

 

4,971

Net increase in net assets resulting from operations, net of excise tax:

 

  

 

  

 

  

 

  

 

  

Net investment income, net of excise tax

 

6,706

6,706

Net realized loss on investments

 

 

 

 

(725)

 

(725)

Net unrealized appreciation on investments

 

 

 

 

1,944

 

1,944

Issuance of common stock under dividend reinvestment plan

 

6,669

 

 

67

 

 

67

Distributions declared

 

 

 

 

(5,188)

 

(5,188)

Balance at June 30, 2020

 

17,291,770

$

17

$

247,924

$

(46,709)

$

201,232

Paid-In Capital

Common Stock

in Excess of

Distributable

Total Net

    

Shares

    

Amount

    

Par

    

Earnings

    

Assets

Balance at December 31, 2018

 

11,535,129

$

12

$

179,616

$

(45,371)

$

134,257

Issuance of common stock, net of offering costs

 

2,000,000

 

2

 

23,145

 

 

23,147

Net increase in net assets resulting from operations, net of excise tax:

 

  

 

  

 

  

 

  

 

  

Net investment income, net of excise tax

 

 

 

 

8,245

 

8,245

Net realized loss on investments

 

 

 

 

(3,447)

 

(3,447)

Net unrealized appreciation on investments

 

 

 

 

2,765

 

2,765

Issuance of common stock under dividend reinvestment plan

 

7,744

 

 

94

 

 

94

Distributions declared

 

 

 

 

(7,925)

 

(7,925)

Balance at June 30, 2019

 

13,542,873

14

202,855

(45,733)

157,136

Balance at December 31, 2019

15,563,290

16

226,660

(42,621)

184,055

Issuance of common stock, net of offering costs

 

1,717,901

 

1

 

21,147

 

 

21,148

Net increase in net assets resulting from operations, net of excise tax:

 

  

 

  

 

  

 

  

 

  

Net investment income, net of excise tax

 

10,989

10,989

Net realized gain on investments

 

 

 

 

2,766

 

2,766

Net unrealized depreciation on investments

 

 

 

 

(6,539)

 

(6,539)

Issuance of common stock under dividend reinvestment plan

 

10,579

 

 

117

 

 

117

Distributions declared

 

 

 

 

(11,304)

 

(11,304)

Balance at June 30, 2020

 

17,291,770

$

17

$

247,924

$

(46,709)

$

201,232

See Notes to Consolidated Financial Statements

5


Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

For the six months ended June 30, 

    

2020

    

2019

Cash flows from operating activities:

 

  

 

  

Net increase in net assets resulting from operations

$

7,216

$

7,563

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:

 

 

Amortization of debt issuance costs

 

555

 

344

Net realized (gain) loss on investments

 

(2,766)

 

3,447

Net unrealized depreciation (appreciation) on investments

 

6,539

 

(2,765)

Purchase of investments

 

(105,554)

 

(93,137)

Principal payments received on investments

 

61,168

 

65,204

Proceeds from sale of investments

6,256

1,905

Distributions from controlled affiliate investment

 

 

530

Dividends from controlled affiliate investment

 

(118)

 

(761)

Warrants received in settlement of fee income

 

(978)

 

Changes in assets and liabilities:

 

  

 

  

Decrease (increase) in interest receivable

 

250

 

(533)

Increase in end-of-term payments

 

(1,398)

 

(558)

Decrease in unearned income

 

(876)

 

(741)

Decrease in other assets

 

(59)

 

(383)

(Decrease) increase in other accrued expenses

 

(48)

 

133

Increase in base management fee payable

 

48

 

37

Increase in incentive fee payable

 

63

 

262

Net cash used in operating activities

 

(29,702)

 

(19,453)

Cash flows from financing activities:

 

  

 

  

Proceeds from issuance of common stock, net of offering costs

 

21,148

 

23,147

Advances on credit facility

 

58,250

 

28,500

Repayment of credit facility

 

(17,000)

 

(30,000)

Debt issuance costs

(888)

Distributions paid

 

(10,668)

 

(7,229)

Net cash provided by financing activities

 

50,842

 

14,418

Net increase (decrease) in cash, cash equivalents and restricted cash

 

21,140

 

(5,035)

Cash, cash equivalents and restricted cash:

 

  

 

  

Beginning of period

 

17,385

 

12,591

End of period

$

38,525

$

7,556

Supplemental disclosure of cash flow information:

 

  

 

  

Cash paid for interest

$

4,078

$

3,737

Supplemental non-cash investing and financing activities:

 

  

 

  

Warrant investments received and recorded as unearned income

$

750

$

1,367

Distributions payable

$

5,188

$

4,063

Acquisition of controlled affiliate investment

$

16,498

$

End-of-term payments receivable

$

5,298

$

3,573

Non-cash income

$

2,527

$

1,081

Six months ended June 30, 

    

2020

    

2019

Cash

$

22,837

$

7,556

Investments in money market funds

 

14,499

 

Restricted investments in money market funds

 

1,189

 

Total cash, cash equivalents and restricted cash

$

38,525

$

7,556

See Notes to Consolidated Financial Statements

6


Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2020

(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 — 173.3% (8)

 

  

 

  

 

  

 

  

 

  

Non-Affiliate Debt Investments — 167.6% (8)

 

  

 

  

 

  

 

  

 

  

Non-Affiliate Debt Investments — Life Science — 88.4% (8)

 

  

 

  

 

  

 

  

Castle Creek Pharmaceuticals Holdings, Inc.(2)(12)

Biotechnology

Term Loan (9.30% cash (Libor + 7.50%; Floor 9.30%), 5.00% ETP, Due 3/1/24)

$

5,000

$

4,875

$

4,875

Term Loan (9.30% cash (Libor + 7.50%; Floor 9.30%), 5.00% ETP, Due 3/1/24)

5,000

4,928

4,928

Term Loan (9.30% cash (Libor + 7.50%; Floor 9.30%), 5.00% ETP, Due 3/1/24)

5,000

4,928

4,928

Term Loan (9.30% cash (Libor + 7.50%; Floor 9.30%), 5.00% ETP, Due 3/1/24)

5,000

4,928

4,928

Celsion Corporation (2)(5)(12)

 

Biotechnology

 

Term Loan (9.63% cash (Libor + 7.63%; Floor 9.63%), 4.00% ETP, Due 7/1/22)

2,500

2,471

2,471

 

 

Term Loan (9.63% cash (Libor + 7.63%; Floor 9.63%), 4.00% ETP, Due 7/1/22)

 

2,500

 

2,471

2,471

Term Loan (9.63% cash (Libor + 7.63%; Floor 9.63%), 4.00% ETP, Due 7/1/22)

2,500

2,521

2,479

Term Loan (9.63% cash (Libor + 7.63%; Floor 9.63%), 4.00% ETP, Due 7/1/22)

2,500

2,521

2,479

Emalex Biosciences, Inc. (2)(12)

Biotechnology

Term Loan (9.75% cash (Libor + 7.95%; Floor 9.75%), 5.00% ETP, Due 12/1/23)

2,500

2,346

2,346

Term Loan (9.75% cash (Libor + 7.95%; Floor 9.75%), 5.00% ETP, Due 12/1/23)

2,500

2,450

2,450

Encore Dermatology, Inc. (2)(12)

Biotechnology

Term Loan (10.00% cash (Libor + 7.50%; Floor 10.00%), 4.00% ETP, Due 4/1/23)

5,000

5,031

4,701

Term Loan (10.00% cash (Libor + 7.50%; Floor 10.00%), 4.00% ETP, Due 4/1/23)

5,000

4,940

4,688

Term Loan (10.00% cash (Libor + 7.50%; Floor 10.00%), 4.00% ETP, Due 4/1/23)

5,000

4,940

4,688

Espero BioPharma, Inc. (2)(12)(14)

 

Biotechnology

Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), 5.10% ETP, Due 8/15/20) (11)

 

5,053

 

5,053

2,465

Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), 5.10% ETP, Due 8/15/20) (11)

4,820

4,820

2,344

Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), Due 8/15/20) (11)

200

200

98

Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), Due 8/15/20) (11)

100

100

49

Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), Due 8/15/20) (11)

100

100

49

Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), Due 8/15/20) (11)

100

100

49

Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), Due 8/15/20) (11)

150

150

73

Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), Due 8/15/20) (11)

100

100

49

Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), Due 8/15/20) (11)

50

50

24

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

4,973

4,973

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

4,938

4,938

Term Loan (9.00% cash (Libor + 6.50%; Floor 9.00%), 5.00% ETP, Due 10/1/22)

5,000

4,938

4,938

Term Loan (9.00% cash (Libor + 6.50%; Floor 9.00%), 5.00% ETP, Due 10/1/22)

5,000

5,036

4,953

Provivi, Inc. (2)(12)

Biotechnology

Term Loan (9.50% cash (Libor + 8.50%; Floor 9.50%), 5.50% ETP, Due 12/1/24)

5,000

4,752

4,752

Term Loan (9.50% cash (Libor + 8.50%; Floor 9.50%), 5.50% ETP, Due 12/1/24)

5,000

4,901

4,901

vTv Therapeutics Inc. (2)(5)(12)

 

Biotechnology

 

Term Loan (10.50% cash (Libor + 10.00%; Floor 10.50%), 6.00% ETP, Due 8/1/20)

 

521

 

520

 

520

 

 

Term Loan (10.50% cash (Libor + 10.00%; Floor 10.50%), 8.50% ETP, Due 1/1/21)

 

1,094

 

1,088

1,088

Titan Pharmaceuticals, Inc. (2)(5)(12)

 

Drug Delivery

 

Term Loan (9.50% cash (Libor + 8.40%; Floor 9.50%), 5.00% ETP, Due 6/1/22)

 

1,600

 

1,547

 

1,547

Bardy Diagnostics, Inc. (2)(12)

Medical Device

Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24)

5,000

4,935

4,935

Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24)

5,000

4,935

4,935

Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24)

1,000

987

987

Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24)

1,000

987

987

Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24)

1,000

987

987

See Notes to Consolidated Financial Statements

7


Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2020

(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 (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24)

1,000

987

987

Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24)

1,000

987

987

Ceribell, Inc. (2)(12)

Medical Device

Term Loan (8.25% cash (Libor + 6.70%; Floor 8.25%), 5.50% ETP, Due 10/1/24)

5,000

4,871

4,871

Term Loan (8.25% cash (Libor + 6.70%; Floor 8.25%), 5.50% ETP, Due 10/1/24)

5,000

4,935

4,935

Conventus Orthopaedics, Inc. (2)(12)

 

Medical Device

 

Term Loan (9.25% cash (Libor + 8.00%; Floor 9.25%), 8.33% ETP, Due 1/1/24)

 

5,311

 

5,242

 

5,242

 

 

Term Loan (9.25% cash (Libor + 8.00%; Floor 9.25%), 8.33% ETP, Due 1/1/24)

 

5,311

 

5,242

5,242

CSA Medical, Inc. (2)(12)

 

Medical Device

 

Term Loan (10.00% cash (Libor + 8.20%; Floor 10.00%), 5.00% ETP, Due 1/1/24)

 

3,750

 

3,697

 

3,697

Term Loan (10.00% cash (Libor + 8.20%; Floor 10.00%), 5.00% ETP, Due 1/1/24)

250

247

247

Term Loan (10.00% cash (Libor + 8.20%; Floor 10.00%), 5.00% ETP, Due 3/1/24)

4,000

3,948

3,948

CVRx, Inc. (2)(12)

Medical Device

Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 10/1/24)

5,000

4,941

4,941

Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 10/1/24)

5,000

4,941

4,941

Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 10/1/24)

5,000

4,941

4,941

Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 10/1/24)

5,000

4,941

4,941

Lantos Technologies, Inc. (2)(12)(14)

 

Medical Device

 

Term Loan (10.00% cash (Libor + 8.43%; Floor 10.00%), 10.00% ETP, Due 9/1/21)

 

3,042

 

2,823

 

1,900

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

 

7,370

 

7,121

 

 

Term Loan (10.08% cash (Libor + 7.68%; Floor 10.08%), 4.00% ETP, Due 10/1/23)

 

4,050

 

4,000

3,865

Magnolia Medical Technologies, Inc. (2)(12)

Medical Device

Term Loan (9.75% cash (Prime + 5.00%; Floor 9.75%), 4.00% ETP, Due 3/1/25)

5,000

4,859

4,859

Term Loan (9.75% cash (Prime + 5.00%; Floor 9.75%), 4.00% ETP, Due 3/1/25)

5,000

4,930

4,930

VERO Biotech LLC (2)(12)

 

Medical Device

 

Term Loan (9.25% cash (Libor + 8.00%; Floor 9.25%), 5.00% ETP, Due 1/1/22)

 

3,167

 

3,142

 

3,142

 

 

Term Loan (9.25% cash (Libor + 8.00%; Floor 9.25%), 5.00% ETP, Due 1/1/22)

 

3,167

 

3,142

3,142

Total Non-Affiliate Debt Investments — Life Science

 

 

  

 

185,733

 

177,952

Non-Affiliate Debt Investments — Technology — 71.9% (8)

Betabrand Corporation (2)(12)

Consumer-related Technologies

Term Loan (10.05% cash (Libor + 7.50%; Floor 10.05%), 5.75% ETP, Due 9/1/23)

4,250

4,159

4,159

Term Loan (10.05% cash (Libor + 7.50%; Floor 10.05%), 5.75% ETP, Due 9/1/23)

4,250

4,191

4,192

Term Loan (10.05% cash (Libor + 7.50%; Floor 10.05%), 5.75% ETP, Due 9/1/23)

1,125

1,092

1,092

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

    

4,928

    

4,928

Term Loan (9.90% cash (Libor + 7.40%; Floor 9.90%), 4.00% ETP, Due 1/1/23)

5,000

4,928

4,928

 

 

Term Loan (9.90% cash (Libor + 7.40%; Floor 9.90%), 4.00% ETP, Due 1/1/23)

 

5,000

4,928

4,928

Updater, Inc.(2)(12)

Consumer-related Technologies

Term Loan (11.50% cash (Prime + 5.75%; Floor 11.50%, Ceiling 14.00%),0.56% ETP, Due 12/20/24)

5,000

4,942

4,672

Term Loan (11.50% cash (Prime + 5.75%; Floor 11.50%, Ceiling 14.00%), 0.56% ETP, Due 12/20/24)

5,000

4,942

4,672

Term Loan (11.50% cash (Prime + 5.75%; Floor 11.50%, Ceiling 14.00%), 0.56% ETP, Due 12/20/24)

10,000

9,883

9,345

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

4,891

4,891

Term Loan (11.00% cash (Libor + 8.60%; Floor 11.00%), 1.00% ETP, Due 2/1/23)

5,000

4,890

4,890

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

 

4,948

 

4,948

 

 

Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 3.00% ETP, Due 1/1/23)

 

5,000

 

4,948

4,948

Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 3.00% ETP, Due 7/1/23)

5,000

4,863

4,863

IgnitionOne, Inc. (2)(12)(14)

 

Internet and Media

 

Term Loan (10.39% cash (Libor + 10.23%; Floor 10.23%), 2.00% ETP, Due 4/1/22)

 

1,873

 

1,789

 

1,789

 

 

Term Loan (10.39% cash (Libor + 10.23%; Floor 10.23%), 2.00% ETP, Due 4/1/22)

 

1,873

 

1,789

 

1,789

See Notes to Consolidated Financial Statements

8


Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2020

(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 (10.39% cash (Libor + 10.23%; Floor 10.23%), 2.00% ETP, Due 4/1/22)

 

1,984

 

1,706

 

1,706

 

 

Term Loan (10.39% cash (Libor + 10.23%; Floor 10.23%), 2.00% ETP, Due 4/1/22)

 

1,873

 

1,789

 

1,789

Skillshare, Inc.(2)(12)

Internet and Media

Term Loan (9.50% cash (Libor + 7.50%; Floor 9.50%), 5.00% ETP, Due 1/1/25)

3,000

2,752

2,752

Term Loan (9.50% cash (Libor + 7.50%; Floor 9.50%), 5.00% ETP, Due 1/1/25)

3,000

2,951

2,951

Term Loan (9.50% cash (Libor + 7.50%; Floor 9.50%), 5.00% ETP, Due 1/1/25)

3,000

2,951

2,951

The NanoSteel Company, Inc. (2)(12)

 

Materials

 

Term Loan (11.00% cash (Libor + 8.50%; Floor 11.00%), 14.88% ETP, Due 6/1/22)

 

4,250

 

4,203

 

4,188

 

 

Term Loan (11.00% cash (Libor + 8.50%; Floor 11.00%), 14.88% ETP, Due 6/1/22)

 

4,250

 

4,203

4,188

Keypath Education, LLC (2)(12)

Software

Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 2.50% ETP, Due 10/1/24)

3,750

3,574

3,574

Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 2.50% ETP, Due 10/1/24)

3,750

3,677

3,677

Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 2.50% ETP, Due 10/1/24)

2,500

2,451

2,451

New Signature US, Inc. (2)(12)(13)

 

Software

 

Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 3.50% ETP, Due 7/1/22)

 

8,250

 

8,331

8,195

Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 3.50% ETP, Due 7/1/22)

2,750

2,727

2,727

Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 3.50% ETP, Due 2/1/23)

3,000

3,024

2,974

Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 3.50% ETP, Due 2/1/23)

1,000

989

989

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

3,939

3,939

Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.00% ETP, Due 7/1/23)

3,500

3,447

3,447

Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.00% ETP, Due 7/1/23)

500

503

494

Revinate, Inc. (2)(12)

Software

Term Loan (9.50% cash (Libor + 7.00%; Floor 9.50%), 4.00% ETP, Due 11/1/23)

4,000

4,029

3,962

Term Loan (9.50% cash (Libor + 7.00%; Floor 9.50%), 4.00% ETP, Due 11/1/23)

1,000

929

929

Term Loan (9.50% cash (Libor + 7.00%; Floor 9.50%), 4.00% ETP, Due 11/1/23)

5,000

4,937

4,937

xAd, Inc. (2)(12)

 

Software

 

Term Loan (10.00% cash (Libor + 8.70%; Floor 10.00%), 5.0% ETP, Due 1/1/22)

 

3,646

 

3,601

 

3,601

 

 

Term Loan (10.00% cash (Libor + 8.70%; Floor 10.00%), 5.0% ETP, Due 1/1/22)

 

3,646

 

3,601

3,601

Term Loan (10.00% cash (Libor + 8.70%; Floor 10.00%), 5.0% ETP, Due 1/1/22)

2,188

2,161

2,161

Term Loan (10.00% cash (Libor + 8.70%; Floor 10.00%), 5.0% ETP, Due 1/1/22)

 

1,458

 

1,441

1,441

Total Non-Affiliate Debt Investments — Technology

 

 

 

 

146,027

144,658

Non-Affiliate Debt Investments — Healthcare information and services — 7.3% (8)

 

  

 

  

 

  

Kate Farms, Inc. (2)(12)

 

Other Healthcare

 

Term Loan (9.75% cash (Libor + 7.45%; Floor 9.75%), 5.00% ETP, Due 10/1/23)

 

5,000

 

4,930

 

4,930

Term Loan (9.75% cash (Libor + 7.45%; Floor 9.75%), 5.00% ETP, Due 10/1/23)

5,000

4,930

4,930

Term Loan (9.75% cash (Libor + 7.45%; Floor 9.75%), 5.00% ETP, Due 10/1/23)

2,500

2,460

2,460

 

 

Term Loan (9.75% cash (Libor + 7.45%; Floor 9.75%), 5.00% ETP, Due 10/1/23)

 

2,500

 

2,460

2,460

Total Non-Affiliate Debt Investments — Healthcare information and services

 

  

 

14,780

 

14,780

Total Non- Affiliate Debt Investments

 

 

  

 

346,540

 

337,390

Non-Affiliate Warrant Investments — 5.2% (8)

 

  

 

  

 

  

 

  

 

  

Non-Affiliate Warrants — Life Science — 0.8% (8)

 

  

 

  

 

  

 

  

 

  

Alpine Immune Sciences, Inc. (5)(12)

 

Biotechnology

 

4,632 Common Stock Warrants

 

 

122

 

Castle Creek Pharmaceuticals, Inc. (2)(12)

Biotechnology

2,428 Preferred Stock Warrants

144

142

Celsion Corporation (2)(5)(12)

 

Biotechnology

 

142,568 Common Stock Warrants

 

 

65

 

174

Corvium, Inc. (2)(12)

Biotechnology

661,956 Preferred Stock Warrants

53

19

Emalex Biosciences, Inc. (2)(12)

Biotechnology

73,602 Preferred Stock Warrants

107

107

Encore Dermatology, Inc. (2)(12)

Biotechnology

1,511 Preferred Stock Warrants

113

Espero BioPharma, Inc. (2)(12)

 

Biotechnology

 

1,507,917 Common Stock Warrants

 

 

183

 

LogicBio, Inc. (2)(5)(12)

Biotechnology

7,843 Common Stock Warrants

8

2

Mustang Bio, Inc. (2)(5)(12)

Biotechnology

252,161 Common Stock Warrants

146

95

Rocket Pharmaceuticals Corporation (5)(12)

 

Biotechnology

 

7,051 Common Stock Warrants

 

 

17

 

9

Palatin Technologies, Inc. (2)(5)(12)

 

Biotechnology

 

274,725 Common Stock Warrants

 

 

20

 

1

Provivi, Inc. (2)(12)

Biotechnology

123,457 Preferred Stock Warrants

147

147

Strongbridge U.S. Inc. (2)(5)(12)

 

Biotechnology

 

160,714 Common Stock Warrants

 

 

72

 

220

See Notes to Consolidated Financial Statements

9


Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

June 30, 2020

(Dollars in thousands)

    

    

    

    

Cost of

    

Fair

Portfolio Company (1)(3)

Sector

Type of Investment (4)(7)(9)(10)

    

Investments (6)

Value

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