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 SEPTEMBER 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 November 3, 2020 was 18,367,587.

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

3

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

4

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

5

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

6

Consolidated Schedules of Investments as of September 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

46

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

67

Item 4.

Controls and Procedures

68

PART II

68

Item 1.

Legal Proceedings

68

Item 1A.

Risk Factors

69

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

71

Item 3.

Defaults Upon Senior Securities

71

Item 4.

Mine Safety Disclosures

71

Item 5.

Other Information

71

Item 6.

Exhibits

71

Signatures

72

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)

September 30, 

December 31, 

    

2020

    

2019

Assets

 

(Unaudited)

 

  

Non-affiliate investments at fair value (cost of $321,034 and $295,256, respectively)

$

304,359

$

294,304

Non-controlled affiliate investments at fair value (cost of $6,822 and $6,891, respectively) (Note 5)

 

7,391

 

8,597

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

 

 

16,650

Total investments at fair value (cost of $327,856 and $318,831, respectively) (Note 4)

 

311,750

 

319,551

Cash

 

34,130

 

6,465

Investments in money market funds

 

22,735

 

9,787

Restricted investments in money market funds

 

801

 

1,133

Interest receivable

 

6,229

 

5,530

Other assets

 

1,913

 

1,535

Total assets

$

377,558

$

344,001

Liabilities

 

  

 

  

Borrowings (Note 7)

$

163,689

$

152,050

Distributions payable

 

5,510

 

4,669

Base management fee payable (Note 3)

 

510

 

519

Incentive fee payable (Note 3)

 

1,465

 

1,613

Other accrued expenses

 

1,213

 

1,095

Total liabilities

 

172,387

 

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 September 30, 2020 and December 31, 2019

 

 

Common stock, par value $0.001 per share, 100,000,000 shares authorized, 18,533,378 and 15,730,755 shares issued and 18,365,913 and 15,563,290 shares outstanding as of September 30, 2020 and December 31, 2019, respectively

 

19

 

16

Paid-in capital in excess of par

 

260,649

 

226,660

Distributable earnings

 

(55,497)

 

(42,621)

Total net assets

 

205,171

 

184,055

Total liabilities and net assets

$

377,558

$

344,001

Net asset value per common share

$

11.17

$

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 Nine Months Ended

September 30, 

September 30, 

    

2020

    

2019

    

2020

    

2019

    

Investment income

 

  

 

  

 

  

 

  

 

Interest income on investments

 

  

 

  

 

  

 

  

 

Interest income on non-affiliate investments

$

10,974

$

8,974

$

32,286

$

25,429

Interest income on affiliate investments

 

175

 

210

 

532

 

645

Total interest income on investments

 

11,149

 

9,184

 

32,818

 

26,074

Fee income

 

  

 

  

 

  

 

  

Prepayment fee income on non-affiliate investments

1,156

639

1,911

1,373

Revenue based payments on non-affiliate investments(1)

1,050

1,080

Fee income on non-affiliate investments

 

23

 

37

 

1,112

 

382

Fee income on affiliate investments

 

3

 

4

 

10

 

18

Total fee income

 

1,182

 

1,730

 

3,033

 

2,853

Dividend income

 

  

 

  

 

  

 

  

Dividend income on controlled affiliate investments

 

 

461

 

118

 

1,223

Total dividend income

 

 

461

 

118

 

1,223

Total investment income

 

12,331

 

11,375

 

35,969

 

30,150

Expenses

 

  

 

  

 

  

 

  

Interest expense

 

2,607

 

2,046

 

7,331

 

6,209

Base management fee (Note 3)

 

1,616

 

1,394

 

4,865

 

4,055

Performance based incentive fee (Note 3)

 

1,465

 

1,443

 

4,212

 

5,352

Administrative fee (Note 3)

 

234

 

212

 

740

 

631

Professional fees

 

247

 

279

 

1,095

 

1,045

General and administrative

 

302

 

228

 

877

 

688

Total expenses

 

6,471

 

5,602

 

19,120

 

17,980

Performance based incentive fee waived (Note 3)

 

 

 

 

(1,848)

Net expenses

 

6,471

 

5,602

 

19,120

 

16,132

Net investment income

 

5,860

 

5,773

 

16,849

 

14,018

Net realized and unrealized loss on investments

 

  

 

  

 

  

 

  

Net realized gain (loss) on non-affiliate investments

 

1,178

 

(424)

 

3,957

 

(3,871)

Net realized loss on controlled affiliate investments

(12)

Net realized gain (loss) on investments

 

1,178

 

(424)

 

3,945

 

(3,871)

Net unrealized (depreciation) appreciation on non-affiliate investments

 

(10,629)

 

(129)

 

(15,435)

 

620

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

 

341

 

 

(1,134)

 

2,019

Net unrealized depreciation on controlled affiliate investments

 

 

(14)

 

(258)

 

(17)

Net unrealized (depreciation) appreciation on investments

 

(10,288)

 

(143)

 

(16,827)

 

2,622

Net realized and unrealized loss on investments

 

(9,110)

 

(567)

 

(12,882)

 

(1,249)

Net (decrease) increase in net assets resulting from operations

$

(3,250)

$

5,206

$

3,967

$

12,769

Net investment income per common share

$

0.34

$

0.42

$

0.98

$

1.08

Net (decrease) increase in net assets per common share

$

(0.19)

$

0.38

$

0.23

$

0.98

Distributions declared per share

$

0.30

$

0.30

$

0.95

$

0.90

Weighted average shares outstanding

 

17,245,662

 

13,816,082

 

17,111,359

 

13,016,839


(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


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 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

Balance at June 30, 2020

17,291,770

17

247,924

(46,709)

201,232

Issuance of common stock, net of offering costs

 

1,069,259

 

2

 

12,666

 

 

12,668

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

 

  

 

  

 

  

 

  

 

  

Net investment income, net of excise tax

 

5,860

5,860

Net realized gain on investments

 

 

 

 

1,178

 

1,178

Net unrealized depreciation on investments

 

 

 

 

(10,288)

 

(10,288)

Issuance of common stock under dividend reinvestment plan

 

4,884

 

 

59

 

 

59

Distributions declared

 

 

 

 

(5,538)

 

(5,538)

Balance at September 30, 2020

 

18,365,913

$

19

$

260,649

$

(55,497)

$

205,171

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

 

2,865,728

 

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

Balance at December 31, 2019

15,563,290

16

226,660

(42,621)

184,055

Issuance of common stock, net of offering costs

 

2,787,160

 

3

 

33,813

 

 

33,816

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

 

  

 

  

 

  

 

  

 

  

Net investment income, net of excise tax

 

16,849

16,849

Net realized gain on investments

 

 

 

 

3,945

 

3,945

Net unrealized depreciation on investments

 

 

 

 

(16,827)

 

(16,827)

Issuance of common stock under dividend reinvestment plan

 

15,463

 

 

176

 

 

176

Distributions declared

 

 

 

 

(16,843)

 

(16,843)

Balance at September 30, 2020

 

18,365,913

$

19

$

260,649

$

(55,497)

$

205,171

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 nine months ended September 30, 

    

2020

    

2019

Cash flows from operating activities:

 

  

 

  

Net increase in net assets resulting from operations

$

3,967

$

12,769

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:

 

 

Amortization of debt issuance costs

 

782

 

522

Net realized (gain) loss on investments

 

(3,945)

 

3,871

Net unrealized depreciation (appreciation) on investments

 

16,827

 

(2,622)

Purchase of investments

 

(121,648)

 

(135,284)

Principal payments received on investments

 

111,129

 

101,117

Proceeds from sale of investments

8,200

2,439

Investment in controlled affiliate investments

 

 

(589)

Distributions from controlled affiliate investment

 

 

715

Dividends from controlled affiliate investment

 

(118)

 

(1,223)

Warrants received in settlement of fee income

 

(978)

 

Changes in assets and liabilities:

 

  

 

  

Decrease (increase) in interest receivable

 

519

 

(507)

Increase in end-of-term payments

 

(1,218)

 

(493)

Decrease in unearned income

 

(1,666)

 

(1,491)

Decrease (increase) in other assets

 

119

 

(516)

Increase (decrease) in other accrued expenses

 

118

 

(115)

(Decrease) increase in base management fee payable

 

(9)

 

48

(Decrease) increase in incentive fee payable

 

(148)

 

452

Net cash provided by (used in) operating activities

 

11,931

 

(20,907)

Cash flows from financing activities:

 

  

 

  

Proceeds from issuance of common stock, net of offering costs

 

33,816

 

33,254

Proceeds from Asset- Backed Notes

 

 

100,000

Advances on credit facilities

 

58,250

 

49,500

Repayment of credit facilities

 

(47,000)

 

(125,000)

Debt issuance costs

(890)

(1,808)

Distributions paid

 

(15,826)

 

(11,272)

Net cash provided by financing activities

 

28,350

 

44,674

Net increase in cash, cash equivalents and restricted cash

 

40,281

 

23,767

Cash, cash equivalents and restricted cash:

 

  

 

  

Beginning of period

 

17,385

 

12,591

End of period

$

57,666

$

36,358

Supplemental disclosure of cash flow information:

 

  

 

  

Cash paid for interest

$

6,296

$

5,801

Supplemental non-cash investing and financing activities:

 

  

 

  

Warrant investments received and recorded as unearned income

$

893

$

1,675

Distributions payable

$

5,510

$

4,324

Acquisition of controlled affiliate investment

$

16,498

$

End-of-term payments receivable

$

5,118

$

3,508

Non-cash income

$

4,701

$

2,798

Receivable resulting from sale of investment

$

$

500

Nine months ended September 30, 

    

2020

    

2019

Cash

$

34,130

$

16,958

Investments in money market funds

 

22,735

 

18,199

Restricted investments in money market funds

 

801

 

1,201

Total cash, cash equivalents and restricted cash

$

57,666

$

36,358

See Notes to Consolidated Financial Statements

6


Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 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 — 148.4% (8)

 

  

 

  

 

  

 

  

 

  

Non-Affiliate Debt Investments — 142.9% (8)

 

  

 

  

 

  

 

  

Non-Affiliate Debt Investments — Life Science — 72.0% (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

$

4,879

$

4,879

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

5,000

4,933

4,933

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

5,000

4,933

4,933

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

5,000

4,933

4,933

Celsion Corporation (2)(5)(12)

 

Biotechnology

 

Term Loan (9.63% cash (Libor + 7.63%; Floor 9.63%), 5.50% ETP, Due 4/1/23)

2,500

 

2,474

2,474

 

 

Term Loan (9.63% cash (Libor + 7.63%; Floor 9.63%), 5.50% ETP, Due 4/1/23)

 

2,500

2,523

2,482

Emalex Biosciences, Inc. (2)(12)

Biotechnology

Term Loan (9.75% cash (Libor + 7.90%; Floor 9.75%), 5.00% ETP, Due 12/1/23)

2,500

2,350

2,350

Term Loan (9.75% cash (Libor + 7.90%; Floor 9.75%), 5.00% ETP, Due 12/1/23)

2,500

2,453

2,453

Encore Dermatology, Inc. (2)(12)(13)

Biotechnology

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

5,078

5,034

2,402

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

5,000

4,957

2,403

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

5,000

4,943

2,395

Espero BioPharma, Inc. (2)(12)(13)

 

Biotechnology

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

 

5,053

 

5,053

2,322

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

4,914

4,914

2,257

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

200

200

91

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

100

100

46

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

100

100

46

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

100

100

46

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

150

150

69

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

100

100

46

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

50

50

22

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

485

485

223

Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), Due 10/31/20)

70

70

32

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

4,975

4,975

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

4,757

4,757

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

5,000

4,907

4,907

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

 

Biotechnology

 

Term Loan (10.50% cash (Libor + 10.00%; Floor 10.50%), 10.17% ETP, Due 1/1/21)

 

656

 

653

653

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

 

1,554

 

1,400

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

4,939

4,939

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

5,000

4,939

4,939

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

1,000

988

988

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

1,000

988

988

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

1,000

988

988

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

1,000

988

988

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

1,000

988

988

See Notes to Consolidated Financial Statements

7


Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 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

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

4,874

4,874

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

5,000

4,939

4,939

Conventus Orthopaedics, Inc. (2)(12)

 

Medical Device

 

Term Loan (9.25% cash (Libor + 8.00%; Floor 9.25%), 9.17% ETP, Due 7/1/25)

 

5,198

 

5,134

 

5,134

 

 

Term Loan (9.25% cash (Libor + 8.00%; Floor 9.25%), 9.17% ETP, Due 7/1/25)

 

5,198

 

5,134

5,134

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

 

3,701

 

3,701

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

3,952

3,952

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

4,944

4,944

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

5,000

4,944

4,944

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

5,000

4,944

4,944

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

5,000

4,944

4,944

Lantos Technologies, Inc. (2)(12)(13)

 

Medical Device

 

Term Loan (10.00% cash (Libor + 8.43%; Floor 10.00%), 10.00% ETP, Due 9/30/20)

 

1,879

 

1,660

 

475

Term Loan (10.00% cash (Libor + 8.43%; Floor 10.00%), Due 9/30/20)

436

436

125

MacuLogix, Inc. (2)(12)

 

Medical Device

 

Term Loan (10.08% cash (Libor + 7.68%; Floor 10.08%), 5.50% ETP, Due 10/1/23)

 

7,500

 

7,415

 

7,158

 

 

Term Loan (10.08% cash (Libor + 7.68%; Floor 10.08%), 5.50% ETP, Due 10/1/23)

 

4,050

 

3,967

3,829

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

4,862

4,862

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

5,000

4,934

4,934

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)

 

2,667

 

2,646

 

2,646

 

 

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

 

2,667

 

2,646

2,646

Total Non-Affiliate Debt Investments — Life Science

 

  

 

163,721

 

147,779

Non-Affiliate Debt Investments — Technology — 63.7% (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

4,164

4,164

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

4,250

4,196

4,196

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

1,125

1,095

1,095

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)

    

4,667

    

4,602

    

4,602

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

4,667

4,602

4,602

 

 

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

 

4,667

4,602

4,602

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

4,945

4,945

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

5,000

4,945

4,945

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

10,000

9,890

9,890

Canara, Inc. (2)(12)

Data Storage

Term Loan (11.00% cash (Libor + 8.60%; Floor 11.00%), 2.00% ETP, Due 8/1/23)

5,000

4,900

4,900

Term Loan (11.00% cash (Libor + 8.60%; Floor 11.00%), 2.00% ETP, Due 8/1/23)

5,000

4,899

4,899

Silk, Inc. (2)(12)

 

Data Storage

 

Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 4.00% ETP, Due 1/1/23)

 

4,667

 

4,620

 

4,620

 

 

Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 4.00% ETP, Due 1/1/23)

 

4,667

 

4,620

4,620

Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 4.00% ETP, Due 7/1/23)

5,000

4,874

4,874

IgnitionOne, Inc. (2)(12)(13)

 

Internet and Media

 

Term Loan (10.39% cash (Libor + 10.23%; Floor 10.23%), 6.00% ETP, Due 4/1/22)

 

1,874

 

1,789

 

1,789

 

 

Term Loan (10.39% cash (Libor + 10.23%; Floor 10.23%), 6.00% ETP, Due 4/1/22)

 

1,874

 

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)

September 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%), 6.00% ETP, Due 4/1/22)

 

1,987

 

1,708

 

1,708

 

 

Term Loan (10.39% cash (Libor + 10.23%; Floor 10.23%), 6.00% ETP, Due 4/1/22)

 

1,874

 

1,789

 

1,789

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

 

4,210

 

2,500

 

 

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

 

4,250

 

4,210

2,500

BriteCore Holdings, Inc. (2)(12)

Software

Term Loan (10.50% cash (Prime + 7.25%; Floor 10.50%), 4.00% ETP, Due 10/1/24)

2,500

2,472

2,472

Term Loan (10.50% cash (Prime + 7.25%; Floor 10.50%), 4.00% ETP, Due 10/1/24)

2,500

2,472

2,472

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

3,579

3,579

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

3,750

3,681

3,681

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

2,500

2,454

2,454

OutboundEngine, Inc. (2)(12)

Software

Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.36% ETP, Due 7/1/23)

4,000

3,944

3,944

Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.36% ETP, Due 7/1/23)

3,500

3,451

3,451

Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.36% ETP, Due 7/1/23)

500

503

495

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

4,030

3,813

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

1,000

929

893

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

5,000

4,942

4,751

Topia Mobility, Inc. (2)(12)

Software

Term Loan (10.00% cash (Prime + 6.75%; Floor 10.00%), 4.00% ETP, Due 9/1/24)

5,000

4,817

4,817

Term Loan (10.00% cash (Prime + 6.75%; Floor 10.00%), 4.00% ETP, Due 9/1/24)

5,000

4,895

4,895

xAd, Inc. (2)(12)

 

Software

 

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

 

3,333

 

3,296

 

3,296

 

 

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

 

3,333

 

3,296

3,296

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

2,000

1,978

1,978

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

 

1,333

 

1,318

1,318

Total Non-Affiliate Debt Investments — Technology

 

 

 

134,506

130,634

Non-Affiliate Debt Investments — Healthcare information and services — 7.2% (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

 

4,935

 

4,935

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

5,000

4,935

4,935

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

2,500

2,463

2,463

 

 

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

 

2,500

 

2,463

2,463

Total Non-Affiliate Debt Investments — Healthcare information and services

 

  

 

14,796

 

14,796

Total Non- Affiliate Debt Investments

 

 

  

 

313,023

 

293,209

Non-Affiliate Warrant Investments — 5.2% (8)

 

  

 

  

 

  

 

  

Non-Affiliate Warrants — Life Science — 1.0% (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

 

295,053 Common Stock Warrants

 

 

65

 

9

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

 

 

184

 

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

Biotechnology

7,843 Common Stock Warrants

8

3

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

Biotechnology

252,161 Common Stock Warrants

146

91

Rocket Pharmaceuticals Corporation (5)(12)

 

Biotechnology

 

7,051 Common Stock Warrants

 

 

17

 

15

Provivi, Inc. (2)(12)

Biotechnology

123,457 Preferred Stock Warrants

147

336

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

 

Biotechnology

 

160,714 Common Stock Warrants

 

 

72

 

23

See Notes to Consolidated Financial Statements

9


Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 30, 2020

(Dollars in thousands)

    

    

    

    

Cost of

    

Fair

Portfolio Company (1)(3)

Sector

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

    

Investments (6)

Value

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

 

 

21

 

25

Aerin Medical, Inc. (2)(12)

 

Medical Device

 

1,818,183 Preferred Stock Warrants

 

 

66

 

458

Bardy Diagnostics, Inc. (2)(12)

Medical Device

346,154 Preferred Stock Warrants

56

54

Ceribell, Inc. (2)(12)

Medical Device

117,521 Preferred Stock Warrants

50

50

Conventus Orthopaedics, Inc. (2)(12)

 

Medical Device

 

6,313,826 Preferred Stock Warrants

 

 

149

 

139

CSA Medical, Inc. (2)(12)

 

Medical Device

 

1,375,727 Preferred Stock Warrants

 

 

153

 

115

CVRx, Inc.(2)(12)

Medical Device

750,000 Preferred Stock Warrants

76

74

Lantos Technologies, Inc. (2)(12)

 

Medical Device

 

560,832 Preferred Stock Warrants

 

 

253

 

MacuLogix, Inc. (2)(12)

 

Medical Device

 

454,460 Preferred Stock Warrants