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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 March 31, 2023

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 May 2, 2023 was 28,656,554.

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
4.875% Notes due 2026	HTFB	The New York Stock Exchange
6.25% Notes due 2027	HTFC	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 March 31, 2023 (unaudited) and December 31, 2022	3
	Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 (unaudited)	4
	Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2023 and 2022 (unaudited)	5
	Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)	6
	Consolidated Schedules of Investments as of March 31, 2023 (unaudited) and December 31, 2022	7
	Notes to the Consolidated Financial Statements (unaudited)	21
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	60

PART II
Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	61
Item 5.	Other Information	61
Item 6.	Exhibits	61
	Signatures	62
EX‑31.1
EX‑31.2
EX‑32.1
EX‑32.2

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)

	*March 31,*			*December 31,*
	*2023*			*2022*
	(Unaudited)
Assets
Non-affiliate investments at fair value (cost of $724,162 and $721,248, respectively)	$	714,466		$	720,026
Non-controlled affiliate investments at fair value (cost of $0 and $0, respectively) (Note 5)		846			—
Total investments at fair value (cost of $724,162 and $721,248, respectively) (Note 4)		715,312			720,026
Cash		19,844			20,612
Investments in money market funds		23,698			7,066
Restricted investments in money market funds		2,987			2,788
Interest receivable		13,843			13,573
Other assets		2,554			2,761
Total assets	$	778,238		$	766,826

Liabilities
Borrowings (Note 7)	$	439,645		$	434,078
Distributions payable		9,365			9,159
Base management fee payable (Note 3)		1,059			1,065
Incentive fee payable (Note 3)		2,978			1,392
Other accrued expenses		3,508			2,684
Total liabilities		456,555			448,378

Commitments and contingencies (Notes 3 and 8)

Net assets
Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, zero shares issued and outstanding as of March 31, 2023 and December 31, 2022		—			—
Common stock, par value $0.001 per share, 100,000,000 shares authorized, 28,544,822 and 27,920,838 shares issued and 28,377,357 and 27,753,373 shares outstanding as of March 31, 2023 and December 31, 2022, respectively		30			29
Paid-in capital in excess of par		393,312			385,921
Distributable earnings (loss)		(71,659	)		(67,502	)
Total net assets		321,683			318,448
Total liabilities and net assets	$	778,238		$	766,826
Net asset value per common share	$	11.34		$	11.47

See Notes to Consolidated Financial Statements

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*
	*March 31,*
	*2023*			*2022*
Investment income
Interest income on non-affiliate investments	$	27,399		$	13,853
Fee income on non-affiliate investments		638			351
Total investment income		28,037			14,204
Expenses
Interest expense		7,120			3,424
Base management fee (Note 3)		3,201			2,244
Performance based incentive fee (Note 3)		2,978			1,424
Administrative fee (Note 3)		440			362
Professional fees		658			577
General and administrative		445			344
Total expenses		14,842			8,375
Net investment income before excise tax		13,195			5,829
Provision for excise tax		184			100
Net investment income		13,011			5,729
Net realized and unrealized loss
Net realized (loss) gain on non-affiliate investments		(168	)		30
Net realized (loss) gain on investments		(168	)		30
Net unrealized depreciation on non-affiliate investments		(8,383	)		(2,287	)
Net unrealized appreciation on non-controlled affiliate investments		846			—
Net unrealized appreciation on controlled affiliate investments		—			50
Net unrealized depreciation on investments		(7,537	)		(2,237	)
Net realized and unrealized loss		(7,705	)		(2,207	)
Net increase in net assets resulting from operations	$	5,306		$	3,522
Net investment income per common share	$	0.46		$	0.26
Net increase in net assets resulting from operations per common share	$	0.19		$	0.16
Distributions declared per share	$	0.33		$	0.30
Weighted average shares outstanding		28,227,100			21,904,160

See Notes to Consolidated Financial Statements

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 December 31, 2021		21,217,460	$	22	$	301,359		(56,046	)	$	245,335
Issuance of common stock, net of offering costs		2,750,171		3		38,184		—			38,187
Net increase in net assets resulting from operations, net of excise tax:
Net investment income, net of excise tax		—		—		—		5,729			5,729
Net realized gain on investments		—		—		—		30			30
Net unrealized depreciation on investments		—		—		—		(2,237	)		(2,237	)
Issuance of common stock under dividend reinvestment plan		9,506		—		145		—			145
Distributions declared		—		—		—		(7,200	)		(7,200	)
Balance at March 31, 2022		23,977,137		25		339,688		(59,724	)		279,989

Balance at December 31, 2022		27,753,373		29		385,921		(67,502	)		318,448
Issuance of common stock, net of offering costs		605,848		1		7,173		—			7,174
Net increase in net assets resulting from operations, net of excise tax:
Net investment income, net of excise tax		—		—		—		13,011			13,011
Net realized loss on investments		—		—		—		(168	)		(168	)
Net unrealized depreciation on investments		—		—		—		(7,537	)		(7,537	)
Issuance of common stock under dividend reinvestment plan		18,136		—		218		—			218
Distributions declared		—		—		—		(9,463	)		(9,463	)
Balance at March 31, 2023		28,377,357	$	30	$	393,312	$	(71,659	)	$	321,683

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

	*For the three months ended March 31,*
	*2023*			*2022*
Cash flows from operating activities:
Net increase in net assets resulting from operations	$	5,306		$	3,522
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		478			336
Net realized loss (gain) on investments		168			(30	)
Net unrealized depreciation on investments		7,537			2,237
Purchase of investments		(47,008	)		(94,485	)
Principal payments received on investments		39,756