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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 June 30, 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 August 1, 2023 was 32,103,683.

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 June 30, 2023 (unaudited) and December 31, 2022	3
	Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (unaudited)	4
	Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2023 and 2022 (unaudited)	5
	Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited)	6
	Consolidated Schedules of Investments as of June 30, 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	45
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61
Item 4.	Controls and Procedures	62

PART II
Item 1.	Legal Proceedings	62
Item 1A.	Risk Factors	62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 3.	Defaults Upon Senior Securities	63
Item 4.	Mine Safety Disclosures	63
Item 5.	Other Information	63
Item 6.	Exhibits	63
	Signatures	64
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)

	*June 30,*			*December 31,*
	*2023*			*2022*
	(Unaudited)
Assets
Non-affiliate investments at fair value (cost of $723,633 and $721,248, respectively)	$	714,485		$	720,026
Non-controlled affiliate investments at fair value (cost of $0 and $0, respectively) (Note 5)		906			—
Total investments at fair value (cost of $723,633 and $721,248, respectively) (Note 4)		715,391			720,026
Cash		24,395			20,612
Investments in money market funds		25,865			7,066
Restricted investments in money market funds		2,904			2,788
Interest receivable		14,893			13,573
Other assets		3,960			2,761
Total assets	$	787,408		$	766,826

Liabilities
Borrowings (Note 7)	$	418,016		$	434,078
Distributions payable		10,592			9,159
Base management fee payable (Note 3)		1,063			1,065
Incentive fee payable (Note 3)		118			1,392
Other accrued expenses		2,200			2,684
Total liabilities		431,989			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 June 30, 2023 and December 31, 2022		—			—
Common stock, par value $0.001 per share, 100,000,000 shares authorized, 32,263,724 and 27,920,838 shares issued and 32,096,259 and 27,753,373 shares outstanding as of June 30, 2023 and December 31, 2022, respectively		34			29
Paid-in capital in excess of par		437,561			385,921
Distributable loss		(82,176	)		(67,502	)
Total net assets		355,419			318,448
Total liabilities and net assets	$	787,408		$	766,826
Net asset value per common share	$	11.07		$	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*						*For The Six Months Ended*
	*June 30,*						*June 30,*
	*2023*			*2022*			*2023*			*2022*

Investment income
Interest income on non-affiliate investments	$	26,624		$	17,720		$	54,023		$	31,573
Fee income on non-affiliate investments		1,493			868			2,131			1,219
Total investment income		28,117			18,588			56,154			32,792
Expenses
Interest expense		7,179			4,225			14,299			7,649
Base management fee (Note 3)		3,207			2,523			6,408			4,767
Performance based incentive fee (Note 3)		118			2,145			3,094			3,570
Administrative fee (Note 3)		368			374			808			735
Professional fees		447			271			1,106			848
General and administrative		546			362			992			706
Total expenses		11,865			9,900			26,707			18,275
Net investment income before excise tax		16,252			8,688			29,447			14,517
Provision for excise tax		179			106			363			206
Net investment income		16,073			8,582			29,084			14,311
Net realized and unrealized loss
Net realized (loss) gain on non-affiliate investments		(16,529	)		271			(16,697	)		301
Net realized loss on controlled affiliate investments		—			(1,200	)		—			(1,200	)
Net realized loss on investments		(16,529	)		(929	)		(16,697	)		(899	)
Net unrealized appreciation (depreciation) on non-affiliate investments		548			(1,436	)		(7,835	)		(3,723	)
Net unrealized appreciation on non-controlled affiliate investments		60			—			906			—
Net unrealized appreciation on controlled affiliate investments		—			1,400			—			1,450
Net unrealized appreciation (depreciation) on investments		608			(36	)		(6,929	)		(2,273	)
Net realized and unrealized loss		(15,921	)		(965