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0001487428 Horizon Technology Finance Corp false --12-31 Q1 2024 721,456 716,077 28,689 28,677 15,028 14,428 765,173 759,182 0.001 0.001 1,000,000 1,000,000 0 0 0 0 0.001 0.001 100,000,000 100,000,000 34,637,343 33,534,854 34,469,878 33,367,389 206.2 196.6 76.8 21.2 77.6 21.0 7.2 2.0 0.2 4.6 0.4 1.0 1.4 3.8 3.8 0.0 0.0 4.1 1.5 0.8 1.8 214.1 214.2 205.0 75.6 24.6 83.3 21.5 7.6 2.3 0.2 4.5 0.6 0.1 1.5 0.3 0.3 0.0 0.0 4.4 1.6 0.9 1.9 218.9 0 0 0 2024 2023 2022 2021 0 0 1.1 3.2 0.4 0.4 0.00 215.03 0.56 215.03 3,510 3,765 8.50 4.60 3.50 181.0 69.0 1.4 100.0 23 May 17, 2024 June 14, 2024 April 18, 2024 May 15, 2024 March 19, 2024 April 16, 2024 March 19, 2024 April 16, 2024 February 16, 2024 March 15, 2024 January 18, 2024 February 14, 2024 December 19, 2023 January 16, 2024 November 17, 2023 December 15, 2023 November 17, 2023 December 15, 2023 October 18, 2023 November 11, 2023 September 19, 2023 October 16, 2023 August 17, 2023 September 15, 2023 July 18, 2023 August 15, 2023 June 16, 2023 July 14, 2023 May 18, 2023 June 14, 2023 April 18, 2023 May 16, 2023 March 17, 2023 April 14, 2023 False False False False Weighted average is calculated by multiplying (a) the unobservable input for each investment in the investment type by (b) (1) the fair value of the related investment in the investment type divided by (2) the total fair value of the investment type. Annualized. Distributions are determined based on taxable income calculated in accordance with income tax regulations, which may differ from amounts determined under GAAP due to (i) changes in unrealized appreciation and depreciation, (ii) temporary and permanent differences in income and expense recognition, and (iii) the amount of spillover income carried over from a given tax year for distribution in the following tax year. The final determination of taxable income for each tax year, as well as the tax attributes for distributions in such tax year, will be made after the close of the tax year. Includes the impact of the different share amounts as a result of calculating per share data based on the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date. The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of common stock in the Company’s continuous public offering and pursuant to the Company’s distribution reinvestment plan. The issuance of common stock at an offering price, net of sales commissions and dealer manager fees, that is greater than the net asset value per share results in an increase in net asset value per share. Calculated by dividing the lesser of purchases or the sum of (1) principal prepayments and (2) maturities by the monthly average debt investment balance. 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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, 2024

  

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) 6768654

(Registrants 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 April 30, 2024 was 35,020,774.

 

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

 



 

 

 

HORIZON TECHNOLOGY FINANCE CORPORATION

 

FORM 10Q

TABLE OF CONTENTS

   

Page

PART I

Item 1

Consolidated Financial Statements.

3

     
 

Consolidated Statements of Assets and Liabilities as of March 31, 2024 (unaudited) and December 31, 2023

3

 

Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (unaudited)

4

 

Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2024 and 2023 (unaudited)

5

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)

6

 

Consolidated Schedules of Investments as of March 31, 2024 (unaudited) and December 31, 2023

7

 

Notes to the Consolidated Financial Statements (unaudited)

25

Item 2.

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

49

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

64

Item 4.

Controls and Procedures

65

     
PART II

Item 1.

Legal Proceedings

65

Item 1A.

Risk Factors

65

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

66

Item 3.

Defaults Upon Senior Securities

66

Item 4.

Mine Safety Disclosures

66

Item 5.

Other Information

66

Item 6.

Exhibits

66

 

Signatures

67

EX‑31.1         

   

EX‑31.2         

   

EX‑32.1         

   

EX‑32.2         

   
 

 

 

 

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)

 

  

March 31,

  

December 31,

 
  

2024

  

2023

 
  

(Unaudited)

     

Assets

        

Non-affiliate investments at fair value (cost of $721,456 and $716,077, respectively)

 $684,895  $693,730 

Non-controlled affiliate investments at fair value (cost of $28,689 and $28,677, respectively) (Note 5)

  12,577   1,132 

Controlled affiliate investments at fair value (cost of $15,028 and $14,428, respectively) (Note 5)

  13,644   14,223 

Total investments at fair value (cost of $765,173 and $759,182, respectively) (Note 4)

  711,116   709,085 

Cash

  46,921   46,630 

Investments in money market funds

  21,879   26,450 

Restricted investments in money market funds

  2,533   2,642 

Interest receivable

  16,579   13,926 

Other assets

  3,260   3,623 

Total assets

 $802,288  $802,356 
         

Liabilities

        

Borrowings (Note 7)

 $452,490  $462,235 

Distributions payable

  13,099   11,011 

Base management fee payable (Note 3)

  1,058   1,052 

Incentive fee payable (Note 3)

  295    

Other accrued expenses

  3,225   4,077 

Total liabilities

  470,167   478,375 
         

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, 2024 and December 31, 2023

      

Common stock, par value $0.001 per share, 100,000,000 shares authorized, 34,637,343 and 33,534,854 shares issued and 34,469,878 and 33,367,389 shares outstanding as of March 31, 2024 and December 31, 2023, respectively

  37   36 

Paid-in capital in excess of par

  463,539   450,949 

Distributable loss

  (131,455)  (127,004)

Total net assets

  332,121   323,981 

Total liabilities and net assets

 $802,288  $802,356 

Net asset value per common share

 $9.64  $9.71 

 

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

 
  

March 31,

 
  

2024

  

2023

 
         

Investment income

        

From non-affiliate investments:

        

Interest income

 $24,468  $26,195 

Fee income

  268   638 

Payment-in-kind interest income

  1,216   1,204 

From controlled affiliate investments:

        

Interest income

  11    

Payment-in-kind interest income

  166    

Total investment income

  26,129   28,037 

Expenses

        

Interest expense

  8,161   7,120 

Base management fee (Note 3)

  3,162   3,201 

Performance based incentive fee (Note 3)

  295   2,978 

Administrative fee (Note 3)

  433   440 

Professional fees

  665   658 

General and administrative

  429   445 

Total expenses

  13,145   14,842 

Net investment income before excise tax

  12,984   13,195 

Provision for excise tax

  379   184 

Net investment income

  12,605   13,011 

Net realized and unrealized loss

        

Net realized gain (loss) on non-affiliate investments

  11   (168)

Net realized loss on non-controlled affiliate investments

  (3)   

Net realized gain (loss) on investments

  8   (168)

Net unrealized depreciation on non-affiliate investments

  (14,214)  (8,383)

Net unrealized appreciation on non-controlled affiliate investments

  11,433   846 

Net unrealized depreciation on controlled affiliate investments

  (1,179)   

Net unrealized depreciation on investments

  (3,960)  (7,537)

Net realized and unrealized loss

  (3,952)  (7,705)

Net increase in net assets resulting from operations

 $8,653  $5,306 

Net investment income per common share

 $0.38  $0.46 

Net increase in net assets resulting from operations per common share

 $0.26  $0.19 

Distributions declared per share

 $0.38  $0.33 

Weighted average shares outstanding

  33,579,743   28,227,100 

 

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)

 

          

Paid-In Capital

         
  

Common Stock

  

in Excess of

  

Distributable

  

Total Net

 
  

Shares

  

Amount

  

Par

  

Loss

  

Assets

 

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 
                     

Balance at December 31, 2023

  33,367,389   36   450,949   (127,004)  323,981 

Issuance of common stock, net of offering costs

  1,053,796   1   11,971      11,972 

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

                    

Net investment income, net of excise tax

           12,605   12,605 

Net realized gain on investments

           8   8 

Net unrealized depreciation on investments

           (3,960)  (3,960)

Issuance of common stock under dividend reinvestment plan

  48,693      619      619 

Distributions declared

           (13,104)  (13,104)

Balance at March 31, 2024

  34,469,878  $37  $463,539  $(131,455) $332,121 

 

See Notes to Consolidated Financial Statements

 

5

Horizon Technology Finance Corporation and Subsidiaries
 

 

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

 

  

For the three months ended March 31,

 
  

2024

  

2023

 

Cash flows from operating activities:

        

Net increase in net assets resulting from operations

 $8,653  $5,306 

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

        

Amortization of debt issuance costs

  393   478 

Net realized (gain) loss on investments

  (8)  168 

Net unrealized depreciation on investments

  3,960   7,537 

Purchase of investments

  (23,319)  (47,008)

Principal payments received on investments

  19,643   39,756 

Payment-in-kind interest on investments

  (1,382)  (1,204)

Proceeds from sale of investments

  41   6,520 

Changes in assets and liabilities:

        

(Increase) decrease in interest receivable

  (1,695)  840 

Increase in end-of-term payments

  (958)  (1,017)

Decrease in unearned income

  (952)  (1,148)

Decrease in other assets

  216   98 

(Decrease) increase in other accrued expenses

  (852)  824 

Increase (decrease) in base management fee payable

  6   (6)

Increase in incentive fee payable

  295   1,586 

Net cash provided by operating activities

  4,041   12,730 

Cash flows from financing activities:

        

Repayment of 2019 Asset-Backed Notes

     (4,783)

Proceeds from issuance of common stock, net of offering costs

  11,972   7,174 

Advances on Credit Facilities

     10,000 

Repayment of Credit Facilities

  (10,000)   

Debt issuance costs

  (5)  (19)

Distributions paid

  (10,397)  (9,039)

Net cash (used in) provided by financing activities

  (8,430)  3,333 

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

  (4,389)  16,063 

Cash, cash equivalents and restricted cash:

        

Beginning of period

  75,722   30,466 

End of period

 $71,333  $46,529 
         

Supplemental disclosure of cash flow information:

        

Cash paid for interest

 $7,565  $6,623 

Supplemental non-cash investing and financing activities:

        

Refinanced debt investment balances

 $11,250  $ 

Warrant investments received and recorded as unearned income

 $128  $141 

Distributions payable

 $13,099  $9,365 

End-of-term payments receivable

 $12,774  $10,799 

Non-cash income

 $4,103  $3,944 

 

  

March 31,

 
  

2024

  

2023

 

Cash

 $46,921  $19,844 

Investments in money market funds

  21,879   23,698 

Restricted investments in money market funds

  2,533   2,987 

Total cash, cash equivalents and restricted cash

 $71,333  $46,529 

 

See Notes to Consolidated Financial Statements

 

6

Horizon Technology Finance Corporation and Subsidiaries
 

 

Consolidated Schedule of Investments (Unaudited)

March 31, 2024

(Dollars in thousands)

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

 

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

 

Maturity Date

 

Principal Amount

  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Non-Affiliate Investments — 206.2% (8)

                                      

Non-Affiliate Debt Investments — 196.6% (8)

                                      

Non-Affiliate Debt Investments — Life Science — 76.8% (8)

                                      

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

 

Biotechnology

 

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50%

May 1, 2026

 $5,000  $4,982  $4,982 
    

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50%

May 1, 2026

  5,000   4,982   4,982 
    

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50%

May 1, 2026

  3,000   2,989   2,989 
    

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50%

May 1, 2026

  5,000   4,982   4,982 
    

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50%

May 1, 2026

  5,000   4,982   4,982 
    

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50%

May 1, 2026

  3,000   2,989   2,989 

Emalex Biosciences, Inc. (2)(12)

 

Biotechnology

 

Term Loan

  13.22%

Prime

  4.72%  9.75%  -   5.00%

June 1, 2024

  565   564   564 
    

Term Loan

  13.22%

Prime

  4.72%  9.75%  -   5.00%

June 1, 2024

  565   564   564 
    

Term Loan

  13.22%

Prime

  4.72%  9.75%  -   5.00%

November 1, 2025

  5,000   4,957   4,957 
    

Term Loan

  13.22%

Prime

  4.72%  9.75%  -   5.00%

May 1, 2026

  5,000   4,958   4,958 

Greenlight Biosciences, Inc. (2)(12)

 

Biotechnology

 

Term Loan

  14.25%

Prime

  5.75%  9.00%  -   3.00%

July 1, 2025

  2,500   2,429   2,429 
    

Term Loan

  14.25%

Prime

  5.75%  9.00%  -   3.00%

July 1, 2025

  1,250   1,215   1,215 

KSQ Therapeutics, Inc. (2)(12)

 

Biotechnology

 

Term Loan

  13.25%

Prime

  4.75%  8.50%  -   5.50%

May 1, 2027

  6,250   6,204   6,204 
    

Term Loan

  13.25%

Prime

  4.75%  8.50%  -   5.50%

May 1, 2027

  6,250   6,204   6,204 

Native Microbials, Inc (2)(12)

 

Biotechnology

 

Term Loan

  13.75%

Prime

  5.25%  8.50%  -   5.00%

November 1, 2026

  3,750   3,725   3,725 
    

Term Loan

  13.75%

Prime

  5.25%  8.50%  -   5.00%

November 1, 2026

  2,500   2,484   2,484 

PDS Biotechnology Corporation (2)(5)(12)

 

Biotechnology

 

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   3.75%

September 1, 2026

  10,000   9,924   9,924 
    

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   3.75%

September 1, 2026

  3,750   3,722   3,722 
    

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   3.75%

September 1, 2026

  3,750   3,722   3,722 

Provivi, Inc. (2)(12)

 

Biotechnology

 

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50%

December 1, 2024

  4,667   4,603   4,327 
    

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50%

December 1, 2024

  4,667   4,603   4,327 
    

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50%

December 1, 2024

  2,333   2,295   2,158 
    

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50%

December 1, 2024

  2,333   2,295   2,158 
    

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50%

December 1, 2024

  2,333   2,293   2,156 
    

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50%

December 1, 2024

  2,333   2,293   2,156 

Stealth Biotherapeutics Inc. (2)(12)

 

Biotechnology

 

Term Loan

  14.00%

Prime

  5.50%  8.75%  -   6.00%

October 1, 2025

  3,643   3,594   3,594 
    

Term Loan

  14.00%

Prime

  5.50%  8.75%  -   6.00%

October 1, 2025

  1,821   1,797   1,797 

Tallac Therapeutics, Inc. (2)(12)

 

Biotechnology

 

Term Loan

  12.75%

Prime

  4.25%  12.25%  -   4.00%

August 1, 2027

  2,500   2,232   2,232 
    

Term Loan

  12.75%

Prime

  4.25%  12.25%  -   4.00%

August 1, 2027

  2,500   2,462   2,462 

Aerobiotix, LLC (2)(12)

 

Medical Device

 

Term Loan

  9.00%

Fixed

  -   -   -   18.00%

April 1, 2028

  2,500   2,471   2,339 
    

Term Loan

  9.00%

Fixed

  -   -   -   18.00%

April 1, 2028

  2,500   2,471   2,339 
    

Term Loan

  9.00%

Fixed

  -   -   -   18.00%

June 30, 2024

  200   200   189 

Candesant Biomedical, Inc. (2)(12)

 

Medical Device

 

Term Loan

  12.00%

Prime

  3.50%  11.50%  -   5.00%

September 1, 2027

  5,000   4,764   4,764 
    

Term Loan

  12.00%

Prime

  3.50%  11.50%  -   5.00%

September 1, 2027

  2,500   2,457   2,457 
    

Term Loan

  12.00%

Prime

  3.50%  11.50%  -   5.00%

September 1, 2027

  2,500   2,457   2,457 

Ceribell, Inc. (2)(12)

 

Medical Device

 

Term Loan

  11.25%

Prime

  2.75%  9.25%  -   4.00%

March 1, 2029

  5,000   4,811   4,811 
    

Term Loan

  11.25%

Prime

  2.75%  9.25%  -   4.00%

March 1, 2029

  5,000   4,932   4,932 
    

Term Loan

  11.25%

Prime

  2.75%  9.25%  -   4.00%

March 1, 2029

  4,000   3,946   3,946 

Cognoa, Inc. (2)(12)

 

Medical Device

 

Term Loan

  14.00%

Prime

  5.50%  8.75%  -   6.00%

August 1, 2026

  4,375   4,332   4,332 
    

Term Loan

  14.00%

Prime

  5.50%  8.75%  -   6.00%

August 1, 2026

  2,188   2,166   2,166 

Conventus Orthopaedics, Inc. (2)(12)

 

Medical Device

 

Term Loan

  13.32%

Prime

  4.82%  9.25%  -   10.36%

July 1, 2025

  3,911   3,864   3,864 
    

Term Loan

  13.32%

Prime

  4.82%  9.25%  -   10.36%

July 1, 2025

  3,911   3,864   3,864 

CSA Medical, Inc. (2)(12)

 

Medical Device

 

Term Loan

  13.59%

Prime

  5.09%  10.00%  -   5.00%

January 1, 2024

  391   391   391 
    

Term Loan

  13.59%

Prime

  5.09%  10.00%  -   5.00%

March 1, 2024

  533   533   533 

MicroTransponder, Inc. (2)(12)

 

Medical Device

 

Term Loan

  12.25%

Prime

  3.75%  12.25%  -   3.50%

January 1, 2029

  3,750   3,691   3,691 
    

Term Loan

  12.25%

Prime

  3.75%  12.25%  -   3.50%

January 1, 2029

  3,750   3,691   3,691 

 

See Notes to Consolidated Financial Statements

 

7

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments (Unaudited)

March 31, 2024

(Dollars in thousands)

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

  

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

  

Maturity Date

 Principal Amount  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Scientia Vascular, Inc. (2)(12)

 

Medical Device

 

Term Loan

  13.25% 

Prime

  4.75%  8.50%  -   5.00% 

January 1, 2027

  3,750   3,726   3,726 
    

Term Loan

  13.25% 

Prime

  4.75%  8.50%  -   5.00% 

January 1, 2027

  3,750   3,725   3,725 
    

Term Loan

  13.75% 

Prime

  5.25%  9.00%  -   5.00% 

January 1, 2027

  5,000   4,949   4,949 
    

Term Loan

  13.75% 

Prime

  5.25%  9.00%  -   5.00% 

January 1, 2027

  5,000   4,909   4,909 

Sonex Health, Inc. (2)(12)

 

Medical Device

 

Term Loan

  12.00% 

Prime

  3.50%  11.75%  -   8.00% 

September 1, 2027

  2,500   2,475   2,475 
    

Term Loan

  12.00% 

Prime

  3.50%  11.75%  -   8.00% 

September 1, 2027

  2,500   2,475   2,475 
    

Term Loan

  12.00% 

Prime

  3.50%  11.75%  -   8.00% 

September 1, 2027

  5,000   4,950   4,950 
    

Term Loan

  12.00% 

Prime

  3.50%  11.75%  -   8.00% 

September 1, 2027

  5,000   4,950   4,950 
    

Term Loan

  12.00% 

Prime

  3.50%  11.75%  -   8.00% 

April 1, 2028

  3,750   3,706   3,706 
    

Term Loan

  12.00% 

Prime

  3.50%  11.75%  -   8.00% 

April 1, 2028

  3,750   3,706   3,706 
    

Term Loan

  12.00% 

Prime

  3.50%  11.75%  -   8.00% 

April 1, 2028

  3,750   3,706   3,706 
    

Term Loan

  12.00% 

Prime

  3.50%  11.75%  -   8.00% 

April 1, 2028

  3,750   3,706   3,706 

Spineology, Inc. (2)(12)

 

Medical Device

 

Term Loan

  15.50% 

Prime

  7.00%  10.25%  -   1.00% 

October 1, 2025

  5,000   4,981   4,981 
    

Term Loan

  15.50% 

Prime

  7.00%  10.25%  -   1.00% 

April 1, 2026

  2,500   2,491   2,491 

Swift Health Systems Inc. (2)(12)

 

Medical Device

 

Term Loan

  13.75% 

Prime

  5.25%  9.00%  -   5.00% 

July 1, 2027

  3,500   3,470   3,470 
    

Term Loan

  13.75% 

Prime

  5.25%  9.00%  -   5.00% 

July 1, 2027

  3,500   3,470   3,470 
    

Term Loan

  13.75% 

Prime

  5.25%  9.00%  -   5.00% 

July 1, 2027

  3,500   3,459   3,459 
    

Term Loan

  13.75% 

Prime

  5.25%  9.00%  -   5.00% 

July 1, 2027

  3,500   3,459   3,459 

Vero Biotech, Inc. (2)(12)

 

Medical Device

 

Term Loan

  12.25% 

Prime

  3.75%  12.25%  -   4.00% 

January 1, 2029

  15,000   14,690   14,690 
    

Term Loan

  12.25% 

Prime

  3.75%  12.25%  -   4.00% 

January 1, 2029

  10,000   9,793   9,793 
    

Term Loan

  12.25% 

Prime

  3.75%  12.25%  -   4.00% 

January 1, 2029

  5,000   4,897   4,897 
    

Term Loan

  12.25% 

Prime

  3.75%  12.25%  -   4.00% 

January 1, 2029

  2,500   2,449   2,449 

Total Non-Affiliate Debt Investments — Life Science

                                  256,228   254,853 

Non-Affiliate Debt Investments — Sustainability — 21.2% (8)

                                        

New Aerofarms, Inc. assignee of Aerofarms, Inc. (2)(12)(15)

 

Other Sustainability

 

Term Loan

  15.25% 

Prime

  6.75%  10.00%  -   4.33% 

December 1, 2026

  3,750   3,695   3,695 
    

Term Loan

  15.25% 

Prime

  6.75%  10.00%  -   4.33% 

December 1, 2026

  3,750   3,695   3,695 

Nexii Building Solutions, Inc. (2)(12)(13)(14)(18)

 

Other Sustainability

 

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   2.50% 

March 31, 2024

  8,759   8,431   2,477 
    

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   2.50% 

March 31, 2024

  8,759   8,229   2,418 
    

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   2.50% 

March 31, 2024

  8,759   8,229   2,418 
    

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   2.50% 

March 31, 2024

  5,840   5,480   1,610 
    

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   2.50% 

March 31, 2024

  5,840   5,480   1,610 
    

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  764   726   213 
    

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  609   578   170 
    

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  304   288   85 
    

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  301   286   84 
    

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  181   172   50 
    

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  833   791   232 
    

Term Loan

  15.50% (11) 

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  1,134   1,083   318 
    

Term Loan

  15.50% (11) 

Fixed

  -   -   -   -  

April 30, 2024

  418   397   117 
    

Term Loan

  15.50% (11) 

Fixed

  -   -   -   -  

April 30, 2024

  552   502   147 
    

Term Loan

  15.50% (11) 

Fixed

  -   -   -   -  

April 30, 2024

  411   405   119 
    

Term Loan

  15.50% (11) 

Fixed

  -   -   -   -  

April 30, 2024

  487   486   143 

Soli Organic, Inc. (2)(12)

 

Other Sustainability

 

Term Loan

  15.25% 

Prime

  6.75%  10.00%  -   2.75% 

April 1, 2026

  5,000   4,967   4,967 
    

Term Loan

  15.25% 

Prime

  6.75%  10.00%  -   2.75% 

April 1, 2026

  2,500   2,483   2,483 
    

Term Loan

  15.25% 

Prime

  6.75%  10.00%  -   2.75% 

May 1, 2026

  5,000   4,964   4,964 
    

Term Loan

  15.25% 

Prime

  6.75%  10.00%  -   2.75% 

May 1, 2026

  2,500   2,482   2,482 
    

Term Loan

  14.00% 

Prime

  5.50%  11.75%  -   2.75% 

December 1, 2026

  5,000   4,942   4,942 
    

Term Loan

  14.00% 

Prime

  5.50%  11.75%  -   2.75% 

December 1, 2026

  2,500   2,471   2,471 

Temperpack Technologies, Inc. (2)(12)

 

Other Sustainability

 

Term Loan

  15.25% 

Prime

  6.75%  10.00%  -   2.50% 

April 1, 2028

  3,750   3,697   3,697 
    

Term Loan

  15.25% 

Prime

  6.75%  10.00%  -   2.50% 

April 1, 2028

  3,750   3,697   3,697 
    

Term Loan

  15.25% 

Prime

  6.75%  10.00%  -   2.50% 

April 1, 2028

  7,500   7,386   7,386 
    

Term Loan

  15.25% 

Prime

  6.75%  10.00%  -   2.50% 

April 1, 2028

  3,750   3,693   3,693 
    

Term Loan

  15.25% 

Prime

  6.75%  10.00%  -   2.50% 

April 1, 2028

  3,750   3,693   3,693 
    

Term Loan

  14.50% 

Prime

  6.00%  10.00%  -   2.00% 

January 1, 2029

  4,500   4,448   4,448 
    

Term Loan

  14.50% 

Prime

  6.00%  10.00%  -   2.00% 

January 1, 2029

  2,000   1,977   1,977 

Total Non-Affiliate Debt Investments — Sustainability

                                  99,853   70,501 

 

See Notes to Consolidated Financial Statements

 

8

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments (Unaudited)

March 31, 2024

(Dollars in thousands)

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

 

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

  

Maturity Date

 

Principal Amount

  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Non-Affiliate Debt Investments — Technology — 77.6% (8)

                                       

Axiom Space, Inc. (2)(12)

 

Communications

 

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   2.50% 

June 1, 2026

  5,625   5,597   5,597 
    

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   2.50% 

June 1, 2026

  5,625   5,597   5,597 
    

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   2.50% 

June 1, 2026

  5,625   5,597   5,597 

CAMP NYC, Inc. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  15.75%

Prime

  7.25%  10.50%  -   3.00% 

May 1, 2026

  3,033   3,009   3,009 

Clara Foods Co. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  14.25%

Prime

  5.75%  9.00%  -   5.50% 

August 1, 2025

  1,417   1,408   1,408 
    

Term Loan

  14.25%

Prime

  5.75%  9.00%  -   5.50% 

August 1, 2025

  1,417   1,408   1,408 

Divergent Technologies, Inc. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  3,750   3,729   3,729 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  1,250   1,243   1,243 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  3,750   3,729   3,729 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  1,250   1,243   1,243 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  3,750   3,729   3,729 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  1,250   1,243   1,243 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

January 1, 2028

  3,750   3,716   3,716 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

January 1, 2028

  3,750   3,716   3,716 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

April 1, 2028

  3,750   3,708   3,708 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2028

  3,750   3,709   3,709 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2028

  3,750   3,709   3,709 

Havenly, Inc. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  13.50%

Prime

  5.00%  5.00%  -   4.00% 

March 1, 2027

  2,000   1,505   1,505 
    

Term Loan

  13.50%

Prime

  5.00%  5.00%  -   4.00% 

March 1, 2027

  3,000   2,258   2,258 
    

Term Loan

  12.00%

Prime

  3.50%  10.50%  -   7.78% 

February 1, 2028

  2,813   2,813   2,813 
    

Term Loan

  12.00%

Prime

  3.50%  10.50%  -   7.78% 

February 1, 2028

  2,813   2,813   2,813 

Lyrical Foods, Inc. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  12.00%

Prime

  3.50%  9.00%  -   1.00% 

September 1, 2027

  2,500   2,590   2,435 

MyForest Foods Co. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   3.00% 

October 1, 2025

  3,000   2,986   2,986 
    

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   3.00% 

October 1, 2025

  1,500   1,493   1,493 

NextCar Holding Company, Inc. (2)(12)(13)

 

Consumer-related Technologies

 

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  5,744   5,744   5,014 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  2,298   2,298   2,006 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  2,872   2,872   2,507 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  3,446   3,446   3,009 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  2,872   2,872   2,507 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  2,872   2,872   2,507 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  5,744   5,744   5,014 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  2,872   2,872   2,507 

Optoro, Inc. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

August 1, 2027

  2,500   2,424   2,424 
    

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

July 1, 2028

  1,875   1,791   1,791 

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

 

Consumer-related Technologies

 

Term Loan

  16.25% (11)

Prime

  7.75%  11.00%  -   -  

May 1, 2027

  1,254   1,086   570 
    

Term Loan

  16.25% (11)

Prime

  7.75%  11.00%  -   -  

May 1, 2027

  627   543   285 
    

Term Loan

  16.25% (11)

Prime

  7.75%  11.00%  -   -  

May 1, 2027

  627   543   285 

Liqid, Inc. (2)(12)

 

Networking

 

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

September 1, 2024

  833   822   822 
    

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

September 1, 2024

  833   822   822 
    

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

September 1, 2024

  417   410   410 
    

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

September 1, 2024

  417   410   410 
    

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

September 1, 2024

  417   403   403 

BriteCore Holdings, Inc. (2)(12)

 

Software

 

Term Loan

  14.00%

Prime

  5.50%  14.00%  -   3.00% 

October 1, 2028

  5,000   4,899   4,899 
    

Term Loan

  14.00%

Prime

  5.50%  14.00%  -   3.00% 

October 1, 2028

  2,500   2,467   2,467 
    

Term Loan

  14.00%

Prime

  5.50%  14.00%  -   3.00% 

October 1, 2028

  2,500   2,467   2,467 
    

Term Loan

  14.00%

Prime

  5.50%  14.00%  -   3.00% 

October 1, 2028

  2,500   2,467   2,467 
    

Term Loan

  14.00%

Prime

  5.50%  14.00%  -   3.00% 

April 1, 2029

  2,500   2,464   2,464 

 

See Notes to Consolidated Financial Statements

 

9

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments (Unaudited)

March 31, 2024

(Dollars in thousands)

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

 

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

  

Maturity Date

 

Principal Amount

  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Dropoff, Inc. (2)(12)

 

Software

 

Term Loan

  15.00% (19)

Prime

  6.50%  9.75%  -   3.50% 

April 1, 2026

  6,701   6,607   6,303 
    

Term Loan

  15.00% (19)

Prime

  6.50%  9.75%  -   3.50% 

April 1, 2026

  6,185   6,098   5,819 
    

Term Loan

  15.00% (19)

Prime

  6.50%  9.75%  -   3.50% 

August 1, 2026

  2,577   2,541   2,425 

Kodiak Robotics, Inc. (2)(12)

 

Software

 

Term Loan

  14.00%

Prime

  5.50%  10.25%  -   4.00% 

April 1, 2026

  10,000   9,912   9,540 
    

Term Loan

  14.00%

Prime

  5.50%  10.25%  -   4.00% 

April 1, 2026

  10,000   9,912   9,540 
    

Term Loan

  14.00%

Prime

  5.50%  10.25%  -   4.00% 

April 1, 2026

  5,000   4,956   4,770 
    

Term Loan

  14.00%

Prime

  5.50%  10.25%  -   4.00% 

April 1, 2026

  5,000   4,956   4,770 

Lemongrass Holdings, Inc. (2)(12)

 

Software

 

Term Loan

  15.00%

Prime

  6.50%  9.75%  -   2.50% 

March 1, 2026

  5,000   4,977   4,977 
    

Term Loan

  15.00%

Prime

  6.50%  9.75%  -   2.50% 

March 1, 2026

  2,500   2,489   2,489 

Lytics, Inc. (2)(12)

 

Software

 

Term Loan

  14.50%

Prime

  6.00%  14.25%  -   5.00% 

November 1, 2026

  2,500   2,473   2,473 
    

Term Loan

  14.50%

Prime

  6.00%  14.25%  -   5.00% 

December 1, 2026

  1,250   1,239   1,239 
    

Term Loan

  14.50%

Prime

  6.00%  14.25%  -   5.00% 

April 1, 2027

  1,000   994   994 

Mirantis, Inc. (2)(12)

 

Software

 

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2028

  5,000   4,783   4,783 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2028

  5,000   4,919   4,919 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2028

  5,000   4,919   4,919 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2028

  5,000   4,919   4,919 

Noodle Partners, Inc. (2)(12)

 

Software

 

Term Loan

  13.50%

Prime

  5.00%  12.00%  -   3.00% 

March 1, 2027

  10,000   9,896   9,896 
    

Term Loan

  13.50%

Prime

  5.00%  12.00%  -   3.00% 

March 1, 2027

  5,000   4,947   4,947 
    

Term Loan

  13.50%

Prime

  5.00%  12.00%  -   3.00% 

March 1, 2027

  5,000   4,947   4,947 

Reputation Institute, Inc. (2)(12)

 

Software

 

Term Loan

  15.75%

Prime

  7.25%  10.50%  -   3.00% 

August 1, 2025

  3,233   3,182   3,182 

Slingshot Aerospace, Inc. (2)(12)

 

Software

 

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   5.00% 

August 1, 2026

  5,000   4,965   4,965 
    

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   5.00% 

August 1, 2026

  5,000   4,965   4,965 
    

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   5.00% 

August 1, 2026

  5,000   4,965   4,965 
    

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   5.00% 

August 1, 2026

  5,000   4,965   4,965 

Supply Network Visibility Holdings LLC (2)(12)

 

Software

 

Term Loan

  12.75%

Prime

  4.25%  12.00%  -   2.50% 

June 1, 2028

  2,500   2,458   2,458 
    

Term Loan

  12.75%

Prime

  4.25%  12.00%  -   2.50% 

June 1, 2028

  3,500   3,490   3,490 
    

Term Loan

  12.75%

Prime

  4.25%  12.00%  -   2.50% 

June 1, 2028

  2,500   2,493   2,493 
    

Term Loan

  12.75%

Prime

  4.25%  12.00%  -   2.50% 

June 1, 2028

  1,500   1,496   1,496 

Viken Detection Corporation (2)(12)

 

Software

 

Term Loan

  12.50%

Prime

  4.00%  11.75%  -   3.50% 

June 1, 2027

  5,000   4,779   4,779 
    

Term Loan

  12.50%

Prime

  4.00%  11.75%  -   3.50% 

June 1, 2027

  2,500   2,470   2,470 
    

Term Loan

  12.50%

Prime

  4.00%  11.75%  -   3.50% 

June 1, 2027

  2,500   2,470   2,470 

Total Non-Affiliate Debt Investments — Technology

                                 264,468   257,817 

Non-Affiliate Debt Investments — Healthcare information and services — 21.0% (8)

                                       

Hound Labs inc. (2) (12)

 

Diagnostics

 

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   3.50% 

June 1, 2026

  2,500   2,487   2,487 
    

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   3.50% 

June 1, 2026

  2,500   2,487   2,487 
    

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   3.50% 

June 1, 2026

  5,000   4,973   4,973 

Parse Biosciences, Inc. (2)(12)

 

Diagnostics

 

Term Loan

  11.75%

Prime

  3.25%  11.50%  -   5.00% 

January 1, 2028

  5,000   4,639   4,639 
    

Term Loan

  11.75%

Prime

  3.25%  11.50%  -   5.00% 

January 1, 2028

  5,000   4,890   4,890 

BrightInsight, Inc. (2)(12)

 

Software

 

Term Loan

  14.00%

Prime

  5.50%  9.50%  -   3.00% 

August 1, 2027

  7,000   6,727   6,727 
    

Term Loan

  14.00%

Prime

  5.50%  9.50%  -   3.00% 

August 1, 2027

  3,500   3,466   3,466 
    

Term Loan

  14.00%

Prime

  5.50%  9.50%  -   3.00% 

August 1, 2027

  3,500   3,466   3,466 
    

Term Loan

  14.00%

Prime

  5.50%  9.50%  -   3.00% 

April 1, 2028

  2,750   2,713   2,713 

Elligo Health Research, Inc. (2)(12)

 

Software

 

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2027

  10,000   9,666   9,666 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2027

  5,000   4,930   4,930 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2027

  5,000   4,930   4,930 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2027

  5,000   4,930   4,930 

SafelyYou, Inc. (2)(12)

 

Software

 

Term Loan

  11.75%

Prime

  3.25%  11.00%  -   5.00% 

June 1, 2027

  5,000   4,654   4,654 
    

Term Loan

  11.75%

Prime

  3.25%  11.00%  -   5.00% 

June 1, 2027

  5,000   4,924   4,924 

Total Non-Affiliate Debt Investments — Healthcare information and services

                                 69,882   69,882 

Total Non- Affiliate Debt Investments

                                 690,431   653,053 

 

See Notes to Consolidated Financial Statements

 

10

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments (Unaudited)

March 31, 2024

(Dollars in thousands)

 

          

Cost of

  

Fair

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Number of Shares

  

Investments (6)(9)

  

Value (9)

 

Non-Affiliate Warrant Investments — 7.2% (8)

                

Non-Affiliate Warrants — Life Science — 2.0% (8)

                

Avalo Therapeutics, Inc. (2)(5)(12)

 

Biotechnology

 

Common Stock Warrant

  117   311    

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

 

Biotechnology

 

Preferred Stock Warrant

  7,404   214   220 

Emalex Biosciences, Inc. (2)(12)

 

Biotechnology

 

Preferred Stock Warrant

  110,402   176   135 

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

 

Biotechnology

 

Common Stock Warrant

  19,671   65    

KSQ Therapeutics, Inc. (2) (12)

 

Biotechnology

 

Preferred Stock Warrant

  48,076   50   54 

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

 

Biotechnology

 

Common Stock Warrant

  16,611   146    

Native Microbials, Inc (2)(12)

 

Biotechnology

 

Preferred Stock Warrant

  103,679   64   80 

PDS Biotechnology Corporation (2)(5)(12)

 

Biotechnology

 

Common Stock Warrant

  299,848   160   364 

Provivi, Inc. (2)(12)

 

Biotechnology

 

Common Stock Warrant

  175,098   278    

Provivi, Inc. (2)(12)

 

Biotechnology

 

Preferred Stock Warrant

  691,895   312   232 

Stealth Biotherapeutics Inc. (2)(12)

 

Biotechnology

 

Common Stock Warrant

  318,181   264   116 

Tallac Therapeutics, Inc. (2)(12)

 

Biotechnology

 

Preferred Stock Warrant

  1,600,002   194   175 

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

 

Biotechnology

 

Common Stock Warrant

  126,000   72   26 

AccuVein Inc. (2)(12)

 

Medical Device

 

Common Stock Warrant

  271   7    

Aerin Medical, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  1,818,183   66   1,046 

Aerobiotix, LLC (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  8,800   48   10 

Canary Medical Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  12,153   86   1,299 

Candesant Biomedical, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  93,336   152   138 

Ceribell, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  219,866   139   267 

Cognoa, Inc. (2)(12)

 

Medical Device

 

Common Stock Warrant

  30,585       

Cognoa, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  4,635,992   162   182 

Conventus Orthopaedics, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  9,313,541   256   247 

CSA Medical, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  3,341,376   174   128 

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

 

Medical Device

 

Common Stock Warrant

  47,410   76   382 

Infobionic, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  2,010,424   124   50 

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

 

Medical Device

 

Preferred Stock Warrant

  809,931   195   374 

Meditrina, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  233,993   83   54 

MicroTransponder, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  103,172   47   48 

Scientia Vascular, Inc (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  34,410   103   329 

Sonex Health, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  2,637,041   275   276 

VERO Biotech LLC (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  4,109   432   368 

Swift Health Systems Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  135,484   71   2 

Total Non-Affiliate Warrants — Life Science

          4,802   6,602 

 

See Notes to Consolidated Financial Statements

 

11

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments (Unaudited)

March 31, 2024

(Dollars in thousands)

 

          

Cost of

  

Fair

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Number of Shares

  

Investments (6)(9)

  

Value (9)

 

Non-Affiliate Warrants — Sustainability — 0.2% (8)

                

New Aerofarms, Inc. assignee of Aerofarms, Inc. (2)(12)(15)

 

Other Sustainability

 

Preferred Stock Warrant

  400,000   81   74 

LiquiGlide, Inc. (2)(12)

 

Other Sustainability

 

Preferred Stock Warrant

  61,359   39   51 

Nexii Building Solutions, Inc. (2)(12)(14)(18)

 

Other Sustainability

 

Common Stock Warrant

  215,171   490    

Soli Organic, Inc. (2)(12)

 

Other Sustainability

 

Preferred Stock Warrant

  681   216   350 

Temperpack Technologies, Inc. (2)(12)

 

Other Sustainability

 

Preferred Stock Warrant

  46,311   175   84 

Total Non-Affiliate Warrants — Sustainability

     1,001   559 

Non-Affiliate Warrants — Technology — 4.6% (8)

                

Axiom Space, Inc. (2)(12)

 

Communications

 

Common Stock Warrant

  1,991   46   62 

Intelepeer Holdings, Inc. (2)(12)

 

Communications

 

Preferred Stock Warrant

  2,936,535   137   2,894 

PebblePost, Inc. (2)(12)

 

Communications

 

Preferred Stock Warrant

  598,850   92   132 

Alula Holdings, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  20,000   93   3 

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

 

Consumer-related Technologies

 

Common Stock Warrant

  6,140   195    

Caastle, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  268,591   68   2,167 

CAMP NYC, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  75,997   22   28 

Clara Foods Co. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  46,745   30   124 

CZV, Inc. (2)(12)

 

Consumer-related Technologies

 

Common Stock Warrant

  65,569   81   73 

Divergent Technologies, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  37,282   95   259 

Havenly, Inc. (2)(12)

 

Consumer-related Technologies

 

Common Stock Warrant

  1,312,500   2,947   2,260 

MyForest Foods Co. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  250   29   58 

NextCar Holding Company, Inc. (2)(12)

 

Consumer-related Technologies

 

Common Stock Warrant

  12,618   188    

NextCar Holding Company, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  1,224,752   9    

Optoro, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  11,550   179   145 

Primary Kids, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  553,778   57   593 

Quip NYC Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  6,191   325   232 

Unagi, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  171,081   32    

Updater, Inc.(2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  114,659   34    

CPG Beyond, Inc. (2)(12)

 

Data Storage

 

Preferred Stock Warrant

  500,000   241   298 

Silk, Inc. (2)(12)

 

Data Storage

 

Preferred Stock Warrant

  394,110   175   128 

Global Worldwide LLC (2)(12)

 

Internet and Media

 

Preferred Stock Warrant

  245,810   74   63 

Rocket Lawyer Incorporated (2)(12)

 

Internet and Media

 

Preferred Stock Warrant

  261,721   92   323 

Skillshare, Inc. (2)(12)

 

Internet and Media

 

Preferred Stock Warrant

  139,074   162   1,206 

Liqid, Inc. (2)(12)

 

Networking

 

Preferred Stock Warrant

  344,102   364   224 

Halio, Inc. (2)(12)

 

Power Management

 

Common Stock Warrant

  38,241,466   1,585   2,700 

Avalanche Technology, Inc. (2)(12)

 

Semiconductors

 

Preferred Stock Warrant

  5,938   45    

BriteCore Holdings, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  161,215   98   136 

Dropoff, Inc. (2)(12)

 

Software

 

Common Stock Warrant

  516,732   455   56 

E La Carte, Inc. (2)(5)(12)

 

Software

 

Common Stock Warrant

  147,361   60    

Everstream Holdings, LLC (2)(12)

 

Software

 

Preferred Stock Warrant

  350,000   70   63 

Kodiak Robotics, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  639,918   273   11 

Lemongrass Holdings, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  101,308   34   121 

Lotame Solutions, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  71,305   18   42 

Lytics, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  85,543   43    

Mirantis, Inc. (2)(12)

 

Software

 

Common Stock Warrant

  948,275   220   253 

Noodle Partners, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  84,037   116   3 

Reputation Institute, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  4,104   66   83 

Revinate Holdings, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  682,034   44   93 

SIGNiX, Inc. (12)

 

Software

 

Preferred Stock Warrant

  186,235   225    

Slingshot Aerospace, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  309,208   123   85 

Supply Network Visibility Holdings LLC (2)(12)

 

Software

 

Preferred Stock Warrant

  682   64   138 

Topia Mobility, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  3,049,607   138    

Viken Detection Corporation (2)(12)

 

Software

 

Preferred Stock Warrant

  345,443   120   211 

xAd, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  4,343,348   177   8 

Total Non-Affiliate Warrants — Technology

      9,741   15,275 

 

See Notes to Consolidated Financial Statements

 

12

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments (Unaudited)

March 31, 2024

(Dollars in thousands)

 

          

Cost of

  

Fair

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Number of Shares

  

Investments (6)(9)

  

Value (9)

 

Non-Affiliate Warrants — Healthcare information and services — 0.4% (8)

                

Hound Labs, Inc (2)(12)

 

Diagnostics

 

Preferred Stock Warrant

  171,370   47   12 

Parse Biosciences, Inc. (2)(12)

 

Diagnostics

 

Common Stock Warrant

  32,244   70   70 

Parse Biosciences, Inc. (2)(12)

 

Diagnostics

 

Preferred Stock Warrant

  184,253   166   171 

Kate Farms, Inc. (2)(12)

 

Other Healthcare

 

Preferred Stock Warrant

  82,965   102   949 

BrightInsight, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  85,066   168    

Elligo Health Research, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  652,250   191   98 

Medsphere Systems Corporation (2)(12)

 

Software

 

Preferred Stock Warrant

  7,097,792   60   134 

SafelyYou, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  150,353   163   58 

Total Non-Affiliate Warrants — Healthcare information and services

      967   1,492 

Total Non-Affiliate Warrants

      16,511   23,928 

Non-Affiliate Other Investments — Life Science — 1.0% (8)

                

Lumithera, Inc. (12)

 

Medical Device

 

Royalty Agreement

      1,200   100 

Robin Healthcare, Inc. (2)(12)

 

Medical Device

 

Royalty Agreement

      7,181   3,247 

ZetrOZ, Inc. (12)

 

Medical Device

 

Royalty Agreement

          

Total Non-Affiliate Other Investments

      8,381   3,347 

Non-Affiliate Equity — 1.4% (8)

                

Cadrenal Therapeutics, Inc. (5)

 

Biotechnology

 

Common Stock

  600,000      367 

Castle Creek Biosciences, Inc. (12)

 

Biotechnology

 

Common Stock

  1,162   250   250 

Emalex Biosciences, Inc. (12)

 

Biotechnology

 

Common Stock

  32,831   355   355 

Axiom Space, Inc. (12)

 

Communications

 

Preferred Stock

  1,810   261   306 

Getaround, Inc. (2)(5)

 

Consumer-related Technologies

 

Common Stock

  87,082   253   27 

NextCar Holding Company, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock

  2,688,971   89    

SnagAJob.com, Inc. (12)

 

Consumer-related Technologies

 

Common Stock

  82,974   10   80 

Lumithera, Inc. (12)

 

Medical Device

 

Common Stock

  392,651   2,000   1,700 

Tigo Energy, Inc. (5)

 

Other Sustainability

 

Common Stock

  5,205   111   8 

Decisyon, Inc. (12)

 

Software

 

Preferred Stock

  280,000   2,800   1,281 

Lotame, Inc. (12)

 

Software

 

Preferred Stock

  66,127   4   193 

Total Non-Affiliate Equity

      6,133   4,567 

Total Non-Affiliate Portfolio Investment Assets

     $721,456  $684,895 

 

See Notes to Consolidated Financial Statements

 

13

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments (Unaudited)

March 31, 2024

(Dollars in thousands)

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

 

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

 

Maturity Date

 

Principal Amount

  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Non-Controlled Affiliate Investments — 3.8% (8)

                                      

Non-Controlled Affiliate Debt Investments — Life Sciences — 3.8% (8)

                                      

Evelo Biosciences, Inc. (2)(5)(12)(13)

 

Biotechnology

 

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   4.25%

January 1, 2028

  5,712   5,228   2,790 
    

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   4.25%

January 1, 2028

  8,568   7,880   4,207 
    

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   4.25%

January 1, 2028

  3,427   3,137   1,674 
    

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   4.25%

January 1, 2028

  3,427   3,137   1,674 
    

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   4.25%

January 1, 2028

  2,285   2,091   1,116 
    

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   4.25%

January 1, 2028

  2,285   2,091   1,116 

Total Non-Controlled Affiliate Debt Investments

                            23,564   12,577 

 

          

Cost of

  

Fair

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Number of Shares

  

Investments (6)(9)

  

Value (9)

 

Non-controlled Affiliate Equity — Life Sciences — 0.0% (8)

                

Aulea Medical, Inc. (12)(16)

 

Medical Device

 

Common Stock

  660,537       

Evelo Biosciences, Inc. (5)(12)

 

Biotechnology

 

Common Stock

  2,164,502   5,000    

Total Non-Controlled Affiliate Equity

         5,000    

Non-controlled Affiliate Warrants — Life Sciences — 0.0% (8)

                

Evelo Biosciences, Inc. (2)(5)(12)

 

Biotechnology

 

Common Stock

  23,196   125    

Total Non-Controlled Affiliate Warrants

          125    

Total Non-Controlled Affiliate Portfolio Investment Assets

         $28,689  $12,577 

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

 

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

 

Maturity Date

 

Principal Amount

  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Controlled Affiliate Investments — 4.1% (8)

                                      

Controlled Affiliate Debt Investments — Technology — 1.5% (8)

                                      

Better Place Forests Co. (12)

 

Consumer-related Technologies

 

Term Loan

  12.25% (11)

Prime

  3.75%  12.00%  -   2.78%

August 1, 2029

  3,658   3,698   3,455 
    

Term Loan

  12.25% (11)

Prime

  3.75%  12.00%  -   2.78%

August 1, 2029

  1,829   1,807   1,688 

Total Controlled Affiliate Debt Investments

                            5,505   5,143 

 

          

Cost of

  

Fair

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Number of Shares

  

Investments (6)(9)

  

Value (9)

 

Controlled Affiliate Equity — Technology — 0.8% (8)

                

Better Place Forests Co. (12)

 

Consumer-related Technologies

 

Common Stock

  2,278,272   2,060   659 

Better Place Forests Co. (12)

 

Consumer-related Technologies

 

Preferred Stock

  4,458,452   2,000   1,997 

Total Controlled Affiliate Equity

          4,060   2,656 

Controlled Affiliate Other Investments — Life Sciences — 1.8% (8)

                

HIMV LLC (12)(17)

 

Biotechnology

 

Other Investment

      5,463   5,845 

Total Controlled Affiliate Other

          5,463   5,845 

Total Controlled Affiliate Portfolio Investment Assets

         $15,028  $13,644 

Total Portfolio Investment Assets — 214.1% (8)

         $765,173  $711,116 

 


(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, unless otherwise noted.

(2)

Has been pledged as collateral under the revolving credit facility (the “Key Facility”) with KeyBank National Association (“Key”), the Note Funding Agreement (the “NYL Facility”, together with the Key Facility, the "Credit Facilities") with several entities owned or affiliated with New York Life Insurance Company (“NYL Noteholders”), and/or the term debt securitization in connection with which an affiliate of the Company made an offering of $100.0 million in aggregate principal amount of fixed rate asset-backed notes that were issued in conjunction with the $157.8 million securitization of secured loans the Company completed on November 9, 2022 (the “2022 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. For each debt investment, the current interest rate in effect as of  March 31, 2024 is provided.

(5)

Portfolio company is a public company.

 

See Notes to Consolidated Financial Statements

 

14

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments (Unaudited)

March 31, 2024

(Dollars in thousands)

 

(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 March 31, 2024, 4.9% and 1.5% of the Company’s total assets on a cost and fair value basis, respectively, are in non-qualifying assets. Under 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 in which the accrued interest is added to the then-outstanding principal amount of the debt investment.

(12)

The fair value of the investment was valued using significant unobservable inputs.

(13)

Debt investment is on non-accrual status as of March 31, 2024.

(14)Entity is organized under the laws of Canada and has a principal place of business in Canada.
(15)On or about September 13, 2023, in connection with New Aerofarms, Inc.’s purchase of substantially all of the assets of Aerofarms, Inc.in a bankruptcy process, New Aerofarms, Inc. assumed all of the debt investments of the Company in Aerofarms, Inc.  
(16)On July 31, 2023, pursuant to a certain Secured Party Bill of Sale and Transfer Agreement, the Company sold substantially all of the assets of Corinth MedTech, Inc., a borrower of the Company, to Aulea Medical Inc. (“Aulea”) in consideration of 660,537 shares of the common stock of  Aulea. 
(17)By an Order of the Supreme Court of Nova Scotia made May 1, 2023, as amended and restated by an Order of the Court made May 5, 2023, IMV, Inc. (“IMV”) commenced proceedings (the “CCAA Proceedings”) under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended to seek creditor protection for IMV and on June 2, 2023, IMV obtained recognition of the CCAA Proceedings under Chapter 15 of the United States Bankruptcy Code in proceedings before the United States Bankruptcy Court for the District of Delaware. In September 2023, the Company, with its co-lender to IMV, credit-bid and acquired substantially all of the assets of IMV through HIMV LLC, an entity formed to acquire the assets of IMV. HIMV LLC is 70% owned by the Company and 30% owned by the co-lender.
(18)On January 11, 2024, Nexii Building Solutions Inc., and its affiliates, obtained an Initial Order under the Companies’ Creditors Arrangement Act from the Supreme Court of British Columbia in Vancouver. The Initial Order provides for, among other things, a stay of proceedings in favor of Nexii, the approval of debtor-in-possession financing and the appointment of KSV Restructuring Inc. as monitor of Nexii.
(19)Debt investment has a partial PIK feature in which (a) a portion of the accrued interest on the debt investment, in an amount equal to four and one half percent (4.5%) on the then-outstanding principal amount of the debt investment is added to the then-outstanding principal amount of the debt investment and (b) the remaining accrued interest on the debt investment is paid in cash.

 

 

See Notes to Consolidated Financial Statements

 

15

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments

December 31, 2023

(Dollars in thousands)

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

 

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

  

Maturity Date

 

Principal Amount

  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Non-Affiliate Investments — 214.2% (8)

                                       

Non-Affiliate Debt Investments — 205.0% (8)

                                       

Non-Affiliate Debt Investments — Life Science — 75.6% (8)

                                       

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

 

Biotechnology

 

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50% 

May 1, 2026

 $5,000  $4,979  $4,979 
    

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50% 

May 1, 2026

  5,000   4,979   4,979 
    

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50% 

May 1, 2026

  3,000   2,987   2,987 
    

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50% 

May 1, 2026

  5,000   4,979   4,979 
    

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50% 

May 1, 2026

  5,000   4,979   4,979 
    

Term Loan

  13.25%

Prime

  4.75%  9.55%  13.50%  5.50% 

May 1, 2026

  3,000   2,987   2,987 

Emalex Biosciences, Inc. (2)(12)

 

Biotechnology

 

Term Loan

  13.22%

Prime

  4.72%  9.75%  -   5.00% 

June 1, 2024

  1,414   1,410   1,410 
    

Term Loan

  13.22%

Prime

  4.72%  9.75%  -   5.00% 

June 1, 2024

  1,414   1,410   1,410 
    

Term Loan

  13.22%

Prime

  4.72%  9.75%  -   5.00% 

November 1, 2025

  5,000   4,950   4,950 
    

Term Loan

  13.22%

Prime

  4.72%  9.75%  -   5.00% 

May 1, 2026

  5,000   4,949   4,949 

Greenlight Biosciences, Inc. (2)(12)

 

Biotechnology

 

Term Loan

  14.25%

Prime

  5.75%  9.00%  -   3.00% 

July 1, 2025

  3,000   2,914   2,870 
    

Term Loan

  14.25%

Prime

  5.75%  9.00%  -   3.00% 

July 1, 2025

  1,500   1,458   1,436 

KSQ Therapeutics, Inc. (2)(12)

 

Biotechnology

 

Term Loan

  13.25%

Prime

  4.75%  8.50%  -   5.50% 

May 1, 2027

  6,250   6,199   6,199 
    

Term Loan

  13.25%

Prime

  4.75%  8.50%  -   5.50% 

May 1, 2027

  6,250   6,199   6,199 

Native Microbials, Inc (2)(12)

 

Biotechnology

 

Term Loan

  13.75%

Prime

  5.25%  8.50%  -   5.00% 

November 1, 2026

  3,750   3,716   3,716 
    

Term Loan

  13.75%

Prime

  5.25%  8.50%  -   5.00% 

November 1, 2026

  2,500   2,478   2,478 

PDS Biotechnology Corporation (2)(5)(12)

 

Biotechnology

 

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   3.75% 

September 1, 2026

  10,000   9,911   9,911 
    

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   3.75% 

September 1, 2026

  3,750   3,717   3,717 
    

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   3.75% 

September 1, 2026

  3,750   3,717   3,717 

Provivi, Inc. (2)(12)

 

Biotechnology

 

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50% 

December 1, 2024

  4,666   4,579   4,414 
    

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50% 

December 1, 2024

  4,666   4,579   4,414 
    

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50% 

December 1, 2024

  2,333   2,281   2,199 
    

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50% 

December 1, 2024

  2,333   2,281   2,199 
    

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50% 

December 1, 2024

  2,333   2,278   2,196 
    

Term Loan

  13.86%

Prime

  5.36%  9.50%  -   5.50% 

December 1, 2024

  2,333   2,278   2,196 

Stealth Biotherapeutics Inc. (2)(12)

 

Biotechnology

 

Term Loan

  14.00%

Prime

  5.50%  8.75%  -   6.00% 

October 1, 2025

  4,250   4,193   4,193 
    

Term Loan

  14.00%

Prime

  5.50%  8.75%  -   6.00% 

October 1, 2025

  2,125   2,096   2,096 

Tallac Therapeutics, Inc. (2)(12)

 

Biotechnology

 

Term Loan

  12.75%

Prime

  4.25%  12.25%  -   4.00% 

August 1, 2027

  2,500   2,230   2,230 
    

Term Loan

  12.75%

Prime

  4.25%  12.25%  -   4.00% 

August 1, 2027

  2,500   2,459   2,459 

Aerobiotix, LLC (2)(12)

 

Medical Device

 

Term Loan

  9.00%

Fixed

  -   -   -   18.00% 

April 1, 2028

  2,500   2,468   2,342 
    

Term Loan

  9.00%

Fixed

  -   -   -   18.00% 

April 1, 2028

  2,500   2,468   2,342 
    

Term Loan

  9.00%

Fixed

  -   -   -   18.00% 

June 30, 2024

  200   200   190 

Candesant Biomedical, Inc. (2)(12)

 

Medical Device

 

Term Loan

  12.00%

Prime

  3.50%  11.50%  -   5.00% 

September 1, 2027

  5,000   4,757   4,757 
    

Term Loan

  12.00%

Prime

  3.50%  11.50%  -   5.00% 

September 1, 2027

  2,500   2,454   2,454 
    

Term Loan

  12.00%

Prime

  3.50%  11.50%  -   5.00% 

September 1, 2027

  2,500   2,454   2,454 

Ceribell, Inc. (2)(12)

 

Medical Device

 

Term Loan

  12.00%

Prime

  3.50%  8.25%  -   5.50% 

October 1, 2024

  3,750   3,738   3,738 
    

Term Loan

  12.00%

Prime

  3.50%  8.25%  -   5.50% 

October 1, 2024

  3,750   3,738   3,738 
    

Term Loan

  12.00%

Prime

  3.50%  8.25%  -   5.50% 

October 1, 2024

  1,875   1,866   1,866 
    

Term Loan

  12.00%

Prime

  3.50%  8.25%  -   5.50% 

October 1, 2024

  1,875   1,866   1,866 

Cognoa, Inc. (2)(12)

 

Medical Device

 

Term Loan

  14.00%

Prime

  5.50%  8.75%  -   6.00% 

August 1, 2026

  4,583   4,546   4,546 
    

Term Loan

  14.00%

Prime

  5.50%  8.75%  -   6.00% 

August 1, 2026

  2,292   2,273   2,273 

Conventus Orthopaedics, Inc. (2)(12)

 

Medical Device

 

Term Loan

  13.32%

Prime

  4.82%  9.25%  -   10.36% 

July 1, 2025

  3,960   3,923   3,923 
    

Term Loan

  13.32%

Prime

  4.82%  9.25%  -   10.36% 

July 1, 2025

  3,960   3,923   3,923 

CSA Medical, Inc. (2)(12)

 

Medical Device

 

Term Loan

  13.59%

Prime

  5.09%  10.00%  -   5.00% 

January 1, 2024

  500   500   500 
    

Term Loan

  13.59%

Prime

  5.09%  10.00%  -   5.00% 

January 1, 2024

  33   33   33 
    

Term Loan

  13.59%

Prime

  5.09%  10.00%  -   5.00% 

March 1, 2024

  800   794   794 

MicroTransponder, Inc. (2)(12)

 

Medical Device

 

Term Loan

  12.25%

Prime

  3.75%  12.25%  -   3.50% 

January 1, 2029

  3,750   3,689   3,689 
    

Term Loan

  12.25%

Prime

  3.75%  12.25%  -   3.50% 

January 1, 2029

  3,750   3,689   3,689 

 

See Notes to Consolidated Financial Statements

 

16

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments

December 31, 2023

(Dollars in thousands)

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

 

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

  

Maturity Date

 

Principal Amount

  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Robin Healthcare, Inc. (2)(12)(13)

 

Medical Device

 

Term Loan

  14.00%

Prime

  5.50%  10.25%  -   4.00% 

November 1, 2026

  3,500   3,469   1,574 
    

Term Loan

  14.00%

Prime

  5.50%  10.25%  -   4.00% 

November 1, 2026

  3,500   3,563   1,617 

Scientia Vascular, Inc. (2)(12)

 

Medical Device

 

Term Loan

  13.25%

Prime

  4.75%  8.50%  -   5.00% 

January 1, 2027

  3,750   3,722   3,722 
    

Term Loan

  13.25%

Prime

  4.75%  8.50%  -   5.00% 

January 1, 2027

  3,750   3,722   3,722 
    

Term Loan

  13.75%

Prime

  5.25%  9.00%  -   5.00% 

January 1, 2027

  5,000   4,943   4,943 
    

Term Loan

  13.75%

Prime

  5.25%  9.00%  -   5.00% 

January 1, 2027

  5,000   4,900   4,900 

Sonex Health, Inc. (2)(12)

 

Medical Device

 

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   8.00% 

September 1, 2027

  2,500   2,297   2,297 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   8.00% 

September 1, 2027

  2,500   2,473   2,473 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   8.00% 

September 1, 2027

  5,000   4,946   4,946 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   8.00% 

September 1, 2027

  5,000   4,946   4,946 

Spineology, Inc. (2)(12)

 

Medical Device

 

Term Loan

  15.50%

Prime

  7.00%  10.25%  -   1.00% 

October 1, 2025

  5,000   4,978   4,978 
    

Term Loan

  15.50%

Prime

  7.00%  10.25%  -   1.00% 

April 1, 2026

  2,500   2,489   2,489 

Swift Health Systems Inc. (2)(12)

 

Medical Device

 

Term Loan

  13.75%

Prime

  5.25%  9.00%  -   5.00% 

July 1, 2027

  3,500   3,467   3,467 
    

Term Loan

  13.75%

Prime

  5.25%  9.00%  -   5.00% 

July 1, 2027

  3,500   3,467   3,467 
    

Term Loan

  13.75%

Prime

  5.25%  9.00%  -   5.00% 

July 1, 2027

  3,500   3,456   3,456 
    

Term Loan

  13.75%

Prime

  5.25%  9.00%  -   5.00% 

July 1, 2027

  3,500   3,456   3,456 

Vero Biotech, Inc. (2)(12)

 

Medical Device

 

Term Loan

  12.25%

Prime

  3.75%  12.25%  -   4.00% 

January 1, 2029

  15,000   14,675   14,675 
    

Term Loan

  12.25%

Prime

  3.75%  12.25%  -   4.00% 

January 1, 2029

  10,000   9,784   9,784 
    

Term Loan

  12.25%

Prime

  3.75%  12.25%  -   4.00% 

January 1, 2029

  5,000   4,892   4,892 
    

Term Loan

  12.25%

Prime

  3.75%  12.25%  -   4.00% 

January 1, 2029

  2,500   2,446   2,446 

Total Non-Affiliate Debt Investments — Life Science

                                 249,642   244,815 

Non-Affiliate Debt Investments — Sustainability — 24.6% (8)

                                       

New Aerofarms, Inc. assignee of Aerofarms, Inc. (2)(12)(15)

 

Other Sustainability

 

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   4.33% 

December 1, 2026

  3,750   3,685   3,685 
    

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   4.33% 

December 1, 2026

  3,750   3,685   3,685 

Nexii Building Solutions, Inc. (2)(12)(13)(14)(18)

 

Other Sustainability

 

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   2.50% 

March 31, 2024

  8,425   8,353   4,549 
    

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   2.50% 

March 31, 2024

  8,425   8,229   4,481 
    

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   2.50% 

March 31, 2024

  8,425   8,229   4,481 
    

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   2.50% 

March 31, 2024

  5,617   5,480   2,984 
    

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   2.50% 

March 31, 2024

  5,617   5,480   2,984 
    

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  735   726   395 
    

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  586   578   315 
    

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  292   288   157 
    

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  290   286   156 
    

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  174   172   93 
    

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  802   791   431 
    

Term Loan

  15.50% (11)

Prime

  7.00%  10.25%  -   -  

March 31, 2024

  1,091   1,083   590 

Soli Organic, Inc. (2)(12)

 

Other Sustainability

 

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   2.75% 

April 1, 2026

  5,000   4,959   4,959 
    

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   2.75% 

April 1, 2026

  2,500   2,479   2,479 
    

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   2.75% 

May 1, 2026

  5,000   4,956   4,956 
    

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   2.75% 

May 1, 2026

  2,500   2,478   2,478 
    

Term Loan

  14.00%

Prime

  5.50%  11.75%  -   2.75% 

December 1, 2026

  5,000   4,934   4,934 
    

Term Loan

  14.00%

Prime

  5.50%  11.75%  -   2.75% 

December 1, 2026

  2,500   2,467   2,467 

Temperpack Technologies, Inc. (2)(12)

 

Other Sustainability

 

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   2.50% 

April 1, 2028

  3,750   3,694   3,694 
    

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   2.50% 

April 1, 2028

  3,750   3,694   3,694 
    

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   2.50% 

April 1, 2028

  7,500   7,379   7,379 
    

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   2.50% 

April 1, 2028

  3,750   3,690   3,690 
    

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   2.50% 

April 1, 2028

  3,750   3,690   3,690 
    

Term Loan

  14.50%

Prime

  6.00%  10.00%  -   2.00% 

January 1,2029

  4,500   4,446   4,446 
    

Term Loan

  14.50%

Prime

  6.00%  10.00%  -   2.00% 

January 1,2029

  2,000   1,976   1,976 

Total Non-Affiliate Debt Investments — Sustainability

                                 97,907   79,828 

 

See Notes to Consolidated Financial Statements

 

17

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments

December 31, 2023

(Dollars in thousands)

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

 

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

  

Maturity Date

 

Principal Amount

  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Non-Affiliate Debt Investments — Technology — 83.3% (8)

                                       

Axiom Space, Inc. (2)(12)

 

Communications

 

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   2.50% 

June 1, 2026

  6,250   6,218   6,218 
    

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   2.50% 

June 1, 2026

  6,250   6,218   6,218 
    

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   2.50% 

June 1, 2026

  6,250   6,218   6,218 

CAMP NYC, Inc. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  15.75%

Prime

  7.25%  10.50%  -   3.00% 

May 1, 2026

  3,383   3,356   3,356 

Clara Foods Co. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  14.25%

Prime

  5.75%  9.00%  -   5.50% 

August 1, 2025

  1,667   1,656   1,656 
    

Term Loan

  14.25%

Prime

  5.75%  9.00%  -   5.50% 

August 1, 2025

  1,583   1,573   1,573 

Divergent Technologies, Inc. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  3,750   3,608   3,608 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  1,250   1,242   1,242 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  3,750   3,726   3,726 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  1,250   1,242   1,242 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  3,750   3,726   3,726 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2027

  1,250   1,242   1,242 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

January 1, 2028

  3,750   3,712   3,712 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

January 1, 2028

  3,750   3,712   3,712 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

April 1, 2028

  3,750   3,706   3,706 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2028

  3,750   3,707   3,707 
    

Term Loan

  11.25%

Prime

  6.00%  9.50%  11.25%  3.00% 

July 1, 2028

  3,750   3,707   3,707 

Havenly, Inc. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  13.50%

Prime

  5.00%  5.00%  -   4.00% 

March 1, 2027

  2,000   1,421   1,421 
    

Term Loan

  13.50%

Prime

  5.00%  5.00%  -   4.00% 

March 1, 2027

  3,000   2,131   2,131 
    

Term Loan

  12.00%

Prime

  3.50%  10.50%  -   7.78% 

February 1, 2028

  2,813   2,813   2,813 
    

Term Loan

  12.00%

Prime

  3.50%  10.50%  -   7.78% 

February 1, 2028

  2,813   2,813   2,813 

Lyrical Foods, Inc. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  12.00%

Prime

  3.50%  9.00%  -   1.00% 

September 1, 2027

  2,500   2,591   2,429 

MyForest Foods Co. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   3.00% 

October 1, 2025

  3,667   3,647   3,647 
    

Term Loan

  15.25%

Prime

  6.75%  10.00%  -   3.00% 

October 1, 2025

  1,833   1,824   1,824 

NextCar Holding Company, Inc. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  5,752   5,752   5,018 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  2,301   2,301   2,007 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  2,876   2,876   2,509 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  3,451   3,451   3,011 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  2,876   2,876   2,510 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  2,876   2,876   2,510 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  5,752   5,752   5,018 
    

Term Loan

  14.25% (11)

Prime

  5.75%  9.00%  -   5.25% 

October 31, 2023

  2,876   2,876   2,510 

Optoro, Inc. (2)(12)

 

Consumer-related Technologies

 

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

August 1, 2027

  2,500   2,416   2,416 
    

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

July 1, 2028

  1,875   1,787   1,787 

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

 

Consumer-related Technologies

 

Term Loan

  16.25% (11)

Prime

  7.75%  11.00%  -   -  

May 1, 2027

  1,204   1,086   872 
    

Term Loan

  16.25% (11)

Prime

  7.75%  11.00%  -   -  

May 1, 2027

  602   543   436 
    

Term Loan

  16.25% (11)

Prime

  7.75%  11.00%  -   -  

May 1, 2027

  602   543   436 

Liqid, Inc. (2)(12)

 

Networking

 

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

September 1, 2024

  1,500   1,481   1,481 
    

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

September 1, 2024

  1,500   1,481   1,481 
    

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

September 1, 2024

  750   740   740 
    

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

September 1, 2024

  667   656   656 
    

Term Loan

  14.75%

Prime

  6.25%  9.50%  -   4.00% 

September 1, 2024

  750   729   729 

BriteCore Holdings, Inc. (2)(12)

 

Software

 

Term Loan

  14.00%

Prime

  5.50%  14.00%  -   3.00% 

October 1, 2028

  5,000   4,860   4,860 
    

Term Loan

  14.00%

Prime

  5.50%  14.00%  -   3.00% 

October 1, 2028

  2,500   2,466   2,466 
    

Term Loan

  14.00%

Prime

  5.50%  14.00%  -   3.00% 

October 1, 2028

  2,500   2,466   2,466 
    

Term Loan

  14.00%

Prime

  5.50%  14.00%  -   3.00% 

October 1, 2028

  2,500   2,466   2,466 

 

See Notes to Consolidated Financial Statements

 

18

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments

December 31, 2023

(Dollars in thousands)

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

 

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

  

Maturity Date

 

Principal Amount

  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Dropoff, Inc. (2)(12)

 

Software

 

Term Loan

  15.00% (19)

Prime

  6.50%  9.75%  -   3.50% 

April 1, 2026

  6,625   6,519   6,176 
    

Term Loan

  15.00% (19)

Prime

  6.50%  9.75%  -   3.50% 

April 1, 2026

  6,116   6,018   5,701 
    

Term Loan

  15.00% (19)

Prime

  6.50%  9.75%  -   3.50% 

August 1, 2026

  2,548   2,507   2,375 

Engage3, LLC (2)(12)

 

Software

 

Term Loan

  14.75%

Prime

  6.25%  9.75%  -   4.50% 

July 1, 2027

  3,750   3,728   3,728 
    

Term Loan

  14.75%

Prime

  6.25%  9.75%  -   4.50% 

July 1, 2027

  3,750   3,728   3,728 

Kodiak Robotics, Inc. (2)(12)

 

Software

 

Term Loan

  14.00%

Prime

  5.50%  10.25%  -   4.00% 

April 1, 2026

  10,000   9,895   9,895 
    

Term Loan

  14.00%

Prime

  5.50%  10.25%  -   4.00% 

April 1, 2026

  10,000   9,895   9,895 
    

Term Loan

  14.00%

Prime

  5.50%  10.25%  -   4.00% 

April 1, 2026

  5,000   4,947   4,947 
    

Term Loan

  14.00%

Prime

  5.50%  10.25%  -   4.00% 

April 1, 2026

  5,000   4,947   4,947 

Lemongrass Holdings, Inc. (2)(12)

 

Software

 

Term Loan

  15.00%

Prime

  6.50%  9.75%  -   2.50% 

March 1, 2026

  5,000   4,971   4,971 
    

Term Loan

  15.00%

Prime

  6.50%  9.75%  -   2.50% 

March 1, 2026

  2,500   2,486   2,486 

Lytics, Inc. (2)(12)

 

Software

 

Term Loan

  14.50%

Prime

  6.00%  14.25%  -   4.00% 

November 1, 2026

  2,500   2,471   2,373 
    

Term Loan

  14.50%

Prime

  6.00%  14.25%  -   4.00% 

December 1, 2026

  1,250   1,237   1,188 
    

Term Loan

  14.50%

Prime

  6.00%  14.25%  -   4.00% 

April 1, 2027

  1,000   994   954 

Mirantis, Inc. (2)(12)

 

Software

 

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2028

  5,000   4,779   4,779 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2028

  5,000   4,915   4,915 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2028

  5,000   4,915   4,915 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2028

  5,000   4,915   4,915 

Noodle Partners, Inc. (2)(12)

 

Software

 

Term Loan

  13.50%

Prime

  5.00%  12.00%  -   3.00% 

March 1, 2027

  10,000   9,885   9,885 
    

Term Loan

  13.50%

Prime

  5.00%  12.00%  -   3.00% 

March 1, 2027

  5,000   4,942   4,942 
    

Term Loan

  13.50%

Prime

  5.00%  12.00%  -   3.00% 

March 1, 2027

  5,000   4,942   4,942 

Reputation Institute, Inc. (2)(12)

 

Software

 

Term Loan

  15.75%

Prime

  7.25%  10.50%  -   3.00% 

August 1, 2025

  3,667   3,625   3,625 

Slingshot Aerospace, Inc. (2)(12)

 

Software

 

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   5.00% 

August 1, 2026

  5,000   4,959   4,959 
    

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   5.00% 

August 1, 2026

  5,000   4,959   4,959 
    

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   5.00% 

August 1, 2026

  5,000   4,959   4,959 
    

Term Loan

  14.25%

Prime

  5.75%  9.75%  -   5.00% 

August 1, 2026

  5,000   4,959   4,959 

Supply Network Visibility Holdings LLC (2)(12)

 

Software

 

Term Loan

  12.75%

Prime

  4.25%  12.00%  -   2.50% 

June 1, 2028

  2,500   2,457   2,457 
    

Term Loan

  12.75%

Prime

  4.25%  12.00%  -   2.50% 

June 1, 2028

  3,500   3,489   3,489 
    

Term Loan

  12.75%

Prime

  4.25%  12.00%  -   2.50% 

June 1, 2028

  2,500   2,492   2,492 
    

Term Loan

  12.75%

Prime

  4.25%  12.00%  -   2.50% 

June 1, 2028

  1,500   1,495   1,495 

Viken Detection Corporation (2)(12)

 

Software

 

Term Loan

  12.50%

Prime

  4.00%  11.75%  -   3.50% 

June 1, 2027

  5,000   4,773   4,773 
    

Term Loan

  12.50%

Prime

  4.00%  11.75%  -   3.50% 

June 1, 2027

  2,500   2,467   2,467 
    

Term Loan

  12.50%

Prime

  4.00%  11.75%  -   3.50% 

June 1, 2027

  2,500   2,467   2,467 

Total Non-Affiliate Debt Investments — Technology

                             275,026   269,790 

Non-Affiliate Debt Investments — Healthcare information and services — 21.5% (8)

                                       

Hound Labs inc. (2) (12)

 

Diagnostics

 

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   3.50% 

June 1, 2026

  2,500   2,484   2,484 
    

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   3.50% 

June 1, 2026

  2,500   2,484   2,484 
    

Term Loan

  14.50%

Prime

  6.00%  9.25%  -   3.50% 

June 1, 2026

  5,000   4,968   4,968 

Parse Biosciences, Inc. (2)(12)

 

Diagnostics

 

Term Loan

  11.75%

Prime

  3.25%  11.50%  -   5.00% 

January 1, 2028

  5,000   4,633   4,633 
    

Term Loan

  11.75%

Prime

  3.25%  11.50%  -   5.00% 

January 1, 2028

  5,000   4,884   4,884 

BrightInsight, Inc. (2)(12)

 

Software

 

Term Loan

  14.00%

Prime

  5.50%  9.50%  -   3.00% 

August 1, 2027

  7,000   6,684   6,684 
    

Term Loan

  14.00%

Prime

  5.50%  9.50%  -   3.00% 

August 1, 2027

  3,500   3,463   3,463 
    

Term Loan

  14.00%

Prime

  5.50%  9.50%  -   3.00% 

August 1, 2027

  3,500   3,463   3,463 
    

Term Loan

  14.00%

Prime

  5.50%  9.50%  -   3.00% 

April 1, 2028

  2,750   2,710   2,710 

Elligo Health Research, Inc. (2)(12)

 

Software

 

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2027

  10,000   9,656   9,656 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2027

  5,000   4,925   4,925 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2027

  5,000   4,925   4,925 
    

Term Loan

  12.00%

Prime

  3.50%  11.75%  -   4.00% 

October 1, 2027

  5,000   4,925   4,925 

SafelyYou, Inc. (2)(12)

 

Software

 

Term Loan

  11.75%

Prime

  3.25%  11.00%  -   5.00% 

June 1, 2027

  5,000   4,648   4,648 
    

Term Loan

  11.75%

Prime

  3.25%  11.00%  -   5.00% 

June 1, 2027

  5,000   4,918   4,918 

Total Non-Affiliate Debt Investments — Healthcare information and services

                             69,770   69,770 

Total Non- Affiliate Debt Investments

                             692,345   664,203 

 

See Notes to Consolidated Financial Statements

 

19

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments

December 31, 2023

(Dollars in thousands)

 

          

Cost of

  

Fair

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Number of Shares

  

Investments (6)(9)

  

Value (9)

 

Non-Affiliate Warrant Investments — 7.6% (8)

                

Non-Affiliate Warrants — Life Science — 2.3% (8)

                

Avalo Therapeutics, Inc. (2)(5)(12)

 

Biotechnology

 

Common Stock Warrant

  117   311    

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

 

Biotechnology

 

Preferred Stock Warrant

  7,404   214   318 

Emalex Biosciences, Inc. (2)(12)

 

Biotechnology

 

Preferred Stock Warrant

  110,402   178   246 

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

 

Biotechnology

 

Common Stock Warrant

  19,671   65    

KSQ Therapeutics, Inc. (2) (12)

 

Biotechnology

 

Preferred Stock Warrant

  48,076   50   53 

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

 

Biotechnology

 

Common Stock Warrant

  16,611   146    

Native Microbials, Inc (2)(12)

 

Biotechnology

 

Preferred Stock Warrant

  103,679   64   157 

PDS Biotechnology Corporation (2)(5)(12)

 

Biotechnology

 

Common Stock Warrant

  299,848   160   606 

Provivi, Inc. (2)(12)

 

Biotechnology

 

Common Stock Warrant

  175,098   278    

Provivi, Inc. (2)(12)

 

Biotechnology

 

Preferred Stock Warrant

  691,895   312   225 

Stealth Biotherapeutics Inc. (2)(12)

 

Biotechnology

 

Common Stock Warrant

  318,181   264   113 

Tallac Therapeutics, Inc. (2)(12)

 

Biotechnology

 

Preferred Stock Warrant

  1,600,002   194   172 

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

 

Biotechnology

 

Common Stock Warrant

  126,000   72   33 

AccuVein Inc. (2)(12)

 

Medical Device

 

Common Stock Warrant

  1,175   24    

Aerin Medical, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  1,818,183   66   1,199 

Aerobiotix, LLC (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  8,800   48   9 

Canary Medical Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  12,153   86   1,305 

Candesant Biomedical, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  93,336   152   135 

Ceribell, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  145,483   69   229 

Cognoa, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  4,106,174   149   167 

Conventus Orthopaedics, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  7,972,222   221   206 

CSA Medical, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  3,341,376   174   124 

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

 

Medical Device

 

Common Stock Warrant

  47,410   76   980 

Infobionic, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  2,010,424   124   26 

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

 

Medical Device

 

Preferred Stock Warrant

  809,931   194   368 

Meditrina, Inc. (12)

 

Medical Device

 

Preferred Stock Warrant

  233,993   83   93 

MicroTransponder, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  103,172   47   47 

Scientia Vascular, Inc (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  34,410   103   215 

Sonex Health, Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  2,637,043   275   269 

VERO Biotech LLC (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  4,109   432   379 

Swift Health Systems Inc. (2)(12)

 

Medical Device

 

Preferred Stock Warrant

  135,484   71   1 

Total Non-Affiliate Warrants — Life Science

      4,702   7,675 

 

See Notes to Consolidated Financial Statements

 

20

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments

December 31, 2023

(Dollars in thousands)

 

          

Cost of

  

Fair

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Number of Shares

  

Investments (6)(9)

  

Value (9)

 

Non-Affiliate Warrants — Sustainability — 0.2% (8)

            

New Aerofarms, Inc. assignee of Aerofarms, Inc. (2)(12)(15)

 

Other Sustainability

 

Preferred Stock Warrant

  400,000   81   72 

LiquiGlide, Inc. (2)(12)

 

Other Sustainability

 

Common Stock Warrant

  61,359   39   50 

Nexii Building Solutions, Inc. (2)(12)(14)(18)

 

Other Sustainability

 

Common Stock Warrant

  215,171   490    

Soli Organic, Inc. (2)(12)

 

Other Sustainability

 

Preferred Stock Warrant

  681   214   340 

Temperpack Technologies, Inc. (2)(12)

 

Other Sustainability

 

Preferred Stock Warrant

  46,311   175   80 

Total Non-Affiliate Warrants — Sustainability

     999   542 

Non-Affiliate Warrants — Technology — 4.5% (8)

                

Axiom Space, Inc. (2)(12)

 

Communications

 

Common Stock Warrant

  1,991   47   61 

Intelepeer Holdings, Inc. (2)(12)

 

Communications

 

Preferred Stock Warrant

  2,936,535   138   3,036 

PebblePost, Inc. (2)(12)

 

Communications

 

Preferred Stock Warrant

  598,850   92   131 

Alula Holdings, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  20,000   93    

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

 

Consumer-related Technologies

 

Common Stock Warrant

  76,923   195    

Caastle, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  268,591   65   1,055 

CAMP NYC, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  75,997   22   27 

Clara Foods Co. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  46,745   29   122 

CZV, Inc. (2)(12)

 

Consumer-related Technologies

 

Common Stock Warrant

  65,569   81   71 

Divergent Technologies, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  37,282   94   250 

Havenly, Inc. (2)(12)

 

Consumer-related Technologies

 

Common Stock Warrant

  1,312,500   2,947   2,259 

MyForest Foods Co. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  250   29   56 

NextCar Holding Company, Inc. (2)(12)

 

Consumer-related Technologies

 

Common Stock Warrant

  12,618   188    

NextCar Holding Company, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  1,224,752   9    

Optoro, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  11,550   182   145 

Primary Kids, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  553,778   57   591 

Quip NYC Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  6,191   325   533 

Unagi, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  171,081   32    

Updater, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock Warrant

  114,659   34    

CPG Beyond, Inc. (2)(12)

 

Data Storage

 

Preferred Stock Warrant

  500,000   242   294 

Silk, Inc. (2)(12)

 

Data Storage

 

Preferred Stock Warrant

  394,110   175   124 

Global Worldwide LLC (2)(12)

 

Internet and Media

 

Preferred Stock Warrant

  245,810   75   63 

Rocket Lawyer Incorporated (2)(12)

 

Internet and Media

 

Preferred Stock Warrant

  261,721   92   318 

Skillshare, Inc. (2)(12)

 

Internet and Media

 

Preferred Stock Warrant

  139,074   162   1,201 

Liqid, Inc. (2)(12)

 

Networking

 

Preferred Stock Warrant

  344,102   364   210 

Halio, Inc. (2)(12)

 

Power Management

 

Common Stock Warrant

  38,241,466   1,585   2,700 

Avalanche Technology, Inc. (2)(12)

 

Semiconductors

 

Preferred Stock Warrant

  5,938   45    

BriteCore Holdings, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  161,215   98   174 

Dropoff, Inc. (2)(12)

 

Software

 

Common Stock Warrant

  516,732   455   46 

E La Carte, Inc. (2)(5)(12)

 

Software

 

Common Stock Warrant

  147,361   60    

Everstream Holdings, LLC (2)(12)

 

Software

 

Preferred Stock Warrant

  350,000   70   63 

Kodiak Robotics, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  639,918   273   13 

Lemongrass Holdings, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  101,308   32   120 

Lotame Solutions, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  71,305   18   42 

Lytics, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  85,543   43   1 

Mirantis, Inc. (2)(12)

 

Software

 

Common Stock Warrant

  948,275   223   247 

Noodle Partners, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  84,037   115   2 

Reputation Institute, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  3,731   56   80 

Revinate Holdings, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  682,034   44   91 

SIGNiX, Inc. (12)

 

Software

 

Preferred Stock Warrant

  186,235   225    

Slingshot Aerospace, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  309,208   123   135 

Supply Network Visibility Holdings LLC (2)(12)

 

Software

 

Preferred Stock Warrant

  682   64   135 

Topia Mobility, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  3,049,607   138    

Viken Detection Corporation (2)(12)

 

Software

 

Preferred Stock Warrant

  345,443   120   105 

xAd, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  4,343,348   177   5 

Total Non-Affiliate Warrants — Technology

      9,733   14,506 
             

 

See Notes to Consolidated Financial Statements

 

21

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments

December 31, 2023

(Dollars in thousands)

 

          

Cost of

  

Fair

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Number of Shares

  

Investments (6)(9)

  

Value (9)

 

Non-Affiliate Warrants — Healthcare information and services — 0.6% (8)

                

Hound Labs, Inc (2) (12)

 

Diagnostics

 

Preferred Stock Warrant

  171,370   46   12 

Parse Biosciences, Inc. (2)(12)

 

Diagnostics

 

Common Stock Warrant

  32,244   70   70 

Parse Biosciences, Inc. (2)(12)

 

Diagnostics

 

Preferred Stock Warrant

  184,253   166   166 

Kate Farms, Inc. (2)(12)

 

Other Healthcare

 

Preferred Stock Warrant

  82,965   102   1,366 

BrightInsight, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  85,066   167    

Elligo Health Research, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  652,250   192   99 

Medsphere Systems Corporation (2)(12)

 

Software

 

Preferred Stock Warrant

  7,097,792   60   108 

SafelyYou, Inc. (2)(12)

 

Software

 

Preferred Stock Warrant

  150,353   163   50 

Total Non-Affiliate Warrants — Healthcare information and services

      966   1,871 

Total Non-Affiliate Warrants

      16,400   24,594 

Non-Affiliate Other Investments — Life Science — 0.1% (8)

                

Lumithera, Inc. (12)

 

Medical Device

 

Royalty Agreement

      1,200   200 

ZetrOZ, Inc. (12)

 

Medical Device

 

Royalty Agreement

          

Total Non-Affiliate Other Investments

      1,200   200 

Non-Affiliate Equity — 1.5% (8)

                

Cadrenal Therapeutics, Inc. (5)

 

Biotechnology

 

Common Stock

  600,000      443 

Castle Creek Biosciences, Inc. (12)

 

Biotechnology

 

Common Stock

  1,162   250   250 

Emalex Biosciences, Inc. (12)

 

Biotechnology

 

Common Stock

  32,831   355   355 

Axiom Space, Inc. (12)

 

Communication

 

Preferred Stock

  1,810   261   306 

Getaround, Inc. (2)(5)

 

Consumer-related Technologies

 

Common Stock

  87,082   253   20 

NextCar Holding Company, Inc. (2)(12)

 

Consumer-related Technologies

 

Preferred Stock

  2,688,971   89   89 

SnagAJob.com, Inc. (12)

 

Consumer-related Technologies

 

Common Stock

  82,974   9   83 

Lumithera, Inc. (12)

 

Medical Device

 

Common Stock

  392,651   2,000   1,700 

Tigo Energy, Inc. (5)

 

Other Sustainability

 

Common Stock

  5,205   111   13 

Decisyon, Inc. (12)

 

Software

 

Preferred Stock

  280,000   2,800   1,281 

Lotame, Inc. (12)

 

Software

 

Preferred Stock

  66,127   4   193 

Total Non-Affiliate Equity

      6,132   4,733 

Total Non-Affiliate Portfolio Investment Assets

     $716,077  $693,730 

 

See Notes to Consolidated Financial Statements

 

22

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments

December 31, 2023

(Dollars in thousands)

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

 

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

 

Maturity Date

 

Principal Amount

  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Non-Controlled Affiliate Investments — 0.3% (8)

                                      

Non-Controlled Affiliate Debt Investments — Life Sciences — 0.3% (8)

                                      

Evelo Biosciences, Inc. (2)(5)(12)(13)

 

Biotechnology

 

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   2.27%

January 1, 2028

  5,532   5,228   222 
    

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   2.27%

January 1, 2028

  8,298   7,867   336 
    

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   2.27%

January 1, 2028

  3,319   3,137   133 
    

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   2.27%

January 1, 2028

  3,319   3,137   133 
    

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   2.27%

January 1, 2028

  2,213   2,091   88 
    

Term Loan

  12.75% (11)

Prime

  4.25%  11.00%  -   2.27%

January 1, 2028

  2,213   2,091   88 

Total Non-Controlled Affiliate Debt Investments

                            23,551   1,000 

 

          

Cost of

  

Fair

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Number of Shares

  

Investments (6)(9)

  

Value (9)

 

Non-controlled Affiliate Equity — Life Sciences — 0.0% (8)

                

Aulea Medical, Inc. (12)(16)

 

Medical Device

 

Common Stock

  660,537       

Evelo Biosciences, Inc. (5)

 

Biotechnology

 

Common Stock

  2,164,502   5,000   132 

Total Non-Controlled Affiliate Equity

     5,000   132 

Non-controlled Affiliate Warrants — Life Sciences — 0.0% (8)

                

Evelo Biosciences, Inc. (2)(5)(12)

 

Biotechnology

 

Common Stock

  23,196   126    

Total Non-Controlled Affiliate Warrants

      126    

Total Non-Controlled Affiliate Portfolio Investment Assets

     $28,677  $1,132 

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Cash Rate (4)

 

Index

 

Margin

  

Floor

  

Ceiling

  

ETP (10)

 

Maturity Date

 

Principal Amount

  

Cost of Investments (6)(9)

  

Fair Value (9)

 

Controlled Affiliate Investments — 4.4% (8)

                                      

Controlled Affiliate Debt Investments — Technology — 1.6% (8)

                                      

Better Place Forests Co. (12)

 

Consumer-related Technologies

 

Term Loan

  12.25% (11)

Prime

  3.75%  12.00%  -   1.85%

August 1, 2029

  3,547   3,585   3,339 
    

Term Loan

  12.25% (11)

Prime

  3.75%  12.00%  -   1.85%

August 1, 2029

  1,773   1,750   1,630 

Total Controlled Affiliate Debt Investments

                            5,335   4,969 

 

          

Cost of

  

Fair

 

Portfolio Company (1)(3)

 

Sector

 

Type of Investment (7)

 

Number of Shares

  

Investments (6)(9)

  

Value (9)

 

Controlled Affiliate Equity — Technology — 0.9% (8)

                

Better Place Forests Co. (12)

 

Consumer-related Technologies

 

Common Stock

  2,278,272   2,061   2,165 

Better Place Forests Co. (12)

 

Consumer-related Technologies

 

Preferred Stock

  3,124,448   1,250   859 

Total Controlled Affiliate Equity

         3,311   3,024 

Controlled Affiliate Other Investments — Life Sciences — 1.9% (8)

                

HIMV LLC (12)(17)

 

Biotechnology

 

Other Investment

      5,782   6,230 

Total Controlled Affiliate Other

      5,782   6,230 

Total Controlled Affiliate Portfolio Investment Assets

     $14,428  $14,223 

Total Portfolio Investment Assets — 218.9% (8)

     $759,182  $709,085 

 


(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, unless otherwise noted.

(2)

Has been pledged as collateral under the Key Facility, the NYL Facility and/or the 2022 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 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. For each debt investment, the current interest rate in effect as of  December 31, 2023 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 December 31, 2023, 4.7% and 2.7% of the Company’s total assets on a cost and fair value basis, respectively, are in non-qualifying assets. Under 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.

 

23

Horizon Technology Finance Corporation and Subsidiaries
 

Consolidated Schedule of Investments

December 31, 2023

(Dollars in thousands)

 

 

(11)

Debt investment has a PIK feature in which the accrued interest is added to the then-outstanding principal amount of the debt investment. 

(12)

The fair value of the investment was valued using significant unobservable inputs.

(13)

Debt investment is on non-accrual status as of December 31, 2023.

(14)Entity is organized under the laws of Canada and has a principal place of business in Canada.
(15)On or about   September 13, 2023, in connection with New Aerofarms, Inc.’s purchase of substantially all of the assets of Aerofarms, Inc. in a bankruptcy process, New Aerofarms, Inc. assumed all of the debt investments of the Company in Aerofarms, Inc..
(16)On   July 31, 2023, pursuant to a certain Secured Party Bill of Sale and Transfer Agreement, the Company sold substantially all of the assets of Corinth MedTech, Inc., a borrower of the Company, to Aulea Medical Inc. (“Aulea”) in consideration of 660,537 shares of the common stock of Aulea. 
(17)By an Order of the Supreme Court of Nova Scotia made May 1, 2023, as amended and restated by an Order of the Court made   May 5, 2023, IMV, Inc. (“IMV”) commenced proceedings  (the “CCAA Proceedings”) under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended to seek creditor protection for IMV and on   June 2, 2023, IMV obtained recognition of the CCAA Proceedings under Chapter 15 of the United States Bankruptcy Code in proceedings before the United States Bankruptcy Court for the District of Delaware. In   September 2023, the Company, with its co-lender to IMV, credit-bid and acquired substantially all of the assets of IMV through HIMV LLC, an entity formed to acquire the assets of IMV. HIMV LLC is 70% owned by the Company and 30% owned by the co-lender.
(18)On  January 11, 2024, Nexii Building Solutions Inc., and its affiliates, obtained an Initial Order under the Companies’ Creditors Arrangement Act from the Supreme Court of British Columbia in Vancouver. The Initial Order provides for, among other things, a stay of proceedings in favour of Nexii, the approval of debtor-in-possession financing and the appointment of KSV Restructuring Inc. as monitor of Nexii.
(19)Debt investment has a partial PIK feature in which (a) a portion of the accrued interest on the debt investment, in an amount equal to four and one half percent (4.5%) on the then-outstanding principal amount of the debt investment is added to the then-outstanding principal amount of the debt investment and (b) the remaining accrued interest on the debt investment is paid in cash.

 

 

See Notes to Consolidated Financial Statements

 

 
24

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 
 

Note 1. Organization

 

Horizon Technology Finance Corporation (the “Company”) was organized as a Delaware corporation on March 16, 2010 and is an externally managed, non-diversified, closed-end investment company. The Company has elected to be regulated as a business development company (“BDC”) under the 1940 Act. In addition, for tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a RIC, the Company generally is not subject to corporate-level federal income tax on the portion of its taxable income (including net capital gains) the Company distributes to its stockholders. The Company primarily makes secured debt investments to development-stage companies in the technology, life science, healthcare information and services and sustainability industries. All of the Company’s debt investments consist of loans secured by all of, or a portion of, the applicable debtor company’s tangible and intangible assets.

 

On October 28, 2010, the Company completed an initial public offering (“IPO”) and its common stock trades on the Nasdaq Global Select Market under the symbol “HRZN”.

 

Horizon Credit II LLC (“Credit II”) was formed as a Delaware limited liability company on June 28, 2011, with the Company as its sole equity member. Credit II is a special purpose bankruptcy-remote entity and is a separate legal entity from the Company. Any assets conveyed to Credit II are not available to creditors of the Company or any other entity other than Credit II’s lenders.

 

The Company formed Horizon Funding 2019‑1 LLC (“2019‑1 LLC”) as a Delaware limited liability company on May 2, 2019 and Horizon Funding Trust 2019‑1 as a Delaware statutory trust on May 15, 2019 (“2019‑1 Trust” and, together with the 2019‑1 LLC, the “2019‑1 Entities”). The 2019‑1 Entities are special purpose bankruptcy remote entities and are separate legal entities from the Company. The Company formed the 2019‑1 Entities for purposes of securitizing the term debt securitization in connection with which an affiliate of the Company made an offering of $100.0 million in aggregate principal amount of fixed rate asset-backed notes that were issued in conjunction with the $160.0 million securitization of secured loans the Company completed on August 13, 2019 (the “2019 Asset-Backed Notes”). The 2019-1 Entities have been dissolved as of March 31, 2024.

 

Horizon Funding I, LLC (“HFI”) was formed as a Delaware limited liability company on May 9, 2018, with Horizon Secured Loan Fund I LLC, a Delaware limited liability company (“HSLFI”) as its sole member. HFI is a special purpose bankruptcy-remote entity and is a separate legal entity from HSLFI. Any assets conveyed to HFI are not available to creditors of HSLFI or any other entity other than HFI’s lenders. As of April 21, 2020, HSLFI and its subsidiary, HFI, are consolidated by the Company.

 

The Company formed Horizon Funding 2022‑1 LLC (“2022‑1 LLC”) as a Delaware limited liability company on September 30, 2022 and Horizon Funding Trust 2022‑1 as a Delaware statutory trust on October 18, 2022 (“2022‑1 Trust” and, together with the 2022‑1 LLC, the “2022‑1 Entities”). The 2022‑1 Entities are special purpose bankruptcy remote entities and are separate legal entities from the Company. The Company formed the 2022‑1 Entities for purposes of securitizing the 2022 Asset-Backed Notes.

 

The Company has established wholly owned subsidiaries, which are structured as Delaware limited liability companies, either to hold assets of portfolio companies acquired in connection with a foreclosure or bankruptcy or to hold equity in portfolio companies which the Company may control. Such wholly-owned subsidiaries are separate legal entities from the Company.

 

The Company, together with its co-lender to IMV, established HIMV LLC, a Delaware limited liability company to purchase and sell the assets of IMV, a borrower of the Company. HIMV LLC is 70% owned by the Company and 30% owned by the co-lender.

 

The Company’s investment strategy is to maximize the investment portfolio’s return by generating current income from the debt investments the Company makes and capital appreciation from the warrants the Company receives when making such debt investments. The Company has entered into an investment management agreement with Horizon Technology Finance Management LLC (the “Advisor”) under which the Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company.

 

 

25

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 
 

Note 2. Basis of presentation and significant accounting policies

 

The consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the requirements for reporting on Form 10‑Q and Articles 6 and 10 of Regulation S-X (“Regulation S-X”) under the Securities Act of 1933, as amended (the “Securities Act”). In the opinion of management, the consolidated financial statements reflect all adjustments and reclassifications, consisting solely of normal recurring accruals, that are necessary for the fair presentation of financial results as of and for the periods presented. All intercompany balances and transactions have been eliminated. The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the year. Therefore, the unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto as of and for the year ended December 31, 2023.

 

Principles of consolidation

 

As required under GAAP and Regulation S-X, the Company will generally consolidate its investment in a company that is an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the results of the Company’s wholly-owned subsidiaries in its consolidated financial statements.

 

Assets related to transactions that do not meet Accounting Standards Codification (“ASC”) Topic 860, Transfers and Servicing requirements for accounting sale treatment are reflected in the Company’s Consolidated Statements of Assets and Liabilities as investments. Those assets are owned by special purpose entities, including 2019‑1 Entities and 2022-1 Entities, that are consolidated in the Company’s consolidated financial statements. The creditors of the special purpose entities have received security interests in such assets, and such assets are not intended to be available to the creditors of the Company (or any affiliate of the Company).

 

Use of estimates

 

In preparing the consolidated financial statements in accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, as of the date of the balance sheet and income and expenses for the period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the valuation of investments.

 

Fair value

 

The Company records all of its investments at fair value in accordance with relevant GAAP, which establishes a framework used to measure fair value and requires disclosures for fair value measurements. The Company has categorized its investments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy as more fully described in Note 6. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity specific measure. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.

 

The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market conditions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3.

 

See Note 6 for additional information regarding fair value.

 

26

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

Segments

 

The Company has determined that it has a single reporting segment and operating unit structure. The Company lends to and invests in portfolio companies in various technology, life science, healthcare information and services and sustainability industries. The Company separately evaluates the performance of each of its lending and investment relationships. However, because each of these debt investments and investment relationships has similar business and economic characteristics, they have been aggregated into a single lending and investment segment.

 

Investments

 

Investments are recorded at fair value. Pursuant to the amended SEC Rule 2a-5 of the 1940 Act, on July 29, 2022, the Company's board of directors (the “Board”) designated the Advisor as the Company’s “valuation designee.” The valuation designee determines the fair value of the Company’s portfolio investments and the Company's Board oversees the valuation designee. The Company has the intent to hold its debt investments for the foreseeable future or until maturity or payoff.

 

Interest on debt investments is accrued and included in income based on contractual rates applied to principal amounts outstanding. Interest income is determined using a method that results in a level rate of return on principal amounts outstanding. Generally, when a debt investment becomes 90 days or more past due, or if the Company otherwise does not expect to receive interest and principal repayments, the debt investment is placed on non-accrual status and the recognition of interest income may be discontinued. Interest payments received on non-accrual debt investments may be recognized as income, on a cash basis, or applied to principal depending upon management’s judgment at the time the debt investment is placed on non-accrual status. As of March 31, 2024, there were four investments on nonaccrual status with a cost of $96.0 million and a fair value of $51.0 million. As of December 31, 2023, there were four investments on non-accrual status with a cost of $72.5 million and a fair value of $27.6 million. For the three months ended March 31, 2024 and 2023, the Company did not recognize any interest income from debt investments while on non-accrual status.

 

The Company has a limited number of debt investments in its portfolio that contain a PIK provision. Contractual PIK interest, which represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on an accrual basis to the extent such amounts are expected to be collected. For the three months ended  March 31, 2024 and 2023, 5.3% and 4.3%, respectively, of the Company's total investment income was attributable to non-cash PIK interest. The Company will generally cease accruing PIK interest if management does not expect the portfolio company to be able to pay all principal and interest due. For the three months ended  March 31, 2024one debt investment, which had accrued PIK interest into income of $1.0 million during the three months ended  March 31, 2024, was placed on nonaccrual status. For the three months ended March 31, 2023, two debt investments, which had accrued PIK interest into income of $1.1 million during the three months ended March 31, 2023, were placed on nonaccrual status.

 

The Company receives a variety of fees from borrowers in the ordinary course of conducting its business, including advisory fees, commitment fees, amendment fees, non-utilization fees, success fees and prepayment fees. In a limited number of cases, the Company may also receive a non-refundable deposit earned upon the termination of a transaction. Debt investment origination fees, net of certain direct origination costs, are deferred and, along with unearned income, are amortized as a level-yield adjustment over the respective term of the debt investment. All other income is recognized when earned. Fees for counterparty debt investment commitments with multiple debt investments are allocated to each debt investment based upon each debt investment’s relative fair value. When a debt investment is placed on non-accrual status, the amortization of the related fees and unearned income is discontinued until the debt investment is returned to accrual status.

 

Certain debt investment agreements also require the borrower to make an ETP, that is accrued into interest receivable and taken into income over the life of the debt investment to the extent such amounts are expected to be collected. The Company will generally cease accruing the income if there is insufficient value to support the accrual or the Company does not expect the borrower to be able to pay the ETP when due. The proportion of the Company’s total investment income that resulted from the portion of ETPs not received in cash for the three months ended  March 31, 2024 and 2023 was 6.8% and 6.3%, respectively. 

 

In connection with substantially all lending arrangements, the Company receives warrants to purchase shares of stock from the borrower. The warrants are recorded as assets at estimated fair value on the grant date using the Black-Scholes valuation model. The warrants are considered loan fees and are recorded as unearned income on the grant date. The unearned income is recognized as interest income over the contractual life of the related debt investment in accordance with the Company’s income recognition policy. Subsequent to debt investment origination, the fair value of the warrants is determined using the Black-Scholes valuation model. Any adjustment to fair value is recorded through earnings as net unrealized appreciation or depreciation on investments. Gains and losses from the disposition of the warrants or stock acquired from the exercise of warrants are recognized as realized gains and losses on investments.

 

27

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

Realized gains or losses on the sale of investments, or upon the determination that an investment balance, or portion thereof, is not recoverable, are calculated using the specific identification method. The Company measures realized gains or losses by calculating the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment. Net change in unrealized appreciation or depreciation reflects the change in the fair values of the Company’s portfolio investments during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

 

Debt issuance costs

 

Debt issuance costs are fees and other direct incremental costs incurred by the Company in obtaining debt financing from its lenders and issuing debt securities. The unamortized balance of debt issuance costs as of  March 31, 2024 and  December 31, 2023 was $5.4 million and $5.8 million, respectively. These amounts are amortized and included in interest expense in the consolidated statements of operations over the life of the borrowings. The accumulated amortization balances as of March 31, 2024 and  December 31, 2023 were $5.6 million and $5.2 million, respectively. The amortization expense for the three months ended  March 31, 2024 and 2023 was $0.4 million and $0.5 million, respectively. 

 

Income taxes

 

As a BDC, the Company has elected to be treated as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify as a RIC and to avoid the imposition of corporate-level income tax on the portion of its taxable income distributed to stockholders, among other things, the Company is required to meet certain source of income and asset diversification requirements and to timely distribute dividends out of assets legally available for distribution to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax year. The Company, among other things, has made and intends to continue to make the requisite distributions to its stockholders, which generally relieves the Company from corporate-level U.S. federal income taxes. Accordingly, no provision for federal income tax has been recorded in the financial statements. Differences between taxable income and net increase in net assets resulting from operations either can be temporary, meaning they will reverse in the future, or permanent. In accordance with ASC Topic 946, Financial ServicesInvestment Companies, as amended, of the Financial Accounting Standards Board (“FASB”), permanent tax differences, such as non-deductible excise taxes paid, are reclassified from distributions in excess of net investment income and net realized loss on investments to paid-in-capital at the end of each fiscal year. These permanent book-to-tax differences are reclassified on the consolidated statements of changes in net assets to reflect their tax character but have no impact on total net assets. 

 

Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year and incur a 4% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the three months ended March 31, 2024 and 2023, $0.4 million and $0.2 million, respectively, was accrued for U.S. federal excise tax. 

 

28

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

The Company evaluates tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority in accordance with ASC Topic 740, Income Taxes, as modified by ASC Topic 946. Tax benefits of positions not deemed to meet the more-likely-than-not threshold, or uncertain tax positions, would be recorded as a tax expense in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. The Company had no material uncertain tax positions at March 31, 2024 and  December 31, 2023. The Company’s income tax returns for the 2024, 2023, 2022 and 2021 tax years remain subject to examination by U.S. federal and state tax authorities.

 

Distributions

 

Distributions to common stockholders are recorded on the declaration date. The amount to be paid out as distributions is determined by the Board. Net realized capital gains, if any, may be distributed, although the Company may decide to retain such net realized gains for investment.

 

The Company has adopted a dividend reinvestment plan that provides for reinvestment of cash distributions on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Board declares a cash distribution, then stockholders who have not “opted out” of the dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. The Company may issue new shares or purchase shares in the open market to fulfill its obligations under the plan.

 

Stockholders Equity

 

On August 2, 2021, the Company entered into an At-The-Market (“ATM”) sales agreement (the “2021 Equity Distribution Agreement”), with Goldman Sachs & Co. LLC and B. Riley FBR, Inc. (each a “Sales Agent” and, collectively, the “Sales Agents”). The 2021 Equity Distribution Agreement provided that the Company may offer and sell its shares of common stock from time to time through the Sales Agents representing up to $100.0 million worth of its common stock, in amounts and at times to be determined by the Company.

 

On September 22, 2023, the Company terminated the 2021 Equity Distribution Agreement and entered into a new ATM sales agreement (the “2023 Equity Distribution Agreement”), with the Sales Agents. The remaining shares available under the 2021 Equity Distribution Agreement are no longer available for issuance. The 2023 Equity Distribution Agreement provides that the Company may offer and sell its shares of common stock from time to time through the Sales Agents up to $150.0 million worth of its common stock, in amounts and at times to be determined by the Company. Sales of the Company’s common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market,” as defined in Rule 415 under the Securities Act, including sales made directly on the Nasdaq or similar securities exchange or sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices.

 

During the three months ended March 31, 2024, the Company sold 1,053,796 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $12.0 million, including $0.3 million of offering expenses, from these sales.

 

During the three months ended March 31, 2023, the Company sold 605,848 shares of common stock under the 2021 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $7.2 million, including $0.2 million of offering expenses, from these sales.

 

The Company generally uses net proceeds from these offerings to make investments, to pay down liabilities and for general corporate purposes. As of March 31, 2024, shares representing approximately $134.5 million of its common stock remain available for issuance and sale under the 2023 Equity Distribution Agreement.

 

29

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

Stock Repurchase Program

 

On April 26, 2024, the Board extended a previously authorized stock repurchase program which allows the Company to repurchase up to $5.0 million of its common stock at prices below the Company’s net asset value per share as reported in its most recent consolidated financial statements. Under the repurchase program, the Company may, but is not obligated to, repurchase shares of its outstanding common stock in the open market or in privately negotiated transactions from time to time. Any repurchases by the Company will comply with the requirements of Rule 10b‑18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any applicable requirements of the 1940 Act. Unless extended by the Board, the repurchase program will terminate on the earlier of June 30, 2025 or the repurchase of $5.0 million of the Company’s common stock. During the three months ended March 31, 2024 and 2023, the Company did not make any repurchases of its common stock. From the inception of the stock repurchase program through March 31, 2024, the Company repurchased 167,465 shares of its common stock at an average price of $11.22 on the open market at a total cost of $1.9 million.

 

Transfers of financial assets

 

Assets related to transactions that do not meet the requirements under ASC Topic 860, Transfers and Servicing for sale treatment under GAAP are reflected in the Company’s consolidated statements of assets and liabilities as investments. Those assets are owned by special purpose entities that are consolidated in the Company’s financial statements. The creditors of the special purpose entities have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or any other affiliate of the Company).

 

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company — put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the transferor does not maintain effective control over the transferred assets through either (a) an agreement that both entitles and obligates the transferor to repurchase or redeem the assets before maturity or (b) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.

 

Recently adopted accounting pronouncement

 

In June 2022, the FASB issued Accounting Standards Update No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). ASU 2022-03 clarifies the guidance when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of the security. The amendments in ASU 2022-03 were effective for public companies for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The adoption of ASU 2022-03 did not have a material impact on the Company’s consolidated financial statements.

 

30

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 
 

Note 3. Related party transactions

 

Investment Management Agreement

 

At a meeting of the stockholders convened on May 25, 2023 and reconvened on June 28, 2023, the stockholders approved a new Investment Management Agreement which became effective on June 30, 2023 (the “Investment Management Agreement”) upon the closing of the acquisition of the Advisor by MCH Holdco LLC, an affiliate of Monroe Capital LLC. The new Investment Management Agreement replaced the previously effective Investment Management Agreement dated as of March 7, 2019. Under the terms of the Investment Management Agreement, the Advisor determines the composition of the Company’s investment portfolio, the nature and timing of the changes to the investment portfolio and the manner of implementing such changes; identifies, evaluates and negotiates the structure of the investments the Company makes (including performing due diligence on the Company’s prospective portfolio companies); and closes, monitors and administers the investments the Company makes, including the exercise of any voting or consent rights.

 

The Advisor’s services under the Investment Management Agreement are not exclusive to the Company, and the Advisor is free to furnish similar services to other entities so long as its services to the Company are not impaired. The Advisor is a registered investment adviser with the SEC. The Advisor receives fees for providing services to the Company under the Investment Management Agreement, consisting of two components, a base management fee and an incentive fee.

 

The base management fee is calculated at an annual rate of 2.00% of the Company’s gross assets (less cash and cash equivalents) including any assets acquired with the proceeds of leverage; provided, that, to the extent the Company’s gross assets (less cash and cash equivalents) exceed $250 million, the base management fee on the amount of such excess over $250 million will be calculated at an annual rate of 1.60% of the Company’s gross assets (less cash and cash equivalents) including any assets acquired with the proceeds of leverage. The base management fee is payable monthly in arrears and is prorated for any partial month.

 

The base management fee payable at March 31, 2024 and  December 31, 2023 was $1.1 million. The base management fee expense was $3.2 million for the three months ended March 31, 2024 and 2023

 

The incentive fee has two parts, as follows:

 

The first part, which is subject to the Incentive Fee Cap and Deferral Mechanism, as defined below, is calculated and payable quarterly in arrears based on the Company’s Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter. For this purpose, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees received from portfolio companies) accrued during the calendar quarter, minus expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement (as defined below), and any interest expense and any dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income the Company has not yet received in cash. The incentive fee with respect to the Pre-Incentive Fee Net Investment Income is 20.00% of the amount, if any, by which the Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter exceeds a hurdle rate of 1.75% (which is 7.00% annualized) of the Company’s net assets at the end of the immediately preceding calendar quarter, adjusted for any share issuances or repurchases during the relevant quarter, subject to a “catch-up” provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, the Advisor receives no incentive fee until the Pre-Incentive Fee Net Investment Income equals the hurdle rate of 1.75%, but then receives, as a “catch-up,” 100.00% of the Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than 2.1875% quarterly (which is 8.75% annualized). The effect of this “catch-up” provision is that, if Pre-Incentive Fee Net Investment Income exceeds 2.1875% in any calendar quarter, the Advisor will receive 20.00% of the Pre-Incentive Fee Net Investment Income as if the hurdle rate did not apply.

 

31

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter in which the Company incurs a loss. For example, if the Company receives Pre-Incentive Fee Net Investment Income in excess of the quarterly minimum hurdle rate, the Company will pay the applicable incentive fee up to the Incentive Fee Cap, defined below, even if the Company has incurred a loss in that quarter due to realized and unrealized capital losses. The Company’s net investment income used to calculate this part of the incentive fee is also included in the amount of the Company’s gross assets used to calculate the 2.00% base management fee. These calculations are appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

 

The incentive fee on Pre-Incentive Fee Net Investment Income is subject to a fee cap and deferral mechanism which is determined based upon a look-back period of up to three years and is expensed when incurred. For this purpose, the look-back period for the incentive fee based on Pre-Incentive Fee Net Investment Income (the “Incentive Fee Look-back Period”) includes the relevant calendar quarter and the 11 preceding full calendar quarters. Each quarterly incentive fee payable on Pre-Incentive Fee Net Investment Income is subject to a cap (the “Incentive Fee Cap”) and a deferral mechanism through which the Advisor may recoup a portion of such deferred incentive fees (collectively, the “Incentive Fee Cap and Deferral Mechanism”). The Incentive Fee Cap is equal to (a) 20.00% of Cumulative Pre-Incentive Fee Net Return (as defined below) during the Incentive Fee Look-back Period less (b) cumulative incentive fees of any kind paid to the Advisor during the Incentive Fee Look-back Period. To the extent the Incentive Fee Cap is zero or a negative value in any calendar quarter, the Company will not pay an incentive fee on Pre-Incentive Fee Net Investment Income to the Advisor in that quarter. To the extent that the payment of incentive fees on Pre-Incentive Fee Net Investment Income is limited by the Incentive Fee Cap, the payment of such fees will be deferred and paid in subsequent calendar quarters up to three years after their date of deferment, subject to certain limitations, which are set forth in the Investment Management Agreement. The Company only pays incentive fees on Pre-Incentive Fee Net Investment Income to the extent allowed by the Incentive Fee Cap and Deferral Mechanism. “Cumulative Pre-Incentive Fee Net Return” during any Incentive Fee Look-back Period means the sum of (a) Pre-Incentive Fee Net Investment Income and the base management fee for each calendar quarter during the Incentive Fee Look-back Period and (b) the sum of cumulative realized capital gains and losses, cumulative unrealized capital appreciation and cumulative unrealized capital depreciation during the applicable Incentive Fee Look-back Period.

 

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or, upon termination of the Investment Management Agreement, as of the termination date), and equals 20.00% of the Company’s realized capital gains, if any, on a cumulative basis from the date of the election to be a BDC through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis through the end of such year, less all previous amounts paid in respect of the capital gain incentive fee. However, in accordance with GAAP, the Company is required to include the aggregate unrealized capital appreciation on investments in the calculation and accrue a capital gain incentive fee on a quarterly basis, as if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Management Agreement.

 

The performance based incentive fee expense was $0.3 million and $3.0 million for the three months ended  March 31, 2024 and 2023, respectively. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap and Deferral Mechanism for the three months ended March 31, 2024 and 2023, which resulted in $2.3 million and $0.2 million, respectively, of reduced expense and additional net investment income. This deferral represents a contingent future liability and is not accrued until the amount can be reasonably estimated and payment is probable. The remaining deferred amount may be paid up to three years after the date of deferment. The total contingent future liability as of March 31, 2024 was $13.1 million, of which $1.0 million expires on December 31, 2025, $0.2 million expires on March 31, 2026, $3.1 million expires on June 30, 2026, $3.5 million expires on September 30, 2026, $3.0 million expires on December 31, 2026, and $2.3 million expires on March 31, 2027, respectively. The performance based incentive fee payable as of March 31, 2024 was $0.3 million. There was no performance based incentive fee payable as of  December 31, 2023

 

32

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

Administration Agreement

 

The Company entered into an administration agreement (the “Administration Agreement”) with the Advisor to provide administrative services to the Company. For providing these services, facilities and personnel, the Company reimburses the Advisor for the Company’s allocable portion of overhead and other expenses incurred by the Advisor in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions and the Company’s allocable portion of the costs of compensation and related expenses of the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs. The administrative fee expense was $0.4 million for the three months ended March 31, 2024 and 2023. The administrative fee payable at March 31, 2024 and  December 31, 2023 was $0.4 million. The administrative fee payable is included in other accrued liabilities on the Company's Statement of Assets and Liabilities. 

 

Note 4. Investments

 

The following table shows the Company’s investments as of March 31, 2024 and  December 31, 2023:

 

  

March 31, 2024

  

December 31, 2023

 
  

Cost

  

Fair Value

  

Cost

  

Fair Value

 
  

(In thousands)

 

Investments

                

Debt

 $719,500  $670,773  $721,231  $670,172 

Warrants

  16,636   23,928   16,526   24,594 

Other

  13,844   9,192   6,982   6,430 

Equity

  15,193   7,223   14,443   7,889 

Total investments

 $765,173  $711,116  $759,182  $709,085 

 

33

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

The following table shows the Company’s investments by industry sector as of March 31, 2024 and  December 31, 2023:

 

  

March 31, 2024

  

December 31, 2023

 
  

Cost

  

Fair Value

  

Cost

  

Fair Value

 
  

(In thousands)

 

Life Science

                

Biotechnology

 $142,108  $124,741  $145,544  $117,781 

Medical Device

  164,060   161,155   147,064   145,019 

Technology

                

Communications

  17,327   20,185   19,192   22,188 

Consumer-Related

  105,165   99,876   105,669   101,327 

Data Storage

  416   426   417   418 

Internet and Media

  328   1,592   329   1,582 

Networking

  3,231   3,091   5,451   5,297 

Power Management

  1,585   2,700   1,585   2,700 

Semiconductors

  45      45    

Software

  159,094   154,908   164,133   160,749 

Sustainability

                

Energy Efficiency

  111   8   111   13 

Other Sustainability

  100,854   71,060   98,906   80,370 

Healthcare Information and Services

                

Diagnostics

  19,759   19,729   19,735   19,701 

Other

  102   949   102   1,366 

Software

  50,988   50,696   50,899   50,574 

Total investments

 $765,173  $711,116  $759,182  $709,085 

 

 

Note 5. Transactions with affiliated companies

 

A non-controlled affiliated company is generally a portfolio company in which the Company owns 5% or more of such portfolio company’s voting securities but not more than 25% of such portfolio company’s voting securities.

 

Transactions related to investments in non-controlled affiliated companies for the three months ended March 31, 2024 were as follows:  

 

          

Three months ended March 31, 2024

             
                                     
  

Fair value at

          

Transfers

      

Net

      

Fair value at

     

Portfolio

 

December 31,

      

Principal

  

in/(out) at

  

Discount

  

unrealized

  

Net realized

  

March 31,

  

Interest

 

Company

 

2023

  

Purchases

  

Payments

  

fair value

  

accretion

  

gain/(loss)

  

gain/(loss)

  

2024

  

income

 
  

(In thousands)

 

Aulea Medical, Inc.

 $  $3  $  $  $  $  $(3) $  $ 

Evelo Biosciences, Inc.

  222               2,568      2,790    
   336   12            3,859      4,207    
   133               1,541      1,674    
   133               1,541      1,674    
   88               1,028      1,116    
   88               1,028      1,116    
   132               (132)         

Total non-controlled affiliates

 $1,132  $15  $  $  $  $11,433  $(3) $12,577  $ 

 

 

34

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

Transactions related to investments in non-controlled affiliated companies for the three months ended March 31, 2023 were as follows: 

 

          

Three months ended March 31, 2023

             
                                     
  

Fair value at

          

Transfers

      

Net

      

Fair value at

     

Portfolio

 

December 31,

          

in/(out) at

  

Discount

  

unrealized

  

Net realized

  

March 31,

  

Interest

 

Company

 

2022

  

Purchases

  

Sales

  

fair value

  

Accretion

  

gain/(loss)

  

gain/(loss)

  

2023

  

income

 
  

(In thousands)

 

Cadrenal Therapeutics, Inc.

                 846      846    

Total non-controlled affiliates

 $  $  $  $  $  $846  $  $846  $ 

 

A controlled affiliated company is generally a portfolio company in which the Company owns more than 25% of such portfolio company’s voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement).

 

Transactions related to investments in controlled affiliated companies for the three months ended  March 31, 2024 were as follows:

 

          

Three months ended March 31, 2024

             
                                         
  

Fair value at

              

Transfers

      

Net

      

Fair value at

     

Portfolio

 

December 31,

      

Principal

      

in/(out) at

  

Discount

  

unrealized

  

Net realized

  

March 31,

  

Interest

 

Company

 

2023

  

Purchases

  

Payments

  

PIK

  

fair value

  

accretion

  

gain/(loss)

  

gain/(loss)

  

2024

  

income

 
  

(In thousands)

 

Better Place Forests Co.

 $3,339  $  $  $111  $  $2  $3  $  $3,455  $116 
   1,630         55      2   1      1,688   61 
   3,024   750               (1,118)     2,656    

HIMV LLC

  6,230   227   (547)           (65)     5,845    

Total controlled affiliates

 $14,223  $977  $(547) $166  $  $4  $(1,179) $  $13,644  $177 

 

For the three months ended March 31, 2023, there were no transactions related to investments in controlled affiliated companies. 

 

35

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 
 

Note 6. Fair value

 

Prior to July 30, 2022, the Board determined the fair value of the Company’s investments. Pursuant to the amended SEC Rule 2a-5 of the 1940 Act, on July 29, 2022, the Board designated the Advisor as the Company’s “valuation designee.” The Board is responsible for oversight of the valuation designee. The valuation designee has established a Valuation Committee to determine in good faith the fair value of the Company’s investments, based on input from the Advisor’s management and personnel and independent valuation firms which are engaged at the direction of the Valuation Committee to assist in the valuation of certain portfolio investments lacking a readily available market quotation at least once during a trailing twelve-month period. The Valuation Committee determines fair values pursuant to a valuation policy approved by the Board and pursuant to a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter, with at least 25% (based on fair value) of the Company’s valuation of portfolio companies lacking readily available market quotations subject to review by an independent valuation firm.

 

The Company uses fair value measurements made by the valuation designee to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in certain instances, there are no quoted market prices for certain assets or liabilities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the asset or liability.

 

Fair value measurements focus on exit prices in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment.

 

The Company’s fair value measurements are classified into a fair value hierarchy in accordance with ASC Topic 820, Fair Value Measurement, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The three categories within the hierarchy are as follows:

 

 

Level 1

Quoted prices in active markets for identical assets and liabilities.

 

 

Level 2

Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, and model-based valuation techniques for which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

 

Level 3

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

 

36

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded such portfolio investment.

 

Cash and interest receivable: The carrying amount is a reasonable estimate of fair value. These financial instruments are not recorded at fair value on a recurring basis and are categorized as Level 1 within the fair value hierarchy described above.

 

Money market funds:  The carrying amounts are valued at their net asset value as of the close of business on the day of valuation. These financial instruments are recorded at fair value on a recurring basis and are categorized as Level 2 within the fair value hierarchy described above as these funds can be redeemed daily.

 

Debt investments: The fair value of debt investments is estimated by discounting the expected future cash flows using the period end rates at which similar debt investments would be made to borrowers with similar credit ratings and for the same remaining maturities. Significant increases (decreases) in this unobservable input would result in a significantly lower (higher) fair value measurement. These assets are recorded at fair value on a recurring basis and are categorized as Level 3 within the fair value hierarchy described above.

 

Under certain circumstances, the Company  may use an alternative technique to value debt investments that better reflects its fair value such as the use of multiple probability weighted cash flow models when the expected future cash flows contain elements of variability.

 

Warrant investments: The Company values its warrants using the Black-Scholes valuation model incorporating the following material assumptions:

 

 

Underlying asset value of the issuer is estimated based on information available, including any information regarding the most recent rounds of borrower funding. Significant increases (decreases) in this unobservable input would result in a significantly higher (lower) fair value measurement.

 

 

Volatility, or the amount of uncertainty or risk about the size of the changes in the warrant price, is based on indices of publicly traded companies similar in nature to the underlying company issuing the warrant. A total of seven such indices are used. Significant increases (decreases) in this unobservable input would result in a significantly higher (lower) fair value measurement.

 

 

The risk-free interest rates are derived from the U.S. Treasury yield curve. The risk-free interest rates are calculated based on a weighted average of the risk-free interest rates that correspond closest to the expected remaining life of the warrant.

 

 

Other adjustments, including a marketability discount on private company warrants, are estimated based on management’s judgment about the general industry environment.

 

37

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 
 

Historical portfolio experience on cancellations and exercises of the Company’s warrants are utilized as the basis for determining the estimated time to exit of the warrants in each financial reporting period. Warrants may be exercised in the event of acquisitions, mergers or initial public offerings, and cancelled due to events such as bankruptcies, restructuring activities or additional financings. These events cause the expected remaining life assumption to be shorter than the contractual term of the warrants. Significant increases (decreases) in this unobservable input would result in significantly higher (lower) fair value measurement.

 

Under certain circumstances the Company may use an alternative technique to value warrants that better reflects the warrants’ fair value, such as an expected settlement of a warrant in the near term or a model that incorporates a put feature associated with the warrant. The fair value may be determined based on the expected proceeds to be received from such settlement or based on the net present value of the expected proceeds from the put option.

 

The fair value of the Company’s warrants held in publicly traded companies is determined based on inputs that are readily available in public markets or can be derived from information available in public markets. Therefore, the Company has categorized these warrants as Level 2 within the fair value hierarchy described above. The fair value of the Company’s warrants held in private companies is determined using both observable and unobservable inputs and represents management’s best estimate of what market participants would use in pricing the warrants at the measurement date. Therefore, the Company has categorized these warrants as Level 3 within the fair value hierarchy described above. These assets are recorded at fair value on a recurring basis.

 

Equity investments: The fair value of an equity investment in a privately held company is initially the face value of the amount invested. The Company adjusts the fair value of equity investments in private companies upon the completion of a new third-party round of equity financing. The Company may make adjustments to fair value, absent a new equity financing event, based upon positive or negative changes in a portfolio company’s financial or operational performance. Significant increases (decreases) in this unobservable input would result in a significantly higher (lower) fair value measurement. The Company has categorized these equity investments as Level 3 within the fair value hierarchy described above. The fair value of an equity investment in a publicly traded company is based upon the closing public share price on the date of measurement. Therefore, the Company has categorized these equity investments as Level 1 within the fair value hierarchy described above. These assets are recorded at fair value on a recurring basis.

 

Other investments: Other investments are valued based on the facts and circumstances of the underlying contractual agreement. The Company currently values these contractual agreements using a multiple probability weighted cash flow model as the contractual future cash flows contain elements of variability. Significant changes in the estimated cash flows and probability weightings would result in a significantly higher or lower fair value measurement. The Company has categorized these other investments as Level 3 within the fair value hierarchy described above. These other investments are recorded at fair value on a recurring basis.

 

The following tables detail the assets that are carried at fair value and measured at fair value on a recurring basis as of March 31, 2024 and  December 31, 2023 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

 

  

March 31, 2024

 
  

Level 1

  

Level 2

  

Level 3

  

Total

 
  

(In thousands)

 

Debt investments

 $  $  $670,773  $670,773 

Warrant investments

     772   23,156   23,928 

Other investments

        9,192   9,192 

Equity investments

  398      6,825   7,223 

Total investments

 $398  $772  $709,946  $711,116 
 
  

December 31, 2023

 
  

Level 1

  

Level 2

  

Level 3

  

Total

 
  

(In thousands)

 

Debt investments

 $  $  $670,172  $670,172 

Warrant investments

     1,619   22,975   24,594 

Other investments

        6,430   6,430 

Equity investments

  608      7,281   7,889 

Total investments

 $608  $1,619  $706,858  $709,085 

 

The following tables provide a summary of quantitative information about the Company’s Level 3 fair value measurements of the Company’s investments as of March 31, 2024 and  December 31, 2023. In addition to the techniques and inputs noted in the table below, according to the Company’s valuation policy, the Company may also use other valuation techniques and methodologies when determining its fair value measurements.

 

38

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

The following table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements as of March 31, 2024:

 

March 31, 2024

 
  

Fair

 

Valuation Techniques/

 

Unobservable

   

Weighted

 

Investment Type

 

Value

 

Methodologies

 

Input

 

Range

 

Average(1)

 
     

(Dollars in thousands, except per share data)

      

Debt investments

 $619,773 

Discounted Expected Future Cash Flows

 

Hypothetical Market Yield

 

11% – 20%

  15%
              
   51,000 

Multiple Probability Weighted Cash Flow Model

 

Probability Weighting

 

5% - 95%

  44%
              

Warrant investments

  23,094 

Black-Scholes Valuation Model

 

Price Per Share

 

0.000 –1,898.58

 $61.04 
       

Average Industry Volatility

 

25%

  25%
       

Marketability Discount

 

0 - 20%

  18%
       

Estimated Time to Exit (in years)

 1 to 5  3 
   62 

Expected Proceeds

 

Price Per Share

 $0.25 $0.25 
              

Other investments

  9,192 

Multiple Probability Weighted Cash Flow Model

 

Discount Rate

 

25%

  25%
       

Probability Weighting

 

30% – 100%

  75%
              

Equity investments

  6,825 

Last Equity Financing

 

Price Per Share

 

0.000 –215.03

 $18.21 
              

Total Level 3 investments

 $709,946          

 


(1)

Weighted average is calculated by multiplying (a) the unobservable input for each investment in the investment type by (b) (1) the fair value of the related investment in the investment type divided by (2) the total fair value of the investment type.

 

The following table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements as of December 31, 2023:

 

December 31, 2023

 
  

Fair

 

Valuation Techniques/

 

Unobservable

   

Weighted

 

Investment Type

 

Value

 

Methodologies

 

Input

 

Range

 

Average(1)

 
     

(Dollars in thousands, except per share data)

      

Debt investments

 $617,529 

Discounted Expected Future Cash Flows

 

Hypothetical Market Yield

 11% – 24%  15%
              
   52,643 

Multiple Probability Weighted Cash Flow Model

 

Probability Weighting

 20% - 100%  50%
              

Warrant investments

  22,913 

Black-Scholes Valuation Model

 

Price Per Share

 

0.000 –1,899

 $64.95 
       

Average Industry Volatility

 25%  25%
       

Marketability Discount

 0 - 20%  18%
       

Estimated Time to Exit (in years)

 1 to 5  3 
   62 

Expected Proceeds

 

Price Per Share

 $0.25 $0.25 
              

Other investments

  6,430 

Multiple Probability Weighted Cash Flow Model

 

Discount Rate

 25%  25%
       

Probability Weighting

 30% – 100%  81%
              

Equity investments

  7,281 

Last Equity Financing

 

Price Per Share

 

0.566 –215.03

 $17.15 
              

Total Level 3 investments

 $706,858          

 


(1)

Weighted average is calculated by multiplying (a) the unobservable input for each investment in the investment type by (b) (1) the fair value of the related investment in the investment type divided by (2) the total fair value of the investment type.

 

Borrowings: The Key Facility and the NYL Facility approximate fair value due to the variable interest rate of the facilities and are categorized as Level 2 within the fair value hierarchy described above. Additionally, the Company considers its creditworthiness in determining the fair value of such borrowings. The fair value of the fixed-rate 2026 Notes (as defined in Note 7) is based on the closing public share price on the date of measurement. On March 31, 2024, the closing price of the 2026 Notes on the New York Stock Exchange was $23.75 per note and had an aggregate fair value of $54.6 million. Therefore, the Company has categorized this borrowing as Level 1 within the fair value hierarchy described above. The fair value of the fixed-rate 2027 Notes (as defined in Note 7) is based on the closing public share price on the date of measurement. On March 31, 2024, the closing price of the 2027 Notes on the New York Stock Exchange was $23.80 per note and had an aggregate fair value of $54.7 million. Therefore, the Company has categorized this borrowing as Level 1 within the fair value hierarchy described above. Based on market quotations on March 31, 2024, the 2022 Asset-Backed Notes were trading at par value, or $100.0 million, and are categorized as Level 3 within the fair value hierarchy described above. These borrowings are not recorded at fair value on a recurring basis.

 

Off-balance-sheet instruments: Fair values for off-balance-sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standings. Therefore, the Company has categorized these instruments as Level 3 within the fair value hierarchy described above.

 

39

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

The following table shows a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the three months ended March 31, 2024:

 

  

Three months ended March 31, 2024

 
  

Debt

  

Warrant

  

Equity

  

Other

     
  

Investments

  

Investments

  

Investments

  

Investments

  

Total

 
  

(In thousands)

 

Level 3 assets, beginning of period

 $670,172  $22,975  $7,281  $6,430  $706,858 

Purchase of investments

  22,177      750   392   23,319 

Warrants received and classified as Level 3

     128         128 

Principal payments received on investments

  (19,080)        (563)  (19,643)

Payment-in-kind interest on investments

  1,382            1,382 

Proceeds from sale of investments

  (41)           (41)

Net realized gain (loss) on investments

  38   (17)        21 

Unrealized (depreciation) appreciation included in earnings

  (1,509)  70   (1,206)  (258)  (2,903)

Transfer out of debt investments

  (3,191)        3,191    

Other

  825            825 

Level 3 assets, end of period

 $670,773  $23,156  $6,825  $9,192  $709,946 

 

During the three months ended March 31, 2024, there was one transfer into Level 3. The transfer related to warrants and equity with an aggregate fair value of $0.00 held in one portfolio company, which were transferred to Level 3 upon their fair value no longer being derived from the closing public share price on the date of measurement. During the three months ended March 31, 2024, there were no transfers out of Level 3. 

 

The change in unrealized depreciation included in the consolidated statement of operations attributable to Level 3 investments still held at March 31, 2024 includes $1.8 million in unrealized depreciation on debt and other investments and $1.2 million in unrealized depreciation on equity investments.

 

The following table shows a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the three months ended March 31, 2023:

 

  

Three months ended March 31, 2023

 
  

Debt

  

Warrant

  

Equity

  

Other

     
  

Investments

  

Investments

  

Investments

  

Investments

  

Total

 
  

(In thousands)

 

Level 3 assets, beginning of period

 $686,458  $26,145  $2,416  $1,300  $716,319 

Purchase of investments

  46,998      10      47,008 

Warrants received and classified as Level 3

     141         141 

Principal payments received on investments

  (39,756)           (39,756)

Payment-in-kind interest on investments

  1,204            1,204 

Proceeds from sale of investments

  (6,508)  (12)        (6,520)

Net realized gain (loss) on investments

  7   (141)        (134)

Unrealized (depreciation) appreciation included in earnings

  (4,566)  (1,490)  189      (5,867)

Transfer out of debt investments

  (295)  (5)  300       

Other

  1,012            1,012 

Level 3 assets, end of period

 $684,554  $24,638  $2,915  $1,300  $713,407 

 

During the three months ended March 31, 2023, there were no transfers in or out of Level 3. 

 

The change in unrealized depreciation included in the consolidated statement of operations attributable to Level 3 investments still held at  March 31, 2023 includes $4.6 million in unrealized depreciation on debt and other investments, $1.4 million in unrealized depreciation on warrant investments and $0.2 million in unrealized appreciation on equity investments.

 

40

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

The Company discloses fair value information about financial instruments, whether or not recognized in the consolidated statement of assets and liabilities, for which it is practicable to estimate that value. Certain financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

 

The fair value amounts have been measured as of the reporting date and have not been reevaluated or updated for purposes of these financial statements subsequent to that date. As such, the fair values of these financial instruments subsequent to the reporting date may be different than amounts reported.

 

As of March 31, 2024 and  December 31, 2023, all of the balances of all the Company’s financial instruments were recorded at fair value, except for the Company’s borrowings, as previously described.

 

Market risk

 

The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments may change when interest rate levels change, and that change may be either favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk by adjusting terms of new debt investments and by investing in securities with terms that mitigate the Company’s overall interest rate risk.

 

 

Note 7. Borrowings

 

The following table shows the Company’s borrowings as of March 31, 2024 and  December 31, 2023:

 

  

March 31, 2024

  

December 31, 2023

 
  

Total

  

Balance

  

Unused

  

Total

  

Balance

  

Unused

 
  

Commitment

  

Outstanding

  

Commitment

  

Commitment

  

Outstanding

  

Commitment

 
  

(In thousands)

 

Key Facility

 $150,000  $60,000  $90,000  $150,000  $70,000  $80,000 

NYL Facility

  250,000   181,000   69,000   250,000   181,000   69,000 

2022 Asset-Backed Notes

  100,000   100,000      100,000   100,000    

2027 Notes

  57,500   57,500      57,500   57,500    

2026 Notes

  57,500   57,500      57,500   57,500    

Total before debt issuance costs

  615,000   456,000   159,000   615,000   466,000   149,000 

Unamortized debt issuance costs attributable to term borrowings

     (3,510)        (3,765)   

Total borrowings outstanding, net

 $615,000  $452,490  $159,000  $615,000  $462,235  $149,000 

 

As of March 31, 2024, with certain limited exceptions, the Company, as a BDC, is only allowed to borrow amounts such that the Company’s asset coverage, as defined in the 1940 Act, is at least 150% after such borrowings. As of March 31, 2024, the asset coverage for borrowed amounts was 173%.

 

41

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

Credit Facilities

 

Key Facility

 

The Company entered into the Key Facility with Key effective November 4, 2013. On June 29, 2023, the Company amended the Key Facility, among other things, to increase the commitment amount to $150 million and to increase the amount of the accordion feature which now allows for the potential increase in the total commitment amount to $300 million. The Key Facility is collateralized by all debt investments and warrants held by Credit II and permits an advance rate of up to 60% of eligible debt investments held by Credit II. The Key Facility contains covenants that, among other things, require the Company to maintain a minimum net worth and to restrict the debt investments securing the Key Facility to certain criteria for qualified debt investments and includes portfolio company concentration limits as defined in the related loan agreement. The Company may request advances under the Key Facility through June 22, 2024 and the Key Facility is scheduled to mature on June 22, 2026. The interest rate on the Key Facility is based on the rate of interest published in The Wall Street Journal as the prime rate in the United States plus 0.25%, with a prime rate floor of 4.25%. The prime rate was 8.50% on March 31, 2024 and December 31, 2023. The average interest rate on the Key Facility for the three months ended March 31, 2024 and 2023 was 8.75% and 7.94%, respectively. The Key Facility requires the payment of an unused line fee in an amount up to 0.50% on an annualized basis of any unborrowed amount available under the facility. As of March 31, 2024 and  December 31, 2023, the Company had borrowing capacity under the Key Facility of $90.0 million and $80.0 million, respectively. At March 31, 2024 and  December 31, 2023, $20.3 million and $25.0 million, respectively, was available for borrowing, subject to existing terms and advance rates.

 

NYL Facility

 

HFI entered into the NYL Facility with the NYL Noteholders for an aggregate purchase price of up to $100.0 million, with an accordion feature of up to $200.0 million at the mutual discretion and agreement of HSLFI and the NYL Noteholders. On June 1, 2018, HSLFI sold or contributed to HFI certain secured loans made to certain portfolio companies pursuant to the Sale and Servicing Agreement. Any notes issued by HFI are collateralized by all investments held by HFI and permit an advance rate of up to 67% of the aggregate principal amount of eligible debt investments. The notes were issued pursuant to the Indenture. The interest rate on the notes issued under the NYL Facility was based on the three year USD mid-market swap rate plus a margin of between 3.55% and 5.15% with an interest rate floor, depending on the rating of such notes at the time of issuance.

 

On February 25, 2022, the Company amended its NYL Facility to, among other things, reduce the applicable margin used to calculate the credit facility’s interest rate on the Company’s borrowings above $100.0 million. Such borrowings were priced at the three-year USD mid-market swap rate plus 3.00%.

 

On May 24, 2023, the Company amended its NYL Facility to, among other things, increase the commitment by $50.0 million to enable its wholly-owned subsidiary to issue up to $250.0 million of secured notes. The amendment to the NYL Facility extends the investment period to June 2024 and the maturity date of all advances to June 2029. In addition, the amendment amended the interest rate for advances made after May 24, 2023, fixing the interest rate at the greater of (i) 4.60% and (ii) the Three Year I Curve plus 3.50%, with the interest rate to be reset on any advance date. 

 

There were $181.0 million in advances made by the NYL Noteholders as of March 31, 2024 and  December 31, 2023. The interest rate as of March 31, 2024 and 2023 was 6.18% and 5.57%, respectively. As of March 31, 2024 and  December 31, 2023, the Company had borrowing capacity under the NYL Facility of $69.0 million. At March 31, 2024 and  December 31, 2023, $0.9 million and $17.4 million, respectively, was available for borrowing, subject to existing terms and advance rates.

 

Under the terms of the NYL Facility, the Company is required to maintain a reserve cash balance, which may be used to pay monthly interest and principal payments on the NYL Facility. The Company has segregated these funds and classified them as restricted investments in money market funds. At  March 31, 2024 and December 31, 2023, there were approximately $1.4 million of restricted investments.

 

 

42

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 

Securitizations

 

2019 Asset-Backed Notes

 

On  August 13, 2019, the Company completed a term debt securitization in connection with which an affiliate of the Company made an offering of the 2019 Asset-Backed Notes. The 2019 Asset-Backed Notes were rated A+(sf) by Morningstar Credit Ratings, LLC. There was no change in the rating since  August 13, 2019. The 2019 Asset-Backed Notes were repaid in full on  November 22, 2023. 

 

The 2019 Asset-Backed Notes were issued by the 2019‑1 Trust pursuant to a note purchase agreement, dated as of  August 13, 2019, by and among the Company and Keybanc Capital Markets Inc. as Initial Purchaser, and were backed by a pool of loans made to certain portfolio companies of the Company and secured by certain assets of those portfolio companies and were to be serviced by the Company. Interest on the 2019 Asset-Backed Notes was paid, to the extent of funds available, at a fixed rate of 4.21% per annum. The reinvestment period of the 2019 Asset-Backed Notes ended  July 15, 2021 and the maturity date was  September 15, 2027.

 

As of  December 31, 2023, the 2019 Asset-Backed Notes were repaid in full.

 

2022 Asset-Backed Notes

 

On November 9, 2022, the Company completed a term debt securitization in connection with which an affiliate of the Company made an offering of the 2022 Asset-Backed Notes. The 2022 Asset-Backed Notes were rated A by DBRS, Inc. There has been no change in the rating since November 9, 2022.

 

The 2022 Asset-Backed Notes were issued by the 2022‑1 Trust pursuant to a note purchase agreement, dated as of November 9, 2022, by and among the Company and Keybanc Capital Markets Inc. as Initial Purchaser, and are backed by a pool of loans made to certain portfolio companies of the Company and secured by certain assets of those portfolio companies and are to be serviced by the Company. Interest on the 2022 Asset-Backed Notes will be paid, to the extent of funds available, at a fixed rate of 7.56% per annum. The reinvestment period of the 2022 Asset-Backed Notes ends November 15, 2024 and the maturity date is November 15, 2030.

 

As of  March 31, 2024 and  December 31, 2023, the 2022 Asset-Backed Notes had an outstanding principal balance of $100.0 million.

 

Under the terms of the 2022 Asset-Backed Notes, the Company is required to maintain a reserve cash balance, funded through proceeds from the sale of the 2022 Asset-Backed Notes, which may be used to pay monthly interest and principal payments on the 2022 Asset-Backed Notes. The Company has segregated these funds and classified them as restricted investments in money market funds. At  March 31, 2024 and  December 31, 2023, there were approximately $1.2 million and $1.3 million, respectively, of restricted investments.

 

Unsecured Notes

 

2026 Notes

 

On March 30, 2021, the Company issued and sold an aggregate principal amount of $57.5 million of 4.875% notes due in 2026 (the “2026 Notes”). The amount of 2026 Notes issued and sold included the full exercise by the underwriters of their option to purchase $7.5 million in aggregate principal of additional notes. The 2026 Notes have a stated maturity of March 30, 2026 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or after March 30, 2023 at a redemption price of $25 per security plus accrued and unpaid interest. The 2026 Notes bear interest at a rate of 4.875% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year. The 2026 Notes are the Company’s direct unsecured obligations and (i) rank equally in right of payment with the Company’s current and future unsecured indebtedness; (ii) are senior in right of payment to any of the Company’s future indebtedness that expressly provides it is subordinated to the 2026 Notes; (iii) are effectively subordinated to all of the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to the extent of the value of the assets securing such indebtedness, and (iv) are structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries. As of March 31, 2024, the Company was in material compliance with the terms of the 2026 Notes. The 2026 Notes are listed on the New York Stock Exchange under the symbol “HTFB”.

 

2027 Notes

 

On June 15, 2022, the Company issued and sold an aggregate principal amount of $50.0 million of 6.25% notes due in 2027 and on July 11, 2022, pursuant to the underwriters’ 30 day option to purchase additional notes, the Company sold an additional $7.5 million of such notes (collectively, the “2027 Notes”). The 2027 Notes have a stated maturity of June 15, 2027 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or after June 15, 2024 at a redemption price of $25 per security plus accrued and unpaid interest. The 2027 Notes bear interest at a rate of 6.25% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year, commencing on September 30, 2022. The 2027 Notes are the Company’s direct unsecured obligations and (i) rank equally in right of payment with the Company’s current and future unsecured indebtedness; (ii) are senior in right of payment to any of the Company’s future indebtedness that expressly provides it is subordinated to the 2027 Notes; (iii) are effectively subordinated to all of the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to the extent of the value of the assets securing such indebtedness, and (iv) are structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries. As of March 31, 2024, the Company was in material compliance with the terms of the 2027 Notes. The 2027 Notes are listed on the New York Stock Exchange under the symbol “HTFC”.

 

43

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 
 

Note 8. Financial instruments with off-balance-sheet risk

 

In the normal course of business, the Company is party to financial instruments with off-balance-sheet risk to meet the financing needs of its borrowers. These financial instruments include commitments to extend credit and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated statement of assets and liabilities. The Company attempts to limit its credit risk by conducting extensive due diligence and obtaining collateral where appropriate.

 

The balance of unfunded commitments to extend credit was $168.2 million and $180.5 million as of March 31, 2024 and  December 31, 2023, respectively. Commitments to extend credit consist principally of the unused portions of commitments that obligate the Company to extend credit, often subject to financial or non-financial milestones and other conditions to borrow that must be achieved before the commitment can be drawn. In addition, the commitments generally have fixed expiration dates or other termination clauses. Since commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. 

 

The following table provides the Company’s unfunded commitments by portfolio company as of March 31, 2024 and December 31, 2023:

 

  

March 31, 2024

  

December 31, 2023

 
      

Fair Value of

      

Fair Value of

 
      

Unfunded

      

Unfunded

 
  

Commitment

  

Commitment

  

Commitment

  

Commitment

 
  

Amount

  

Liability

  

Amount

  

Liability

 
  

(In thousands)

  

(In thousands)

 

BrightInsight, Inc.

 $15,500  $205  $15,500  $241 

Britecore Holdings, Inc.

  2,500   36   5,000   72 

Candesant Biomedical Corporation

  10,000   151   10,000   151 

Ceribell, Inc.

  21,000   120       

Divergent Technologies, Inc.

        11,250   118 

Elligo Healthcare Research, Inc.

  15,000   194   15,000   194 

MicroTransponder, Inc.

  22,500      22,500    

Mirantis, Inc.

  15,000   136   15,000   136 

Nexii Building Solutions, Inc.

  486          

Optoro, Inc.

  6,250      6,250    

Parse Biosciences, Inc.

  15,000   251   15,000   251 

SafelyYou, Inc.

  20,000   270   20,000   270 

Sonex Health, Inc.

        15,000   176 

Supply Network Visibility Holdings, LLC

  10,000   35   10,000   35 

Tallac Therapeutics, Inc.

  5,000   229   10,000   229 

Viken Detection Corporation

  10,000   160   10,000   160 

Total

 $168,236  $1,787  $180,500  $2,033 

 

The table above also provides the fair value of the Company’s unfunded commitment liability as of March 31, 2024 and December 31, 2023, which totaled $1.8 million and $2.0 million, respectively. The fair value at inception of the delay draw credit agreements is equal to the fees and/or warrants received to enter into these agreements, taking into account the remaining terms of the agreements and the counterparties’ credit profile. The unfunded commitment liability reflects the fair value of these future funding commitments and is included in the Company’s consolidated statement of assets and liabilities.

 

44

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 
 

Note 9. Concentrations of credit risk

 

The Company’s debt investments consist primarily of loans to development-stage companies at various stages of development in the technology, life science, healthcare information and services and sustainability industries. Many of these companies may have relatively limited operating histories and also may experience variation in operating results. Many of these companies conduct business in regulated industries and could be affected by changes in government regulations. Most of the Company’s borrowers will need additional capital to satisfy their continuing working capital needs and other requirements, and in many instances, to service the interest and principal payments on the loans.

 

The Company’s largest debt investments may vary from period to period as new debt investments are recorded and existing debt investments are repaid. The Company’s five largest debt investments at cost represented 23% of total debt investments outstanding as of March 31, 2024 and  December 31, 2023. The Company’s five largest debt investments at fair value represented 23% and 22% of total debt investments outstanding as of March 31, 2024 and  December 31, 2023, respectively. No single debt investment represented more than 10% of the total debt investments at cost or fair value as of March 31, 2024 and  December 31, 2023. Investment income, consisting of interest and fees, can fluctuate significantly upon repayment of large debt investments. Interest income from the five largest debt investments at cost accounted for 16% and 22% of total interest and fee income on investments for the three months ended March 31, 2024 and 2023, respectively. Interest income from the five largest debt investments at fair value accounted for 21% and 22% of total interest and fee income on investments for the three months ended March 31, 2024 and 2023, respectively. 

 

45

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 
 

Note 10. Distributions

 

The Company’s distributions are recorded on the declaration date. The following table summarizes the Company’s distribution activity for the three months ended March 31, 2024 and for the year ended December 31, 2023:

 

              

DRIP

  

DRIP

 

Date

     

Amount

  

Cash

  

Shares

  

Share

 

Declared

 

Record Date

 

Payment Date

 

Per Share

  

Distribution

  

Issued

  

Value

 
      

(In thousands, except share and per share data)

 

Three Months Ended March 31, 2024

                    

2/23/2024

 

5/17/2024

 

6/14/2024

 $0.11  $     $ 

2/23/2024

 

4/18/2024

 

5/15/2024

  0.11          

2/23/2024

 

3/19/2024

 

4/16/2024

  0.05   1,625   7,598   85 

2/23/2024

 

3/19/2024

 

4/16/2024

  0.11   3,574   16,717   188 
      $0.38  $5,199   24,315  $273 

Year Ended December 31, 2023

                    

10/27/2023

 

2/16/2024

 

3/15/2024

 $0.11  $3,463   18,257  $210 

10/27/2023

 

1/18/2024

 

2/14/2024

  0.11   3,462   15,873   210 

10/27/2023

 

12/19/2023

 

1/16/2024

  0.11   3,472   14,563   199 

10/27/2023

 

11/17/2023

 

12/15/2023

  0.05   1,574   7,137   93 

7/28/2023

 

11/17/2023

 

12/15/2023

  0.11   3,463   15,701   206 

7/28/2023

 

10/18/2023

 

11/15/2023

  0.11   3,493   14,022   173 

7/28/2023

 

9/19/2023

 

10/16/2023

  0.11   3,445   15,067   184 

4/28/2023

 

8/17/2023

 

9/15/2023

  0.11   3,458   8,665   106 

4/28/2023

 

7/18/2023

 

8/15/2023

  0.11   3,427   8,307   105 

4/28/2023

 

6/16/2023

 

7/14/2023

  0.11   3,434   7,424   96 

2/23/2023

 

5/18/2023

 

6/14/2023

  0.11   3,087   7,128   86 

2/23/2023

 

4/18/2023

 

5/16/2023

  0.11   3,068   6,705   84 

2/23/2023

 

3/17/2023

 

4/14/2023

  0.11   3,035   6,894   81 
      $1.37  $41,881   145,743  $1,833 

 

On April 26, 2024, the Board declared monthly distributions per share, payable as set forth in the following table:

 

Monthly distributions

 

Ex-Dividend Date

 

Record Date

 

Payment Date

 

Distributions Declared

 

August 16, 2024

 

August 16, 2024

 

September 13, 2024

 $0.11 

July 17, 2024

 

July 17, 2024

 

August 15, 2024

 $0.11 

June 17, 2024

 

June 17, 2024

 

July 16, 2024

 $0.11 

 

After paying distributions of $0.33 per share and earning net investment income of $0.38 per share for the quarter, the Company’s undistributed spillover income as of March 31, 2024 was $1.30 per share. Spillover income includes any ordinary income and net capital gains from the preceding tax years that were not distributed during such tax years.

 

46

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 
 

Note 11. Financial highlights

 

The following table shows financial highlights for the Company:

 

  

Three months ended March 31,

  
  

2024

   

2023

  
  

(In thousands, except share and per share data)

  

Per share data:

          

Net asset value at beginning of period

 $9.71   $11.47  

Net investment income

  0.38    0.46  

Realized loss

      (0.01) 

Unrealized depreciation on investments

  (0.12)   (0.26) 

Net increase in net assets resulting from operations

  0.26    0.19  

Distributions declared (1)

  (0.38)   (0.33) 

From net investment income

  (0.38)   (0.33) 

From net realized gain on investments

        

Return of capital

        

Other (2)

  0.05    0.01  

Net asset value at end of period

 $9.64   $11.34  

Per share market value, beginning of period

 $13.17   $11.60  

Per share market value, end of period

 $11.37   $11.28  

Total return based on a market value (3)

  (11.2

)%

   0.1

%

 

Shares outstanding at end of period

  34,469,878    28,377,357  

Ratios to average net assets:

          

Expenses without incentive fee (4)

  15.7

%

   14.8

%

 

Incentive fees (4)

  0.4

%

   3.7

%

 

Net expenses (4)

  16.1

%

   18.5

%

 

Net investment income with incentive fee (4)

  15.4

%

   16.3

%

 

Net assets at the end of the period

 $332,121   $321,683  

Average net asset value

 $328,051   $320,066  

Average debt per share

 $13.61   $15.61  

Portfolio turnover ratio

  1.4

%

(5)

  4.2

%

(5)

 


(1)

Distributions are determined based on taxable income calculated in accordance with income tax regulations, which may differ from amounts determined under GAAP due to (i) changes in unrealized appreciation and depreciation, (ii) temporary and permanent differences in income and expense recognition, and (iii) the amount of spillover income carried over from a given tax year for distribution in the following tax year. The final determination of taxable income for each tax year, as well as the tax attributes for distributions in such tax year, will be made after the close of the tax year.

 

(2)

Includes the impact of the different share amounts as a result of calculating per share data based on the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date. The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of common stock in the Company’s continuous public offering and pursuant to the Company’s distribution reinvestment plan. The issuance of common stock at an offering price, net of sales commissions and dealer manager fees, that is greater than the net asset value per share results in an increase in net asset value per share.

 

(3)

The total return equals the change in the ending market value over the beginning of period price per share plus distributions paid per share during the period, divided by the beginning price.

 

(4)

Annualized.

 

(5)

Calculated by dividing the lesser of purchases or the sum of (1) principal prepayments and (2) maturities by the monthly average debt investment balance.

 

47

Horizon Technology Finance Corporation and Subsidiaries
Notes to Consolidated Financial Statements
 
 

Note 12. Subsequent Events

 

In April 2024, the Company sold 526,581 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $5.8 million, including $0.1 million of offering expenses, from these sales.

 

On April 1, 2024, Provivi, Inc. (“Provivi”) paid down $4.7 million of the principal amount of its loans outstanding and $0.3 million of its ETPs under the Venture Loan and Security Agreement by and among the Company and Provivi, dated as of June 15, 2020, as amended. 

 

On April 11, 2024, the Company funded a $0.5 million equity investment to an existing portfolio company, Better Place Forests Co.

 

On April 22, 2024, Camp NYC, Inc. paid down $1.0 million of the principal amount of its loan outstanding. 

 

 

48

 
 

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

 

In this quarterly report on Form 10Q, except where the context suggests otherwise, the terms we, us, our and Horizon Technology Finance refer to Horizon Technology Finance Corporation and its consolidated subsidiaries. The information contained in this section should be read in conjunction with our consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10Q.

 

Forward-looking statements

 

This quarterly report on Form 10‑Q, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that constitute forward-looking statements, which relate to future events or our future performance or financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. The forward-looking statements contained in this quarterly report on Form 10‑Q involve risks and uncertainties, including statements as to:

 

 

our future operating results, including the performance of our existing debt investments, warrants and other investments;

 

 

the introduction, withdrawal, success and timing of business initiatives and strategies;

 

 

general economic and political trends and other external factors, including continuing supply chain disruptions, increased inflation and a general slowdown in economic activity;

 

 

the relative and absolute investment performance and operations of our Advisor;

 

 

the impact of increased competition;

 

 

the impact of investments we intend to make and future acquisitions and divestitures;

 

 

the unfavorable resolution of legal proceedings;

 

 

our business prospects and the prospects of our portfolio companies;

 

 

geopolitical turmoil and the potential for volatility in energy prices and disruptions to global supply chains resulting from such turmoil and its impact on the industries in which we invest;

 

 

the impact, extent and timing of technological changes and the adequacy of intellectual property protection;

 

 

our regulatory structure and tax status;

 

 

changes in the general interest rate environment;

 

 

our ability to qualify and maintain qualification as a RIC and as a BDC;

 

 

the adequacy of our cash resources and working capital;

 

 

any losses or operations disruptions caused by us, our Advisor or our portfolio companies holding cash balances at financial institutions that exceed federally insured limits or by disruptions in the financial services industry;

 

 

the timing of cash flows, if any, from the operations of our portfolio companies, and the resulting effect on our portfolio companies' decisions to make payment-in-kind (“PIK”) interest payments or ability to make end of term payments;

 

 

●    

the impact of interest rate volatility on our results, particularly if we use leverage as part of our investment strategy;

 

 

 

the ability of our portfolio companies to achieve their objective;

 

 

the impact of legislative and regulatory actions and reforms and regulatory supervisory or enforcement actions of government agencies relating to us or our Advisor;

 

 

our contractual arrangements and relationships with third parties;

 

 

our ability to access capital and any future financings by us;

 

 

our use of financial leverage;

 

 

the ability of our Advisor to attract and retain highly talented professionals;

 

 

the impact of changes to tax legislation and, generally, our tax position; and

 

 

our ability to fund unfunded commitments.

 

We use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks” and similar expressions to identify forward-looking statements. Undue influence should not be placed on the forward looking statements as our actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors in “Risk Factors” and elsewhere in our annual report on Form 10‑K for the year ended December 31, 2023, and elsewhere in this quarterly report on Form 10‑Q.

 

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this quarterly report on Form 10‑Q, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the U.S. Securities and Exchange Commission, or the SEC, including periodic reports on Form 10‑Q and Form 10‑K and current reports on Form 8‑K.

 

You should understand that under Sections 27A(b)(2)(B) and (D) of the Securities Act and Sections 21E(b)(2)(B) and (D) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to statements made in connection with any annual or quarterly reports we file under the Exchange Act.

 

Overview

 

We are a specialty finance company that lends to and invests in development-stage companies in the technology, life science, healthcare information and services and sustainability industries, which we refer to as our “Target Industries.” Our investment objective is to maximize our investment portfolio’s total return by generating current income from the debt investments we make and capital appreciation from the warrants we receive when making such debt investments. We are focused on making secured debt investments, which we refer to collectively as “Venture Loans,” to venture capital and private equity backed companies and publicly traded companies in our Target Industries, which we refer to as “Venture Lending.” Our debt investments are typically secured by first liens or first liens behind a secured revolving line of credit, or collectively “Senior Term Loans.” Some of our debt investments may also be subordinated to term debt provided by third parties. As of March 31, 2024, 87.0%, or $583.4 million, of our debt investment portfolio at fair value consisted of Senior Term Loans. Venture Lending is typically characterized by (1) the making of a secured debt investment after a venture capital or equity investment in the portfolio company has been made, which investment provides a source of cash to fund the portfolio company’s debt service obligations under the Venture Loan, (2) the senior priority of the Venture Loan which requires repayment of the Venture Loan prior to the equity investors realizing a return on their capital, (3) the amortization of the Venture Loan and (4) the lender’s receipt of warrants or other success fees with the making of the Venture Loan.

 

We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, for U.S. federal income tax purposes, we have elected to be treated as a RIC under Subchapter M of the Code. As a BDC, we are required to comply with regulatory requirements, including limitations on our use of debt. We are permitted to, and expect to, finance our investments through borrowings subject to a 150% asset coverage test. As defined in the 1940 Act, asset coverage of 150% means that for every $100 of net assets a BDC holds, it may raise up to $200 from borrowing and issuing senior securities. The amount of leverage that we may employ will depend on our assessment of market conditions and other factors at the time of any proposed borrowing. As a RIC, we generally are not subject to corporate-level income taxes on our investment company taxable income, determined without regard to any deductions for dividends paid, and our net capital gain that we distribute as dividends for U.S. federal income tax purposes to our stockholders as long as we meet certain source-of-income, distribution, asset diversification and other requirements.

 

 

We were formed in March 2010 and completed an initial public offering.

 

Our investment activities, and our day-to-day operations, are managed by our Advisor and supervised by our Board, of which a majority of the members are independent of us. Under the Investment Management Agreement, we have agreed to pay our Advisor a base management fee and an incentive fee for its advisory services to us. We have also entered into the Administration Agreement with our Advisor under which we have agreed to reimburse our Advisor for our allocable portion of overhead and other expenses incurred by our Advisor in performing its obligations under the Administration Agreement.

 

Portfolio composition and investment activity

 

The following table shows our portfolio by type of investment as of March 31, 2024 and December 31, 2023:

 

   

March 31, 2024

   

December 31, 2023

 
                 

Percentage of

                 

Percentage of

 
   

Number of

   

Fair

   

Total

   

Number of

   

Fair

   

Total

 
   

Investments

   

Value

   

Portfolio

   

Investments

   

Value

   

Portfolio

 
   

(Dollars in thousands)

 

Debt investments

  54     $ 670,773       94.3

%

  56     $ 670,172       94.5

%

Warrants

  85       23,928       3.4     85       24,594       3.5  

Other investments

  4       9,192       1.3     3       6,430       0.9  

Equity

  14       7,223       1.0     14       7,889       1.1  

Total

        $ 711,116       100.0

%

        $ 709,085       100.0

%

 

The following table shows total portfolio investment activity as of and for the three months ended March 31, 2024 and 2023:

 

   

For the three months ended

 
   

March 31,

 
   

2024

   

2023

 
   

(In thousands)

 

Beginning portfolio

  $ 709,085     $ 720,026  

New debt and equity investments

    34,569       47,008  

Less refinanced debt balances

    (11,250 )      

Net new debt and equity investments

    23,319       47,008  

Principal payments received on investments

    (10,500 )     (6,815 )

Payment-in-kind interest on investments

    1,382       1,204  

Early pay-offs and principal paydowns

    (9,143 )     (32,941 )

Accretion of debt investment fees

    1,261       1,448  

New debt investment fees

    (309 )     (300 )

Proceeds from sale of investments

    (41 )     (6,520 )

Net gain (loss) on investments

    8       (168 )

Net unrealized depreciation on investments

    (3,960 )     (7,537 )

Other

    14       (93 )

Ending portfolio

  $ 711,116     $ 715,312  

 

We receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments may fluctuate significantly from period to period.

 

 

The following table shows our debt investments by industry sector as of March 31, 2024 and December 31, 2023:

 

   

March 31, 2024

   

December 31, 2023

 
   

Debt

   

Percentage of

   

Debt

   

Percentage of

 
   

Investments at

   

Total

   

Investments at

   

Total

 
   

Fair Value

   

Portfolio

   

Fair Value

   

Portfolio

 
   

(Dollars in thousands)

 

Life Science

                               

Biotechnology

  $ 116,522       17.4

%

  $ 108,448       16.2

%

Medical Device

    150,908       22.5       137,367       20.5  

Technology

                               

Communications

    16,791       2.5       18,654       2.8  

Consumer-Related

    91,171       13.6       93,002       13.9  

Networking

    2,867       0.4       5,087       0.8  

Software

    152,131       22.7       158,016       23.6  

Sustainability

                               

Other Sustainability

    70,501       10.5       79,828       11.8  

Healthcare Information and Services

                               

Diagnostics

    19,476       2.9       19,453       2.9  

Software

    50,406       7.5       50,317       7.5  

Total

  $ 670,773       100.0

%

  $ 670,172       100.0

%

 

The largest debt investments in our portfolio may vary from period to period as new debt investments are originated and existing debt investments are repaid. Our five largest debt investments at cost represented 23% of total debt investments outstanding as of March 31, 2024 and December 31, 2023. Our five largest debt investments at fair value represented 23% and 22% of total debt investments outstanding as of March 31, 2024 and December 31, 2023, respectively. No single debt investment at cost or fair value represented more than 10% of our total debt investments as of March 31, 2024 and December 31, 2023.

 

Debt investment asset quality

 

We use an internal credit rating system which rates each debt investment on a scale of 4 to 1, with 4 being the highest credit quality rating and 3 being the rating for a standard level of risk. A rating of 2 represents an increased level of risk and, while no loss is currently anticipated for a 2‑rated debt investment, there is potential for future loss of principal. A rating of 1 represents a deteriorating credit quality and a high degree of risk of loss of principal. Our internal credit rating system is not a national credit rating system. As of March 31, 2024 and December 31, 2023, our debt investments had a weighted average credit rating of 3.1. The following table shows the classification of our debt investment portfolio by credit rating as of March 31, 2024 and December 31, 2023:

 

   

March 31, 2024

   

December 31, 2023

 
           

Debt

   

Percentage

           

Debt

   

Percentage

 
   

Number of

   

Investments at

   

of Debt

   

Number of

   

Investments at

   

of Debt

 
   

Investments

   

Fair Value

   

Investments

   

Investments

   

Fair Value

   

Investments

 
   

(Dollars in thousands)

 

Credit Rating

                                               

4

    13     $ 197,989       29.5

%

    11     $ 150,367       22.4

%

3

    36       407,237       60.7       39       452,911       67.6  

2

    1       14,546       2.2       2       39,343       5.9  

1

    4       51,001       7.6       4       27,551       4.1  

Total

    54     $ 670,773       100.0

%

    56     $ 670,172       100.0

%

 

As of March 31, 2024, there were four debt investments with an internal credit rating of 1, with an aggregate cost of $96.0 million and an aggregate fair value of $51.0 million. As of December 31, 2023, there were four debt investments with an internal credit rating of 1, with an aggregate cost of $72.5 million and an aggregate fair value of $27.6 million.

 

 

Consolidated results of operations

 

As a BDC and a RIC, we are subject to certain constraints on our operations, including limitations imposed by the 1940 Act and the Code. The consolidated results of operations described below may not be indicative of the results we report in future periods.

 

 

Comparison of the three months ended March 31, 2024 and 2023

 

The following table shows consolidated results of operations for the three months ended March 31, 2024 and 2023:

 

   

For the three months ended

 
   

March 31,

 
   

2024

   

2023

 
   

(In thousands)

 

Total investment income

  $ 26,129     $ 28,037  

Total expenses

    13,145       14,842  

Net investment income before excise tax

    12,984       13,195  

Provision for excise tax

    379       184  

Net investment income

    12,605       13,011  

Net realized gain (loss)

    8       (168 )

Net unrealized depreciation on investments

    (3,960 )     (7,537 )

Net increase in net assets resulting from operations

  $ 8,653     $ 5,306  

Average debt investments, at fair value

  $ 669,024     $ 687,602  

Average earning debt investments

  $ 651,229     $ 701,803  

Average gross assets less cash

  $ 728,087     $ 737,826  

Average borrowings outstanding

  $ 456,989     $ 440,695  

 

Net increase in net assets resulting from operations can vary substantially from period to period for various reasons, including, without limitation, the recognition of realized gains and losses and unrealized appreciation and depreciation on investments. As a result, quarterly comparisons of net increase in net assets resulting from operations may not be meaningful.

 

Investment income

 

Total investment income decreased by $1.9 million, or 6.8%, to $26.1 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. For the three months ended March 31, 2024, total investment income consisted primarily of $25.9 million in interest income from investments, which included $3.4 million in income from the accretion of origination fees and end of term payments, or ETPs, $1.4 million in PIK interest, and $0.3 million in fee income. Interest income on debt investments decreased by $1.5 million, or 5.6%, to $25.9 million, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Interest income on debt investments for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 decreased primarily due to a decrease of $50.6 million, or 7.2%, in the average earning debt investments, offset by an increase in the Prime Rate which is the base rate for most of our variable rate debt investments. Fee income, which includes success fee, other fee and prepayment fee income on debt investments, decreased by $0.4 million, or 58.0%, to $0.3 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to a lower aggregate amount of principal prepayments for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. 

 

The following table shows our dollar-weighted annualized yield for the three months ended March 31, 2024 and 2023:

 

   

For the three months ended

 
   

March 31,

 

Investment type:

 

2024

   

2023

 

Debt investments(1)

    15.6 %     16.3 %

All investments(1)

    14.7 %     15.5 %

(1)

We calculate the dollar-weighted annualized yield on average investment type for any period as (1) total related investment income during the period divided by (2) the average of the fair value of the investment type outstanding on (a) the last day of the calendar month immediately preceding the first day of the period and (b) the last day of each calendar month during the period. The dollar-weighted annualized yield on average investment type is higher than what investors will realize because it does not reflect our expenses or any sales load paid by investors.

 

Investment income, consisting of interest income and fees on debt investments, can fluctuate significantly upon repayment of large debt investments. Interest income from the five largest debt investments at cost in the aggregate accounted for 16% and 22% of investment income for the three months ended March 31, 2024 and 2023, respectively. Interest income from the five largest debt investments at fair value in the aggregate accounted for 21% and 22% of investment income for the three months ended March 31, 2024 and 2023, respectively. 

 

 

Expenses

 

Total expenses decreased by $1.7 million, or 11.4%, to $13.1 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Total expenses for each period consisted of interest expense, base management fee, incentive and administrative fees, professional fees and general and administrative expenses.

 

Interest expense increased by $1.0 million, or 14.6%, to $8.2 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Interest expense, which includes the amortization of debt issuance costs, increased primarily due to an increase in average borrowings of $16.3 million, or 3.7%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 and an increase in our effective cost of debt for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

 

Base management fee expense decreased by $0.04 million, or 1.2%, to $3.2 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Base management fee decreased primarily due to a decrease of $9.7 million, or 1.3%, in average gross assets less cash for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. 

 

Performance based incentive fee expense decreased by $2.7 million, or 90.1%, to $0.3 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This decrease was due to an Incentive Fee Cap and Deferral Mechanism in our Investment Management Agreement of $2.3 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The Incentive Fee Cap and Deferral Mechanism resulted in $2.3 million of reduced incentive fee expense and increased net investment income for the three months ended March 31, 2024. The incentive fee on pre-incentive fee net investment income was subject to the Incentive Fee Cap for the three months ended March 31, 2024 due to the cumulative incentive fees paid exceeding 20% of cumulative pre-incentive fee net return during the applicable quarter and the 11 preceding full calendar quarters.

 

Administrative fee expense, professional fees and general and administrative expenses were $1.5 million for the three months ended March 31, 2024 and 2023. 

 

Net realized gains and losses and net unrealized appreciation and depreciation

 

Realized gains or losses on investments are measured by the difference between the net proceeds from the repayment or sale and the cost basis of our investments without regard to unrealized appreciation or depreciation previously recognized. Realized gains or losses on investments include investments charged off during the period, net of recoveries. The net change in unrealized appreciation or depreciation on investments primarily reflects the change in portfolio investment fair values during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

 

During the three months ended March 31, 2024, we realized net gains on investments totaling $0.01 million. During the three months ended March 31, 2023, we realized net losses on investments totaling $0.2 million primarily due to the write off of warrants in three portfolio companies.

 

During the three months ended March 31, 2024, net unrealized depreciation on investments totaled $4.0 million which was primarily due to the unrealized depreciation on two of our debt investments and one of our equity investments offset by the unrealized appreciation on one of our debt investments. During the three months ended March 31, 2023, net unrealized depreciation on investments totaled $7.5 million which was primarily due to the unrealized depreciation on five of our debt investments and the unrealized depreciation on our warrant investments. 

 

 

Liquidity and capital resources

 

As of March 31, 2024 and December 31, 2023, we had cash and investments in money market funds of $68.8 million and $73.1 million, respectively. Cash and investments in money market funds are available to fund new investments, reduce borrowings, pay expenses, repurchase common stock and pay distributions. In addition, as of March 31, 2024 and December 31, 2023, we had $2.5 million and $2.6 million, respectively, of restricted investments in money market funds. Restricted investments in money market funds may be used to make monthly interest and principal payments on our 2022 Asset-Backed Notes or our NYL Facility. Our primary sources of capital have been from our public equity offerings, use of our revolving credit facility (the “Key Facility”) with KeyBank National Association (“Key”) and the Note Funding Agreement (the “NYL Facility”, together with the Key Facility, the “Credit Facilities”) with several entities owned or affiliated with New York Life Insurance Company, and issuance of our public and private debt securities. 

 

On August 2, 2021, we entered into an At-The-Market (“ATM”) sales agreement (the “2021 Equity Distribution Agreement”) with Goldman Sachs & Co. LLC and B. Riley FBR, Inc., (each a “Sales Agent” and, collectively, the “Sales Agents”). The 2021 Equity Distribution Agreement provided that we may offer and sell shares of our common stock from time to time through the Sales Agents up to $100.0 million worth of our common stock, in amounts and at times to be determined by us. 

 

On September 22, 2023, we terminated the 2021 Equity Distribution Agreement and entered into a new ATM sales agreement (the “2023 Equity Distribution Agreement”) with the Sales Agents. The remaining shares available under the 2021 Equity Distribution Agreement are no longer available for issuance. The 2023 Equity Distribution Agreement provides that we may offer and sell shares of our common stock from time to time through the Sales Agents up to $150.0 million worth of our common stock, in amounts and at times to be determined by us. Sales of our common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market,” as defined in Rule 415 under the Securities Act, including sales made directly on the NASDAQ or similar securities exchange or sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices.

 

During the three months ended March 31, 2024, we sold 1,053,796 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $12.0 million, including $0.3 million of offering expenses, from these sales.

 

During the three months ended March 31, 2023, we sold 605,848 shares of common stock under the 2021 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $7.2 million, including $0.2 million of offering expenses, from these sales.

 

 

On April 26, 2024, our Board extended a previously authorized stock repurchase program which allows us to repurchase up to $5.0 million of our common stock at prices below our net asset value (“NAV”) per share as reported in our most recent consolidated financial statements. Under the repurchase program, we may, but are not obligated to, repurchase shares of our outstanding common stock in the open market or in privately negotiated transactions from time to time. Any repurchases by us will comply with the requirements of Rule 10b‑18 under the Exchange Act and any applicable requirements of the 1940 Act. Unless extended by our Board, the repurchase program will terminate on the earlier of June 30, 2025 or the repurchase of $5.0 million of our common stock. During the three months ended March 31, 2024 and 2023, we did not make any repurchases of our common stock. From the inception of the stock repurchase program through March 31, 2024, we repurchased 167,465 shares of our common stock at an average price of $11.22 on the open market at a total cost of $1.9 million.

 

At March 31, 2024 and December 31, 2023, the outstanding principal balance under our Key Facility was $60.0 million and $70.0 million, respectively. As of March 31, 2024 and December 31, 2023, we had borrowing capacity under the Key Facility of $90.0 million and $80.0 million, respectively. At March 31, 2024 and December 31, 2023, $20.3 million and $25.0 million, respectively, was available, subject to existing terms and advance rates.

 

At March 31, 2024 and December 31, 2023, the outstanding principal balance under the NYL Facility was $181.0 million. As of March 31, 2024 and December 31, 2023, we had borrowing capacity under the NYL Facility of $69.0 million. At March 31, 2024 and December 31, 2023, $0.9 million and $17.4 million, respectively, was available, subject to existing terms and advance rates.

 

Our operating activities provided cash of $4.0 million for the three months ended March 31, 2024, and our financing activities used cash of $8.4 million for the same period. Our operating activities provided cash from principal payments received on our debt investments partially offset by cash used to purchase investments in portfolio companies. Our financing activities used cash primarily to repay our Key Facility and to pay distributions to our stockholders, partially offset from the sale of shares through our ATM for net proceeds of $12.0 million.

 

Our operating activities provided cash of $12.7 million for the three months ended March 31, 2023, and our financing activities provided cash of $3.3 million for the same period. Our operating activities provided cash from principal payments received on our debt investments partially offset by cash used to purchase investments in portfolio companies. Our financing activities provided cash primarily from advances on our Credit Facilities and the sale of shares through our ATM for net proceeds of $7.2 million, partially offset by cash used to repay our 2019 Asset-Backed Notes and to pay distributions to our stockholders.

 

Our primary use of available funds is to make debt investments in portfolio companies and for general corporate purposes. We expect to raise additional equity and debt capital opportunistically as needed and, subject to market conditions, to support our future growth to the extent permitted by the 1940 Act.

 

In order to remain subject to taxation as a RIC, we intend to distribute to our stockholders all or substantially all of our investment company taxable income. In addition, as a BDC, we are required to maintain asset coverage of at least 150%. This requirement limits the amount that we may borrow.

 

We believe that our current cash, cash generated from operations, and funds available from our Credit Facilities will be sufficient to meet our working capital and capital expenditure commitments for at least the next 12 months.

 

 

Current borrowings

 

The following table shows our borrowings as of March 31, 2024 and December 31, 2023:

 

   

March 31, 2024

   

December 31, 2023

 
   

Total

   

Balance

   

Unused

   

Total

   

Balance

   

Unused

 
   

Commitment

   

Outstanding

   

Commitment

   

Commitment

   

Outstanding

   

Commitment

 
   

(In thousands)

 

Key Facility

  $ 150,000     $ 60,000     $ 90,000     $ 150,000     $ 70,000     $ 80,000  

NYL Facility

    250,000       181,000       69,000       250,000       181,000       69,000  

2022 Asset-Backed Notes

    100,000       100,000             100,000       100,000        

2027 Notes

    57,500       57,500             57,500       57,500        

2026 Notes

    57,500       57,500             57,500       57,500        

Total before debt issuance costs

    615,000       456,000       159,000       615,000       466,000       149,000  

Unamortized debt issuance costs attributable to term borrowings

          (3,510 )                 (3,765 )      

Total borrowings outstanding, net

  $ 615,000     $ 452,490     $ 159,000     $ 615,000     $ 462,235     $ 149,000  

 

Credit Facilities

 

Key Facility

 

We entered into the Key Facility effective November 4, 2013. The interest rate on the Key Facility is based on the rate of interest published in The Wall Street Journal as the prime rate in the United States plus 0.25%, with a prime rate floor of 4.25%. The prime rate was 8.50% as of March 31, 2024 and December 31, 2023. The interest rate in effect was 8.75% as of March 31, 2024 and December 31, 2023. The Key Facility requires the payment of an unused line fee in an amount up to 0.50% of any unborrowed amount available under the facility annually.

 

On June 29, 2023, we amended the Key Facility to, among other things, increase the commitment amount to $150 million and to increase the amount of the accordion feature which now allows the potential increase in the total commitment amount to $300 million. The Key Facility is collateralized by debt investments held by Credit II and permits an advance rate of up to sixty percent (60%) of eligible debt investments held by Credit II. The Key Facility contains covenants that, among other things, require us to maintain a minimum net worth, to restrict the debt investments securing the Key Facility to certain criteria for qualified debt investments and to comply with portfolio company concentration limits as defined in the related loan agreement. After the period during which we may request advances under the Key Facility (or the “Revolving Period”), we may not request new advances, and we must repay the outstanding advances under the Key Facility as of such date, at such times and in such amounts as are necessary to maintain compliance with the terms and conditions of the Key Facility, particularly the condition that the principal balance of the Key Facility not exceed sixty percent (60%) of the aggregate principal balance of our eligible debt investments to our portfolio companies. The Revolving Period ends on June 22, 2024 and the maturity date of the Key Facility, the date on which all outstanding advances under the Key Facility are due and payable, is June 22, 2026.

 

NYL Facility

 

HFI is a wholly-owned subsidiary of HSLFI. HFI entered into the NYL Facility with the NYL Noteholders for an aggregate purchase price of up to $100.0 million, with an accordion feature of up to $200.0 million at the mutual discretion and agreement of HSLFI and the NYL Noteholders. On June 1, 2018, HSLFI sold or contributed to HFI certain secured loans made to certain portfolio companies pursuant to the Sale and Servicing Agreement. Any notes issued by HFI are collateralized by all investments held by HFI and permit an advance rate of up to 67% of the aggregate principal amount of eligible debt investments.

 

On February 25, 2022, we amended the NYL Facility to, among other things, reduce the applicable margin used to calculate the NYL Facility’s interest rate on our borrowings above $100 million. Such borrowings were priced at the three-year USD mid-market swap rate plus 3.00%.

 

On May 24, 2023, we amended the NYL Facility to, among other things, increase the commitment by $50.0 million to enable our wholly-owned subsidiary to issue up to $250.0 million of secured notes. The amendment to the NYL Facility extends the investment period to June 2024 and the maturity date of all advances to June 2029. In addition, the amendment amended the interest rate for advances made after May 24, 2023, fixing the interest rate at the greater of (i) 4.60% and (ii) the Three Year I-Curve plus 3.50% with the interest rate to be reset on any advance date. 

 

Under the terms of the NYL Facility, we are required to maintain a reserve cash balance, which may be used to pay monthly interest and principal payments on the NYL Facility. We have segregated these funds and classified them as restricted investments in money market funds. At March 31, 2024, and December 31, 2023, there were approximately $1.4 million of restricted investments.

 

There were $181.0 million in notes issued to the NYL Noteholders as of March 31, 2024 and December 31, 2023 at an interest rate of 6.18% and 5.96%, respectively. As of March 31, 2024 and December 31, 2023, we had borrowing capacity under the NYL Facility of $69.0 million. At March 31, 2024 and December 31, 2023, $0.9 million and $17.4 million, respectively, was available for borrowing, subject to existing terms and advance rates.

 

 

Securitizations

 

2019 Asset-Backed Notes

 

On August 13, 2019, the 2019 Asset-Backed Notes were issued by the 2019‑1 Trust pursuant to a note purchase agreement, dated as of August 13, 2019, by and among us and Keybanc Capital Markets Inc. as Initial Purchaser, and were backed by a pool of loans made to certain portfolio companies of ours and secured by certain assets of those portfolio companies. The 2019 Asset-Backed Notes were rated A+(sf) by Morningstar Credit Ratings, LLC on August 13, 2019. The 2019 Asset-Backed Notes bore interest at a fixed rate of 4.21% per annum and had a stated maturity of September 15, 2027. As of December 31, 2023, the 2019 Asset-Backed Notes were repaid in full.

 

2022 Asset-Backed Notes

 

On November 9, 2022, the 2022 Asset-Backed Notes were issued by the 2022‑1 Trust pursuant to a note purchase agreement, dated as of November 9, 2022, by and among us and Keybanc Capital Markets Inc. as Initial Purchaser, and are backed by a pool of loans made to certain portfolio companies of ours and secured by certain assets of those portfolio companies and are to be serviced by us. Interest on the 2022 Asset-Backed Notes will be paid, to the extent of funds available, at a fixed rate of 7.56% per annum. The 2022 Asset-Backed Notes have a two-year reinvestment period and a stated maturity of November 15, 2030. The 2022 Asset-Backed Notes were rated A by Morningstar Credit Ratings, LLC on November 9, 2022. There has been no change in the rating since November 9, 2022.

 

At March 31, 2024 and December 31, 2023, the 2022 Asset-Backed Notes had an outstanding principal balance of $100.0 million.

 

Under the terms of the 2022 Asset-Backed Notes, we are required to maintain a reserve cash balance, funded through proceeds from the sale of the 2022 Asset-Backed Notes, which may be used to pay monthly interest and principal payments on the 2022 Asset-Backed Notes. We have segregated these funds and classified them as restricted investments in money market funds. At March 31, 2024, and December 31, 2023, there were approximately $1.2 million and $1.3 million, respectively, of restricted investments.

 

Unsecured Notes

 

2026 Notes

 

On March 30, 2021, we issued and sold an aggregate principal amount of $57.5 million of 4.875% notes due in 2026 (the “2026 Notes”). The amount of 2026 Notes issued and sold included the full exercise by the underwriters of their option to purchase $7.5 million in aggregate principal of additional notes. The 2026 Notes have a stated maturity of March 30, 2026 and may be redeemed in whole or in part at our option at any time or from time to time on or after March 30, 2023 at a redemption price of $25 per security plus accrued and unpaid interest. The 2026 Notes bear interest at a rate of 4.875% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year. The 2026 Notes are our direct unsecured obligations and (i) rank equally in right of payment with our current and future unsecured indebtedness; (ii) are senior in right of payment to any of our future indebtedness that expressly provides it is subordinated to the 2026 Notes; (iii) are effectively subordinated to all of our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness, and (iv) are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries. As of March 31, 2024, we were in material compliance with the terms of the 2026 Notes. The 2026 Notes are listed on the New York Stock Exchange under the symbol “HTFB”.

 

2027 Notes

 

On June 15, 2022, we issued and sold an aggregate principal amount of $50.0 million of 6.25% notes due in 2027 and on July 11, 2022, pursuant to the underwriters’ 30 day option to purchase additional notes, we sold an additional $7.5 million of such notes (collectively, the “2027 Notes”). The 2027 Notes have a stated maturity of June 15, 2027 and may be redeemed in whole or in part at our option at any time or from time to time on or after June 15, 2024 at a redemption price of $25 per security plus accrued and unpaid interest. The 2027 Notes bear interest at a rate of 6.25% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year, commencing on September 30, 2022. The 2027 Notes are our direct unsecured obligations and (i) rank equally in right of payment with our current and future unsecured indebtedness; (ii) are senior in right of payment to any of our future indebtedness that expressly provides it is subordinated to the 2027 Notes; (iii) are effectively subordinated to all of our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness, and (iv) are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries. As of March 31, 2024, we were in material compliance with the terms of the 2027 Notes. The 2027 Notes are listed on the New York Stock Exchange under the symbol “HTFC”.

 

 

Other assets

 

As of March 31, 2024 and December 31, 2023, other assets were $3.3 million and $3.6 million, respectively, which was primarily comprised of debt issuance costs and prepaid expenses.

 

Contractual obligations and off-balance sheet arrangements

 

The following table shows our significant contractual payment obligations and off-balance sheet arrangements as of March 31, 2024:

 

   

Payments due by period

 
           

Less than

    1 – 3     3 – 5    

After 5

 
   

Total

   

1 year

   

Years

   

Years

   

years

 
   

(In thousands)

 

Borrowings

  $ 456,000     $ 50,136     $ 252,574     $ 153,290     $  

Unfunded commitments

    168,236       131,236       37,000              

Incentive fee deferral

    13,133             13,133              

Total

  $ 637,369     $ 181,372     $ 302,707     $ 153,290     $  

 

In the normal course of business, we are party to financial instruments with off-balance sheet risk. These consist primarily of unfunded commitments to extend credit, in the form of loans, to our portfolio companies. Unfunded commitments to provide funds to portfolio companies are not reflected on our balance sheet. Our unfunded commitments may be significant from time to time. As of March 31, 2024, we had unfunded commitments of $168.2 million. This includes no undrawn revolver commitments. These commitments are subject to the same underwriting and ongoing portfolio maintenance requirements as are the financial instruments that we hold on our balance sheet. In addition, these commitments are often subject to financial or non-financial milestones and other conditions to borrowing that must be achieved before the commitment can be drawn. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. We regularly monitor our unfunded commitments and anticipated refinancings, maturities and capital raising, to ensure that we have sufficient liquidity to fund unfunded commitments. As of March 31, 2024, we reasonably believed that our assets would provide adequate financial resources to satisfy all of our unfunded commitments.

 

In addition to the Credit Facilities, we have certain commitments pursuant to our Investment Management Agreement entered into with our Advisor. We have agreed to pay a fee for investment advisory and management services consisting of two components (1) a base management fee equal to a percentage of the value of our gross assets less cash or cash equivalents, and (2) a two-part incentive fee. We have also entered into a contract with our Advisor to serve as our administrator. Payments under the Administration Agreement are equal to an amount based upon our allocable portion of our Advisor’s overhead in performing its obligations under the agreement, including rent, fees and other expenses inclusive of our allocable portion of the compensation of our Chief Financial Officer and Chief Compliance Officer and their respective staffs. See Note 3 to our consolidated financial statements for additional information regarding our Investment Management Agreement and our Administration Agreement.

 

 

The incentive fee on Pre-Incentive Fee Net Investment Income is subject to a fee cap and deferral mechanism which is determined based upon a look-back period of up to three years and is expensed when incurred. For this purpose, the Incentive Fee Look-back Period includes the relevant calendar quarter and the 11 preceding full calendar quarters. Each quarterly incentive fee payable on Pre-Incentive Fee Net Investment Income is subject to the Incentive Fee Cap and Deferral Mechanism. The Incentive Fee Cap is equal to (a) 20.00% of Cumulative Pre-Incentive Fee Net Return during the Incentive Fee Look-back Period less (b) cumulative incentive fees of any kind paid to our Advisor during the Incentive Fee Look-back Period. To the extent the Incentive Fee Cap is zero or a negative value in any calendar quarter, we will not pay an incentive fee on Pre-Incentive Fee Net Investment Income to our Advisor in that quarter. To the extent that the payment of incentive fees on Pre-Incentive Fee Net Investment Income is limited by the Incentive Fee Cap, the payment of such fees will be deferred and paid in subsequent calendar quarters up to three years after their date of deferment, subject to certain limitations, which are set forth in the Investment Management Agreement. During the three months ended March 31, 2024, the Incentive Fee Cap and Deferral Mechanism resulted in deferral of $2.3 million of incentive fee which may become subject to payment up to three years after the date of deferment. As of March 31, 2024, the total amount subject to recoupment was $13.1 million.

 

Distributions

 

In order to qualify and be subject to tax as a RIC, we must meet certain source-of-income, asset diversification and annual distribution requirements. Generally, in order to qualify as a RIC, we must derive at least 90% of our gross income for each tax year from dividends, interest, payments with respect to certain securities, loans, gains from the sale or other disposition of stock, securities or foreign currencies, income derived from certain publicly traded partnerships, or other income derived with respect to our business of investing in stock or other securities. We must also meet certain asset diversification requirements at the end of each quarter of each tax year. Failure to meet these diversification requirements on the last day of a quarter may result in us having to dispose of certain investments quickly in order to prevent the loss of RIC status. Any such dispositions could be made at disadvantageous prices or times, and may cause us to incur substantial losses.

 

In addition, in order to be subject to tax as a RIC and to avoid the imposition of corporate-level tax on the income and gains we distribute to our stockholders in respect of any tax year, we are required under the Code to distribute as dividends to our stockholders out of assets legally available for distribution each tax year an amount generally at least equal to 90% of the sum of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any. Additionally, in order to avoid the imposition of a U.S. federal excise tax, we are required to distribute, in respect of each calendar year, dividends to our stockholders of an amount at least equal to the sum of 98% of our calendar year net ordinary income (taking into account certain deferrals and elections); 98.2% of our capital gain net income (adjusted for certain ordinary losses) for the one year period ending on October 31 of such calendar year; and any net ordinary income and capital gain net income for preceding calendar years that were not distributed during such calendar years and on which we previously did not incur any U.S. federal income tax. If we fail to qualify as a RIC for any reason and become subject to corporate tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and our stockholders. In addition, we could be required to recognize unrealized gains, incur substantial taxes and interest and make substantial distributions in order to re-qualify as a RIC. We cannot assure stockholders that they will receive any distributions.

 

To the extent our taxable earnings in a tax year fall below the total amount of our distributions made to stockholders in respect of such tax year, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our income or gains. Stockholders should review any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is our ordinary income or gains.

 

We have adopted an “opt out” dividend reinvestment plan, or DRIP, for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock unless a stockholder specifically “opts out” of our DRIP. If a stockholder opts out, that stockholder will receive cash distributions. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes, stockholders participating in our DRIP will not receive any corresponding cash distributions with which to pay any such applicable taxes. If our common stock is trading above NAV, a stockholder receiving distributions in the form of additional shares of our common stock will be treated as receiving a distribution of an amount equal to the fair market value of such shares of our common stock. We may use newly issued shares to implement the DRIP, or we may purchase shares in the open market in connection with our obligations under the DRIP.

 

Related party transactions

 

We have entered into the Investment Management Agreement with our Advisor. Our Advisor is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. Our investment activities are managed by our Advisor and supervised by our Board, the majority of whom are independent directors. Under the Investment Management Agreement, we have agreed to pay our Advisor a base management fee as well as an incentive fee. During the three months ended March 31, 2024 and 2023, our Advisor earned $3.5 million and $6.2 million, respectively, pursuant to the Investment Management Agreement. 

 

 

On February 22, 2023, our Advisor, Horizon Technology Finance Principals LLC f/k/a Horizon Technology Finance, LLC (“HTF Principals”) and Horizon Technology Finance Employees LLC (“HTF Employees”) entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with MCH Holdco LLC (“MCH Holdco”), an affiliate of Monroe Capital LLC (“Monroe Capital”), and Monroe Capital Investment Holdings, L.P., an affiliate of Monroe Capital and the sole stockholder of MCH Holdco. On June 30, 2023, pursuant to the Purchase Agreement, HTF Principals and HTF Employees sold all of their membership interests in our Advisor (which constitute one hundred percent (100%) of the membership interests of our Advisor) to MCH Holdco and our Advisor became a direct wholly owned subsidiary of MCH Holdco and an affiliate of Monroe Capital. Pursuant to the Purchase Agreement, a significant portion of the consideration payable by Monroe Capital to HTF Principals and HTF Employees is in the form of earnout payments contingent upon our performance in 2023, 2024, and 2025, aligning the incentives of our Advisor’s current officers with our stockholders.

 

We have also entered into the Administration Agreement with our Advisor. Under the Administration Agreement, we have agreed to reimburse our Advisor for our allocable portion of overhead and other expenses incurred by our Advisor in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Financial Officer and Chief Compliance Officer and their respective staffs. In addition, pursuant to the terms of the Administration Agreement our Advisor provides us with the office facilities and administrative services necessary to conduct our day-to-day operations. During the three months ended March 31, 2024 and 2023, our Advisor earned $0.4 million pursuant to the Administration Agreement.

 

In connection with the Purchase Agreement, HTF Principals sold its trademark interest in “Horizon Technology Finance”, and granted us a royalty-free license to use the name “Horizon Technology Finance.”

 

We believe that we derive substantial benefits from our relationship with our Advisor. Our Advisor or its affiliates may manage other investment vehicles (the “Advisor Funds”), with the same investment strategy as us, which now may include investment vehicles managed by affiliates of Monroe Capital. Our Advisor may provide us an opportunity to co-invest with the Advisor Funds. Under the 1940 Act, absent receipt of exemptive relief from the SEC, we and our affiliates are precluded from co-investing in negotiated investments. Monroe Capital's exemptive relief to permit joint transactions granted by the SEC on October 15, 2014, as amended, permits us to co-invest with the Advisor Funds, subject to certain conditions.

 

Critical accounting policies

 

The discussion of our financial condition and results of operation is based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. In addition to the discussion below, we describe our significant accounting policies in the notes to our consolidated financial statements.

 

We have identified the following items as critical accounting policies.

 

Valuation of investments

 

Investments are recorded at fair value. Prior to July 30, 2022, our Board determined the fair value of our investments. Pursuant to the amended SEC Rule 2a-5 of the 1940 Act, on July 29, 2022, our Board designated our Advisor as the “valuation designee.” Our Board is responsible for oversight of the valuation designee. The valuation designee has established a Valuation Committee to determine in good faith the fair value of our investments, based on input of our Advisor’s management and personnel and independent valuation firms which are engaged at the direction of the Valuation Committee to assist in the valuation of certain portfolio investments lacking a readily available market quotation at least once during a trailing twelve-month period. The Valuation Committee determines fair values pursuant to a valuation policy approved by our Board and pursuant to a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter, with at least 25% (based on fair value) of our valuation of portfolio companies lacking readily available market quotations subject to review by an independent valuation firm. We apply fair value to substantially all of our investments in accordance with Topic 820, Fair Value Measurement, of the Financial Accounting Standards Board’s, or FASB’s, Accounting Standards Codification as amended, or ASC, which establishes a framework used to measure fair value and requires disclosures for fair value measurements. We have categorized our investments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity specific measure. Therefore, when market assumptions are not readily available, our own assumptions are set to reflect those that we believe market participants would use in pricing the financial instrument at the measurement date. 

 

 

The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market conditions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. The three categories within the hierarchy are as follows:

 

 

Level 1

Quoted prices in active markets for identical assets and liabilities.

 

Level 2

Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active and model-based valuation techniques for which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

 

Income recognition

 

Interest on debt investments is accrued and included in income based on contractual rates applied to principal amounts outstanding. Interest income is determined using a method that results in a level rate of return on principal amounts outstanding. Generally, when a debt investment becomes 90 days or more past due, or if we otherwise do not expect to receive interest and principal repayments, the debt investment is placed on non-accrual status and the recognition of interest income may be discontinued. Interest payments received on non-accrual debt investments may be recognized as income, on a cash basis, or applied to principal depending upon management’s judgment at the time the debt investment is placed on non-accrual status. For the three months ended March 31, 2024 and 2023, we did not recognize any interest income from debt investments on non-accrual status. 

 

We receive a variety of fees from borrowers in the ordinary course of conducting our business, including advisory fees, commitment fees, amendment fees, non-utilization fees, success fees and prepayment fees. In a limited number of cases, we may also receive a non-refundable deposit earned upon the termination of a transaction. Debt investment origination fees, net of certain direct origination costs, are deferred, and along with unearned income, are amortized as a level yield adjustment over the respective term of the debt investment. All other income is recorded into income when earned. Fees for counterparty debt investment commitments with multiple debt investments are allocated to each debt investment based upon each debt investment’s relative fair value. When a debt investment is placed on non-accrual status, the amortization of the related fees and unearned income is discontinued until the debt investment is returned to accrual status.

 

Certain debt investment agreements also require the borrower to make an ETP that is accrued into income over the life of the debt investment to the extent such amounts are expected to be collected. We will generally cease accruing the income if there is insufficient value to support the accrual or if we do not expect the borrower to be able to pay all principal and interest due.

 

In connection with substantially all lending arrangements, we receive warrants to purchase shares of stock from the borrower. We record the warrants as assets at estimated fair value on the grant date using the Black-Scholes valuation model. We consider the warrants as loan fees and record them as unearned income on the grant date. The unearned income is recognized as interest income over the contractual life of the related debt investment in accordance with our income recognition policy. Subsequent to origination, the warrants are also measured at fair value using the Black-Scholes valuation model. Any adjustment to fair value is recorded through earnings as net unrealized gain or loss on investments. Gains and losses from the disposition of the warrants or stock acquired from the exercise of warrants are recognized as realized gains and losses on investments.

 

 

Realized gains or losses on the sale of investments, or upon the determination that an investment balance, or portion thereof, is not recoverable, are calculated using the specific identification method. We measure realized gains or losses by calculating the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment. Net change in unrealized appreciation or depreciation reflects the change in the fair values of our portfolio investments during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

 

Income taxes

 

We have elected to be treated as a RIC under Subchapter M of the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify as a RIC and to avoid the imposition of corporate-level U.S. federal income tax on the amounts we distribute to our stockholders, among other things, we are required to meet certain source of income and asset diversification requirements, and we must timely distribute dividends to our stockholders out of assets legally available for distribution each tax year of an amount generally equal to at least 90% of our investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid. We, among other things, have made and intend to continue to make the requisite distributions to our stockholders, which will generally relieve us from incurring any material liability for U.S. federal income taxes.

 

Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and incur a 4% excise tax on such income, as required. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year distributions, we will accrue excise tax, if any, on estimated excess taxable income as taxable income is earned.

 

We evaluate tax positions taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority in accordance with ASC Topic 740, Income Taxes, as modified by ASC Topic 946, Financial Services — Investment Companies. Tax benefits of positions not deemed to meet the more-likely-than-not threshold, or uncertain tax positions, are recorded as a tax expense in the current year. It is our policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. We had no material uncertain tax positions at March 31, 2024 and December 31, 2023.

 

Recent developments

 

In April 2024, we sold 526,581 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $5.8 million, including $0.1 million of offering expenses, from these sales.

 

On April 1, 2024, Provivi, Inc. (“Provivi”) paid down $4.7 million of the principal amount of its loans outstanding and $0.3 million of its ETPs under the Venture Loan and Security Agreement by and among us and Provivi, dated as of June 15, 2020, as amended. 

 

On April 11, 2024, we funded a $0.5 million equity investment to an existing portfolio company, Better Place Forests Co.

 

On April 22, 2024, Camp NYC, Inc. paid down $1.0 million of the principal amount of its loan outstanding. 

 

 

Recently adopted accounting pronouncement

 

In June 2022, the FASB issued Accounting Standards Update No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, or ASU 2022-03. ASU 2022-03 clarifies the guidance when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of the security. The amendments in ASU 2022-03 were effective for public companies for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The adoption of ASU 2022-03 did not have a material impact on our consolidated financial statements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We are subject to financial market risks, including changes in interest rates. During the periods covered by our financial statements, the interest rates on the debt investments within our portfolio were primarily at floating rates. We expect that our debt investments in the future will primarily have floating interest rates. As of March 31, 2024 and December 31, 2023, 94% of the outstanding principal amount of our debt investments bore interest at floating rates. Contractual interest rates on our commitments to lend to our portfolio companies are typically based on the Prime Rate as published in the Wall Street Journal.

 

Based on our March 31, 2024 consolidated statement of assets and liabilities (without adjustment for potential changes in the credit market, credit quality, size and composition of assets on the consolidated statement of assets and liabilities or other business developments that could affect net income) and the base index rates at March 31, 2024, the following table shows the annual impact on the change in net assets resulting from operations of changes in interest rates, which assumes no changes in our investments and borrowings:

 

   

Investment

   

Interest

   

Change in Net

 

Change in basis points

 

Income

   

Expense

   

Assets(1)

 
   

(In thousands)

 

Up 300 basis points

  $ 17,120     $ 1,825     $ 15,295  

Up 200 basis points

  $ 11,408     $ 1,217     $ 10,191  

Up 100 basis points

  $ 5,724     $ 608     $ 5,116  

Down 300 basis points

  $ (11,595 )   $ (1,825 )   $ (9,770 )

Down 200 basis points

  $ (8,300 )   $ (1,217 )   $ (7,083 )

Down 100 basis points

  $ (4,205 )   $ (608 )   $ (3,597 )

(1)

Excludes the impact of incentive fees based on Pre-Incentive Fee Net Investment Income.

 

While our 2027 Notes, our 2026 Notes, and our 2022 Asset-Backed Notes bear interest at a fixed rate, our Credit Facilities have a floating interest rate provision. The Key Facility is subject to an interest rate floor of 0.25% per annum, based on a prime rate index which resets monthly, and the interest payable on the NYL Facility is based on the Three Year I Curve rate plus a margin of 3.50% with an interest rate floor and resets on any advance date. Any other credit facilities into which we enter in the future may have floating interest rate provisions. We have used hedging instruments in the past to protect us against interest rate fluctuations, and we may use them in the future. Such instruments may include caps, swaps, futures, options and forward contracts. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio with fixed interest rates. Engaging in commodity interest transactions such as swap transactions or futures contracts on our behalf may cause our Advisor to fall within the definition of “commodity pool operator” under the Commodity Exchange Act (the “CEA”), and related Commodity Futures Trading Commission (the “CFTC”), regulations. On January 31, 2020, our Advisor claimed an exclusion from the definition of the term “commodity pool operator” under the CEA and the CFTC regulations in connection with its management of us and, therefore, is not subject to CFTC registration or regulation under the CEA as a commodity pool operator with respect to its management of us.

 

 

Because we currently fund, and expect to continue to fund, our investments with borrowings, our net income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest the funds borrowed. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net income. In periods of rising interest rates, our cost of funds could increase, which would reduce our net investment income.

 

Inflation and Supply Chain Risk

 

Economic activity has continued to accelerate across sectors and regions. Nevertheless, due to global supply chain issues, geopolitical events, a rise in energy prices and strong consumer demand as economies continue to reopen, inflation is showing signs of acceleration in the U.S. and globally. Inflation is likely to continue in the near to medium-term, particularly in the U.S., with the possibility that monetary policy may tighten in response. Persistent inflationary pressures could affect our portfolio companies’ profit margins.

 

Item 4. Controls and Procedures

 

(a) Evaluation of disclosure controls and procedures

 

As of March 31, 2024, we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a‑15(e) under the Exchange Act). Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

 

(b) Changes in internal controls over financial reporting.

 

There have been no material changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) during our most recently completed fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II

 

Item 1: Legal Proceedings.

 

We are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of any such future legal or regulatory proceedings cannot be predicted with certainty, we do not expect that any such future proceedings will have a material effect upon our financial condition or results of operations. 

 

Item 1A: Risk Factors.

 

In addition to other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors set forth in “Item 1A Risk Factors” in our annual report on Form 10‑K for the year ended December 31, 2023, which could materially affect our business, financial condition and/or operating results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or operating results. There have been no material changes during the three months ended March 31, 2024 to the risk factors set forth in “Item 1A. Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2023.

 

 

 

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3: Defaults Upon Senior Securities

 

None.

 

Item 4: Mine Safety Disclosures

 

Not applicable

 

 

Item 5: Other Information

 

Rule 10b5-1 Trading Plans

 

During the fiscal quarter ended December 31, 2023, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement”.

 

 

Item 6: Exhibits

 

EXHIBIT INDEX

 

Exhibit 
No.

 

Description

31.1*

 

Certifications by Chief Executive Officer pursuant to Exchange Act Rule 13a‑14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended

31.2*

 

Certifications by Chief Financial Officer pursuant to Exchange Act Rule 13a‑14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended

32.1*

 

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended

32.2*

 

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended

101.INS   Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH   Inline XBRL Taxonomy Extension Schema Document
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*         Filed herewith

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Quarterly Report on Form 10‑Q to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

HORIZON TECHNOLOGY FINANCE CORPORATION

   

Date: April 30, 2024

By:

/s/ Robert D. Pomeroy, Jr.

 

Name:

Robert D. Pomeroy, Jr.

 

Title:

Chief Executive Officer and Chairman of the Board

     

Date: April 30, 2024

By:

/s/ Daniel R. Trolio

 

Name:

Daniel R. Trolio

 

Title:

Chief Financial Officer

 

67
ex_634391.htm

EXHIBIT 31.1

 

CERTIFICATION PURSUANT TO EXCHANGE ACT

RULES 13a-14 AND 15d-14, AS ADOPTED PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

CHIEF EXECUTIVE OFFICER CERTIFICATION

 

I, Robert D. Pomeroy, Jr., as Chief Executive Officer and Chairman of the Board of Horizon Technology Finance Corporation, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Horizon Technology Finance Corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: April 30, 2024

 

       

By:

/s/ Robert D. Pomeroy, Jr.

   
 

Chief Executive Officer and

   
 

Chairman of the Board

   

 

 

 

 

 
ex_634392.htm

EXHIBIT 31.2

 

CERTIFICATION PURSUANT TO EXCHANGE ACT

RULES 13a-14 AND 15d-14, AS ADOPTED PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

CHIEF FINANCIAL OFFICER CERTIFICATION

 

I, Daniel R. Trolio, as Chief Financial Officer of Horizon Technology Finance Corporation, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Horizon Technology Finance Corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: April 30, 2024

 

By:

/s/ Daniel R. Trolio

   
 

Daniel R. Trolio

   
 

Chief Financial Officer

   

 

 

 

 

 
ex_634393.htm

EXHIBIT 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

 

In connection with the Quarterly Report on Form 10-Q of Horizon Technology Finance Corporation (the “Company”) for the quarterly period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert D. Pomeroy, Jr., as Chief Executive Officer and Chairman of the Board, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002, as amended, that to my knowledge:

 

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Robert D. Pomeroy, Jr.

   

Name:

Robert D. Pomeroy, Jr.

   

Title:

Chief Executive Officer and Chairman of the Board

   
       

Date:

April 30, 2024

   

 

 

 

 

 
ex_634394.htm

EXHIBIT 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

 

In connection with the Quarterly Report on Form 10-Q of Horizon Technology Finance Corporation (the “Company”) for the quarterly period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel R. Trolio, as Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002, as amended, that to my knowledge:

 

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Daniel R. Trolio

   

Name:

Daniel R. Trolio

   

Title:

Chief Financial Officer

   
       

Date:

April 30, 2024