HRZN 10-Q Quarterly Report Sept. 30, 2024

HORIZON TECHNOLOGY FINANCE CORP

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hrzn20240930_10q.htm

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED September 30, 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 ) 676 ‑ 8654

(Registrant ’ s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock traded under the symbol “HRZN” on the Nasdaq Global Select Market, $0.001 par value per share, outstanding as of October 29, 2024 was 38,062,377 .

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Ticker symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	HRZN	The Nasdaq Stock Market LLC
4.875% Notes due 2026	HTFB	The New York Stock Exchange
6.25% Notes due 2027	HTFC	The New York Stock Exchange

Table of Contents

HORIZON TECHNOLOGY FINANCE CORPORATION

FORM 10 ‑ Q

TABLE OF CONTENTS

		Page
PART I
Item 1	Consolidated Financial Statements.	3

	Consolidated Statements of Assets and Liabilities as of September 30, 2024 (unaudited) and December 31, 2023	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 (unaudited)	4
	Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2024 and 2023 (unaudited)	5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (unaudited)	6
	Consolidated Schedules of Investments as of September 30, 2024 (unaudited) and December 31, 2023	7
	Notes to the Consolidated Financial Statements (unaudited)	26
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	51
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	68
Item 4.	Controls and Procedures	69

PART II
Item 1.	Legal Proceedings	69
Item 1A.	Risk Factors	69
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3.	Defaults Upon Senior Securities	70
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	70
Item 6.	Exhibits	70
	Signatures	71
EX‑31.1
EX‑31.2
EX‑32.1
EX‑32.2

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Statements of Assets and Liabilities

(Dollars in thousands, except share and per share data)

	*September 30,*			*December 31,*
	*2024*			*2023*
	(Unaudited)
Assets
Non-affiliate investments at fair value (cost of $ 680,401 and $ 716,077 , respectively)	$	655,962		$	693,730
Non-controlled affiliate investments at fair value (cost of $ 27,478 and $ 28,677 , respectively) (Note 5)		8,307			1,132
Controlled affiliate investments at fair value (cost of $ 25,353 and $ 14,428 , respectively) (Note 5)		19,731			14,223
Total investments at fair value (cost of $ 733,232 and $ 759,182 , respectively) (Note 4)		684,000			709,085
Cash		52,302			46,630
Investments in money market funds		31,080			26,450
Restricted investments in money market funds		3,266			2,642
Interest receivable		15,789			13,926
Other assets		6,637			3,623
Total assets	$	793,074		$	802,356

Liabilities
Borrowings (Note 7)	$	433,969		$	462,235
Distributions payable		12,475			11,011
Base management fee payable (Note 3)		1,025			1,052
Other accrued expenses		3,072			4,077
Total liabilities		450,541			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 September 30, 2024 and December 31, 2023		—			—
Common stock, par value $ 0.001 per share, 100,000,000 shares authorized, 37,970,529 and 33,534,854 shares issued and 37,803,064 and 33,367,389 shares outstanding as of September 30, 2024 and December 31, 2023, respectively		42			36
Paid-in capital in excess of par		500,345			450,949
Distributable loss		( 157,854	)		( 127,004	)
Total net assets		342,533			323,981
Total liabilities and net assets	$	793,074		$	802,356
Net asset value per common share	$	9.06		$	9.71

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except share and per share data)

	*For the Three Months Ended*						*For The Nine Months Ended*
	*September 30,*						*September 30,*
	*2024*			*2023*			*2024*			*2023*
Investment income
From non-affiliate investments:
Interest income	$	22,779		$	23,825		$	71,549		$	75,695
Fee income		1,382			124			2,661			2,255
Payment-in-kind interest income		161			3,777			1,554			5,930
From non-controlled affiliate investments:
Interest income		—			1,246			—			1,246
From controlled affiliate investments:
Interest income		25			8			46			8
Payment-in-kind interest income		216			158			560			158
Total investment income		24,563			29,138			76,370			85,292
Expenses
Interest expense		7,945			7,107			24,046			21,407
Base management fee (Note 3)		2,989			3,213			9,178			9,621
Performance based incentive fee (Note 3)		—			—			295			3,094
Administrative fee (Note 3)		400			441			1,259			1,249
Professional fees		587			452			1,707			1,558
General and administrative		432			392			1,419			1,384
Total expenses		12,353			11,605			37,904			38,313
Net investment income before excise tax		12,210			17,533			38,466			46,979
Provision for excise tax		373			179			1,109			542
Net investment income		11,837			17,354			37,357			46,437
Net realized and unrealized loss
Net realized loss on non-affiliate investments		( 33,894	)		( 11,816	)		( 31,459	)		( 28,513	)
Net realized gain on non-controlled affiliate investments		—			—			37			—
Net realized loss on investments		( 33,894	)		( 11,816	)		( 31,422	)		( 28,513	)
Net unrealized appreciation (depreciation) on non-affiliate investments		35,407			180			( 2,094	)		( 7,656	)
Net unrealized (depreciation) appreciation on non-controlled affiliate investments		( 6,237	)		( 19,055	)		8,374			( 18,149	)
Net unrealized appreciation (depreciation) on controlled affiliate investments		165			1,357			( 5,416	)		1,357
Net unrealized appreciation (depreciation) on investments		29,335			( 17,518	)		864			( 24,448	)
Net realized and unrealized loss		( 4,559	)		( 29,334	)		( 30,558	)		( 52,961	)
Net increase (decrease) in net assets resulting from operations	$	7,278		$	( 11,980	)	$	6,799		$	( 6,524	)
Net investment income per common share	$	0.32		$	0.53		$	1.06		$	1.54
Net increase (decrease) in net assets resulting from operations per common share	$	0.20		$	( 0.37	)	$	0.19		$	( 0.22	)
Distributions declared per share	$	0.33		$	0.33		$	1.04		$	0.99
Weighted average shares outstanding		36,571,000			32,451,900			35,200,189			30,155,287

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Statements of Changes in Net Assets (Unaudited)

(Dollars in thousands, except share data)

					*Paid-In Capital*
	*Common Stock*				*in Excess of*		*Distributable*			*Total Net*
	*Shares*		*Amount*		*Par*		*Loss*			*Assets*
Balance at June 30, 2023		32,096,259	$	34	$	437,561		( 82,176	)	$	355,419
Issuance of common stock, net of offering costs		1,186,303		1		13,854		—			13,855
Net increase in net assets resulting from operations, net of excise tax:
Net investment income, net of excise tax		—		—		—		17,354			17,354
Net realized loss on investments		—		—		—		( 11,816	)		( 11,816	)
Net unrealized depreciation on investments		—		—		—		( 17,518	)		( 17,518	)
Issuance of common stock under dividend reinvestment plan		24,396		—		307		—			307
Distributions declared		—		—		—		( 11,026	)		( 11,026	)
Balance at September 30, 2023		33,306,958		35		451,722		( 105,182	)		346,575

Balance at June 30, 2024		36,043,815		40		481,349		( 152,611	)		328,778
Issuance of common stock, net of offering costs		1,709,096		2		18,413		—			18,415
Net increase in net assets resulting from operations, net of excise tax:
Net investment income, net of excise tax		—		—		—		11,837			11,837
Net realized loss on investments		—		—		—		( 33,894	)		( 33,894	)
Net unrealized appreciation on investments		—		—		—		29,335			29,335
Issuance of common stock under dividend reinvestment plan		50,153		—		583		—			583
Distributions declared		—		—		—		( 12,521	)		( 12,521	)
Balance at September 30, 2024		37,803,064	$	42	$	500,345	$	( 157,854	)	$	342,533

					*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		5,490,326		6		65,025		—			65,031
Net increase in net assets resulting from operations, net of excise tax:
Net investment income, net of excise tax		—		—		—		46,437			46,437
Net realized loss on investments		—		—		—		( 28,513	)		( 28,513	)
Net unrealized depreciation on investments		—		—		—		( 24,448	)		( 24,448	)
Issuance of common stock under dividend reinvestment plan		63,259		—		776		—			776
Distributions declared		—		—		—		( 31,156	)		( 31,156	)
Balance at September 30, 2023		33,306,958		35		451,722		( 105,182	)		346,575

Balance at December 31, 2023		33,367,389		36		450,949		( 127,004	)		323,981
Issuance of common stock, net of offering costs		4,279,141		6		47,521		—			47,527
Net increase in net assets resulting from operations, net of excise tax:
Net investment income, net of excise tax		—		—		—		37,357			37,357
Net realized loss on investments		—		—		—		( 31,422	)		( 31,422	)
Net unrealized appreciation on investments		—		—		—		864			864
Issuance of common stock under dividend reinvestment plan		156,534		—		1,875		—			1,875
Distributions declared		—		—		—		( 37,649	)		( 37,649	)
Balance at September 30, 2024		37,803,064	$	42	$	500,345	$	( 157,854	)	$	342,533

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

	*For the nine months ended September 30,*
	*2024*			*2023*
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations	$	6,799		$	( 6,524	)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Amortization of debt issuance costs		1,272			1,433
Net realized loss on investments		31,422			28,513
Net unrealized (appreciation) depreciation on investments		( 864	)		24,448
Purchase of investments		( 121,211	)		( 154,488	)
Principal payments received on investments		120,448			90,222
Payment-in-kind interest on investments		( 2,114	)		( 6,088	)
Proceeds from sale of investments		157			11,063
Equity received in settlement of fee income		—			( 89	)
Warrants received in settlement of fee income		( 359	)		( 80	)
Changes in assets and liabilities:
(Increase) decrease in interest receivable		( 775	)		1,491
Increase in end-of-term payments		( 1,088	)		( 1,960	)
Decrease in unearned income		( 2,381	)		( 2,621	)
Increase in other assets		( 201	)		( 837	)
(Decrease) increase in other accrued expenses		( 1,005	)		414
(Decrease) increase in base management fee payable		( 27	)		15
Decrease in incentive fee payable		—			( 1,392	)
Net cash provided by (used in) operating activities		30,073			( 16,480	)
Cash flows from financing activities:
Repayment of 2022 Asset-Backed Notes		( 9,030	)		—
Repayment of 2019 Asset-Backed Notes		—			( 23,876	)
Proceeds from issuance of common stock, net of offering costs		47,527			65,031
Advances on Credit Facilities		50,000			59,250
Repayment of Credit Facilities		( 70,000	)		( 35,000	)
Debt issuance costs		( 3,334	)		( 732	)
Distributions paid		( 34,310	)		( 28,548	)
Net cash (used in) provided by financing activities		( 19,147	)		36,125
Net increase in cash, cash equivalents and restricted cash		10,926			19,645
Cash, cash equivalents and restricted cash:
Beginning of period		75,722			30,466
End of period	$	86,648		$	50,111

Supplemental disclosure of cash flow information:
Cash paid for interest	$	22,770		$	19,956
Supplemental non-cash investing and financing activities:
Refinanced debt investment balances	$	19,540		$	—
Warrant investments received and recorded as unearned income	$	1,269		$	1,870
Distributions payable	$	12,475		$	10,991
End-of-term payments receivable	$	12,905		$	11,743
Non-cash income	$	9,448		$	12,861

	*September 30,*
	*2024*		*2023*
Cash	$	52,302	$	34,816
Investments in money market funds		31,080		12,457
Restricted investments in money market funds		3,266		2,838
Total cash, cash equivalents and restricted cash	$	86,648	$	50,111

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 30, 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 — 191.6 % (8)
Non-Affiliate Debt Investments — 182.9 % (8)
Non-Affiliate Debt Investments — Life Science — 76.0 % (8)
Castle Creek Biosciences, Inc. (2)(12)	Biotechnology	Term Loan		13.25	%	Prime		4.75	%		9.55	%		13.50	%		5.50	%	May 1, 2026	$	3,958	$	3,948	$	3,948
		Term Loan		13.25	%	Prime		4.75	%		9.55	%		13.50	%		5.50	%	May 1, 2026		3,958		3,948		3,948
		Term Loan		13.25	%	Prime		4.75	%		9.55	%		13.50	%		5.50	%	May 1, 2026		2,375		2,368		2,368
		Term Loan		13.25	%	Prime		4.75	%		9.55	%		13.50	%		5.50	%	May 1, 2026		3,958		3,948		3,948
		Term Loan		13.25	%	Prime		4.75	%		9.55	%		13.50	%		5.50	%	May 1, 2026		3,958		3,949		3,949
		Term Loan		13.25	%	Prime		4.75	%		9.55	%		13.50	%		5.50	%	May 1, 2026		2,375		2,369		2,369
Emalex Biosciences, Inc. (2)(12)	Biotechnology	Term Loan		12.72	%	Prime		4.72	%		9.75	%		—			5.00	%	November 1, 2025		5,000		4,970		4,970
		Term Loan		12.72	%	Prime		4.72	%		9.75	%		—			5.00	%	May 1, 2026		5,000		4,975		4,975
Greenlight Biosciences, Inc. (2)(12)	Biotechnology	Term Loan		13.75	%	Prime		5.75	%		9.00	%		—			3.00	%	July 1, 2025		1,667		1,624		1,624
		Term Loan		13.75	%	Prime		5.75	%		9.00	%		—			3.00	%	July 1, 2025		833		812		812
KSQ Therapeutics, Inc. (2)(12)	Biotechnology	Term Loan		12.75	%	Prime		4.75	%		8.50	%		—			5.50	%	May 1, 2027		6,250		6,215		6,215
		Term Loan		12.75	%	Prime		4.75	%		8.50	%		—			5.50	%	May 1, 2027		6,250		6,215		6,215
Native Microbials, Inc (2)(12)	Biotechnology	Term Loan		13.25	%	Prime		5.25	%		8.50	%		—			5.00	%	November 1, 2026		3,250		3,234		3,234
		Term Loan		13.25	%	Prime		5.25	%		8.50	%		—			5.00	%	November 1, 2026		2,167		2,156		2,156
PDS Biotechnology Corporation (2)(5)(12)	Biotechnology	Term Loan		13.75	%	Prime		5.75	%		9.75	%		—			3.75	%	September 1, 2026		10,000		9,950		9,950
		Term Loan		13.75	%	Prime		5.75	%		9.75	%		—			3.75	%	September 1, 2026		3,750		3,731		3,731
		Term Loan		13.75	%	Prime		5.75	%		9.75	%		—			3.75	%	September 1, 2026		3,750		3,731		3,731
Provivi, Inc. (2)(12)	Biotechnology	Term Loan		13.36	%	Prime		5.36	%		9.50	%		—			4.30	%	January 1, 2027		3,482		3,410		3,218
		Term Loan		13.36	%	Prime		5.36	%		9.50	%		—			4.30	%	January 1, 2027		3,482		3,410		3,218
		Term Loan		13.36	%	Prime		5.36	%		9.50	%		—			4.31	%	January 1, 2027		1,741		1,701		1,605
		Term Loan		13.36	%	Prime		5.36	%		9.50	%		—			4.31	%	January 1, 2027		1,741		1,701		1,605
		Term Loan		13.36	%	Prime		5.36	%		9.50	%		—			4.31	%	January 1, 2027		1,741		1,699		1,604
		Term Loan		13.36	%	Prime		5.36	%		9.50	%		—			4.31	%	January 1, 2027		1,741		1,699		1,604
Stealth Biotherapeutics Inc. (2)(12)	Biotechnology	Term Loan		13.50	%	Prime		5.50	%		8.75	%		—			6.00	%	October 1, 2025		2,631		2,598		2,598
		Term Loan		13.50	%	Prime		5.50	%		8.75	%		—			6.00	%	October 1, 2025		1,315		1,299		1,299
Tallac Therapeutics, Inc. (2)(12)	Biotechnology	Term Loan		12.25	%	Prime		4.25	%		12.25	%		—			4.00	%	August 1, 2027		2,500		2,468		2,468
		Term Loan		12.25	%	Prime		4.25	%		12.25	%		—			4.00	%	August 1, 2027		2,500		2,468		2,468
Aerobiotix, LLC (2)(12)	Medical Device	Term Loan		9.00	%	Fixed		—			—			—			18.00	%	April 1, 2028		2,500		2,477		2,205
		Term Loan		9.00	%	Fixed		—			—			—			18.00	%	April 1, 2028		2,500		2,477		2,205
		Term Loan		9.00	%	Fixed		—			—			—			18.00	%	April 1, 2028		200		188		168

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 30, 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)*
Candesant Biomedical, Inc. (2)(12)	Medical Device	Term Loan		11.50	%	Prime		3.50	%		11.50	%		—		5.00	%	September 1, 2027		5,000		4,777		4,777
		Term Loan		11.50	%	Prime		3.50	%		11.50	%		—		5.00	%	September 1, 2027		2,500		2,464		2,464
		Term Loan		11.50	%	Prime		3.50	%		11.50	%		—		5.00	%	September 1, 2027		2,500		2,464		2,464
Ceribell, Inc. (2)(12)	Medical Device	Term Loan		10.75	%	Prime		2.75	%		9.25	%		—		4.00	%	March 1, 2029		5,000		4,817		4,817
		Term Loan		10.75	%	Prime		2.75	%		9.25	%		—		4.00	%	March 1, 2029		5,000		4,938		4,938
		Term Loan		10.75	%	Prime		2.75	%		9.25	%		—		4.00	%	March 1, 2029		4,000		3,950		3,950
Cognoa, Inc. (2)(12)	Medical Device	Term Loan		13.50	%	Prime		5.50	%		8.75	%		—		6.00	%	August 1, 2026		3,611		3,584		3,356
		Term Loan		13.50	%	Prime		5.50	%		8.75	%		—		6.00	%	August 1, 2026		1,806		1,792		1,678
Conventus Orthopaedics, Inc. (2)(12)	Medical Device	Term Loan		12.82	%	Prime		4.82	%		9.25	%		—		10.36	%	July 1, 2025		3,477		3,448		3,448
		Term Loan		12.82	%	Prime		4.82	%		9.25	%		—		10.36	%	July 1, 2025		3,477		3,448		3,448
Infobionic, Inc. (2)(12)	Medical Device	Term Loan		13.00	%	Prime		4.50	%		12.00	%		—		2.00	%	September 1, 2029		5,000		4,916		4,916
		Term Loan		13.00	%	Prime		4.50	%		12.00	%		—		2.00	%	September 1, 2029		5,000		4,916		4,916
		Term Loan		13.00	%	Prime		4.50	%		12.00	%		—		2.00	%	September 1, 2029		5,000		4,916		4,916
MicroTransponder, Inc. (2)(12)	Medical Device	Term Loan		12.25	%	Prime		3.75	%		12.25	%		—		3.50	%	January 1, 2029		3,750		3,696		3,696
		Term Loan		12.25	%	Prime		3.75	%		12.25	%		—		3.50	%	January 1, 2029		3,750		3,696		3,696
Scientia Vascular, Inc. (2)(12)	Medical Device	Term Loan		13.25	%	Prime		4.75	%		8.50	%		—		5.00	%	January 1, 2027		3,750		3,734		3,734
		Term Loan		13.25	%	Prime		4.75	%		8.50	%		—		5.00	%	January 1, 2027		3,750		3,733		3,733
		Term Loan		13.75	%	Prime		5.25	%		9.00	%		—		5.00	%	January 1, 2027		5,000		4,959		4,959
		Term Loan		13.75	%	Prime		5.25	%		9.00	%		—		5.00	%	January 1, 2027		5,000		4,927		4,927
Sonex Health, Inc. (2)(12)	Medical Device	Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		8.00	%	September 1, 2027		2,500		2,479		2,479
		Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		8.00	%	September 1, 2027		2,500		2,479		2,479
		Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		8.00	%	September 1, 2027		5,000		4,957		4,957
		Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		8.00	%	September 1, 2027		5,000		4,957		4,957
		Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		8.00	%	April 1, 2028		3,750		3,711		3,711
		Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		8.00	%	April 1, 2028		3,750		3,711		3,711
		Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		8.00	%	April 1, 2028		3,750		3,711		3,711
		Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		8.00	%	April 1, 2028		3,750		3,711		3,711
Spineology, Inc. (2)(12)	Medical Device	Term Loan		13.00	%	Prime		5.00	%		12.00	%		—		1.00	%	August 1, 2029		5,000		4,911		4,911
		Term Loan		13.00	%	Prime		5.00	%		12.00	%		—		1.00	%	August 1, 2029		4,250		4,174		4,174
		Term Loan		13.00	%	Prime		5.00	%		12.00	%		—		1.00	%	August 1, 2029		4,250		4,174		4,174
		Term Loan		13.00	%	Prime		5.00	%		12.00	%		—		1.00	%	August 1, 2029		2,500		2,455		2,455
Swift Health Systems Inc. (2)(12)(14)	Medical Device	Term Loan		13.75	%	Prime		5.25	%		9.00	%		—		5.00	%	July 1, 2027		3,500		3,510		3,509
		Term Loan		13.75	%	Prime		5.25	%		9.00	%		—		5.00	%	July 1, 2027		3,500		3,475		3,474
		Term Loan		13.75	%	Prime		5.25	%		9.00	%		—		5.00	%	July 1, 2027		3,500		3,469		3,468
		Term Loan		13.75	%	Prime		5.25	%		9.00	%		—		5.00	%	July 1, 2027		3,500		3,469		3,468

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 30, 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)*
		Term Loan		13.75	%	Prime		5.25	%		9.00	%		—		100.00	%	July 1, 2027		300		300		300
		Term Loan		13.75	%	Prime		5.25	%		9.00	%		—		100.00	%	July 1, 2027		150		150		150
		Term Loan		13.75	%	Prime		5.25	%		9.00	%		—		—		July 1, 2027		200		200		200
		Term Loan		13.25	%	Prime		5.25	%		9.00	%		—		—		July 1, 2027		350		350		350
Vero Biotech, Inc. (2)(12)	Medical Device	Term Loan		12.25	%	Prime		3.75	%		12.25	%		—		4.00	%	January 1, 2029		15,000		14,719		14,117
		Term Loan		12.25	%	Prime		3.75	%		12.25	%		—		4.00	%	January 1, 2029		10,000		9,813		9,411
		Term Loan		12.25	%	Prime		3.75	%		12.25	%		—		4.00	%	January 1, 2029		5,000		4,907		4,706
		Term Loan		12.25	%	Prime		3.75	%		12.25	%		—		4.00	%	January 1, 2029		2,500		2,453		2,353
Total Non-Affiliate Debt Investments — Life Science																						263,158		260,177
Non-Affiliate Debt Investments — Sustainability — 19.8 % (8)
Pivot Bio, Inc.(2)(12)	Energy Efficiency	Term Loan		12.00	%	Prime		4.00	%		12.00	%		—		4.00	%	February 1, 2029		5,000		4,739		4,739
		Term Loan		12.00	%	Prime		4.00	%		12.00	%		—		4.00	%	February 1, 2029		5,000		4,948		4,948
New Aerofarms, Inc. assignee of Aerofarms, Inc. (2)(12)(15)	Other Sustainability	Term Loan		14.75	%	Prime		6.75	%		10.00	%		—		4.33	%	December 1, 2026		3,750		3,712		3,712
		Term Loan		14.75	%	Prime		6.75	%		10.00	%		—		4.33	%	December 1, 2026		3,750		3,712		3,712
Soli Organic, Inc. (2)(12)	Other Sustainability	Term Loan		14.75	%	Prime		6.75	%		10.00	%		—		2.75	%	April 1, 2026		5,000		4,937		4,937
		Term Loan		14.75	%	Prime		6.75	%		10.00	%		—		2.75	%	April 1, 2026		2,500		2,469		2,469
		Term Loan		14.75	%	Prime		6.75	%		10.00	%		—		2.75	%	May 1, 2026		5,000		4,938		4,938
		Term Loan		14.75	%	Prime		6.75	%		10.00	%		—		2.75	%	May 1, 2026		2,500		2,469		2,469
		Term Loan		13.50	%	Prime		5.50	%		11.75	%		—		2.75	%	December 1, 2026		5,000		4,946		4,946
		Term Loan		13.50	%	Prime		5.50	%		11.75	%		—		2.75	%	December 1, 2026		2,500		2,473		2,473
Temperpack Technologies, Inc. (2)(12)	Other Sustainability	Term Loan		14.75	%	Prime		6.75	%		10.00	%		—		2.50	%	April 1, 2028		3,750		3,703		3,703
		Term Loan		14.75	%	Prime		6.75	%		10.00	%		—		2.50	%	April 1, 2028		3,750		3,703		3,703
		Term Loan		14.75	%	Prime		6.75	%		10.00	%		—		2.50	%	April 1, 2028		7,500		7,400		7,400
		Term Loan		14.75	%	Prime		6.75	%		10.00	%		—		2.50	%	April 1, 2028		3,750		3,700		3,700
		Term Loan		14.75	%	Prime		6.75	%		10.00	%		—		2.50	%	April 1, 2028		3,750		3,700		3,700
		Term Loan		14.00	%	Prime		6.00	%		10.00	%		—		2.00	%	January 1, 2029		4,500		4,452		4,452
		Term Loan		14.00	%	Prime		6.00	%		10.00	%		—		2.00	%	January 1, 2029		2,000		1,979		1,979
Total Non-Affiliate Debt Investments — Sustainability																						67,980		67,980
Non-Affiliate Debt Investments — Technology — 56.7 % (8)
Axiom Space, Inc. (2)(12)	Communications	Term Loan		14.50	%	Prime		6.00	%		9.25	%		—		2.50	%	June 1, 2026		4,375		4,354		4,354
		Term Loan		14.50	%	Prime		6.00	%		9.25	%		—		2.50	%	June 1, 2026		4,375		4,353		4,353
		Term Loan		14.50	%	Prime		6.00	%		9.25	%		—		2.50	%	June 1, 2026		4,375		4,353		4,353
CAMP NYC, Inc. (2)(12)	Consumer-related Technologies	Term Loan		15.25	%	Prime		7.25	%		10.50	%		—		3.00	%	March 1, 2027		2,033		1,980		1,922

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 30, 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)*
Clara Foods Co. (2)(12)	Consumer-related Technologies	Term Loan		14.25	%	Prime		5.75	%		9.00	%		—		5.50	%	August 1, 2025		833		828		828
		Term Loan		14.25	%	Prime		5.75	%		9.00	%		—		5.50	%	August 1, 2025		833		828		828
Havenly, Inc. (2)(12)	Consumer-related Technologies	Term Loan		13.00	%	Prime		5.00	%		5.00	%		—		10.40	%	March 1, 2027		2,000		1,467		1,467
		Term Loan		13.00	%	Prime		5.00	%		5.00	%		—		10.40	%	March 1, 2027		3,000		2,441		2,441
		Term Loan		11.50	%	Prime		3.50	%		10.50	%		—		7.78	%	February 1, 2028		2,813		2,813		2,813
		Term Loan		11.50	%	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		11.50	% (11)	Prime		3.50	%		9.00	%		—		5.00	%	July 1, 2028		2,603		2,692		2,341
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		5,908		5,489		3,256
		Term Loan		14.25	% (11)	Prime		5.75	%		9.00	%		—		5.25	%	October 31, 2023		2,363		2,196		1,303
		Term Loan		14.25	% (11)	Prime		5.75	%		9.00	%		—		5.25	%	October 31, 2023		2,954		2,745		1,628
		Term Loan		14.25	% (11)	Prime		5.75	%		9.00	%		—		5.25	%	October 31, 2023		3,545		3,294		1,953
		Term Loan		14.25	% (11)	Prime		5.75	%		9.00	%		—		5.25	%	October 31, 2023		2,954		2,745		1,628
		Term Loan		14.25	% (11)	Prime		5.75	%		9.00	%		—		5.25	%	October 31, 2023		2,954		2,745		1,628
		Term Loan		14.25	% (11)	Prime		5.75	%		9.00	%		—		5.25	%	October 31, 2023		5,908		5,489		3,255
		Term Loan		14.25	% (11)	Prime		5.75	%		9.00	%		—		5.25	%	October 31, 2023		2,954		2,745		1,628
Optoro, Inc. (2)(12)	Consumer-related Technologies	Term Loan		14.75	%	Prime		6.25	%		9.50	%		—		4.00	%	August 1, 2027		2,500		2,440		2,440
		Term Loan		14.75	%	Prime		6.25	%		9.50	%		—		4.00	%	July 1, 2028		1,875		1,800		1,800
Standvast Holdings, LLC (2)(12)	Consumer-related Technologies	Term Loan		12.75	%	Prime		4.25	%		12.75	%		—		3.00	%	June 1, 2028		2,500		2,245		2,245
		Term Loan		12.75	%	Prime		4.25	%		12.75	%		—		3.00	%	June 1, 2028		2,500		2,421		2,421
Unagi, Inc. (2)(12)(13)	Consumer-related Technologies	Term Loan		15.75	% (11)	Prime		7.75	%		11.00	%		—		—		May 1, 2027		1,361		1,086		228
		Term Loan		15.75	% (11)	Prime		7.75	%		11.00	%		—		—		May 1, 2027		680		543		114
		Term Loan		15.75	% (11)	Prime		7.75	%		11.00	%		—		—		May 1, 2027		680		543		114
Fictiv, Inc. (2)(12)	Networking	Term Loan		11.25	%	Prime		3.25	%		10.00	%		—		4.00	%	April 1, 2029		5,000		4,703		4,703
		Term Loan		11.25	%	Prime		3.25	%		10.00	%		—		4.00	%	April 1, 2029		5,000		4,938		4,938
BriteCore Holdings, Inc. (2)(12)	Software	Term Loan		14.00	%	Prime		5.50	%		14.00	%		—		3.00	%	October 1, 2028		5,000		4,905		4,905
		Term Loan		14.00	%	Prime		5.50	%		14.00	%		—		3.00	%	October 1, 2028		2,500		2,471		2,471
		Term Loan		14.00	%	Prime		5.50	%		14.00	%		—		3.00	%	October 1, 2028		2,500		2,471		2,471
		Term Loan		14.00	%	Prime		5.50	%		14.00	%		—		3.00	%	October 1, 2028		2,500		2,471		2,471
		Term Loan		14.00	%	Prime		5.50	%		14.00	%		—		3.00	%	April 1, 2029		2,500		2,467		2,467
Dropoff, Inc. (2)(12)	Software	Term Loan		14.50	%	Prime		6.50	%		9.75	%		—		3.50	%	June 1, 2026		6,804		6,729		6,337
		Term Loan		14.50	%	Prime		6.50	%		9.75	%		—		3.50	%	June 1, 2026		6,280		6,211		5,849
		Term Loan		14.50	%	Prime		6.50	%		9.75	%		—		3.50	%	June 1, 2026		2,617		2,590		2,439

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 30, 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)*
Kodiak Robotics, Inc. (2)(12)	Software	Term Loan		13.50	%	Prime		5.50	%		10.25	%		—		4.00	%	April 1, 2026		10,000		9,946		9,946
		Term Loan		13.50	%	Prime		5.50	%		10.25	%		—		4.00	%	April 1, 2026		10,000		9,946		9,946
		Term Loan		13.50	%	Prime		5.50	%		10.25	%		—		4.00	%	April 1, 2026		5,000		4,973		4,973
		Term Loan		13.50	%	Prime		5.50	%		10.25	%		—		4.00	%	April 1, 2026		5,000		4,973		4,973
Lytics, Inc. (2)(12)	Software	Term Loan		14.50	%	Prime		6.00	%		14.25	%		—		5.00	%	November 1, 2026		2,500		2,479		2,479
		Term Loan		14.50	%	Prime		6.00	%		14.25	%		—		5.00	%	December 1, 2026		1,250		1,242		1,242
		Term Loan		14.50	%	Prime		6.00	%		14.25	%		—		5.00	%	April 1, 2027		1,000		996		996
Mirantis, Inc. (2)(12)	Software	Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		4.00	%	October 1, 2028		5,000		4,929		4,929
		Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		4.00	%	October 1, 2028		5,000		4,929		4,929
		Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		4.00	%	October 1, 2028		5,000		4,929		4,929
		Term Loan		12.00	%	Prime		3.50	%		11.75	%		—		4.00	%	October 1, 2028		5,000		4,929		4,929
Noodle Partners, Inc. (2)(12)	Software	Term Loan		13.00	%	Prime		5.00	%		12.00	%		—		3.00	%	March 1, 2027		10,000		9,916		9,916
		Term Loan		13.00	%	Prime		5.00	%		12.00	%		—		3.00	%	March 1, 2027		5,000		4,958		4,958
		Term Loan		13.00	%	Prime		5.00	%		12.00	%		—		3.00	%	March 1, 2027		5,000		4,958		4,958
Reputation Institute, Inc. (2)(12)	Software	Term Loan		15.75	%	Prime		7.25	%		10.50	%		—		3.00	%	August 1, 2025		1,933		1,901		1,901
Supply Network Visibility Holdings LLC (2)(12)	Software	Term Loan		12.25	%	Prime		4.25	%		12.00	%		—		2.50	%	June 1, 2028		2,500		2,476		2,476
		Term Loan		12.25	%	Prime		4.25	%		12.00	%		—		2.50	%	June 1, 2028		3,500		3,491		3,491
		Term Loan		12.25	%	Prime		4.25	%		12.00	%		—		2.50	%	June 1, 2028		2,500		2,493		2,493
		Term Loan		12.25	%	Prime		4.25	%		12.00	%		—		2.50	%	June 1, 2028		1,500		1,496		1,496
		Term Loan		12.25	%	Prime		4.25	%		12.00	%		—		2.50	%	July 1, 2029		5,000		4,983		4,983
Viken Detection Corporation (2)(12)	Software	Term Loan		12.00	%	Prime		4.00	%		11.75	%		—		3.50	%	June 1, 2027		5,000		4,951		4,951
		Term Loan		12.00	%	Prime		4.00	%		11.75	%		—		3.50	%	June 1, 2027		2,500		2,476		2,476
		Term Loan		12.00	%	Prime		4.00	%		11.75	%		—		3.50	%	June 1, 2027		2,500		2,476		2,476
Total Non-Affiliate Debt Investments — Technology																						208,250		194,051
Non-Affiliate Debt Investments — Healthcare information and services — 30.4 % (8)
Hound Labs Inc. (12)(13)	Diagnostics	Term Loan		14.00	%	Prime		6.00	%		9.25	%		—		3.50	%	June 1, 2026		1,607		1,577		1,034
		Term Loan		14.00	%	Prime		6.00	%		9.25	%		—		3.50	%	June 1, 2026		1,607		1,577		1,034
		Term Loan		14.00	%	Prime		6.00	%		9.25	%		—		3.50	%	June 1, 2026		3,214		3,151		2,068
		Term Loan		14.00	%	Fixed		—			—			—		50.00	%	March 1, 2025		300		300		197
		Term Loan		14.00	%	Fixed		—			—			—		100.00	%	March 1, 2025		250		250		164
Parse Biosciences, Inc. (2)(12)	Diagnostics	Term Loan		11.75	%	Prime		3.25	%		11.50	%		—		5.00	%	January 1, 2028		5,000		4,652		4,652
		Term Loan		11.75	%	Prime		3.25	%		11.50	%		—		5.00	%	January 1, 2028		5,000		4,903		4,903

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 30, 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)*
BrightInsight, Inc. (2)(12)	Software	Term Loan		14.00	%	Prime		5.50	%		9.50	%		—		3.00	%	August 1, 2027		7,000		6,814		6,814
		Term Loan		14.00	%	Prime		5.50	%		9.50	%		—		3.00	%	August 1, 2027		3,500		3,473		3,473
		Term Loan		14.00	%	Prime		5.50	%		9.50	%		—		3.00	%	August 1, 2027		3,500		3,473		3,473
		Term Loan		14.00	%	Prime		5.50	%		9.50	%		—		3.00	%	April 1, 2028		2,750		2,717		2,717
Elligo Health Research, Inc. (2)(12)	Software	Term Loan		11.75	%	Prime		3.50	%		11.75	%		—		4.00	%	October 1, 2027		10,000		9,783		9,783
		Term Loan		11.75	%	Prime		3.50	%		11.75	%		—		4.00	%	October 1, 2027		5,000		4,940		4,940
		Term Loan		11.75	%	Prime		3.50	%		11.75	%		—		4.00	%	October 1, 2027		5,000		4,940		4,940
		Term Loan		11.75	%	Prime		3.50	%		11.75	%		—		4.00	%	October 1, 2027		5,000		4,940		4,940
SafelyYou, Inc. (2)(12)	Software	Term Loan		11.25	%	Prime		3.25	%		11.00	%		—		5.00	%	June 1, 2027		5,000		4,791		4,791
		Term Loan		11.25	%	Prime		3.25	%		11.00	%		—		5.00	%	June 1, 2027		5,000		4,938		4,938
GT Medical Technologies, Inc. (2)(12)	Other Healthcare Services	Term Loan		11.25	%	Prime		3.25	%		11.25	%		—		4.00	%	October 1, 2029		3,750		3,592		3,592
		Term Loan		11.25	%	Prime		3.25	%		11.25	%		—		4.00	%	October 1, 2029		3,750		3,692		3,692
		Term Loan		11.25	%	Prime		3.25	%		11.25	%		—		4.00	%	October 1, 2029		7,500		7,384		7,384
Hometeam Technologies, Inc. (2)(12)	Other Healthcare Services	Term Loan		11.25	%	Prime		3.25	%		11.25	%		—		3.50	%	August 1, 2029		5,000		4,851		4,851
		Term Loan		11.25	%	Prime		3.25	%		11.25	%		—		3.50	%	August 1, 2029		5,000		4,951		4,951
		Term Loan		11.25	%	Prime		3.25	%		11.25	%		—		3.50	%	August 1, 2029		5,000		4,951		4,951
		Term Loan		11.25	%	Prime		3.25	%		11.25	%		—		3.50	%	August 1, 2029		5,000		4,951		4,951
		Term Loan		11.25	%	Prime		3.25	%		11.25	%		—		3.50	%	August 1, 2029		5,000		4,951		4,951
Total Non-Affiliate Debt Investments — Healthcare information and services																					$	106,542	$	104,184
*Total Non- Affiliate Debt Investments*																					$	645,930	$	626,392

					*Cost of*		*Fair*
Portfolio Company (1)(3)	*Sector*	*Type of Investment (7)*	*Number of Shares*		*Investments (6)(9)*		*Value (9)*
Non-Affiliate Warrant Investments — 5.5 % (8)
Non-Affiliate Warrants — Life Science — 1.5 % (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		169
Emalex Biosciences, Inc. (2)(12)	Biotechnology	Preferred Stock Warrant		110,402		176		127
Imunon, Inc. (2)(5)(12)	Biotechnology	Common Stock Warrant		19,671		64		—
KSQ Therapeutics, Inc. (2)(12)	Biotechnology	Preferred Stock Warrant		48,076		49		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		58
PDS Biotechnology Corporation (2)(5)(12)	Biotechnology	Common Stock Warrant		299,848		160		316
Provivi, Inc. (2)(12)	Biotechnology	Common Stock Warrant		175,098		278		—
Provivi, Inc. (2)(12)	Biotechnology	Preferred Stock Warrant		709,981		312		222
Stealth Biotherapeutics Inc. (2)(12)	Biotechnology	Common Stock Warrant		318,181		265		110
Tallac Therapeutics, Inc. (2)(12)	Biotechnology	Preferred Stock Warrant		1,600,002		195		167
Xeris Pharmaceuticals, Inc. (2)(5)(12)	Biotechnology	Common Stock Warrant		126,000		73		64
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		1,048
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		87		171
Candesant Biomedical, Inc. (2)(12)	Medical Device	Preferred Stock Warrant		93,336		152		131
Ceribell, Inc. (2)(12)	Medical Device	Preferred Stock Warrant		231,050		147		192
Cognoa, Inc. (2)(12)	Medical Device	Common Stock Warrant		30,585		—		—
Cognoa, Inc. (2)(12)	Medical Device	Preferred Stock Warrant		4,635,992		162		13
Conventus Orthopaedics, Inc. (2)(12)	Medical Device	Preferred Stock Warrant		9,313,541		256		197
CSA Medical, Inc. (2)(12)	Medical Device	Preferred Stock Warrant		4,917,794		174		471
CVRx, Inc. (2)(5)(12)	Medical Device	Common Stock Warrant		47,410		76		50
Infobionic, Inc. (2)(12)	Medical Device	Preferred Stock Warrant		5,361,130		231		169

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 30, 2024

(Dollars in thousands)

					*Cost of*		*Fair*
Portfolio Company (1)(3)	*Sector*	*Type of Investment (7)*	*Number of Shares*		*Investments (6)(9)*		*Value (9)*
Magnolia Medical Technologies, Inc. (2)(12)	Medical Device	Preferred Stock Warrant		809,931		194		304
Meditrina, Inc. (2)(12)	Medical Device	Preferred Stock Warrant		233,993		83		29
MicroTransponder, Inc. (2)(12)	Medical Device	Preferred Stock Warrant		103,172		48		48
Scientia Vascular, Inc (2)(12)	Medical Device	Preferred Stock Warrant		34,410		103		273
Sonex Health, Inc. (2)(12)	Medical Device	Preferred Stock Warrant		2,637,133		275		262
VERO Biotech LLC (2)(12)	Medical Device	Preferred Stock Warrant		4,109		432		196
Spineology, Inc. (2)(12)	Medical Device	Common Stock Warrant		2,714,033		143		108
Spineology, Inc. (2)(12)	Medical Device	Preferred Stock Warrant		2,255,155		16		27
Swift Health Systems Inc. (2)(12)	Medical Device	Preferred Stock Warrant		135,484		71		—
Total Non-Affiliate Warrants — Life Science						5,078		4,984
Non-Affiliate Warrants — Sustainability — 0.2 % (8)
New Aerofarms, Inc. assignee of Aerofarms, Inc. (2)(12)(15)	Other Sustainability	Preferred Stock Warrant		400,000		82		69
LiquiGlide, Inc. (2)(12)	Other Sustainability	Preferred Stock Warrant		61,359		40		25
Soli Organic, Inc. (2)(12)	Other Sustainability	Common Stock Warrant		65		20		19
Soli Organic, Inc. (2)(12)	Other Sustainability	Preferred Stock Warrant		1,103		382		489
Temperpack Technologies, Inc. (2)(12)	Other Sustainability	Preferred Stock Warrant		49,693		178		91
Pivot Bio, Inc. (2)(12)	Energy Efficiency	Preferred Stock Warrant		210,418		14		14
Total Non-Affiliate Warrants — Sustainability						716		707
Non-Affiliate Warrants — Technology — 3.5 % (8)
Axiom Space Holdings, Inc. (2)(12)	Communications	Common Stock Warrant		1,991		46		57
Intelepeer Holdings, Inc. (2)(12)	Communications	Preferred Stock Warrant		2,936,535		137		2,100
Alula Holdings, Inc. (2)(12)	Consumer-related Technologies	Preferred Stock Warrant		20,000		93		7
CAMP NYC, Inc. (2)(12)	Consumer-related Technologies	Preferred Stock Warrant		112,356		36		39
Clara Foods Co. (2)(12)	Consumer-related Technologies	Preferred Stock Warrant		46,745		30		121
Divergent Technologies, Inc. (2)(12)	Consumer-related Technologies	Common Stock Warrant		9,801		79		55
Divergent Technologies, Inc. (2)(12)	Consumer-related Technologies	Preferred Stock Warrant		53,264		454		622
Havenly, Inc. (2)(12)	Consumer-related Technologies	Common Stock Warrant		1,446,429		3,178		2,489
MyForest Foods Co. (2)(12)	Consumer-related Technologies	Preferred Stock Warrant		250		28		24
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		3,913,723		9		—
Optoro, Inc. (2)(12)	Consumer-related Technologies	Preferred Stock Warrant		11,550		181		144
Primary Kids, Inc. (2)(12)	Consumer-related Technologies	Preferred Stock Warrant		553,778		57		587
Quip NYC Inc. (2)(12)	Consumer-related Technologies	Preferred Stock Warrant		6,191		325		—
Standvast Holdings, LLC (2)(12)	Consumer-related Technologies	Preferred Stock Warrant		1,225,492		275		258
Unagi, Inc. (2)(12)	Consumer-related Technologies	Preferred Stock Warrant		171,081		29		—
Updater, Inc.(2)(12)	Consumer-related Technologies	Preferred Stock Warrant		108,333		34		26
CPG Beyond, Inc. (2)(12)	Data Storage	Preferred Stock Warrant		500,000		242		290
Silk, Inc. (2)(12)	Data Storage	Preferred Stock Warrant		394,110		175		119
Global Worldwide LLC (2)(12)	Internet and Media	Preferred Stock Warrant		245,810		75		—
Rocket Lawyer Incorporated (2)(12)	Internet and Media	Preferred Stock Warrant		261,721		92		313
Skillshare, Inc. (2)(12)	Internet and Media	Preferred Stock Warrant		139,074		162		671
Liqid, Inc. (2)(12)	Networking	Preferred Stock Warrant		344,102		364		103
Fictiv, Inc. (2)(12)	Networking	Common Stock Warrant		126,841		59		74
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		254
Dropoff, Inc. (2)(12)	Software	Common Stock Warrant		516,732		455		90
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		21
Kodiak Robotics, Inc. (2)(12)	Software	Preferred Stock Warrant		639,918		273		9
Lemongrass Holdings, Inc. (2)(12)	Software	Preferred Stock Warrant		101,308		34		83
Lotame Solutions, Inc. (2)(12)	Software	Preferred Stock Warrant		71,305		18		40
Lytics, Inc. (2)(12)	Software	Preferred Stock Warrant		85,543		43		—
Mirantis, Inc. (2)(12)	Software	Common Stock Warrant		948,275		223		240

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 30, 2024

(Dollars in thousands)

					*Cost of*		*Fair*
Portfolio Company (1)(3)	*Sector*	*Type of Investment (7)*	*Number of Shares*		*Investments (6)(9)*		*Value (9)*
Noodle Partners, Inc. (2)(12)	Software	Preferred Stock Warrant		84,037		116		—
Reputation Institute, Inc. (2)(12)	Software	Preferred Stock Warrant		4,104		63		33
Revinate Holdings, Inc. (2)(12)	Software	Preferred Stock Warrant		682,034		44		90
SIGNiX, Inc. (12)	Software	Preferred Stock Warrant		186,235		225		—
Slingshot Aerospace, Inc. (2)(12)	Software	Preferred Stock Warrant		309,208		123		79
Supply Network Visibility Holdings LLC (2)(12)	Software	Preferred Stock Warrant		682		65		75
Topia Mobility, Inc. (2)(12)	Software	Preferred Stock Warrant		3,049,607		137		—
Viken Detection Corporation (2)(12)	Software	Preferred Stock Warrant		345,443		120		203
xAd, Inc. (2)(12)	Software	Preferred Stock Warrant		4,343,348		176		7
Total Non-Affiliate Warrants — Technology						10,321		12,023
Non-Affiliate Warrants — Healthcare information and services — 0.3 % (8)
Hound Labs, Inc (12)	Diagnostics	Preferred Stock Warrant		451,796		45		—
Parse Biosciences, Inc. (2)(12)	Diagnostics	Common Stock Warrant		32,244		71		15
Parse Biosciences, Inc. (2)(12)	Diagnostics	Preferred Stock Warrant		184,253		166		47
Kate Farms, Inc. (2)(12)	Other Healthcare	Preferred Stock Warrant		82,965		103		777
GT Medical Technologies, Inc. (2)(12)	Other Healthcare	Preferred Stock Warrant		255,871		85		86
BrightInsight, Inc. (2)(12)	Software	Preferred Stock Warrant		85,066		167		—
Elligo Health Research, Inc. (2)(12)	Software	Preferred Stock Warrant		652,250		191		85
Medsphere Systems Corporation (2)(12)	Software	Preferred Stock Warrant		7,097,792		61		—
SafelyYou, Inc. (2)(12)	Software	Preferred Stock Warrant		150,353		163		11
*Total Non-Affiliate Warrants — Healthcare information and services*						1,052		1,021
*Total Non-Affiliate Warrants*						17,167		18,735
Non-Affiliate Other Investments — Life Science — 1.5 % (8)
Lumithera, Inc. (12)	Medical Device	Royalty Agreement				1,147		100
Robin Healthcare, Inc. (2)(12)	Medical Device	Royalty Agreement				7,271		3,247
ZetrOZ, Inc. (12)	Medical Device	Royalty Agreement				—		—
*Total Non-Affiliate Other Investments*						8,418		3,347
Non-Affiliate Equity — 2.2 % (8)
Cadrenal Therapeutics, Inc. (5)	Biotechnology	Common Stock		600,000		—		546
Castle Creek Biosciences, Inc. (12)	Biotechnology	Common Stock		1,162		250		250
Emalex Biosciences, Inc. (12)	Biotechnology	Common Stock		32,831		356		356
Axiom Space, Inc. (12)	Communications	Preferred Stock		1,810		261		306
PebblePost, Inc. (2)(12)	Communications	Preferred Stock		598,850		73		73
Caastle, Inc. (2)(12)	Consumer-related Technologies	Preferred Stock		242,180		2,681		2,687
Getaround, Inc. (2)(5)	Consumer-related Technologies	Common Stock		87,082		253		5
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		7		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		11
Decisyon, Inc. (12)	Software	Preferred Stock		280,000		2,800		1,281
Lotame, Inc. (12)	Software	Preferred Stock		66,127		5		190
*Total Non-Affiliate Equity*						8,886		7,488
*Total Non-Affiliate Portfolio Investment Assets*						$ 680,401		$ 655,962

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 30, 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 — 2.4 % (8)
Non-Controlled Affiliate Other Investments — 2.4 % (8)
Evelo Holdings, Inc. (2)(5)(12)(17)	Biotechnology	Other Investment		12.25	% (11)	Prime		4.25	%		11.00	%		—		4.25	%	January 1, 2028	$	5,770	$	4,910	$	1,825
		Other Investment		12.25	% (11)	Prime		4.25	%		11.00	%		—		4.25	%	January 1, 2028		8,656		7,621		2,832
		Other Investment		12.25	% (11)	Prime		4.25	%		11.00	%		—		4.25	%	January 1, 2028		3,462		2,947		1,095
		Other Investment		12.25	% (11)	Prime		4.25	%		11.00	%		—		4.25	%	January 1, 2028		3,462		2,947		1,095
		Other Investment		12.25	% (11)	Prime		4.25	%		11.00	%		—		4.25	%	January 1, 2028		2,308		1,964		730
		Other Investment		12.25	% (11)	Prime		4.25	%		11.00	%		—		4.25	%	January 1, 2028		2,308		1,964		730
Total Non-Controlled Affiliate Other Investments																						22,353		8,307

					Cost of		Fair
Portfolio Company (1)(3)	Sector	Type of Investment (7)	Number of Shares		Investments (6)(9)		Value (9)
Non-controlled Affiliate Equity — 0.0 % (8)
Aulea Medical, Inc. (12)	Medical Device	Common Stock		660,537	$	—	$	—
Evelo Holdings, Inc. (2)(5)(12)	Biotechnology	Common Stock		2,164,502		5,000		—
Total Non-Controlled Affiliate Equity						5,000		—
Non-controlled Affiliate Warrants — 0.0 % (8)
Evelo Holdings, Inc. (2)(5)(12)	Biotechnology	Common Stock		23,196		125		—
Total Non-Controlled Affiliate Warrants						125		—
*Total Non-Controlled Affiliate Portfolio Investment Assets*					$	27,478	$	8,307

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 — 5.7 % (8)
Controlled Affiliate Debt Investments — 2.0 % (8)
Better Place Forests Co. (12)	Consumer-related Technologies	Term Loan		12.00	% (11)	Prime		3.75	%		12.00	%		—		2.78	%	August 1, 2029	$	3,891	$	3,935	$	3,234
		Term Loan		12.00	% (11)	Prime		3.75	%		12.00	%		—		2.78	%	August 1, 2029		1,946		1,927		1,583
		Term Loan		12.00	% (11)	Prime		3.75	%		12.00	%		—		—		August 1, 2025		521		521		489
		Term Loan		12.00	% (11)	Prime		3.75	%		12.00	%		—		—		August 1, 2025		516		517		484
		Term Loan		12.00	% (11)	Prime		3.75	%		12.00	%		—		—		August 1, 2025		506		507		474
Nexii, Inc. (12)	Other Sustainability	Term Loan		10.00	%	Fixed		—			—			—		—		July 1, 2027		790		790		628
Total Controlled Affiliate Debt Investments																						8,197		6,892

					*Cost of*		*Fair*
Portfolio Company (1)(3)	*Sector*	*Type of Investment (7)*	*Number of Shares*		*Investments (6)(9)*		*Value (9)*
Controlled Affiliate Equity — 1.9 % (8)
Better Place Forests Co. (12)	Consumer-related Technologies	Common Stock		2,278,272		2,060		—
Better Place Forests Co. (12)	Consumer-related Technologies	Preferred Stock		5,350,142		2,500		—
Nexii, Inc. (2)(12)	Other Sustainability	Common Stock		108,320		3,297		3,309
Nexii, Inc. (2)(12)	Other Sustainability	Preferred Stock		542		3,419		3,240
Total Controlled Affiliate Equity						11,276		6,549
Controlled Affiliate Other Investments — 1.8 % (8)
HIMV LLC (12)(16)	Biotechnology	Other Investment				5,880		6,290
Total Controlled Affiliate Other						5,880		6,290
*Total Controlled Affiliate Portfolio Investment Assets*					$	25,353	$	19,731
*Total Portfolio Investment Assets — 199.7 % (8)*					$	733,232	$	684,000

Short Term Investments - Unrestricted Investments - 9.1 % (8)
US Bank Money Market Deposit Account		31,080		31,080
Total Short Term Investments - Unrestricted Investments	$	31,080	$	31,080

Short Term Investments - Restricted Investments - 1.0 % (8)
US Bank Money Market Deposit Account		3,266		3,266
Total Short Term Investments - Restricted Investments	$	3,266	$	3,266

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments (Unaudited)

September 30, 2024

(Dollars in thousands)

( 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”), a credit facility (the “NYL Facility”) led by New York Life Insurance Company, a credit facility (the “Nuveen Facility”, together with the Key Facility and the NYL Facility, the “Credit Facilities”) led by Nuveen Alternatives Advisors LLC, 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 September 30, 2024 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 )

The Company did not have any non-qualifying assets under Section 55 (a) of the 1940 Act as of September 30, 2024 . 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 )

Investment has a payment-in-kind (“PIK”) feature in which the accrued interest is added to the then-outstanding principal amount of the investment.

( 12 )

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

( 13 )

Debt investment is on non-accrual status as of September 30, 2024 .

( 14 )

Debt investment is on non-accrual status as of September 30, 2024 and interest payments received will be recognized as income on a cash basis.

( 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 )

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. The assets of IMV were sold for (i) the right to receive certain payments, if any, in connection with the potential future development and licensing of the assets sold and (ii) equity in the buyer of such assets. HIMV LLC is 70% owned by the Company and 30% owned by a third -party co-lender.

( 17 )

The investment originally consisted of debt investments in Evelo Biosciences Inc. (“Evelo”). Evelo was a clinical stage life science company that was unable to raise additional capital to continue as a going concern and, through a series of transactions, Evelo became a subsidiary of Evelo Holdings, Inc. (“Evelo Holdings”) and Evelo Holdings assumed the indebtedness of Evelo to the Company. Evelo Holdings is not an operating company but holds certain contractual rights to contingent payments and owns equity in Evelo, as well as certain assets it seeks to sell. The Company has a first priority security interest in the assets of Evelo Holdings, so if any payments are received by Evelo Holdings or any of its equity holdings or other assets are sold, the Company will receive substantially all of the proceeds from the same, until such time, if ever, that all of the indebtedness is repaid. Accordingly, the Company characterizes this investment as an “Other Investment” rather than a “Debt Investment”.

See Notes to Consolidated Financial Statements

Table of Contents

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				2,096		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

Table of Contents

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

Table of Contents

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

Table of Contents

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

Table of Contents

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

Table of Contents

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

Table of Contents

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

Table of Contents

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

Short Term Investments - Unrestricted Investments - 1.0 % (8)
US Bank Money Market Deposit Account		26,450		26,450
Total Short Term Investments - Unrestricted Investments	$	26,450	$	26,450

Short Term Investments - Restricted Investments - 0.8 % (8)
US Bank Money Market Deposit Account		2,642		2,642
Total Short Term Investments - Restricted Investments	$	2,642	$	2,642

See Notes to Consolidated Financial Statements

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2023

(Dollars in thousands)

( 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.

( 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

Table of Contents

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. Credit II is consolidated in the financial statements of the Company.

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 were dissolved on February 27, 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 in the financial statements of 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 2022 - 1 Entities are consolidated in the financial statements of the Company.

Horizon Funding II, LLC (“HFII”) was formed as a Delaware limited liability company o n May 13, 20 24, with the Company as its sole equity member. H FII is a special purpose bankruptcy-remote entity and is a separate legal entity from the Company. Any assets conveyed to HFII are not available to creditors of the Company or any other entity other than HFII’s lenders. HFII is consolidated in the financial statements of the Company.

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 and are consolidated in the financial statements of 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 past borrower of the Company. The assets of IMV were sold for (i) the right to receive certain payments, if any, in connection with the potential future development and licensing of the assets sold and (ii) equity in the buyer of such assets. HIMV LLC is 70 % owned by the Company and 30 % owned by a third -party 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.

Table of Contents

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.

Table of Contents

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 September 30, 2024 , there were four investments on nonaccrual status with a cost of $ 51.4 million and a fair value of $ 36.1 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 and nine months ended September 30, 2024 , the Company recognized interest income of $ 0.2 million from debt investments while on non-accrual status. For the three and nine months ended September 30, 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 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 September 30, 2024 and 2023, 1.5 % and 13.5 %, respectively, of the Company's total investment income was attributable to non-cash PIK interest. For the nine months ended September 30, 2024 and 2023, 2.8 % and 7.1 %, 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 September 30, 2024, no debt investments, which had accrued PIK interest into income, were placed on nonaccrual status. For the nine months ended September 30, 2024 , one debt investment, which had accrued PIK interest into income of $ 1.0 million during the nine months ended September 30, 2024 was placed on nonaccrual status. For the three and nine months ended September 30, 2023, three debt investments, which had accrued PIK interest into income of $ 3.7 million and $ 5.8 million during the three and nine months ended September 30, 2023, respectively, 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 September 30, 2024 and 2023 was 4.6 % and 5.1 %, respectively. The proportion of the Company’s total investment income that resulted from the portion of ETPs not received in cash for the nine months ended September 30, 2024 and 2023 was 6.0 % and 4.9 %, 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.

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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 September 30, 2024 and December 31, 2023 was $ 7.9 million and $ 5.8 million, respectively. These amounts are capitalized and amortized and included in interest expense in the consolidated statements of operations over the life of the borrowings. The accumulated amortization balances as of September 30, 2024 and December 31, 2023 were $ 6.7 million and $ 5.2 million, respectively. The amortization expense for the three months ended September 30, 2024 and 2023 was $ 0.5 million and $ 0.5 million, respectively. The amortization expense for the nine months ended September 30, 2024 and 2023 was $ 1.3 million and $ 1.4 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 Services — Investment 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 September 30, 2024 and 2023 , $ 0.4 million and $ 0.2 million, respectively, was accrued for U.S. federal excise tax. For the nine months ended September 30, 2024 and 2023 , $ 1.1 million and $ 0.5 million, respectively, was accrued for U.S. federal excise tax.

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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 September 30, 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 September 30, 2024 , the Company sold 1,709,096 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 18.4 million, including $ 0.4 million of offering expenses, from these sales.

During the three months ended September 30, 2023 , the Company sold 1,186,303 shares of common stock under the 2023 Equity Distribution Agreement and the 2021 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 13.9 million, including $ 0.4 million of offering expenses, from these sales.

During the nine months ended September 30, 2024 , the Company sold 4,279,141 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 47.5 million, including $ 1.0 million of offering expenses, from these sales.

During the nine months ended September 30, 2023 , the Company sold 2,240,326 shares of common stock under the 2023 Equity Distribution Agreement and the 2021 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 26.1 million, including $ 0.7 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 September 30, 2024 , shares representing approximately $ 98.2 million of its common stock remain available for issuance and sale under the 2023 Equity Distribution Agreement.

On June 2, 2023, the Company completed a follow-on public offering of 3,250,000 shares of our common stock at a public offering price of $ 12.50 per share, for total net proceeds to us of $ 38.9 million, after deducting underwriting commission and discounts and other offering expenses.

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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 and nine months ended September 30, 2024 and 2023 , the Company did not make any repurchases of its common stock. From the inception of the stock repurchase program through September 30, 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 issued accounting pronouncement

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures (“ASU 2023 - 07” ). ASU 2023 - 07 is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole. The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker, clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures and providing new disclosure requirements for entities with a single reportable segment, among other new disclosure requirements. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance with respect to the consolidated financial statements and disclosures.

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.

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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 September 30, 2024 and December 31, 2023 was $ 1.0 million and $ 1.1 million, respectively. The base management fee expense was $ 3.0 million and $ 3.2 million for the three months ended September 30, 2024 and 2023 , respectively. The base management fee expense was $ 9.2 and $ 9.6 million for the nine months ended September 30, 2024 and 2023 , respectively.

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.

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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.

There was no performance based incentive fee expense for the three months ended September 30, 2024 and 2023. The performance based incentive fee expense was $ 0.3 million and $ 3.1 million for the nine months ended September 30, 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 September 30, 2024 and 2023, which resulted in $ 2.4 million and $ 3.5 million, respectively, of reduced expense and additional net investment income. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap and Deferral Mechanism for the nine months ended September 30, 2024 and 2023, which resulted in $ 7.2 million and $ 6.8 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.

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Horizon Technology Finance Corporation and Subsidiaries

Notes to Consolidated Financial Statements

The following table provides the expiration dates of the Company’s Incentive Fee Cap and Deferral Mechanism contingent future liability as of September 30, 2024 :

Expiration	*Total*
	(In thousands)
December 31, 2025	$	1,037
March 31, 2026		219
June 30, 2026		3,120
September 30, 2026		3,471
December 31, 2026		3,002
March 31, 2027		2,285
June 30, 2027		2,582
September 30, 2027		2,368
Total	$	18,084

There was no performance based incentive fee payable as of September 30, 2024 and December 31, 2023 .

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 September 30, 2024 and 2023 . The administrative fee expense was $ 1.3 million and $ 1.2 million for the nine months ended September 30, 2024 and 2023 , respectively. The administrative fee payable at September 30, 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 September 30, 2024 and December 31, 2023 :

	*September 30, 2024*				*December 31, 2023*
	*Cost*		*Fair Value*		*Cost*		*Fair Value*
	(In thousands)
Investments
Debt	$	654,127	$	633,284	$	721,231	$	670,172
Warrants		17,292		18,735		16,526		24,594
Other		36,651		17,944		6,982		6,430
Equity		25,162		14,037		14,443		7,889
Total investments	$	733,232	$	684,000	$	759,182	$	709,085

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Horizon Technology Finance Corporation and Subsidiaries

Notes to Consolidated Financial Statements

The following table shows the Company’s investments by industry sector as of September 30, 2024 and December 31, 2023 :

	*September 30, 2024*				*December 31, 2023*
	*Cost*		*Fair Value*		*Cost*		*Fair Value*
	(In thousands)
Life Science
Biotechnology	$	126,867	$	106,865	$	145,544	$	117,781
Medical Device		185,751		179,092		147,064		145,019
Technology
Communications		13,577		15,596		19,192		22,188
Consumer-Related		74,381		54,505		105,669		101,327
Data Storage		417		409		417		418
Internet and Media		329		984		329		1,582
Networking		10,064		9,818		5,451		5,297
Power Management		1,585		2,700		1,585		2,700
Semiconductors		45		—		45		—
Software		136,309		132,951		164,133		160,749
Sustainability
Energy Efficiency		9,812		9,712		111		13
Other Sustainability		66,501		66,163		98,906		80,370
Healthcare Information and Services
Diagnostics		16,692		14,114		19,735		19,701
Other		39,511		40,186		102		1,366
Software		51,391		50,905		50,899		50,574
Total investments	$	733,232	$	684,000	$	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 September 30, 2024 were as follows:

					*Three months ended September 30, 2024*

	*Fair value at*							*Transfers*				*Net*					*Fair value at*
Portfolio	*June 30,*				*Principal*			*in/(out) at*		*Discount*		*unrealized*			*Net realized*		*September 30,*
Company	*2024*		*Purchases*		*payments*			*fair value*		*accretion*		*gain/(loss)*			*gain/(loss)*		*2024*
	(In thousands)
Aulea Medical, Inc.	$	—	$	—	$	—		$	—	$	—	$	—		$	—	$	—
Evelo Biosciences, Inc.		3,503		—		( 318	)		—		—		( 1,360	)		—		1,825
		5,340		127		( 476	)		—		—		( 2,159	)		—		2,832
		2,101		—		( 191	)		—		—		( 815	)		—		1,095
		2,101		—		( 191	)		—		—		( 815	)		—		1,095
		1,401		—		( 127	)		—		—		( 544	)		—		730
		1,401		—		( 127	)		—		—		( 544	)		—		730
Total non-controlled affiliates	$	15,847	$	127	$	( 1,430	)	$	—	$	—	$	( 6,237	)	$	—	$	8,307

Table of Contents

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 September 30, 2023 were as follows:

					*Three months ended September 30, 2023*

	*Fair value at*						*Transfers*					*Net*					*Fair value at*
Portfolio	*June 30,*				*Principal*		*in/(out) at*			*Discount*		*unrealized*			*Net realized*		*September 30,*		*Interest*
Company	*2023*		*Purchases*		*payments*		*fair value*			*accretion*		*gain/(loss)*			*gain/(loss)*		*2023*		*income*
	(In thousands)
Aulea Medical, Inc.	$	—	$	—	$	—	$	—		$	—	$	—		$	—	$	—	$	—
Cadrenal Therapeutics, Inc. (1)		906		—		—		( 906	)		—		—			—		—		—
Evelo Biosciences, Inc.		—		—		—		7,665			8		( 5,007	)		—		2,666		277
		—		—		—		11,496			11		( 7,510	)		—		3,997		415
		—		—		—		4,612			5		( 3,013	)		—		1,604		166
		—		—		—		4,598			3		( 3,004	)		—		1,597		163
		—		—		—		3,067			4		( 2,003	)		—		1,068		114
		—		—		—		3,067			4		( 2,003	)		—		1,068		111
		—		—		—		5,000			—		3,485			—		8,485		—
Total non-controlled affiliates	$	906	$	—	$	—	$	38,599		$	35	$	( 19,055	)	$	—	$	20,485	$	1,246

( 1 )

As of September 30, 2023 , the Company no longer owns 5 % or more of the portfolio company.

Transactions related to investments in non-controlled affiliated companies for the nine months ended September 30, 2024 were as follows:

					*Nine months ended September 30, 2024*
	*Fair value at*							*Transfers*				*Net*					*Fair value at*
Portfolio	*December 31,*				*Principal*			*in/(out) at*		*Discount*		*unrealized*			*Net realized*		*September 30,*		*Interest*
Company	*2023*		*Purchases*		*payments*			*fair value*		*accretion*		*gain/(loss)*			*gain/(loss)*		*2024*		*income*
	(In thousands)
Aulea Medical, Inc.	$	—	$	3	$	( 40	)	$	—	$	—	$	—		$	37	$	—	$	—
Evelo Biosciences, Inc.		222		—		( 318	)		—		—		1,921			—		1,825		—
		336		231		( 476	)		—		—		2,741			—		2,832		—
		133		—		( 191	)		—		—		1,153			—		1,095		—
		133		—		( 191	)		—		—		1,153			—		1,095		—
		88		—		( 127	)		—		—		769			—		730		—
		88		—		( 127	)		—		—		769			—		730		—
		132		—		—			—		—		( 132	)		—		—		—
Total non-controlled affiliates	$	1,132	$	234	$	( 1,470	)	$	—	$	—	$	8,374		$	37	$	8,307	$	—

Transactions related to investments in non-controlled affiliated companies for the nine months ended September 30, 2023 were as follows:

					*Nine months ended September 30, 2023*

	*Fair value at*						*Transfers*					*Net*					*Fair value at*
Portfolio	*December 31,*				Principal		*in/(out) at*			*Discount*		*unrealized*			*Net realized*		*September 30,*		*Interest*
Company	*2022*		*Purchases*		*payments*		*fair value*			*accretion*		*gain/(loss)*			*gain/(loss)*		*2023*		*income*
	(In thousands)
Aulea Medical, Inc.	$	—	$	—	$	—	$	—		$	—	$	—		$	—	$	—	$	—
Cadrenal Therapeutics, Inc. (1)		—		—		—		( 906	)		—		906			—		—		—
Evelo Biosciences, Inc.		—		—		—		7,665			8		( 5,007	)		—		2,666		277
		—		—		—		11,496			11		( 7,510	)		—		3,997		415
		—		—		—		4,612			5		( 3,013	)		—		1,604		166
		—		—		—		4,598			3		( 3,004	)		—		1,597		163
		—		—		—		3,067			4		( 2,003	)		—		1,068		114
		—		—		—		3,067			4		( 2,003	)		—		1,068		111
		—		—		—		5,000			—		3,485			—		8,485		—
Total non-controlled affiliates	$	—	$	—	$	—	$	38,599		$	35	$	( 18,149	)	$	—	$	20,485	$	1,246

( 1 )

As of September 30, 2023 , the Company no longer owns 5% or more of the portfolio company.

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).

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Notes to Consolidated Financial Statements

Transactions related to investments in controlled affiliated companies for the three months ended September 30, 2024 were as follows:

					*Three months ended September 30, 2024*

	*Fair value at*									*Transfers*				*Net*					*Fair value at*
Portfolio	*June 30,*				*Principal*					*in/(out) at*		*Discount*		*unrealized*			*Net realized*		*September 30,*		*Interest*
Company	*2024*		*Purchases*		*payments*			*PIK*		*fair value*		*accretion*		*gain/(loss)*			*gain/(loss)*		*2024*		*income*
	(In thousands)
Better Place Forests Co.	$	3,166	$	—	$	—		$	119	$	—	$	2	$	( 53	)	$	—	$	3,234	$	125
		1,549		—		—			59		—		1		( 26	)		—		1,583		63
		420		—		—			16		—		—		53			—		489		16
		415		—		—			16		—		—		53			—		484		16
		—		500		—			6		—		—		( 32	)		—		474		6
HIMV LLC		5,836		—		( 45	)		—		—		—		499			—		6,290		—
Nexii, Inc.		—		—		—			—		6,716		—		( 167	)		—		6,549		15
		—		790		—			—		—		—		( 162	)		—		628		—
Total controlled affiliates	$	11,386	$	1,290	$	( 45	)	$	216	$	6,716	$	3	$	165		$	—	$	19,731	$	241

Transactions related to investments in controlled affiliated companies for the three months ended September 30, 2023 were as follows:

					*Three months ended September 30, 2023*

	*Fair value at*								*Transfers*				*Net*					*Fair value at*
Portfolio	*June 30,*				*Principal*				*in/(out) at*		*Discount*		*unrealized*			*Net realized*		*September 30,*		*Interest*
Company	*2023*		*Purchases*		*payments*		*PIK*		*fair value*		*accretion*		*gain/(loss)*			*gain/(loss)*		*2023*		*income*
	(In thousands)
Better Place Forests Co.	$	—	$	59	$	—	$	105	$	1,759	$	2	$	1,080		$	—	$	3,005	$	111
		—		—		—		53		844		1		536			—		1,434		55
		—		—		—		—		2,061		—		—			—		2,061		—
		—		750		—		—		—		—		( 259	)		—		491		—
HIMV LLC		—		—		—		—		6,154		—		—			—		6,154		—
Total controlled affiliates	$	—	$	809	$	—	$	158	$	10,818	$	3	$	1,357		$	—	$	13,145	$	166

Transactions related to investments in controlled affiliated companies for the nine months ended September 30, 2024 were as follows:

					*Nine months ended September 30, 2024*

	*Fair value at*									*Transfers*				*Net*					*Fair value at*
Portfolio	*December 31,*				*Principal*					*in/(out) at*		*Discount*		*unrealized*			*Net realized*		*September 30,*		*Interest*
Company	*2023*		*Purchases*		*payments*			*PIK*		*fair value*		*accretion*		*gain/(loss)*			*gain/(loss)*		*2024*		*income*
	(In thousands)
Better Place Forests Co.	$	3,339	$	—	$	—		$	345	$	—	$	6	$	( 456	)	$	—	$	3,234	$	363
		1,630		—		—			171		—		4		( 222	)		—		1,583		184
		—		500		—			21		—		—		( 32	)		—		489		21
		—		500		—			17		—		—		( 33	)		—		484		17
		—		500		—			6		—		—		( 32	)		—		474		6
		3,024		1,250		—			—		—		—		( 4,274	)		—		—		—
HIMV LLC		6,230		227		( 592	)		—		463		—		( 38	)		—		6,290		—
Nexii, Inc.		—		—		—			—		6,716		—		( 167	)		—		6,549		15
		—		790		—			—		—		—		( 162	)		—		628		—
Total controlled affiliates	$	14,223	$	3,767	$	( 592	)	$	560	$	7,179	$	10	$	( 5,416	)	$	—	$	19,731	$	606

Table of Contents

Horizon Technology Finance Corporation and Subsidiaries

Notes to Consolidated Financial Statements

Transactions related to investments in controlled affiliated companies for the nine months ended September 30, 2023 were as follows:

					*Nine months ended September 30, 2023*

	*Fair value at*								*Transfers*				*Net*					*Fair value at*
Portfolio	*December 31,*				*Principal*				*in/(out) at*		*Discount*		*unrealized*			*Net realized*		*September 30,*		*Interest*
Company	*2022*		*Purchases*		*payments*		*PIK*		*fair value*		*accretion*		*gain/(loss)*			*gain/(loss)*		*2023*		*income*
	(In thousands)
Better Place Forests Co.	$	—	$	59	$	—	$	105	$	1,759	$	2	$	1,080		$	—	$	3,005	$	111
		—		—		—		53		844		1		536			—		1,434		55
		—		—		—		—		2,061		—		—			—		2,061		—
		—		750		—		—		—		—		( 259	)		—		491		—
HIMV LLC		—		—		—		—		6,154		—		—			—		6,154		—
Total controlled affiliates	$	—	$	809	$	—	$	158	$	10,818	$	3	$	1,357		$	—	$	13,145	$	166

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.

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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.

Table of Contents

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 September 30, 2024 and December 31, 2023 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

	*September 30, 2024*
	*Level 1*		*Level 2*		*Level 3*		*Total*
	(In thousands)
Debt investments	$	—	$	—	$	633,284	$	633,284
Warrant investments		—		430		18,305		18,735
Other investments		—		—		17,944		17,944
Equity investments		560		—		13,477		14,037
Total investments	$	560	$	430	$	683,010	$	684,000

	*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 September 30, 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.

Table of Contents

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 September 30, 2024 :

*September 30, 2024*
	*Fair*		*Valuation Techniques/*	*Unobservable*		*Weighted*
Investment Type	*Value*		*Methodologies*	*Input*	*Range*	*Average(1)*
			(Dollars in thousands, except per share data)
Debt investments	$	597,137	Discounted Expected Future Cash Flows	Hypothetical Market Yield	12 % – 20 %		14	%

		36,147	Multiple Probability Weighted Cash Flow Model	Probability Weighting	10 % - 100 %		77	%

Warrant investments		18,305	Black-Scholes Valuation Model	Price Per Share	0.00 0 – 1,898.58 58	$	65.35
				Average Industry Volatility	25 %		25	%
				Marketability Discount	0 - 20 %		17	%
				Estimated Time to Exit (in years)	1 to 5		3

Other investments		17,944	Multiple Probability Weighted Cash Flow Model	Discount Rate	15 % – 100 %		36	%
				Probability Weighting	30 % – 100 %		86	%

Equity investments		13,477	Last Equity Financing	Price Per Share	0.00 0 – 14,592.60 60	$	3,532.29

Total Level 3 investments	$	683,010

( 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.

*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	0.00 0 – 1,899.00 00	$	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	0.56 6 – 215.03 03	$	17.15

Total Level 3 investments	$	706,858

( 1 )

Borrowings: The Credit Facilities 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 September 30, 2024 , the closing price of the 2026 Notes on the New York Stock Exchange was $ 24.30 per note and had an aggregate fair value of $ 55.9 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 September 30, 2024 , the closing price of the 2027 Notes on the New York Stock Exchange was $ 24.16 per note and had an aggregate fair value of $ 55.6 million. Therefore, the Company has categorized this borrowing as Level 1 within the fair value hierarchy described above. Based on market quotations on September 30, 2024 , the 2022 Asset-Backed Notes were trading at par value, or $ 91.0 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.

Table of Contents

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 September 30, 2024 :

	*Three months ended September 30, 2024*
	*Debt*			*Warrant*			*Equity*			*Other*
	*Investments*			*Investments*			*Investments*			*Investments*			*Total*
	(In thousands)
Level 3 assets, beginning of period	$	609,068		$	21,131		$	6,850		$	9,183		$	646,232
Purchase of investments		85,782			—			—			45			85,827
Warrants received and classified as Level 3		—			411			—			—			411
Principal payments received on investments		( 44,347	)		—			—			( 45	)		( 44,392	)
Payment-in-kind interest on investments		377			—			—			—			377
Proceeds from sale of investments		( 69	)		—			—			—			( 69	)
Net realized loss on investments		( 33,385	)		( 509	)		—			—			( 33,894	)
Unrealized appreciation (depreciation) included in earnings		37,574			( 2,655	)		( 162	)		( 5,783	)		28,974
Transfer out of warrant investments		( 21,260	)		( 73	)		6,789			14,544			—
Other		( 456	)		—			—			—			( 456	)
Level 3 assets, end of period	$	633,284		$	18,305		$	13,477		$	17,944		$	683,010

During the three months ended September 30, 2024, there were no transfers in or out of Level 3.

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 September 30, 2023 :

	*Three months ended September 30, 2023*
	*Debt*			*Warrant*			*Equity*			*Other*
	*Investments*			*Investments*			*Investments*			*Investments*			*Total*
	(In thousands)
Level 3 assets, beginning of period	$	683,309		$	24,376		$	4,259		$	1,300		$	713,244
Purchase of investments		66,185			—			750			—			66,935
Warrants received and classified as Level 3		—			1,294			—			—			1,294
Principal payments received on investments		( 25,726	)		—			—			—			( 25,726	)
Payment-in-kind interest on investments		3,934			—			—			—			3,934
Proceeds from sale of investments		( 2,528	)		( 23	)		( 6	)		—			( 2,557	)
Net realized (loss) gain on investments		( 11,440	)		( 118	)		6			—			( 11,552	)
Unrealized depreciation included in earnings		( 18,877	)		( 296	)		( 1,349	)		( 200	)		( 20,722	)
Transfer out of Level 3		( 5,000	)		—			—			—			( 5,000	)
Transfer out of debt investments		( 9,304	)		—			3,150			6,154			—
Other		( 715	)		—			—			—			( 715	)
Level 3 assets, end of period	$	679,838		$	25,233		$	6,810		$	7,254		$	719,135

During the three months ended September 30, 2023 , there was one transfer out of Level 3. The one transfer out of Level 3 related to debt investments held in one portfolio company with an aggregate fair value of $ 5.0 million that were transferred to Level 1 upon the conversion into shares of common stock of a public company.

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 nine months ended September 30, 2024 :

	*Nine months ended September 30, 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		119,564			—			1,250			397			121,211
Warrants received and classified as Level 3		—			1,628			—			—			1,628
Principal payments received on investments		( 120,333	)		—			—			( 115	)		( 120,448	)
Payment-in-kind interest on investments		2,114			—			—			—			2,114
Proceeds from sale of investments		( 113	)		( 4	)		—			( 40	)		( 157	)
Net realized (loss) gain on investments		( 33,344	)		2,091			—			40			( 31,213	)
Unrealized appreciation (depreciation) included in earnings		18,564			( 5,631	)		( 4,524	)		( 6,503	)		1,906
Transfer out of debt and warrant investments		( 24,451	)		( 2,754	)		9,470			17,735			—
Other		1,111			—			—			—			1,111
Level 3 assets, end of period	$	633,284		$	18,305		$	13,477		$	17,944		$	683,010

During the nine months ended September 30, 2024 , there were no transfers in or out of Level 3.

The change in unrealized appreciation included in the consolidated statement of operations attributable to Level 3 investments still held at September 30, 2024 includes $ 6.0 million in unrealized depreciation on debt and other investments, $ 4.5 million in unrealized depreciation on equity investments and $ 0.3 million in unrealized depreciation on warrant investments.

Table of Contents

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 nine months ended September 30, 2023 :

	*Nine months ended September 30, 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		153,728			—			760			—			154,488
Warrants and equity received and classified as Level 3		—			1,950			89			—			2,039
Principal payments received on investments		( 90,222	)		—			—			—			( 90,222	)
Payment-in-kind interest on investments		6,088			—			—			—			6,088
Proceeds from sale of investments		( 9,564	)		( 1,493	)		( 6	)		—			( 11,063	)
Net realized (loss) gain on investments		( 29,105	)		1,028			( 121	)		—			( 28,198	)
Unrealized depreciation included in earnings		( 21,325	)		( 2,392	)		( 2,467	)		( 200	)		( 26,384	)
Transfer out of Level 3		( 5,000	)		—			( 111	)		—			( 5,111	)
Transfer out of debt investments		( 12,399	)		( 5	)		6,250			6,154			—
Other		1,179			—			—			—			1,179
Level 3 assets, end of period	$	679,838		$	25,233		$	6,810		$	7,254		$	719,135

During the nine months ended September 30, 2023 , there were two transfers out of Level 3. One transfer out of Level 3 related to equity held in one portfolio company with an aggregate fair value of $ 0.1 million that was transferred to Level 1 upon the portfolio company becoming a public company. One transfer related to debt investments held in one portfolio company with an aggregate fair value of $ 5.0 million that were transferred to Level 1 upon the conversion into shares of common stock of a public company.

The change in unrealized depreciation included in the consolidated statement of operations attributable to Level 3 investments still held at September 30, 2023 includes $ 33.6 million in unrealized depreciation on debt and other investments, $ 2.1 million in unrealized depreciation on warrant investments and $ 1.6 million in unrealized depreciation on equity investments.

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 September 30, 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 September 30, 2024 and December 31, 2023 :

	*September 30, 2024*							*December 31, 2023*
	*Total*		*Balance*			*Unused*		*Total*		*Balance*			*Unused*
	*Commitment*		*Outstanding*			*Commitment*		*Commitment*		*Outstanding*			*Commitment*
	(In thousands)
Key Facility	$	150,000	$	—		$	150,000	$	150,000	$	70,000		$	80,000
NYL Facility		250,000		181,000			69,000		250,000		181,000			69,000
Nuveen Facility		100,000		50,000			50,000		—		—			—
2022 Asset-Backed Notes		90,970		90,970			—		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		705,970		436,970			269,000		615,000		466,000			149,000
Unamortized debt issuance costs attributable to term borrowings		—		( 3,001	)		—		—		( 3,765	)		—
Total borrowings outstanding, net	$	705,970	$	433,969		$	269,000	$	615,000	$	462,235		$	149,000

As of September 30, 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 September 30, 2024 , the asset coverage for borrowed amounts was 178 %.

Table of Contents

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 20, 2024, the Company amended the Key Facility, among other things, (i) to extend the date on which the Company may request advances under the Key Facility to June 20, 2027 and to extend the maturity date to June 20, 2029 and (ii) to amend the interest rate to be based on the rate of interest published in The Wall Street Journal as the prime rate in the United States plus 0.10 %, with a prime rate floor of 4.10 %. 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 prime rate was 8.00 % and 8.50 % on September 30, 2024 and December 31, 2023, respectively. The average interest rate on the Key Facility for the three months ended September 30, 2024 and 2023 was 8.53 % and 8.68 %, respectively. The average interest rate on the Key Facility for the nine months ended September 30, 2024 and 2023 was 8.67 % and 8.34 %, 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 September 30, 2024 and December 31, 2023 , the Company had borrowing capacity under the Key Facility of $ 150.0 million and $ 80.0 million, respectively. At September 30, 2024 and December 31, 2023 , $ 13.3 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 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. 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.

On May 6, 2024, the Company amended its NYL Facility to, among other things, extend the investment period to June 2025 and the maturity date of all advances to June 2030. In addition, the amendment amended the interest rate for advances made after May 6, 2024, fixing the interest rate at the greater of (i) 4.60 % and (ii) the Three Year I Curve plus 3.20 %, 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 September 30, 2024 and December 31, 2023 . The interest rate was 6.43 % and 5.85 % as of September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023 , the Company had borrowing capacity under the NYL Facility of $ 69.0 million. At September 30, 2024 and December 31, 2023 , $ 8.2 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 September 30, 2024 and December 31, 2023 , there were approximately $ 1.4 million of such restricted investments.

Nuveen Facility

HFII entered into the Nuveen Facility with the Nuveen 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 HFII and the Nuveen Noteholders. On June 21, 2024, the Company sold or contributed to HFII certain secured loans made to certain portfolio companies pursuant to the Sale and Servicing Agreement. Any notes issued by HFII are collateralized by all investments held by HFII and permit an advance rate of up to 67.5 % of the aggregate principal amount of eligible debt investments. The notes were issued pursuant to the Indenture. The Nuveen Facility bears interest, payable monthly, determined at a rate per annum equal to the greater of (i) the yield for the United States Treasury constant maturity 3 -year and 5 -year in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily) – H.15” interpolated to a 4.88 -year weighted average life plus 3.15 % and (ii) 5.00 %. The Company may request advances under the Nuveen Facility through June 21, 2027 and the Nuveen Facility is scheduled to mature on June 10, 2033.

There were $ 50.0 million in advances made by the Nuveen Noteholders as of September 30, 2024 . The interest rate as of September 30, 2024 was 7.38 %. As of September 30, 2024 , the Company had borrowing capacity under the Nuveen Facility of $ 50.0 million. At September 30, 2024 , $ 29.9 million was available for borrowing, subject to existing terms and advance rates. The Nuveen Facility was not outstanding at December 31, 2023.

Under the terms of the Nuveen Facility, the Company is required to maintain a reserve cash balance, which may be used to pay monthly interest and principal payments on the Nuveen Facility. The Company has segregated these funds and classified them as restricted investments in money market funds. At September 30, 2024 , there were approximately $ 0.9 million of such restricted investments.

Table of Contents

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 September 30, 2024 and December 31, 2023 , the 2022 Asset-Backed Notes had an outstanding principal balance of $ 91.0 million and $ 100.0 million, respectively.

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 September 30, 2024 and December 31, 2023 , there were approximately $ 1.0 million and $ 1.3 million, respectively, of such 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 September 30, 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 September 30, 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”.

Table of Contents

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 $ 189.9 million and $ 180.5 million as of September 30, 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 September 30, 2024 and December 31, 2023 :

	*September 30, 2024*				*December 31, 2023*
			*Fair Value of*				*Fair Value of*
			*Unfunded*				*Unfunded*
	*Commitment*		*Commitment*		*Commitment*		*Commitment*
	*Amount*		*Liability*		*Amount*		*Liability*
	(In thousands)				(In thousands)
Better Place Forests Co.	$	1,000	$	—	$	—	$	—
BrightInsight, Inc.		10,000		132		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.		7,500		97		15,000		194
Fictiv, Inc.		30,000		236		—		—
GT Medical Technologies, Inc.		20,000		100		—		—
Hometeam Technologies, Inc.		10,000		100		—		—
MicroTransponder, Inc.		22,500		—		22,500		—
Mirantis, Inc.		—		—		15,000		136
Optoro, Inc.		—		—		6,250		—
Parse Biosciences, Inc.		15,000		252		15,000		251
Pivot Bio, Inc.		20,000		209		—		—
SafelyYou, Inc.		10,000		147		20,000		270
Sonex Health, Inc.		—		—		15,000		176
Standvast Holdings, LLC		5,000		175		—		—
Supply Network Visibility Holdings, LLC		5,000		17		10,000		35
Swift Health Systems, Inc.		375		—		—		—
Tallac Therapeutics, Inc.		—		—		10,000		229
Viken Detection Corporation		—		—		10,000		160
Total	$	189,875	$	1,772	$	180,500	$	2,033

The table above also provides the fair value of the Company’s unfunded commitment liability as of September 30, 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.

Table of Contents

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 22 % and 23 % of total debt investments outstanding as of September 30, 2024 and December 31, 2023 , respectively. The Company’s five largest debt investments at fair value represented 23 % and 22 % of total debt investments outstanding as of September 30, 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 September 30, 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 21 % and 24 % of total interest and fee income on investments for the three months ended September 30, 2024 and 2023 , respectively. Interest income from the five largest debt investments at fair value accounted for 25 % and 22 % of total interest and fee income on investments for the three months ended September 30, 2024 and 2023 , respectively. Interest income from the five largest debt investments at cost accounted for 21 % and 23 % of total interest and fee income on investments for the nine months ended September 30, 2024 and 2023 , respectively. Interest income from the five largest debt investments at fair value accounted for 23 % and 21 % of total interest and fee income on investments for the nine months ended September 30, 2024 and 2023 , respectively.

Table of Contents

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 nine months ended September 30, 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)
Nine Months Ended September 30, 2024
July 26, 2024	November 15, 2024	December 13, 2024	$	0.11	$	—		—	$	—
July 26, 2024	October 17, 2024	November 14, 2024		0.11		—		—		—
July 26, 2024	September 16, 2024	October 16, 2024		0.11		3,914		18,539		195
April 26, 2024	August 16, 2024	September 13, 2024		0.11		3,818		17,441		192
April 26, 2024	July 17, 2024	August 15, 2024		0.11		3,775		16,852		192
April 26, 2024	June 17, 2024	July 16, 2024		0.11		3,766		15,860		199
February 23, 2024	June 17, 2024	June 14, 2024		0.11		3,701		16,686		201
February 23, 2024	April 18, 2024	May 15, 2024		0.11		3,654		16,687		199
February 23, 2024	March 19, 2024	April 16, 2024		0.05		1,625		7,598		85
February 23, 2024	March 19, 2024	April 16, 2024		0.11		3,574		16,717		188
			$	1.04	$	27,827		126,380	$	1,451
Year Ended December 31, 2023
October 27, 2023	February 16, 2024	March 15, 2024	$	0.11	$	3,463		18,257	$	210
October 27, 2023	January 18, 2024	February 14, 2024		0.11		3,462		15,873		210
October 27, 2023	December 19, 2023	January 16, 2024		0.11		3,472		14,563		199
October 27, 2023	November 17, 2023	December 15, 2023		0.05		1,574		7,137		93
July 28, 2023	November 17, 2023	December 15, 2023		0.11		3,463		15,701		206
July 28, 2023	October 18, 2023	November 15, 2023		0.11		3,493		14,022		173
July 28, 2023	September 19, 2023	October 16, 2023		0.11		3,445		15,067		184
April 28, 2023	August 17, 2023	September 15, 2023		0.11		3,458		8,665		106
April 28, 2023	July 18, 2023	August 15, 2023		0.11		3,427		8,307		105
April 28, 2023	June 16, 2023	July 14, 2023		0.11		3,434		7,424		96
February 23, 2023	May 18, 2023	June 14, 2023		0.11		3,087		7,128		86
February 23, 2023	April 18, 2023	May 16, 2023		0.11		3,068		6,705		84
February 23, 2023	March 17, 2023	April 14, 2023		0.11		3,035		6,894		81
			$	1.37	$	41,881		145,743	$	1,833

On October 25, 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*
February 18, 2025	February 18, 2025	March 14, 2025	$	0.11
January 16, 2025	January 16, 2025	February 14, 2025	$	0.11
December 16, 2024	December 16, 2024	January 15, 2025	$	0.11

After paying distributions of $ 0.33 per share and earning net investment income of $ 0.32 per share for the quarter, the Company’s undistributed spillover income as of September 30, 2024 was $ 1.27 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.

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Horizon Technology Finance Corporation and Subsidiaries

Notes to Consolidated Financial Statements

Note 11. Financial highlights

The following table shows financial highlights for the Company:

	*Nine months ended September 30,*
	*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		1.06				1.54
Realized loss		( 0.89	)			( 0.95	)
Unrealized appreciation (depreciation) on investments		0.02				( 0.81	)
Net increase (decrease) in net assets resulting from operations		0.19				( 0.22	)
Distributions declared ⁽¹⁾		( 1.04	)			( 0.99	)
From net investment income		( 1.04	)			( 0.99	)
From net realized gain on investments		—				—
Return of capital		—				—
Other ⁽²⁾		0.20				0.15
Net asset value at end of period	$	9.06			$	10.41
Per share market value, beginning of period	$	13.17			$	11.60
Per share market value, end of period	$	10.65			$	11.88
Total return based on a market value ⁽³⁾		( 11.2	)%			10.9	%
Shares outstanding at end of period		37,803,064				33,306,958
Ratios to average net assets:
Expenses without incentive fee ⁽⁴⁾		15.1	%			14.0	%
Incentive fees ⁽⁴⁾		0.1				1.2	%
Net expenses ⁽⁴⁾		15.2	%			15.2	%
Net investment income with incentive fee ⁽⁴⁾		15.0	%			18.5	%
Net assets at the end of the period	$	342,533			$	346,575
Average net asset value	$	331,853			$	335,531
Average debt per share	$	12.70			$	14.29
Portfolio turnover ratio		13.4	%	⁽⁵⁾		10.0	%	⁽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 (A) the lesser of purchases or sales of portfolio securities for the fiscal year by (B) the monthly average of the value of portfolio securities owned by the Company during the fiscal year, with certain securities excluded from the numerator and denominator pursuant to applicable federal securities laws.

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Horizon Technology Finance Corporation and Subsidiaries

Notes to Consolidated Financial Statements

Note 12. Subsequent Events

On October 7, 2024, the Company funded a $ 2.5 million debt investment to an existing portfolio company, Standvast Holdings, LLC.

On October 15, 2025, the Company funded a $ 0.6 million debt investment to an existing portfolio company, Swift Health Systems, Inc.

On October 17, 2024, the Company entered into a note purchase agreement, by and among the Company, each purchaser named therein, and the investment adviser named therein, in connection with the issuance and sale of $ 20,000,000 aggregate principal of the Company’s 7.125 % Convertible Notes due 2031, par value $ 25.00 per share (the “Convertible Notes”), in a transaction exempt from registration pursuant to Section 4 (a)( 2 ) of the Securities Act of 1933. The Company received net proceeds (before expenses) from the sale of the Convertible Notes of approximately $ 18.6 million.

The Convertible Notes mature on October 16, 2031 , unless earlier converted or repurchased in accordance with their terms. The Convertible Notes bear interest at a rate of 7.125 % per year, subject to additional interest or repurchase obligation upon certain events, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on December 31, 2024. The Convertible Notes may be converted into common stock by the holders of the Convertible Notes at any time after April 17, 2025 at a conversion price equal to the greater of: (i) volume-weighted average closing sale price for the five trading days immediately prior to the relevant conversion date and (ii) the most recently report net asset value per share of the Company’s common stock.

On October 18, 2025, the Company funded a $ 0.5 million debt investment to an existing portfolio company, Better Place Forests Co.

On October 22, 2024, Monroe Capital LLC (“Monroe Capital”), an affiliate of the Company and the Advisor, announced that Monroe Capital has entered into a definitive agreement with Wendel Group (Euronext: MF:FP) (“Wendel”) relating to Wendel’s strategic investment in Monroe Capital. The transaction is expected to close in the first quarter of 2025, subject to the satisfaction of customary closing conditions, including the receipt of regulatory clearances and approvals and client consents. In connection with the transaction, the Company expects to seek approval of a new investment management agreement between the Company and the Advisor, from the Board and its shareholders, the terms of which are expected to remain substantively similar to the current investment management agreement.

On October 23, 2024, CAMP NYC, Inc. (“CAMP”) prepaid its outstanding principal balance of $ 2.0 million on its venture loan, plus interest and end-of-term payment. The Company continues to hold warrants in CAMP.

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Item 2. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

In this quarterly report on Form 10 ‑ Q, 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 10 ‑ Q.

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;

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●

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 September 30, 2024, 86.2%, or $546.0 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.

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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 September 30, 2024 and December 31, 2023:

	September 30, 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	53	$	633,284		92.6	%	56	$	670,172		94.5	%
Warrants	86		18,735		2.7		85		24,594		3.5
Other investments	5		17,944		2.6		3		6,430		0.9
Equity	17		14,037		2.1		14		7,889		1.1
Total		$	684,000		100.0	%		$	709,085		100.0	%

The following table shows total portfolio investment activity as of and for the three and nine months ended September 30, 2024 and 2023:

	For the three months ended						For the nine months ended
	September 30,						September 30,
	2024			2023			2024			2023
	(In thousands)
Beginning portfolio	$	646,862		$	715,391		$	709,085		$	720,026
New debt and equity investments		94,117			89,435			140,751			186,988
Less refinanced debt balances		(8,290	)		(22,500	)		(19,540	)		(32,500	)
Net new debt and equity investments		85,827			66,935			121,211			154,488
Principal payments received on investments		(12,502	)		(9,121	)		(34,805	)		(22,011	)
Early pay-offs and principal paydowns		(31,890	)		(16,605	)		(85,643	)		(68,211	)
Payment-in-kind interest on investments		379			3,934			2,114			6,088
Accretion of debt investment fees		1,474			1,925			4,470			5,018
New debt investment fees		(1,522	)		(1,595	)		(2,089	)		(2,397	)
Warrants and equity received in settlement of fee income		—			80			359			169
Proceeds from sale of investments		(69	)		(2,557	)		(157	)		(11,063	)
Net realized loss on investments		(33,894	)		(11,816	)		(31,422	)		(28,513	)
Net unrealized appreciation (depreciation) on investments		29,335			(17,518	)		864			(24,448	)
Other		—			—			13			(93	)
Ending portfolio	$	684,000		$	729,053		$	684,000		$	729,053

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.

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The following table shows our debt investments by industry sector as of September 30, 2024 and December 31, 2023:

	September 30, 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	$	89,830		14.2	%	$	108,448		16.2	%
Medical Device		170,347		26.9			137,367		20.5
Technology
Communications		13,060		2.1			18,654		2.8
Consumer-Related		47,358		7.5			93,002		13.9
Networking		9,641		1.5			5,087		0.8
Software		130,256		20.6			158,016		23.6
Sustainability
Energy Efficiency		9,687		1.5			—		—
Other Sustainability		58,921		9.3			79,828		11.8
Healthcare Information and Services
Diagnostics		14,052		2.2			19,453		2.9
Other Healthcare		39,323		6.2			—		—
Software		50,809		8.0			50,317		7.5
Total	$	633,284		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 22% and 23% of total debt investments outstanding as of September 30, 2024 and December 31, 2023, respectively. Our five largest debt investments at fair value represented 23% and 22% of total debt investments outstanding as of September 30, 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 September 30, 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 September 30, 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 September 30, 2024 and December 31, 2023:

	September 30, 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		10	$	129,508		20.5	%		11	$	150,367		22.4	%
3		34		449,085		70.9			39		452,911		67.6
2		6		33,465		5.3			2		39,343		5.9
1		3		21,226		3.3			4		27,551		4.1
Total		53	$	633,284		100.0	%		56	$	670,172		100.0	%

As of September 30, 2024, there were three debt investments with an internal credit rating of 1, with an aggregate cost of $36.5 million and an aggregate fair value of $21.2 million and there were six debt investments with an internal credit rating of 2, with an aggregate cost of $36.9 million and an aggregate fair value of $33.5 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 and there were two debt investments with an internal credit rating of 2, with an aggregate cost of $43.8 million and an aggregate fair value of $39.3 million. The increase in the number of investments with internal credit ratings of 1 or 2 was principally a result of the increase in the risk of loss of principal caused by the portfolio companies low cash positions and the difficult equity fundraising market and/or the underperformance of certain portfolio companies.

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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 September 30, 2024 and 2023

The following table shows consolidated results of operations for the three months ended September 30, 2024 and 2023:

	For the three months ended
	September 30,
	2024			2023
	(In thousands)
Total investment income	$	24,563		$	29,138
Total expenses		12,353			11,605
Net investment income before excise tax		12,210			17,533
Provision for excise tax		373			179
Net investment income		11,837			17,354
Net realized loss		(33,894	)		(11,816	)
Net unrealized appreciation (depreciation) on investments		29,335			(17,518	)
Net increase (decrease) in net assets resulting from operations	$	7,278		$	(11,980	)
Average debt investments, at fair value	$	611,924		$	679,763
Average earning debt investments	$	598,522		$	685,107
Average gross assets less cash	$	684,620		$	740,836
Average borrowings outstanding	$	441,723		$	417,220

Net increase (decrease) 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 $4.6 million, or 15.7%, to $24.6 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. For the three months ended September 30, 2024, total investment income consisted primarily of $22.8 million in interest income from investments, which included $3.3 million in income from the accretion of origination fees and end of term payments (“ETPs”), $1.4 million in fee income and $0.4 million in PIK income. Interest income on debt investments decreased by $2.3 million, or 9.1%, to $22.8 million, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Interest income on debt investments for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 decreased primarily due to a decrease of $86.6 million, or 12.6%, in the average earning debt investments. The proportion of total investment income that resulted from the portion of ETPs not received in cash for the three months ended September 30, 2024 and 2023 was 4.6% and 5.1%, respectively. The decrease in the proportion of total investment income that resulted from the portion of ETPs not received in cash was a result of a decrease in final payments received in cash from prepayments for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Fee income, which includes success fee, other fee and prepayment fee income on debt investments, increased by $1.3 million, or 1014.5%, to $1.4 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to higher fee income earned on prepayments for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

PIK income decreased by $3.6 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. For the three months ended September 30, 2024 and 2023, 1.5% and 13.5%, respectively, of total investment income was attributable to non-cash PIK interest. The decrease in PIK income for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to a decrease in earning assets that contain a PIK feature for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

The following table shows our dollar-weighted annualized yield for the three months ended September 30, 2024 and 2023:

	For the three months ended
	September 30,
Investment type:	2024			2023
Debt investments ⁽¹⁾		15.9	%		17.1	%
All investments ⁽¹⁾		14.8	%		16.1	%

(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 21% and 24% of investment income for the three months ended September 30, 2024 and 2023, respectively. Interest income from the five largest debt investments at fair value in the aggregate accounted for 25% and 22% of investment income for the three months ended September 30, 2024 and 2023, respectively.

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Expenses

Total expenses increased by $0.7 million, or 6.4%, to $12.4 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 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 $0.8 million, or 11.8%, to $7.9 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. Interest expense, which includes the amortization of debt issuance costs, increased primarily due to an increase in average borrowings of $24.5 million, or 5.9%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 and an increase in our effective cost of debt for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Base management fee expense decreased by $0.2 million, or 7.0%, to $3.0 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. Base management fee decreased primarily due to a decrease of $56.2 million, or 7.6%, in average gross assets less cash for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

There was no performance based incentive fee expense for the three months ended September 30, 2024 and 2023. The incentive fee on pre-incentive fee net investment income was subject to an Incentive Fee Cap and Deferral Mechanism in our Investment Management Agreement of $2.4 million for the three months ended September 30, 2024 compared to $3.5 million for the three months ended September 30, 2023. The Incentive Fee Cap and Deferral Mechanism resulted in $2.4 million of reduced incentive fee expense and increased net investment income for the three months ended September 30, 2024. The incentive fee on pre-incentive fee net investment income was subject to the Incentive Fee Cap for the three months ended September 30, 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 $1.4 million and $1.3 million for the three months ended September 30, 2024 and 2023, respectively.

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 September 30, 2024, we realized net losses on investments totaling $33.9 million primarily due to the settlement of one of our debt investments. During the three months ended September 30, 2023, we realized net losses on investments totaling $11.8 million primarily due to the settlement of one of our debt investments. Such net realized losses were primarily the result of portfolio companies ceasing operations due to their inability to raise additional capital and the sale of their assets for less than the cost of their debt investments.

During the three months ended September 30, 2024, net unrealized appreciation on investments totaled $29.3 million which was primarily due to (1) the reversal of previously recorded unrealized depreciation from the settlement of one of our debt investments and (2) the unrealized appreciation on one of our debt investments offset by (1) the unrealized depreciation on one of our other investments and (2) the unrealized depreciation on our warrant investments. During the three months ended September 30, 2023, net unrealized depreciation on investments totaled $17.5 million which was primarily due to the unrealized depreciation on two of our debt investments offset by (1) the reversal of previously recorded unrealized depreciation from the settlement of one of our debt investments and (2) the unrealized appreciation on one of our equity investments. The difficult equity fundraising market and under performance of certain portfolio companies, among other factors, resulted in us reducing the fair market value of the debt investments in such portfolio companies, thus increasing the unrealized depreciation on such debt investments.

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Comparison of the nine months ended September 30, 2024 and 2023

The following table shows consolidated results of operations for the nine months ended September 30, 2024 and 2023:

	For the nine months ended
	September 30,
	2024			2023
	(In thousands)
Total investment income	$	76,370		$	85,292
Total expenses		37,904			38,313
Net investment income before excise tax		38,466			46,979
Provision for excise tax		1,109			542
Net investment income		37,357			46,437
Net realized loss		(31,422	)		(28,513	)
Net unrealized appreciation (depreciation) on investments		864			(24,448	)
Net increase (decrease) in net assets resulting from operations	$	6,799		$	(6,524	)
Average debt investments, at fair value	$	641,287		$	685,171
Average earning debt investments	$	621,463		$	692,991
Average gross assets less cash	$	702,312		$	739,268
Average borrowings outstanding	$	447,009		$	430,974

Investment income

Total investment income decreased by $8.9 million, or 10.5%, to $76.4 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. For the nine months ended September 30, 2024, total investment income consisted primarily of $71.6 million in interest income from investments, which included $10.8 million in income from the accretion of origination fees and end of term payments, $2.7 million in fee income and $2.1 million in PIK income. Interest income on debt investments decreased by $5.4 million, or 7.0%, to $71.6 million, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Interest income on debt investments for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 decreased primarily due to a decrease of $71.5 million, or 10.3%, 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. The proportion of total investment income that resulted from the portion of ETPs not received in cash for the nine months ended September 30, 2024 and 2023 was 6.0% and 4.9%, respectively. The increase in the proportion of total investment income that resulted from the portion of ETPs not received in cash was a result of a decrease in earning assets for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Fee income, which includes success fee, other fee and prepayment fee income on debt investments, increased by $0.4 million, or 18.0%, to $2.7 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to higher fee income earned on prepayments for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

PIK income decreased by $3.9 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. For the nine months ended September 30, 2024 and 2023, 2.8% and 7.1%, respectively, of total investment income was attributable to non-cash PIK interest. The decrease in PIK interest as a percentage of total investment income was principally the result of a decrease in earning assets that contain a PIK feature for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The following table shows our dollar-weighted annualized yield for the nine months ended September 30, 2024 and 2023:

	For the nine months ended
	September 30,
Investment type:	2024			2023
Debt investments ⁽¹⁾		15.8	%		16.5	%
All investments ⁽¹⁾		14.8	%		15.7	%

(1)

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 21% and 23% of investment income for the nine months ended September 30, 2024 and 2023, respectively. Interest income from the five largest debt investments at fair value in the aggregate accounted for 23% and 21% of investment income for the nine months ended September 30, 2024 and 2023, respectively.

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Expenses

Total expenses decreased by $0.4 million, or 1.1%, to $37.9 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 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 $2.6 million, or 12.3%, to $24.0 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Interest expense, which includes the amortization of debt issuance costs, increased primarily due to an increase in average borrowings of $16.0 million, or 3.7%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 and an increase in our effective cost of debt for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Base management fee expense decreased by $0.4 million, or 4.6%, to $9.2 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Base management fee decreased primarily due to a decrease of $37.0 million, or 5.0%, in average gross assets less cash for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Performance based incentive fee expense decreased by $2.8 million, or 90.5%, to $0.3 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. This decrease was due to an Incentive Fee Cap and Deferral Mechanism in our Investment Management Agreement of $7.2 million for the nine months ended September 30, 2024 compared to $6.8 million for the nine months ended September 30, 2023. The Incentive Fee Cap and Deferral Mechanism resulted in $7.2 million and $6.8 million of reduced incentive fee expense and increased net investment income for the nine months ended September 30, 2024 and 2023, respectively. The incentive fee on pre-incentive fee net investment income was subject to the Incentive Fee Cap for the nine months ended September 30, 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 $4.4 million and $4.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Net realized gains and losses and net unrealized appreciation and depreciation

During the nine months ended September 30, 2024, we realized net losses on investments totaling $31.4 million primarily due to the settlement of one of our debt investments. During the nine months ended September 30, 2023, we realized net losses on investments totaling $28.5 million primarily due to the settlement of four of our debt investments. Such net realized losses were primarily the result of portfolio companies ceasing operations due to their inability to raise additional capital and the sale of their assets for less than the cost of their debt investments.

During the nine months ended September 30, 2024, net unrealized appreciation on investments totaled $0.9 million which was primarily due to (1) the reversal of previously recorded unrealized depreciation from the settlement of one of our debt investments and (2) the unrealized appreciation on one of our other investments partially offset by (1) the unrealized depreciation on four of our debt investments and (2) the unrealized depreciation on our warrant and equity investments. During the nine months ended September 30, 2023, net unrealized depreciation on investments totaled $24.4 million which was primarily due to (1) the unrealized depreciation on four of our debt investments and (2) the unrealized depreciation on two of our equity investments offset by (1) the reversal of previously recorded unrealized depreciation from the settlement of three of our debt investments and (2) the unrealized appreciation on one of our equity investments. The difficult equity fundraising market and under performance of certain portfolio companies, among other factors, resulted in us reducing the fair market value of the debt investments in such portfolio companies, thus increasing the unrealized depreciation on such debt investments.

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Liquidity and capital resources

As of September 30, 2024 and December 31, 2023, we had cash and investments in money market funds of $83.4 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 September 30, 2024 and December 31, 2023, we had $3.3 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, our NYL Facility or our Nuveen 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”), the Note Funding Agreement (the “NYL Facility”), with several entities owned or affiliated with New York Life Insurance Company and the Nuveen Note Funding Agreement (the “Nuveen Facility”, together with the Key Facility and the NYL Facility, the “Credit Facilities”) with several entities owned or affiliated with Nuveen Alternative Advisors LLC, 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 September 30, 2024, we sold 1,709,096 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $18.4 million, including $0.4 million of offering expenses, from these sales.

During the three months ended September 30, 2023, we sold 1,186,303 shares of common stock under the 2023 Equity Distribution Agreement and 2021 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $13.9 million, including $0.4 million of offering expenses, from these sales.

During the nine months ended September 30, 2024, we sold 4,279,141 shares of common stock under the 2023 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $47.5 million, including $1.0 million of offering expenses, from these sales.

During the nine months ended September 30, 2023, we sold 2,240,326 shares of common stock under the 2023 Equity Distribution Agreement and 2021 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $26.1 million, including $0.7 million of offering expenses, from these sales.

On June 2, 2023, we completed a follow-on public offering of 3,250,000 shares of our common stock at a public offering price of $12.50 per share, for total net proceeds to us of $38.9 million, after deducting underwriting commission and discounts and other offering expenses.

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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 and nine months ended September 30, 2024 and 2023, we did not make any repurchases of our common stock. From the inception of the stock repurchase program through September 30, 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 September 30, 2024 there was no outstanding principal balance under our Key Facility. At December 31, 2023, the outstanding principal balance under our Key Facility was $70.0 million. As of September 30, 2024 and December 31, 2023, we had borrowing capacity under the Key Facility of $150.0 million and $80.0 million, respectively. At September 30, 2024 and December 31, 2023, $13.3 million and $25.0 million, respectively, was available for borrowing under the Key Facility, subject to existing terms and advance rates.

At September 30, 2024 and December 31, 2023, the outstanding principal balance under the NYL Facility was $181.0 million. As of September 30, 2024 and December 31, 2023, we had borrowing capacity under the NYL Facility of $69.0 million. At September 30, 2024 and December 31, 2023, $8.2 million and $17.4 million, respectively, was available for borrowing under the NYL Facility, subject to existing terms and advance rates.

At September 30, 2024, the outstanding principal balance under the Nuveen Facility was $50.0 million. As of September 30, 2024, we had borrowing capacity under the Nuveen Facility of $50.0 million. At September 30, 2024, $29.9 million was available for borrowing under the Nuveen Facility, subject to existing terms and advance rates. The Nuveen Facility was not outstanding at December 31, 2023.

Our operating activities provided cash of $30.1 million for the nine months ended September 30, 2024, and our financing activities used cash of $19.1 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, to repay our 2022 Asset-Backed Notes and to pay distributions to our stockholders, partially offset from an advance on our Nuveen Facility and the sale of shares through our ATM for net proceeds of $47.5 million.

Our operating activities used cash of $16.5 million for the nine months ended September 30, 2023, and our financing activities provided cash of $36.1 million for the same period. Our operating activities used cash to purchase investments in portfolio companies partially offset by principal payments received on our debt investments. Our financing activities provided cash primarily from the completion of a follow-on public offering of 3.25 million shares of common stock for net proceeds of $38.9 million, after deducting underwriting commission and discounts and other offering expenses, the sale of shares through our ATM for net proceeds of $26.1 million, and advances on our Credit Facilities, partially offset by cash used to repay our 2019 Asset-Backed Notes, to repay the outstanding principal balance under our Key Facility 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.

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Current borrowings

The following table shows our borrowings as of September 30, 2024 and December 31, 2023:

	September 30, 2024							December 31, 2023
	Total		Balance			Unused		Total		Balance			Unused
	Commitment		Outstanding			Commitment		Commitment		Outstanding			Commitment
	(In thousands)
Key Facility	$	150,000	$	—		$	150,000	$	150,000	$	70,000		$	80,000
NYL Facility		250,000		181,000			69,000		250,000		181,000			69,000
Nuveen Facility		100,000		50,000			50,000		—		—			—
2022 Asset-Backed Notes		90,970		90,970			—		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		705,970		436,970			269,000		615,000		466,000			149,000
Unamortized debt issuance costs attributable to term borrowings		—		(3,001	)		—		—		(3,765	)		—
Total borrowings outstanding, net	$	705,970	$	433,969		$	269,000	$	615,000	$	462,235		$	149,000

Credit Facilities

Key Facility

We entered into the Key Facility effective November 4, 2013. On June 20, 2024, we amended the Key Facility, among other things, (i) to extend the date on which we may request advances under the Key Facility to June 20, 2027 and to extend the maturity date to June 20, 2029 and (ii) to amend the interest rate to be based on the rate of interest published in The Wall Street Journal as the prime rate in the United States plus 0.10%, with a prime rate floor of 4.10%. Prior to June 20, 2024, the interest rate on the Key Facility was based on Prime plus 0.25%, with a prime rate floor of 4.25%. The prime rate was 8.00% and 8.50% as of September 30, 2024 and December 31, 2023, respectively. The interest rate in effect was 8.10% and 8.75% as of September 30, 2024 and December 31, 2023, respectively. 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.

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 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. 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.

On May 6, 2024, we amended the NYL Facility to, among other things, extend the investment period to June 2025 and the maturity date of all advances to June 2030. In addition, the amendment amended the interest rate for advances made after May 6, 2024, fixing the interest rate at the greater of (i) 4.60% and (ii) the Three Year I Curve plus 3.20%, 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 September 30, 2024 and December 31, 2023, there were approximately $1.4 million of such restricted investments.

There were $181.0 million in notes issued to the NYL Noteholders as of September 30, 2024 and December 31, 2023 at an interest rate of 6.43% and 5.96%, respectively. As of September 30, 2024 and December 31, 2023, we had borrowing capacity under the NYL Facility of $69.0 million. At September 30, 2024 and December 31, 2023, $8.2 million and $17.4 million, respectively, was available for borrowing, subject to existing terms and advance rates.

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Nuveen Facility

HFII entered into the Nuveen Facility with the Nuveen 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 us and the Nuveen Noteholders. On June 21, 2024, we sold or contributed to HFII certain secured loans made to certain portfolio companies pursuant to the Sale and Servicing Agreement. Any notes issued by HFII are collateralized by all investments held by HFII and permit an advance rate of up to 67.5% of the aggregate principal amount of eligible debt investments. The Nuveen Facility bears interest, payable monthly, determined at a rate per annum equal to the greater of (i) the yield for the United States Treasury constant maturity 3-year and 5-year in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily) – H.15” interpolated to a 4.88-year weighted average life plus 3.15% and (ii) 5.00%. We may request advances under the Nuveen Facility through June 21, 2027 and the Nuveen Facility is scheduled to mature on June 10, 2033.

Under the terms of the Nuveen Facility, we are required to maintain a reserve cash balance, which may be used to pay monthly interest and principal payments on the Nuveen Facility. We have segregated these funds and classified them as restricted investments in money market funds. At September 30, 2024, there were approximately $0.9 million of such restricted investments.

There were $50.0 million in notes issued to the Nuveen Noteholders as of September 30, 2024 at an interest rate of 7.38%. As of September 30, 2024, we had borrowing capacity under the Nuveen Facility of $50.0 million. At September 30, 2024, $29.9 million, 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 September 30, 2024 and December 31, 2023, the 2022 Asset-Backed Notes had an outstanding principal balance of $91.0 million and $100.0 million, respectively.

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 September 30, 2024, and December 31, 2023, there were approximately $1.0 million and $1.3 million, respectively, of such 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 September 30, 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 September 30, 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”.

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Other assets

As of September 30, 2024 and December 31, 2023, other assets were $6.6 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 September 30, 2024:

	Payments due by period
			Less than		1 – 3		3 – 5		After 5
	Total		1 year		Years		Years		years
	(In thousands)
Borrowings	$	436,970	$	70,284	$	284,255	$	82,431	$	—
Unfunded commitments		189,875		122,375		67,500		—		—
Incentive fee deferral		18,084		—		18,084		—		—
Total	$	644,929	$	192,659	$	369,839	$	82,431	$	—

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 September 30, 2024, we had unfunded commitments of $189.9 million. This includes $20.0 million of 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 September 30, 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.

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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 September 30, 2024 and 2023, the Incentive Fee Cap and Deferral Mechanism resulted in deferral of $2.4 million and $3.5 million, respectively, of incentive fee which may become subject to payment up to three years after the date of deferment. During the nine months ended September 30, 2024 and 2023, the Incentive Fee Cap and Deferral Mechanism resulted in deferral of $7.2 million and $6.8 million, respectively, of incentive fee which may become subject to payment up to three years after the date of deferment. As of September 30, 2024 and December 31, 2023, the total amount subject to recoupment was $18.1 million and $10.8 million, respectively.

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 September 30, 2024 and 2023, our Advisor earned $3.0 million and $3.2 million, respectively, pursuant to the Investment Management Agreement. During the nine months ended September 30, 2024 and 2023, our Advisor earned $9.5 million and $12.7 million, respectively, pursuant to the Investment Management Agreement.

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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 September 30, 2024 and 2023, our Advisor earned $0.4 million pursuant to the Administration Agreement. During the nine months ended September 30, 2024 and 2023, our Advisor earned $1.3 million and $1.2 million, respectively, 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.

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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

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 and nine months ended September 30, 2024, we recognized in interest income $0.2 million from debt investments while on non-accrual status. For the three and nine months ended September 30, 2023, we did not recognize any interest income from debt investments while 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 the ETP when 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.

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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 September 30, 2024 and December 31, 2023.

Recent developments

On October 7, 2024, we funded a $2.5 million debt investment to an existing portfolio company, Standvast Holdings, LLC.

On October 15, 2025, we funded a $0.6 million debt investment to an existing portfolio company, Swift Health Systems, Inc.

On October 17, 2024, we entered into a note purchase agreement, by and among us, each purchaser named therein, and the investment adviser named therein, in connection with the issuance and sale of $20,000,000 aggregate principal of our 7.125% Convertible Notes due 2031, par value $25.00 per share (the “Convertible Notes”), in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933. We received net proceeds (before expenses) from the sale of the Convertible Notes of approximately $18.6 million.

The Convertible Notes mature on October 16, 2031, unless earlier converted or repurchased in accordance with their terms. The Convertible Notes bear interest at a rate of 7.125% per year, subject to additional interest or a repurchase obligation upon certain events, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on December 31, 2024. The Convertible Notes may be converted into common stock by the holders of the Convertible Notes at any time after April 17, 2025 at a conversion price equal to the greater of: (i) volume-weighted average closing sale price for the five trading days immediately prior to the relevant conversion date and (ii) the most recently report net asset value per share of our common stock.

On October 18, 2025, we funded a $0.5 million debt investment to an existing portfolio company, Better Place Forests Co.

On October 22, 2024, Monroe Capital, an affiliate of us and our Advisor, announced that Monroe Capital has entered into a definitive agreement with Wendel Group (Euronext: MF:FP) (“Wendel”) relating to Wendel’s strategic investment in Monroe Capital. The transaction is expected to close in the first quarter of 2025, subject to the satisfaction of customary closing conditions, including the receipt of regulatory clearances and approvals and client consents. In connection with the transaction, we expect to seek approval of a new investment management agreement between us and our Advisor, from our Board and its shareholders, the terms of which are expected to remain substantively similar to the current investment management agreement.

On October 23, 2024, CAMP NYC, Inc. (“CAMP”) prepaid its outstanding principal balance of $2.0 million on its venture loan, plus interest and end-of-term payment. We continue to hold warrants in CAMP.

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Recently issued accounting pronouncement

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole. The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker, clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures and providing new disclosure requirements for entities with a single reportable segment, among other new disclosure requirements. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance with respect to our consolidated financial statements and disclosures.

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 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 September 30, 2024 and December 31, 2023, 99% and 94%, respectively, 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 September 30, 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 September 30, 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	$	17,060		$	—	$	17,060
Up 200 basis points	$	11,230		$	—	$	11,230
Up 100 basis points	$	5,399		$	—	$	5,399
Down 300 basis points	$	(8,685	)	$	—	$	(8,685	)
Down 200 basis points	$	(6,030	)	$	—	$	(6,030	)
Down 100 basis points	$	(3,206	)	$	—	$	(3,206	)

(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 floating interest rate provisions. The Key Facility is subject to an interest rate floor of 0.10% per annum, based on a prime rate index which resets monthly. The interest payable on the NYL Facility is based on the Three Year I Curve rate plus a margin of 3.20% with an interest rate floor and resets on any advance date. The interest payable on the Nuveen Facility is based on the United States Treasury constant maturity 3-year and 5-year rates plus a margin of 3.15% 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.

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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 September 30, 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 nine months ended September 30, 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.

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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 September 30, 2024, 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

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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: October 29, 2024	By:	/s/ Robert D. Pomeroy, Jr.
	Name:	Robert D. Pomeroy, Jr.
	Title:	Chief Executive Officer and Chairman of the Board

Date: October 29, 2024	By:	/s/ Daniel R. Trolio
	Name:	Daniel R. Trolio
	Title:	Chief Financial Officer

TABLE OF CONTENTS

Part I: Financial Information Item 1. Consolidated Financial Statements Note 1. Organization Note 2. Basis Of Presentation and Significant Accounting Policies Note 3. Related Party Transactions Note 4. Investments Note 5. Transactions with Affiliated Companies Note 6. Fair Value Note 7. Borrowings Note 8. Financial Instruments with Off-balance-sheet Risk Note 9. Concentrations Of Credit Risk Note 10. Distributions Note 11. Financial Highlights Note 12. Subsequent Events Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II Item 1: Legal Proceedings Item 1A: Risk Factors Item 2: Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3: Defaults Upon Senior Securities Item 4: Mine Safety Disclosures Item 5: Other Information Item 6: Exhibits

Exhibits

31.1* Certifications by Chief Executive Officer pursuant to Exchange Act Rule13a14(a), as adopted pursuant to Section302 of the Sarbanes-Oxley Act of 2002, as amended 31.2* Certifications by Chief Financial Officer pursuant to Exchange Act Rule13a14(a), as adopted pursuant to Section302 of the Sarbanes-Oxley Act of 2002, as amended 32.1* Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section906 of the Sarbanes-Oxley Act of 2002, as amended 32.2* Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section906 of the Sarbanes-Oxley Act of 2002, as amended

HRZN 10-Q Quarter ended Sept. 30, 2024

Exhibits