Horizon Technology Finance Corp 10-Q

hrzn20230630_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 June 30, 2023     OR     ☐ TRANSITION REPORT PURSUANT TO SECTION   13 OR 15(d)   OF THE SECURITIES EXCHANGE ACT OF 1934   FOR THE TRANSITION PERIOD FROM _____TO   COMMISSION FILE NUMBER: 814 - 00802   HORIZON TECHNOLOGY FINANCE CORPORATION (Exact name of registrant as specified in its charter)   Delaware   27-2114934 (State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.) 312 Farmington Avenue     Farmington , CT   06032 (Address of principal executive offices)   (Zip Code)   ( 860 ) 676 ‑ 8654 (Registrant ’ s telephone number, including area code)     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐   Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐   Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.   Large accelerated filer ☐   Accelerated filer ☐ Non-accelerated filer ☒   Smaller reporting company ☐ Emerging growth company ☐             If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐   Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒   The number of shares of the registrant’s common stock traded under the symbol “HRZN” on the Nasdaq Global Select Market, $0.001 par value per share, outstanding as of August 1, 2023 was 32,103,683 .   Securities registered pursuant to Section 12(b) of the Act:   Title of each class   Ticker symbol(s)   Name of each exchange on which registered Common Stock, par value $0.001 per share   HRZN   The Nasdaq Stock Market LLC 4.875% Notes due 2026   HTFB   The New York Stock Exchange 6.25% Notes due 2027   HTFC   The New York Stock Exchange       Table of Contents     HORIZON TECHNOLOGY FINANCE CORPORATION   FORM   10 ‑ Q TABLE OF CONTENTS     Page PART   I Item 1 Consolidated Financial Statements. 3         Consolidated Statements of Assets and Liabilities as of June 30, 2023 (unaudited) and December 31, 2022 3   Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (unaudited) 4   Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2023 and 2022 (unaudited) 5   Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited) 6   Consolidated Schedules of Investments as of June 30, 2023 (unaudited) and December 31, 2022 7   Notes to the Consolidated Financial Statements (unaudited) 21 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 45 Item 3. Quantitative and Qualitative Disclosures About Market Risk 61 Item 4. Controls and Procedures 62       PART   II Item 1. Legal Proceedings 62 Item 1A. Risk Factors 62 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 63 Item 3. Defaults Upon Senior Securities 63 Item 4. Mine Safety Disclosures 63 Item 5. Other Information 63 Item 6. Exhibits 63   Signatures 64 EX‑31.1              EX‑31.2              EX‑32.1              EX‑32.2                  2 Table of Contents     PART   I: FINANCIAL INFORMATION   Item   1. Consolidated Financial Statements   Horizon Technology Finance Corporation and Subsidiaries   Consolidated Statements of Assets and Liabilities (Dollars in thousands, except share and per share data)       June 30,     December 31,       2023     2022       (Unaudited)           Assets                 Non-affiliate investments at fair value (cost of $ 723,633 and $ 721,248 , respectively)   $ 714,485     $ 720,026   Non-controlled affiliate investments at fair value (cost of $ 0 and $ 0 , respectively) (Note 5)     906       —   Total investments at fair value (cost of $ 723,633 and $ 721,248 , respectively) (Note 4)     715,391       720,026   Cash     24,395       20,612   Investments in money market funds     25,865       7,066   Restricted investments in money market funds     2,904       2,788   Interest receivable     14,893       13,573   Other assets     3,960       2,761   Total assets   $ 787,408     $ 766,826                     Liabilities                 Borrowings (Note 7)   $ 418,016     $ 434,078   Distributions payable     10,592       9,159   Base management fee payable (Note 3)     1,063       1,065   Incentive fee payable (Note 3)     118       1,392   Other accrued expenses     2,200       2,684   Total liabilities     431,989       448,378                     Commitments and contingencies (Notes 3 and 8)                                       Net assets                 Preferred stock, par value $ 0.001 per share, 1,000,000 shares authorized, zero shares issued and outstanding as of June 30, 2023 and December 31, 2022     —       —   Common stock, par value $ 0.001 per share, 100,000,000 shares authorized, 32,263,724 and 27,920,838 shares issued and 32,096,259 and 27,753,373 shares outstanding as of June 30, 2023 and December 31, 2022, respectively     34       29   Paid-in capital in excess of par     437,561       385,921   Distributable loss     ( 82,176 )     ( 67,502 ) Total net assets     355,419       318,448   Total liabilities and net assets   $ 787,408     $ 766,826   Net asset value per common share   $ 11.07     $ 11.47     See Notes to Consolidated Financial Statements     3 Table of Contents Horizon Technology Finance Corporation and Subsidiaries     Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except share and per share data)       For the Three Months Ended     For The Six Months Ended       June 30,     June 30,       2023     2022     2023     2022                                     Investment income                                 Interest income on non-affiliate investments   $ 26,624     $ 17,720     $ 54,023     $ 31,573   Fee income on non-affiliate investments     1,493       868       2,131       1,219   Total investment income     28,117       18,588       56,154       32,792   Expenses                                 Interest expense     7,179       4,225       14,299       7,649   Base management fee (Note 3)     3,207       2,523       6,408       4,767   Performance based incentive fee (Note 3)     118       2,145       3,094       3,570   Administrative fee (Note 3)     368       374       808       735   Professional fees     447       271       1,106       848   General and administrative     546       362       992       706   Total expenses     11,865       9,900       26,707       18,275   Net investment income before excise tax     16,252       8,688       29,447       14,517   Provision for excise tax     179       106       363       206   Net investment income     16,073       8,582       29,084       14,311   Net realized and unrealized loss                                 Net realized (loss) gain on non-affiliate investments     ( 16,529 )     271       ( 16,697 )     301   Net realized loss on controlled affiliate investments     —       ( 1,200 )     —       ( 1,200 ) Net realized loss on investments     ( 16,529 )     ( 929 )     ( 16,697 )     ( 899 ) Net unrealized appreciation (depreciation) on non-affiliate investments     548       ( 1,436 )     ( 7,835 )     ( 3,723 ) Net unrealized appreciation on non-controlled affiliate investments     60       —       906       —   Net unrealized appreciation on controlled affiliate investments     —       1,400       —       1,450   Net unrealized appreciation (depreciation) on investments     608       ( 36 )     ( 6,929 )     ( 2,273 ) Net realized and unrealized loss     ( 15,921 )     ( 965 )     ( 23,626 )     ( 3,172 ) Net increase in net assets resulting from operations   $ 152     $ 7,617     $ 5,458     $ 11,139   Net investment income per common share   $ 0.54     $ 0.35     $ 1.00     $ 0.62   Net increase in net assets resulting from operations per common share   $ 0.01     $ 0.31     $ 0.19     $ 0.48   Distributions declared per share   $ 0.33     $ 0.30     $ 0.66     $ 0.60   Weighted average shares outstanding     29,747,290       24,301,762       28,987,948       23,109,584     See Notes to Consolidated Financial Statements   4 Table of Contents Horizon Technology Finance Corporation and Subsidiaries     Consolidated Statements of Changes in Net Assets (Unaudited) (Dollars in thousands, except share data)                       Paid-In Capital                       Common Stock     in Excess of     Distributable     Total Net       Shares     Amount     Par     Earnings     Assets   Balance at March 31, 2022     23,977,137     $ 25     $ 339,688       ( 59,724 )   $ 279,989   Issuance of common stock, net of offering costs     868,230       1       10,340       —       10,341   Net increase in net assets resulting from operations, net of excise tax:                                         Net investment income, net of excise tax     —       —       —       8,582       8,582   Net realized loss on investments     —       —       —       ( 929 )     ( 929 ) Net unrealized depreciation on investments     —       —       —       ( 36 )     ( 36 ) Issuance of common stock under dividend reinvestment plan     11,737       —       145       —       145   Distributions declared     —       —       —       ( 7,487 )     ( 7,487 ) Balance at June 30, 2022     24,857,104       26       350,173       ( 59,594 )     290,605                                             Balance at March 31, 2023     28,377,357       30       393,312       ( 71,659 )     321,683   Issuance of common stock, net of offering costs     3,698,175       4       43,998       —       44,002   Net increase in net assets resulting from operations, net of excise tax:                                         Net investment income, net of excise tax     —       —       —       16,073       16,073   Net realized loss on investments     —       —       —       ( 16,529 )     ( 16,529 ) Net unrealized appreciation on investments     —       —       —       608       608   Issuance of common stock under dividend reinvestment plan     20,727       —       251       —       251   Distributions declared     —       —       —       ( 10,669 )     ( 10,669 ) Balance at June 30, 2023     32,096,259     $ 34     $ 437,561     $ ( 82,176 )   $ 355,419                           Paid-In Capital                       Common Stock     in Excess of     Distributable     Total Net       Shares     Amount     Par     Earnings     Assets   Balance at December 31, 2021     21,217,460     $ 22     $ 301,359     $ ( 56,046 )   $ 245,335   Issuance of common stock, net of offering costs     3,618,401       4       48,524       —       48,528   Net increase in net assets resulting from operations, net of excise tax:                                         Net investment income, net of excise tax     —       —       —       14,311       14,311   Net realized loss on investments     —       —       —       ( 899 )     ( 899 ) Net unrealized depreciation on investments     —       —       —       ( 2,273 )     ( 2,273 ) Issuance of common stock under dividend reinvestment plan     21,243       —       290       —       290   Distributions declared     —       —       —       ( 14,687 )     ( 14,687 ) Balance at June 30, 2022     24,857,104       26       350,173       ( 59,594 )     290,605                                             Balance at December 31, 2022     27,753,373       29       385,921       ( 67,502 )     318,448   Issuance of common stock, net of offering costs     4,304,023       5       51,171       —       51,176   Net increase in net assets resulting from operations, net of excise tax:                                         Net investment income, net of excise tax     —       —       —       29,084       29,084   Net realized loss on investments     —       —       —       ( 16,697 )     ( 16,697 ) Net unrealized depreciation on investments     —       —       —       ( 6,929 )     ( 6,929 ) Issuance of common stock under dividend reinvestment plan     38,863       —       469       —       469   Distributions declared     —       —       —       ( 20,132 )     ( 20,132 ) Balance at June 30, 2023     32,096,259     $ 34     $ 437,561     $ ( 82,176 )   $ 355,419     See Notes to Consolidated Financial Statements   5 Table of Contents Horizon Technology Finance Corporation and Subsidiaries     Consolidated Statements of Cash Flows (Unaudited) (Dollars in thousands)       For the six months ended June 30,       2023     2022   Cash flows from operating activities:                 Net increase in net assets resulting from operations   $ 5,458     $ 11,139   Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:                 Amortization of debt issuance costs     950       705   Net realized loss on investments     16,697       899   Net unrealized depreciation on investments     6,929       2,273   Purchase of investments     ( 87,553 )     ( 253,720 ) Principal payments received on investments     64,496       87,473   Payment-in-kind interest on investments     ( 2,154 )     —   Proceeds from sale of investments     8,506       43,426   Equity received in settlement of fee income     ( 89 )     —   Changes in assets and liabilities:                 Decrease (increase) in interest receivable     65       ( 1,019 ) Increase in end-of-term payments     ( 1,291 )     ( 1,911 ) (Decrease) increase in unearned income     ( 2,291 )     232   Decrease in other assets     ( 717 )     ( 620 ) (Decrease) increase in other accrued expenses     ( 484 )     91   (Decrease) increase in base management fee payable     ( 2 )     165   (Decrease) increase in incentive fee payable     ( 1,274 )     130   Net cash provided by (used in) operating activities     7,246       ( 110,737 ) Cash flows from financing activities:                 Proceeds from issuance of 2027 Notes     —       50,000   Repayment of 2019 Asset-Backed Notes     ( 11,765 )     ( 20,702 ) Proceeds from issuance of common stock, net of offering costs     51,175       48,529   Advances on Credit Facilities     30,000       119,000   Repayment of Credit Facilities     ( 35,000 )     ( 40,000 ) Debt issuance costs     ( 729 )     ( 2,170 ) Distributions paid     ( 18,229 )     ( 13,306 ) Net cash provided by financing activities     15,452       141,351   Net increase in cash, cash equivalents and restricted cash     22,698       30,614   Cash, cash equivalents and restricted cash:                 Beginning of period     30,466       47,281   End of period   $ 53,164     $ 77,895                     Supplemental disclosure of cash flow information:                 Cash paid for interest   $ 13,409     $ 6,535   Supplemental non-cash investing and financing activities:                 Warrant investments received and recorded as unearned income   $ 656     $ 1,845   Distributions payable   $ 10,592     $ 7,457   End-of-term payments receivable   $ 11,074     $ 7,149   Non-cash income   $ 7,182     $ 2,378         June 30,       2023     2022   Cash   $ 24,395     $ 54,353   Investments in money market funds     25,865       21,959   Restricted investments in money market funds     2,904       1,583   Total cash, cash equivalents and restricted cash   $ 53,164     $ 77,895     See Notes to Consolidated Financial Statements   6 Table of Contents Horizon Technology Finance Corporation and Subsidiaries     Consolidated Schedule of Investments (Unaudited) June 30, 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 — 201.1% (8)                                                                                 Non-Affiliate Debt Investments — 192.3% (8)                                                                                 Non-Affiliate Debt Investments — Life Science — 82.9% (8)                                                                                 Avalo Therapeutics, Inc. (2)(5)(12)   Biotechnology   Term Loan     14.50 %   Prime     6.25 %     9.50 %     -       3.00 %   January 1, 2025   $ 2,055     $ 2,011     $ 1,938           Term Loan     14.50 %   Prime     6.25 %     9.50 %     -       3.00 %   January 1, 2025     2,028       1,982       1,910           Term Loan     14.50 %   Prime     6.25 %     9.50 %     -       3.00 %   January 1, 2025     1,014       991       955           Term Loan     14.50 %   Prime     6.25 %     9.50 %     -       3.00 %   February 1, 2025     2,028       1,980       1,907           Term Loan     14.50 %   Prime     6.25 %     9.50 %     -       3.00 %   February 1, 2025     2,028       1,980       1,907           Term Loan     14.50 %   Prime     6.25 %     9.50 %     -       3.00 %   April 1, 2025     1,014       987       951           Term Loan     14.50 %   Prime     6.25 %     9.50 %     -       3.00 %   April 1, 2025     1,014       987       951   Castle Creek Biosciences, Inc. (2)(12)   Biotechnology   Term Loan     13.13 %   Prime     4.88 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,899       4,899           Term Loan     13.13 %   Prime     4.88 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,971       4,971           Term Loan     13.13 %   Prime     4.88 %     9.55 %     13.50 %     5.50 %   May 1, 2026     3,000       2,982       2,982           Term Loan     13.13 %   Prime     4.88 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,971       4,971           Term Loan     13.13 %   Prime     4.88 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,971       4,971           Term Loan     13.13 %   Prime     4.88 %     9.55 %     13.50 %     5.50 %   May 1, 2026     3,000       2,982       2,982   Emalex Biosciences, Inc. (2)(12)   Biotechnology   Term Loan     12.97 %   Prime     4.72 %     9.75 %     -       5.00 %   June 1, 2024     1,979       1,968       1,968           Term Loan     12.97 %   Prime     4.72 %     9.75 %     -       5.00 %   June 1, 2024     1,979       1,969       1,969           Term Loan     12.97 %   Prime     4.72 %     9.75 %     -       5.00 %   November 1, 2025     5,000       4,936       4,936           Term Loan     12.97 %   Prime     4.72 %     9.75 %     -       5.00 %   May 1, 2026     5,000       4,930       4,930   Evelo Biosciences, Inc. (2)(5)(12)   Biotechnology   Term Loan     12.50 %   Prime     4.25 %     11.00 %     -       4.25 %   January 1, 2028     10,000       9,887       9,887           Term Loan     12.50 %   Prime     4.25 %     11.00 %     -       4.25 %   January 1, 2028     15,000       14,830       14,830           Term Loan     12.50 %   Prime     4.25 %     11.00 %     -       4.25 %   January 1, 2028     6,000       5,932       5,932           Term Loan     12.50 %   Prime     4.25 %     11.00 %     -       4.25 %   January 1, 2028     6,000       5,932       5,932           Term Loan     12.50 %   Prime     4.25 %     11.00 %     -       4.25 %   January 1, 2028     4,000       3,955       3,955           Term Loan     12.50 %   Prime     4.25 %     11.00 %     -       4.25 %   January 1, 2028     4,000       3,955       3,955   Greenlight Biosciences, Inc. (2)(5)(12)   Biotechnology   Term Loan     14.00 %   Prime     5.75 %     9.00 %     -       3.00 %   July 1, 2025     4,000       3,886       3,859           Term Loan     14.00 %   Prime     5.75 %     9.00 %     -       3.00 %   July 1, 2025     2,000       1,944       1,931   IMV Inc. (5)(12)(13)(15)   Biotechnology   Term Loan     14.00 %   Prime     5.75 %     9.00 %     -       5.00 %   July 1, 2025     5,035       4,988       2,814           Term Loan     14.00 %   Prime     5.75 %     9.00 %     -       5.00 %   July 1, 2025     2,500       2,476       1,397           Term Loan     14.00 %   Prime     5.75 %     9.00 %     -       5.00 %   January 1, 2026     5,000       4,953       2,795           Term Loan     14.00 %   Prime     5.75 %     9.00 %     -       5.00 %   January 1, 2026     5,000       4,953       2,794   KSQ Therapeutics, Inc. (2)(12)   Biotechnology   Term Loan     13.00 %   Prime     4.75 %     8.50 %     -       5.50 %   May 1, 2027     6,250       6,188       6,188           Term Loan     13.00 %   Prime     4.75 %     8.50 %     -       5.50 %   May 1, 2027     6,250       6,188       6,188   Native Microbials, Inc (2)(12)   Biotechnology   Term Loan     13.50 %   Prime     5.25 %     8.50 %     -       5.00 %   November 1, 2026     3,750       3,711       3,711           Term Loan     13.50 %   Prime     5.25 %     8.50 %     -       5.00 %   November 1, 2026     2,500       2,475       2,475   PDS Biotechnology Corporation (2)(5)(12)   Biotechnology   Term Loan     14.00 %   Prime     5.75 %     9.75 %     -       3.75 %   September 1, 2026     10,000       9,727       9,727           Term Loan     14.00 %   Prime     5.75 %     9.75 %     -       3.75 %   September 1, 2026     3,750       3,707       3,707           Term Loan     14.00 %   Prime     5.75 %     9.75 %     -       3.75 %   September 1, 2026     3,750       3,707       3,707   Provivi, Inc. (2)(12)   Biotechnology   Term Loan     13.61 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     4,667       4,605       4,605           Term Loan     13.61 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     4,667       4,605       4,605           Term Loan     13.61 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,289       2,289           Term Loan     13.61 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,289       2,289           Term Loan     13.61 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,284       2,284           Term Loan     13.61 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,284       2,284     See Notes to Consolidated Financial Statements   7 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) June 30, 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)   Stealth Biotherapeutics Inc. (2)(12)   Biotechnology   Term Loan     13.75 %   Prime     5.50 %     8.75 %     -       6.00 %   October 1, 2025     4,750       4,680       4,680           Term Loan     13.75 %   Prime     5.50 %     8.75 %     -       6.00 %   October 1, 2025     2,375       2,338       2,338   Aerobiotix, LLC (2)(12)   Medical Device   Term Loan     14.50 %   Prime     6.25 %     9.50 %     -       6.00 %   April 1, 2026     2,500       2,471       2,358           Term Loan     14.50 %   Prime     6.25 %     9.50 %     -       6.00 %   April 1, 2026     2,500       2,471       2,358   Ceribell, Inc. (2)(12)   Medical Device   Term Loan     11.75 %   Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     5,000       4,981       4,981           Term Loan     11.75 %   Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     5,000       4,981       4,981           Term Loan     11.75 %   Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     2,500       2,485       2,485           Term Loan     11.75 %   Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     2,500       2,485       2,485   Cognoa, Inc. (2)(12)   Medical Device   Term Loan     13.75 %   Prime     5.50 %     8.75 %     -       6.00 %   August 1, 2026     5,000       4,948       4,948           Term Loan     13.75 %   Prime     5.50 %     8.75 %     -       6.00 %   August 1, 2026     2,500       2,474       2,474   Conventus Orthopaedics, Inc. (2)(12)   Medical Device   Term Loan     13.07 %   Prime     4.82 %     9.25 %     -       10.36 %   July 1, 2025     3,960       3,910       3,910           Term Loan     13.07 %   Prime     4.82 %     9.25 %     -       10.36 %   July 1, 2025     3,960       3,910       3,910   CSA Medical, Inc. (2)(12)   Medical Device   Term Loan     13.34 %   Prime     5.09 %     10.00 %     -       5.00 %   January 1, 2024     875       867       867           Term Loan     13.34 %   Prime     5.09 %     10.00 %     -       5.00 %   January 1, 2024     58       58       58           Term Loan     13.34 %   Prime     5.09 %     10.00 %     -       5.00 %   March 1, 2024     1,200       1,191       1,191   InfoBionic, Inc. (2)(12)   Medical Device   Term Loan     14.50 %   Prime     6.25 %     9.50 %     -       4.00 %   October 1, 2024     2,771       2,724       2,724           Term Loan     14.50 %   Prime     6.25 %     9.50 %     -       4.00 %   June 1, 2025     1,000       979       979   Magnolia Medical Technologies, Inc. (2)(12)   Medical Device   Term Loan     13.25 %   Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,953       4,953           Term Loan     13.25 %   Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,953       4,953           Term Loan     13.25 %   Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,948       4,948           Term Loan     13.25 %   Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,949       4,949           Term Loan     13.25 %   Prime     5.00 %     9.75 %     -       4.00 %   January 1, 2027     5,000       4,927       4,927           Term Loan     13.25 %   Prime     5.00 %     9.75 %     -       4.00 %   January 1, 2027     5,000       4,927       4,927   Robin Healthcare, Inc. (2)(12)   Medical Device   Term Loan     13.75 %   Prime     5.50 %     10.25 %     -       4.00 %   November 1, 2026     3,500       3,417       3,417           Term Loan     13.75 %   Prime     5.50 %     10.25 %     -       4.00 %   November 1, 2026     3,500       3,467       3,467   Scientia Vascular, Inc. (2)(12)   Medical Device   Term Loan     13.00 %   Prime     4.75 %     8.50 %     -       5.00 %   January 1, 2027     3,750       3,659       3,659           Term Loan     13.00 %   Prime     4.75 %     8.50 %     -       5.00 %   January 1, 2027     3,750       3,714       3,714           Term Loan     13.50 %   Prime     5.25 %     9.00 %     -       5.00 %   March 1, 2027     5,000       4,928       4,928   Sonex Health, Inc. (2)(12)   Medical Device   Term Loan     14.75 %   Prime     6.50 %     9.75 %     -       8.00 %   June 1, 2025     2,500       2,481       2,481           Term Loan     14.75 %   Prime     6.50 %     9.75 %     -       8.00 %   June 1, 2025     2,500       2,481       2,481           Term Loan     14.75 %   Prime     6.50 %     9.75 %     -       8.00 %   June 1, 2025     2,500       2,481       2,481           Term Loan     14.75 %   Prime     6.50 %     9.75 %     -       8.00 %   April 1, 2026     2,500       2,463       2,463           Term Loan     14.75 %   Prime     6.50 %     9.75 %     -       8.00 %   May 1, 2026     2,500       2,462       2,462   Spineology, Inc. (2)(12)   Medical Device   Term Loan     15.25 %   Prime     7.00 %     10.25 %     -       1.00 %   October 1, 2025     5,000       4,972       4,972           Term Loan     15.25 %   Prime     7.00 %     10.25 %     -       1.00 %   April 1, 2026     2,500       2,485       2,485     See Notes to Consolidated Financial Statements   8 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) June 30, 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)   Swift Health Systems Inc. (2)(12)   Medical Device   Term Loan     13.50 % Prime     5.25 %     9.00 %     -       5.00 %   July 1, 2027     3,500       3,460       3,460           Term Loan     13.50 % Prime     5.25 %     9.00 %     -       5.00 %   July 1, 2027     3,500       3,460       3,460           Term Loan     13.50 % Prime     5.25 %     9.00 %     -       5.00 %   July 1, 2027     3,500       3,450       3,450           Term Loan     13.50 % Prime     5.25 %     9.00 %     -       5.00 %   July 1, 2027     3,500       3,450       3,450   Total Non-Affiliate Debt Investments — Life Science                                                           302,687       294,452   Non-Affiliate Debt Investments — Sustainability — 23.4% (8)                                                                               Aerofarms, Inc. (12)   Other Sustainability   Term Loan     15.00 % Prime     6.75 %     10.00 %     -       3.00 %   April 1, 2026     3,750       3,710       3,585           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       3.00 %   April 1, 2026     3,750       3,710       3,585   Nexii Building Solutions, Inc. (2)(12)(15)   Other Sustainability   Term Loan     15.25 % Prime     7.00 %     10.25 %     -       2.50 %   August 27, 2025     7,500       7,395       7,024           Term Loan     15.25 % Prime     7.00 %     10.25 %     -       2.50 %   August 27, 2025     7,500       7,395       7,024           Term Loan     15.25 % Prime     7.00 %     10.25 %     -       2.50 %   August 27, 2025     7,500       7,395       7,024           Term Loan     15.25 % Prime     7.00 %     10.25 %     -       2.50 %   June 8, 2026     5,000       4,922       4,675           Term Loan     15.25 % Prime     7.00 %     10.25 %     -       2.50 %   June 8, 2026     5,000       4,922       4,675           Term Loan     15.25 % (11) Prime     7.00 %     10.25 %     -       -     September 30, 2023     680       680       646           Term Loan     15.25 % (11) Prime     7.00 %     10.25 %     -       -     September 30, 2023     542       542       515   Soli Organic, Inc. (2)(12)   Other Sustainability   Term Loan     15.00 % Prime     6.75 %     10.00 %     -       2.75 %   April 1, 2026     5,000       4,942       4,942           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       2.75 %   April 1, 2026     2,500       2,471       2,471           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       2.75 %   May 1, 2026     5,000       4,940       4,940           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       2.75 %   May 1, 2026     2,500       2,470       2,470           Term Loan     13.75 % Prime     5.50 %     11.75 %     -       2.75 %   December 1, 2026     5,000       4,917       4,917           Term Loan     13.75 % Prime     5.50 %     11.75 %     -       2.75 %   December 1, 2026     2,500       2,458       2,458   Temperpack Technologies, Inc. (2)(12)   Other Sustainability   Term Loan     15.00 % Prime     6.75 %     10.00 %     -       2.50 %   June 1, 2026     3,750       3,709       3,709           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       2.50 %   June 1, 2026     3,750       3,723       3,723           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       2.50 %   October 1, 2026     7,500       7,436       7,436           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       2.50 %   October 1, 2026     3,750       3,718       3,718           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       2.50 %   October 1, 2026     3,750       3,718       3,718   Total Non-Affiliate Debt Investments — Sustainability                                                           85,173       83,255   Non-Affiliate Debt Investments — Technology — 75.9% (8)                                                                               Axiom Space, Inc. (2)(12)   Communications   Term Loan     14.25 % Prime     6.00 %     9.25 %     -       2.50 %   June 1, 2026     7,500       7,462       7,462           Term Loan     14.25 % Prime     6.00 %     9.25 %     -       2.50 %   June 1, 2026     7,500       7,462       7,462           Term Loan     14.25 % Prime     6.00 %     9.25 %     -       2.50 %   June 1, 2026     7,500       7,462       7,462   Better Place Forests Co. (12)(13)   Consumer-related Technologies   Term Loan     14.50 % Prime     6.25 %     9.50 %     -       1.85 %   July 1, 2025     5,104       5,056       3,426           Term Loan     14.50 % Prime     6.25 %     9.50 %     -       1.85 %   October 1, 2025     2,500       2,474       1,677           Term Loan     14.50 % Prime     6.25 %     9.50 %     -       100.00 %   September 30, 2023     150       150       102           Term Loan     14.50 % Prime     6.25 %     9.50 %     -       100.00 %   September 30, 2023     250       250       169           Term Loan     14.50 % Prime     6.25 %     9.50 %     -       100.00 %   September 30, 2023     250       250       169   CAMP NYC, Inc. (2)(12)   Consumer-related Technologies   Term Loan     15.50 % Prime     7.25 %     10.50 %     -       3.00 %   May 1, 2026     3,500       3,467       3,467   Clara Foods Co. (2)(12)   Consumer-related Technologies   Term Loan     14.00 % Prime     5.75 %     9.00 %     -       5.50 %   August 1, 2025     2,083       2,069       2,069           Term Loan     14.00 % Prime     5.75 %     9.00 %     -       5.50 %   August 1, 2025     2,083       2,069       2,069     See Notes to Consolidated Financial Statements   9 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) June 30, 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)   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       3,602       3,602           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     1,250       1,240       1,240           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     3,750       3,720       3,720           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     1,250       1,240       1,240           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     3,750       3,720       3,720           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     1,250       1,240       1,240           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   January 1, 2028     3,750       3,705       3,705           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   January 1, 2028     3,750       3,700       3,700           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   April 1, 2028     3,750       3,705       3,705           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2028     3,750       3,698       3,698           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2028     3,750       3,698       3,698           Term Loan (14)     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2028     1,250       1,250       1,250           Term Loan (14)     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2028     1,250       1,250       1,250   Havenly, Inc. (2)(12)   Consumer-related Technologies   Term Loan     13.25 % Prime     5.00 %     5.00 %     -       4.00 %   March 1, 2027     2,000       1,250       1,250           Term Loan     13.25 % Prime     5.00 %     5.00 %     -       4.00 %   March 1, 2027     3,000       1,875       1,875           Term Loan     11.75 % Prime     3.50 %     10.50 %     -       7.78 %   February 1, 2028     2,813       2,813       2,813           Term Loan     11.75 % 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     10.75 % Prime     2.50 %     8.00 %     -       -     September 1, 2027     2,598       2,589       2,330   MyForest Foods Co. (2)(12)   Consumer-related Technologies   Term Loan     15.00 % Prime     6.75 %     10.00 %     -       3.00 %   October 1, 2025     4,667       4,635       4,635           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       3.00 %   October 1, 2025     2,333       2,317       2,317   NextCar Holding Company, Inc. (2)(12)   Consumer-related Technologies   Term Loan     14.00 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     5,352       5,304       4,630           Term Loan     14.00 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     2,141       2,124       1,854           Term Loan     14.00 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     2,676       2,658       2,320           Term Loan     14.00 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     3,211       3,189       2,784           Term Loan     14.00 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     2,676       2,644       2,308           Term Loan     14.00 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     2,676       2,644       2,308           Term Loan     14.00 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     5,351       5,287       4,614           Term Loan     14.00 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     2,676       2,642       2,306   Optoro, Inc. (2)(12)   Consumer-related Technologies   Term Loan     14.50 % Prime     6.25 %     9.50 %     -       4.00 %   August 1, 2027     2,500       2,400       2,400           Term Loan     14.50 % Prime     6.25 %     9.50 %     -       4.00 %   July 1, 2028     1,875       1,779       1,779   Primary Kids, Inc. (2)(12)   Consumer-related Technologies   Term Loan     15.50 % Prime     7.25 %     10.50 %     -       3.00 %   March 1, 2025     2,000       1,980       1,980           Term Loan     15.50 % Prime     7.25 %     10.50 %     -       3.00 %   March 1, 2025     2,000       1,980       1,980           Term Loan     15.50 % Prime     7.25 %     10.50 %     -       3.00 %   September 1, 2025     2,600       2,573       2,573   Unagi, Inc. (2)(12)   Consumer-related Technologies   Term Loan     16.00 % (11) Prime     7.75 %     11.00 %     -       -     May 1, 2027     1,108       1,086       868           Term Loan     16.00 % (11) Prime     7.75 %     11.00 %     -       -     May 1, 2027     554       543       434           Term Loan     16.00 % (11) Prime     7.75 %     11.00 %     -       -     May 1, 2027     554       543       434   Liqid, Inc. (2)(12)   Networking   Term Loan     14.50 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     2,333       2,300       2,300           Term Loan     14.50 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     2,333       2,300       2,300           Term Loan     14.50 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     1,167       1,149       1,149           Term Loan     14.50 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     1,167       1,149       1,149           Term Loan     14.50 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     1,167       1,129       1,129   BriteCore Holdings, Inc. (2)(12)   Software   Term Loan     15.00 % Prime     6.75 %     10.00 %     -       5.00 %   March 1, 2026     2,500       2,489       2,489           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       5.00 %   March 1, 2026     2,500       2,489       2,489           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       3.00 %   March 1, 2027     2,500       2,469       2,469           Term Loan     15.00 % Prime     6.75 %     10.00 %     -       3.00 %   March 1, 2027     2,500       2,469       2,469     See Notes to Consolidated Financial Statements   10 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) June 30, 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     14.75 % Prime     6.50 %     9.75 %     -       3.50 %   April 1, 2026     6,500       6,370       6,370           Term Loan     14.75 % Prime     6.50 %     9.75 %     -       3.50 %   April 1, 2026     6,000       5,880       5,880           Term Loan     14.75 % Prime     6.50 %     9.75 %     -       3.50 %   August 1, 2026     2,500       2,447       2,447   Engage3, LLC (2)(12)   Software   Term Loan     14.50 % Prime     6.25 %     9.75 %     -       4.50 %   July 1, 2027     3,750       3,723       3,723           Term Loan     14.50 % Prime     6.25 %     9.75 %     -       4.50 %   July 1, 2027     3,750       3,723       3,723   Kodiak Robotics, Inc. (2)(12)   Software   Term Loan     13.75 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     10,000       9,860       9,860           Term Loan     13.75 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     10,000       9,860       9,860           Term Loan     13.75 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     5,000       4,930       4,930           Term Loan     13.75 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     5,000       4,930       4,930   Lemongrass Holdings, Inc. (2)(12)   Software   Term Loan     14.75 % Prime     6.50 %     9.75 %     -       2.50 %   March 1, 2026     5,000       4,959       4,959           Term Loan     14.75 % Prime     6.50 %     9.75 %     -       2.50 %   March 1, 2026     2,500       2,480       2,480   Lytics, Inc. (2)(12)   Software   Term Loan     14.25 % Prime     6.00 %     12.25 %     -       3.00 %   November 1, 2026     2,500       2,414       2,414           Term Loan     14.25 % Prime     6.00 %     12.25 %     -       3.00 %   December 1, 2026     1,250       1,234       1,234           Term Loan     14.25 % Prime     6.00 %     12.25 %     -       3.00 %   April 1, 2027     1,000       985       985   Noodle Partners, Inc. (2)(12)   Software   Term Loan     13.25 % Prime     5.00 %     12.00 %     -       3.00 %   March 1, 2027     10,000       9,741       9,741           Term Loan     13.25 % Prime     5.00 %     12.00 %     -       3.00 %   March 1, 2027     5,000       4,932       4,932           Term Loan     13.25 % Prime     5.00 %     12.00 %     -       3.00 %   March 1, 2027     5,000       4,933       4,933   Reputation Institute, Inc. (2)(12)   Software   Term Loan     15.50 % Prime     7.25 %     10.50 %     -       3.00 %   August 1, 2025     4,333       4,278       4,278   Slingshot Aerospace, Inc. (2)(12)   Software   Term Loan     14.00 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,946       4,946           Term Loan     14.00 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,946       4,946           Term Loan     14.00 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,882       4,882           Term Loan     14.00 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,946       4,946   Supply Network Visibility Holdings LLC (2)(12)   Software   Term Loan     12.50 % Prime     4.25 %     12.00 %     -       2.50 %   June 1, 2028     2,500       2,456       2,456           Term Loan     12.50 % Prime     4.25 %     12.00 %     -       2.50 %   June 1, 2028     3,500       3,488       3,488           Term Loan     12.50 % Prime     4.25 %     12.00 %     -       2.50 %   June 1, 2028     2,500       2,491       2,491           Term Loan     12.50 % Prime     4.25 %     12.00 %     -       2.50 %   June 1, 2028     1,500       1,495       1,495   Viken Detection Corporation (2)(12)   Software   Term Loan     12.25 % Prime     4.00 %     11.75 %     -       3.50 %   June 1, 2027     5,000       4,762       4,762           Term Loan     12.25 % Prime     4.00 %     11.75 %     -       3.50 %   June 1, 2027     2,500       2,461       2,461           Term Loan     12.25 % Prime     4.00 %     11.75 %     -       3.50 %   June 1, 2027     2,500       2,461       2,461   Total Non-Affiliate Debt Investments — Technology                                                         276,563       269,863   Non-Affiliate Debt Investments — Healthcare information and services — 10.1% (8)                                                                               Hound Labs inc. (2) (12)   Diagnostics   Term Loan     14.25 % Prime     6.00 %     9.25 %     -       3.50 %   June 1, 2026     2,500       2,478       2,478           Term Loan     14.25 % Prime     6.00 %     9.25 %     -       3.50 %   June 1, 2026     2,500       2,478       2,478           Term Loan     14.25 % Prime     6.00 %     9.25 %     -       3.50 %   June 1, 2026     5,000       4,957       4,957   BrightInsight, Inc. (2)(12)   Software   Term Loan     13.75 % Prime     5.50 %     9.50 %     -       3.00 %   August 1, 2027     7,000       6,670       6,670           Term Loan     13.75 % Prime     5.50 %     9.50 %     -       3.00 %   August 1, 2027     3,500       3,455       3,455           Term Loan     13.75 % Prime     5.50 %     9.50 %     -       3.00 %   August 1, 2027     3,500       3,455       3,455           Term Loan     13.75 % Prime     5.50 %     9.50 %     -       3.00 %   April 1, 2028     2,750       2,706       2,706   SafelyYou, Inc. (2)(12)   Software   Term Loan     11.50 % Prime     3.25 %     11.00 %     -       5.00 %   June 1, 2027     5,000       4,635       4,635           Term Loan     11.50 % Prime     3.25 %     11.00 %     -       5.00 %   June 1, 2027     5,000       4,905       4,905   Total Non-Affiliate Debt Investments — Healthcare information and services                                                           35,739       35,739   Total Non- Affiliate Debt Investments                                                           700,162       683,309     See Notes to Consolidated Financial Statements   11 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) June 30, 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 — 7.2% (8)                                 Non-Affiliate Warrants — Life Science — 1.8% (8)                                 Avalo Therapeutics, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     26,444       311       —   Castle Creek Biosciences, Inc. (2)(12)   Biotechnology   Preferred Stock Warrant     7,404       212       338   Corvium, Inc. (2)(12)   Biotechnology   Preferred Stock Warrant     661,956       53       —   Emalex Biosciences, Inc. (2)(12)   Biotechnology   Preferred Stock Warrant     110,402       175       264   Evelo Biosciences, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     23,196       126       —   Greenlight Biosciences, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     47,452       366       —   Imunon, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     19,671       66       —   IMV Inc. (2)(5)(12)(15)   Biotechnology   Common Stock Warrant     39,774       67       —   KSQ Therapeutics, Inc. (2) (12)   Biotechnology   Preferred Stock Warrant     48,076       50       58   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       163   PDS Biotechnology Corporation (2)(5)(12)   Biotechnology   Common Stock Warrant     299,848       160       651   Provivi, Inc. (2)(12)   Biotechnology   Preferred Stock Warrant     293,488       442       173   Stealth Biotherapeutics Inc. (2)(12)   Biotechnology   Common Stock Warrant     318,181       264       125   vTv Therapeutics Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     95,293       44       —   Xeris Pharmaceuticals, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     126,000       72       58   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       1,204   Aerobiotix, LLC (2)(12)   Medical Device   Preferred Stock Warrant     27,330       48       32   Canary Medical Inc. (2)(12)   Medical Device   Preferred Stock Warrant     12,153       86       1,319   Ceribell, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     145,483       69       211   Cognoa, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     4,106,174       145       178   Conventus Orthopaedics, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     7,972,222       221       229   CSA Medical, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     1,375,727       150       154   CVRx, Inc. (2)(5)(12)   Medical Device   Common Stock Warrant     47,410       76       278   Infobionic, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     317,647       124       52   Magnolia Medical Technologies, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     809,931       194       390   Meditrina, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     233,993       83       101   Robin Healthcare, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     86,066       16       16   Scientia Vascular, Inc (2)(12)   Medical Device   Preferred Stock Warrant     27,036       57       64   Sonex Health, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     1,098,805       98       125   VERO Biotech LLC (2)(12)   Medical Device   Preferred Stock Warrant     408       53       1   Swift Health Systems Inc. (2)(12)   Medical Device   Preferred Stock Warrant     135,484       71       84   Total Non-Affiliate Warrants — Life Science                     4,199       6,268     See Notes to Consolidated Financial Statements   12 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) June 30, 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)                                 Aerofarms, Inc. (2)(12)   Other Sustainability   Preferred Stock Warrant     201,537       61       —   LiquiGlide, Inc. (2)(12)   Other Sustainability   Common Stock Warrant     61,359       36       56   Nexii Building Solutions, Inc. (2)(12)(15)   Other Sustainability   Common Stock Warrant     213,746       490       —   Soli Organic, Inc. (2)(12)   Other Sustainability   Preferred Stock Warrant     681       214       365   Temperpack Technologies, Inc. (2)(12)   Other Sustainability   Preferred Stock Warrant     34,604       121       266   Total Non-Affiliate Warrants — Sustainability           922       687   Non-Affiliate Warrants — Technology — 4.6% (8)                                 Axiom Space, Inc. (2)(12)   Communications   Common Stock Warrant     1,991       45       67   Intelepeer Holdings, Inc. (2)(12)   Communications   Preferred Stock Warrant     2,936,535       138       3,272   PebblePost, Inc. (2)(12)   Communications   Preferred Stock Warrant     598,850       92       139   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       —   Better Place Forests Co. (12)   Consumer-related Technologies   Preferred Stock Warrant     10,690       26       —   Caastle, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     268,591       67       1,058   CAMP NYC, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     75,997       22       30   Clara Foods Co. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     46,745       30       126   Divergent Technologies, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     37,294       95       276   Havenly, Inc. (2)(12)   Consumer-related Technologies   Common Stock Warrant     1,312,500       2,947       2,677   MyForest Foods Co. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     250       29       61   NextCar Holding Company, Inc. (2)(12)   Consumer-related Technologies   Preferred and Common Stock Warrant     1,237,370       197       —   Optoro, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     11,550       182       182   Primary Kids, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     553,778       57       595   Quip NYC Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     6,191       325       536   Unagi, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     171,081       32       —   Updater, Inc.(2)(12)   Consumer-related Technologies   Common Stock Warrant     108,333       34       11   CPG Beyond, Inc. (2)(12)   Data Storage   Preferred Stock Warrant     500,000       242       912   Silk, Inc. (2)(12)   Data Storage   Preferred Stock Warrant     394,110       175       148   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       360   Skillshare, Inc. (2)(12)   Internet and Media   Preferred Stock Warrant     139,074       162       1,211   Liqid, Inc. (2)(12)   Networking   Preferred Stock Warrant     344,102       364       247   Halio, Inc. (2)(12)   Power Management   Preferred Stock Warrant     5,002,574       1,585       2,898   Avalanche Technology, Inc. (2)(12)   Semiconductors   Preferred and Common Stock Warrant     6,081       57       —   BriteCore Holdings, Inc. (2)(12)   Software   Preferred Stock Warrant     77,828       21       70   Dropoff, Inc. (2)(12)   Software   Common Stock Warrant     516,732       455       169   E La Carte, Inc. (2)(5)(12)   Software   Common Stock Warrant     147,361       60       121   Everstream Holdings, LLC (2)(12)   Software   Preferred Stock Warrant     350,000       70       70   Kodiak Robotics, Inc. (2)(12)   Software   Preferred Stock Warrant     639,918       273       299   Lemongrass Holdings, Inc. (2)(12)   Software   Preferred Stock Warrant     101,308       34       41   Lotame Solutions, Inc. (2)(12)   Software   Preferred Stock Warrant     71,305       21       57   Lytics, Inc. (2)(12)   Software   Preferred Stock Warrant     85,543       46       18   Noodle Partners, Inc. (2)(12)   Software   Preferred Stock Warrant     84,037       116       120   Reputation Institute, Inc. (2)(12)   Software   Preferred Stock Warrant     3,731       56       50   Revinate Holdings, Inc. (2)(12)   Software   Preferred Stock Warrant     682,034       44       101   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       140   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       120   xAd, Inc. (2)(12)   Software   Preferred Stock Warrant     4,343,348       177       12   Total Non-Affiliate Warrants — Technology             9,401       16,392     See Notes to Consolidated Financial Statements   13 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) June 30, 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       47       56   Kate Farms, Inc. (2)(12)   Other Healthcare   Preferred Stock Warrant     82,965       101       1,374   BrightInsight, Inc. (2)(12)   Software   Preferred Stock Warrant     85,066       167       181   Medsphere Systems Corporation (2)(12)   Software   Preferred Stock Warrant     7,097,792       61       362   SafelyYou, Inc. (2)(12)   Software   Preferred Stock Warrant     150,353       163       163   Total Non-Affiliate Warrants — Healthcare information and services             539       2,136   Total Non-Affiliate Warrants             15,061       25,483   Non-Affiliate Other Investments — 0.4% (8)                                 Lumithera, Inc. (12)   Medical Device   Royalty Agreement             1,200       1,100   ZetrOZ, Inc. (12)   Medical Device   Royalty Agreement             —       200   Total Non-Affiliate Other Investments             1,200       1,300   Non-Affiliate Equity — 1.2% (8)                                 Castle Creek Biosciences, Inc. (12)   Biotechnology   Common Stock     1,162       250       250   Emalex Biosciences, Inc. (12)   Biotechnology   Common Stock     32,831       356       356   Getaround, Inc. (2)(5)   Consumer-related Technologies   Common Stock     87,082       253       30   NextCar Holding Company, Inc. (2)(12)   Technology   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)(12)   Other Sustainability   Common Stock     5,205       111       97   Branded Online, Inc. (2)(5)   Software   Common Stock     5,398       1,079       8   Decisyon, Inc. (12)   Software   Preferred Stock     280,000       2,800       1,281   Lotame, Inc. (12)   Software   Preferred Stock     66,127       2       193   Axiom Space, Inc. (12)   Technology   Preferred Stock     1,810       261       306   Total Non-Affiliate Equity             7,210       4,393   Total Non-Affiliate Portfolio Investment Assets           $ 723,633     $ 714,485   Non-controlled Affiliate Investments — 0.3% (8)                                 Non-controlled Affiliate Equity — Life Science — 0.3% (8)                                 Cadrenal Therapeutics, Inc. (5)   Biotechnology   Common Stock     600,000       —       906   Total Non-Controlled Affiliate Equity           $ —       906   Total Non-Controlled Affiliate Portfolio Investment Assets           $ —       906   Total Portfolio Investment Assets — 201.4% (8)           $ 723,633     $ 715,391                                       ( 1 ) All investments of the Company are in entities which are organized under the laws of the United States and have a principal place of business in the United States, unless otherwise noted. ( 2 ) Has been pledged as collateral under the revolving credit facility (the “Key Facility”) with KeyBank National Association (“Key”), the Note Funding Agreement (the “NYL Facility”, together with the Key Facility, the "Credit Facilities") with several entities owned or affiliated with New York Life Insurance Company (“NYL Noteholders”), 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”), 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  June 30, 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 June 30, 2023 , 6.4 % and  5.3 % of the Company’s total assets on a cost and fair value basis, respectively, are in non-qualifying assets. Under the 1940 Act, the Company may not acquire any non-qualifying assets unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. ( 10 ) ETPs are contractual fixed-interest payments due in cash at the maturity date of the applicable debt investment, including upon any prepayment, and are a fixed percentage of the original principal balance of the debt investments unless otherwise noted. Interest will accrue during the life of the debt investment on each ETP and will be recognized as non-cash income until it is actually paid. Therefore, a portion of the incentive fee the Company may pay its Advisor will be based on income that the Company has not yet received in cash. ( 11 ) Debt investment has a payment-in-kind (“PIK”) feature. PIK interest is accrued, added to the principal balance of the debt investment, and payable at maturity. ( 12 ) The fair value of the investment was valued using significant unobservable inputs. ( 13 ) Debt investment is on non-accrual status as of June 30, 2023 . ( 14 ) Debt investment sold to third party on July 3, 2023. ( 15 ) Entity is organized under the laws of Canada and has a principal place of business in Canada.   See Notes to Consolidated Financial Statements   14 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments December 31, 2022 (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 — 226.1% (8)                                                                               Non-Affiliate Debt Investments — 215.5% (8)                                                                               Non-Affiliate Debt Investments — Life Science — 99.7% (8)                                                                               Avalo Therapeutics, Inc. (2)(5)(12)   Biotechnology   Term Loan     13.75 % Prime     6.25 %     9.50 %     -       3.00 %   January 1, 2025   $ 2,885     $ 2,853     $ 2,777           Term Loan     13.75 % Prime     6.25 %     9.50 %     -       3.00 %   January 1, 2025     2,885       2,823       2,750           Term Loan     13.75 % Prime     6.25 %     9.50 %     -       3.00 %   January 1, 2025     1,442       1,411       1,374           Term Loan     13.75 % Prime     6.25 %     9.50 %     -       3.00 %   February 1, 2025     2,885       2,821       2,748           Term Loan     13.75 % Prime     6.25 %     9.50 %     -       3.00 %   February 1, 2025     2,885       2,821       2,748           Term Loan     13.75 % Prime     6.25 %     9.50 %     -       3.00 %   April 1, 2025     1,442       1,408       1,371           Term Loan     13.75 % Prime     6.25 %     9.50 %     -       3.00 %   April 1, 2025     1,442       1,408       1,371   Castle Creek Biosciences, Inc. (2)(12)   Biotechnology   Term Loan     12.50 % Prime     6.05 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,891       4,891           Term Loan     12.50 % Prime     6.05 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,963       4,963           Term Loan     12.50 % Prime     6.05 %     9.55 %     13.50 %     5.50 %   May 1, 2026     3,000       2,978       2,978           Term Loan     12.50 % Prime     6.05 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,963       4,963           Term Loan     12.50 % Prime     6.05 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,963       4,963           Term Loan     12.50 % Prime     6.05 %     9.55 %     13.50 %     5.50 %   May 1, 2026     3,000       2,978       2,978   Emalex Biosciences, Inc. (2)(12)   Biotechnology   Term Loan     12.07 % Libor     7.90 %     9.75 %     -       5.00 %   June 1, 2024     1,979       1,962       1,962           Term Loan     12.07 % Libor     7.90 %     9.75 %     -       5.00 %   June 1, 2024     1,979       1,963       1,963           Term Loan     12.07 % Libor     7.90 %     9.75 %     -       5.00 %   November 1, 2025     5,000       4,923       4,923           Term Loan     12.07 % Libor     7.90 %     9.75 %     -       5.00 %   May 1, 2026     5,000       4,912       4,912   Evelo Biosciences, Inc. (2)(5)(12)   Biotechnology   Term Loan     11.75 % Prime     4.75 %     11.00 %     -       4.25 %   January 1, 2028     10,000       9,872       9,872           Term Loan     11.75 % Prime     4.75 %     11.00 %     -       4.25 %   January 1, 2028     15,000       14,808       14,808           Term Loan     11.75 % Prime     4.75 %     11.00 %     -       4.25 %   January 1, 2028     6,000       5,923       5,923           Term Loan     11.75 % Prime     4.75 %     11.00 %     -       4.25 %   January 1, 2028     6,000       5,923       5,923           Term Loan     11.75 % Prime     4.75 %     11.00 %     -       4.25 %   January 1, 2028     4,000       3,949       3,949           Term Loan     11.75 % Prime     4.75 %     11.00 %     -       4.25 %   January 1, 2028     4,000       3,949       3,949   F-Star Therapeutics, Inc. (2)(5)(12)   Biotechnology   Term Loan     13.25 % Prime     6.25 %     9.50 %     -       4.00 %   April 1, 2025     2,500       2,476       2,476           Term Loan     13.25 % Prime     6.25 %     9.50 %     -       4.00 %   July 1, 2025     2,500       2,473       2,473   Greenlight Biosciences, Inc. (2)(5)(12)   Biotechnology   Term Loan     13.25 % Prime     5.75 %     9.00 %     -       3.00 %   July 1, 2025     5,000       4,857       4,857           Term Loan     13.25 % Prime     5.75 %     9.00 %     -       3.00 %   July 1, 2025     2,500       2,430       2,430   IMV Inc. (2)(5)(12)(14)   Biotechnology   Term Loan     13.25 % Prime     5.75 %     9.00 %     -       5.00 %   July 1, 2025     5,000       4,946       4,946           Term Loan     13.25 % Prime     5.75 %     9.00 %     -       5.00 %   July 1, 2025     2,500       2,473       2,473           Term Loan     13.25 % Prime     5.75 %     9.00 %     -       5.00 %   January 1, 2026     5,000       4,947       4,947           Term Loan     13.25 % Prime     5.75 %     9.00 %     -       5.00 %   January 1, 2026     5,000       4,947       4,947   KSQ Therapeutics, Inc. (2) (12)   Biotechnology   Term Loan     12.25 % Prime     4.75 %     8.50 %     -       5.50 %   May 1, 2027     6,250       6,077       6,077           Term Loan     12.25 % Prime     4.75 %     8.50 %     -       5.50 %   May 1, 2027     6,250       6,177       6,177   Native Microbials, Inc (2) (12)   Biotechnology   Term Loan     12.75 % Prime     5.25 %     8.50 %     -       5.00 %   November 1, 2026     3,750       3,630       3,630           Term Loan     12.75 % Prime     5.25 %     8.50 %     -       5.00 %   November 1, 2026     2,500       2,469       2,469   PDS Biotechnology Corporation (2)(5)(12)   Biotechnology   Term Loan     13.25 % Prime     5.75 %     9.75 %     -       3.75 %   September 1, 2026     10,000       9,701       9,701           Term Loan     13.25 % Prime     5.75 %     9.75 %     -       3.75 %   September 1, 2026     3,750       3,697       3,697           Term Loan     13.25 % Prime     5.75 %     9.75 %     -       3.75 %   September 1, 2026     3,750       3,697       3,697   Provivi, Inc. (2)(12)   Biotechnology   Term Loan     12.67 % Libor     8.50 %     9.50 %     -       5.50 %   December 1, 2024     4,667       4,597       4,597           Term Loan     12.67 % Libor     8.50 %     9.50 %     -       5.50 %   December 1, 2024     4,667       4,597       4,597           Term Loan     12.67 % Libor     8.50 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,280       2,280           Term Loan     12.67 % Libor     8.50 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,280       2,280           Term Loan     12.67 % Libor     8.50 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,274       2,274           Term Loan     12.67 % Libor     8.50 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,274       2,274   Stealth Biotherapeutics Inc. (2)(12)   Biotechnology   Term Loan     13.00 % Prime     5.50 %     8.75 %     -       6.00 %   October 1, 2025     5,000       4,914       4,914           Term Loan     13.00 % Prime     5.50 %     8.75 %     -       6.00 %   October 1, 2025     2,500       2,457       2,457   Aerobiotix, LLC (2)(12)   Medical Device   Term Loan     13.75 % Prime     6.25 %     9.50 %     -       6.00 %   April 1, 2026     2,500       2,463       2,364           Term Loan     13.75 % Prime     6.25 %     9.50 %     -       6.00 %   April 1, 2026     2,500       2,463       2,364   Canary Medical Inc. (2)(12)   Medical Device   Term Loan     12.75 % Prime     5.75 %     9.00 %     -       7.00 %   November 1, 2024     2,500       2,475       2,475           Term Loan     12.75 % Prime     5.75 %     9.00 %     -       7.00 %   November 1, 2024     2,500       2,489       2,489           Term Loan     12.75 % Prime     5.75 %     9.00 %     -       7.00 %   November 1, 2024     2,500       2,473       2,473   Ceribell, Inc. (2)(12)   Medical Device   Term Loan     10.50 % Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     5,000       4,973       4,973           Term Loan     10.50 % Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     5,000       4,973       4,973           Term Loan     10.50 % Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     2,500       2,478       2,478           Term Loan     10.50 % Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     2,500       2,478       2,478   Cognoa, Inc. (2)(12)   Medical Device   Term Loan     13.00 % Prime     5.50 %     8.75 %     -       6.00 %   August 1, 2026     2,500       2,466       2,466           Term Loan     13.00 % Prime     5.50 %     8.75 %     -       6.00 %   August 1, 2026     5,000       4,932       4,932   Conventus Orthopaedics, Inc. (2)(12)   Medical Device   Term Loan     12.17 % Libor     8.00 %     9.25 %     -       10.36 %   July 1, 2025     3,960       3,898       3,898           Term Loan     12.17 % Libor     8.00 %     9.25 %     -       10.36 %   July 1, 2025     3,960       3,898       3,898     See Notes to Consolidated Financial Statements   15 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments December 31, 2022 (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)   Corinth Medtech, Inc. (2)(12)   Medical Device   Term Loan     12.25 % Prime     5.25 %     8.50 %     -       20.00 %   September 15, 2022     2,500       2,500       2,500           Term Loan     12.25 % Prime     5.25 %     8.50 %     -       20.00 %   September 15, 2022     2,500       2,500       2,500   CSA Medical, Inc. (2)(12)   Medical Device   Term Loan     12.37 % Libor     8.20 %     10.00 %     -       5.00 %   January 1, 2024     1,625       1,610       1,610           Term Loan     12.37 % Libor     8.20 %     10.00 %     -       5.00 %   January 1, 2024     108       107       107           Term Loan     12.37 % Libor     8.20 %     10.00 %     -       5.00 %   March 1, 2024     2,000       1,983       1,983   Embody, Inc. (2)(12)   Medical Device   Term Loan     14.00 % Prime     6.50 %     9.75 %     -       28.00 %   August 1, 2026     2,500       2,482       2,482   InfoBionic, Inc. (2)(12)   Medical Device   Term Loan     13.25 % Prime     6.25 %     9.50 %     -       4.00 %   October 1, 2024     3,208       3,143       3,143           Term Loan     13.25 % Prime     6.25 %     9.50 %     -       4.00 %   June 1, 2025     1,000       974       974   Magnolia Medical Technologies, Inc. (2)(12)   Medical Device   Term Loan     12.00 % Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,939       4,939           Term Loan     12.00 % Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,939       4,939           Term Loan     12.00 % Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,933       4,933           Term Loan     12.00 % Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,933       4,933           Term Loan     12.50 % Prime     5.00 %     9.75 %     -       4.00 %   January 1, 2027     5,000       4,913       4,913           Term Loan     12.50 % Prime     5.00 %     9.75 %     -       4.00 %   January 1, 2027     5,000       4,913       4,913   Robin Healthcare, Inc. (2)(12)   Medical Device   Term Loan     13.00 % Prime     5.50 %     10.25 %     -       4.00 %   November 1, 2026     3,500       3,360       3,360           Term Loan     13.00 % Prime     5.50 %     10.25 %     -       4.00 %   November 1, 2026     3,500       3,460       3,460   Scientia Vascular, Inc. (2)(12)   Medical Device   Term Loan     11.75 % Prime     4.75 %     8.50 %     -       5.00 %   January 1, 2027     3,750       3,597       3,597           Term Loan     11.75 % Prime     4.75 %     8.50 %     -       5.00 %   January 1, 2027     3,750       3,706       3,706   Sonex Health, Inc. (2)(12)   Medical Device   Term Loan     13.50 % Prime     6.50 %     9.75 %     -       8.00 %   June 1, 2025     2,500       2,476       2,476           Term Loan     13.50 % Prime     6.50 %     9.75 %     -       8.00 %   June 1, 2025     2,500       2,476       2,476           Term Loan     13.50 % Prime     6.50 %     9.75 %     -       8.00 %   June 1, 2025     2,500       2,476       2,476           Term Loan     13.50 % Prime     6.50 %     9.75 %     -       8.00 %   April 1, 2026     2,500       2,453       2,453           Term Loan     13.50 % Prime     6.50 %     9.75 %     -       8.00 %   May 1, 2026     2,500       2,455       2,455   Spineology, Inc. (2)(12)   Medical Device   Term Loan     14.50 % Prime     7.00 %     10.25 %     -       1.00 %   October 1, 2025     5,000       4,966       4,966           Term Loan     14.50 % Prime     7.00 %     10.25 %     -       1.00 %   April 1, 2026     2,500       2,481       2,481   Swift Health Systems Inc. (2)(12)   Medical Device   Term Loan     12.25 % Prime     5.25 %     9.00 %     -       5.00 %   July 1, 2027     3,500       3,349       3,349           Term Loan     12.25 % Prime     5.25 %     9.00 %     -       5.00 %   July 1, 2027     3,500       3,454       3,454   Total Non-Affiliate Debt Investments — Life Science                                                                   318,172       317,568   Non-Affiliate Debt Investments — Sustainability — 26.3% (8)                                                                               Aerofarms, Inc. (2)(12)   Other Sustainability   Term Loan     14.25 % Prime     6.75 %     10.00 %     -       3.00 %   April 1, 2026     3,750       3,699       3,699           Term Loan     14.25 % Prime     6.75 %     10.00 %     -       3.00 %   April 1, 2026     3,750       3,699       3,699   Nexii Building Solutions, Inc. (2)(12)(14)   Other Sustainability   Term Loan     14.50 % Prime     7.00 %     10.25 %     -       2.50 %   September 1, 2025     7,500       7,371       7,371           Term Loan     14.50 % Prime     7.00 %     10.25 %     -       2.50 %   September 1, 2025     7,500       7,371       7,371           Term Loan     14.50 % Prime     7.00 %     10.25 %     -       2.50 %   September 1, 2025     7,500       7,371       7,371           Term Loan     14.50 % Prime     7.00 %     10.25 %     -       2.50 %   July 1, 2026     5,000       4,903       4,903           Term Loan     14.50 % Prime     7.00 %     10.25 %     -       2.50 %   July 1, 2026     5,000       4,903       4,903   Soli Organic, Inc. (2)(12)   Other Sustainability   Term Loan     14.25 % Prime     6.75 %     10.00 %     -       2.75 %   April 1, 2026     2,500       2,463       2,463           Term Loan     14.25 % Prime     6.75 %     10.00 %     -       2.75 %   April 1, 2026     5,000       4,927       4,927           Term Loan     14.25 % Prime     6.75 %     10.00 %     -       2.75 %   May 1, 2026     5,000       4,924       4,924           Term Loan     14.25 % Prime     6.75 %     10.00 %     -       2.75 %   May 1, 2026     2,500       2,462       2,462           Term Loan     13.00 % Prime     5.50 %     10.00 %     -       2.75 %   December 1, 2026     5,000       4,900       4,900           Term Loan     13.00 % Prime     5.50 %     10.00 %     -       2.75 %   December 1, 2026     2,500       2,450       2,450   Temperpack Technologies, Inc. (2)(12)   Other Sustainability   Term Loan     14.25 % Prime     6.75 %     10.00 %     -       2.50 %   June 1, 2025     3,750       3,697       3,697           Term Loan     14.25 % Prime     6.75 %     10.00 %     -       2.50 %   June 1, 2025     3,750       3,717       3,717           Term Loan     14.25 % Prime     6.75 %     10.00 %     -       2.50 %   October 1, 2025     7,500       7,424       7,424           Term Loan     14.25 % Prime     6.75 %     10.00 %     -       2.50 %   October 1, 2025     3,750       3,712       3,712           Term Loan     14.25 % Prime     6.75 %     10.00 %     -       2.50 %   October 1, 2025     3,750       3,712       3,712   Total Non-Affiliate Debt Investments — Sustainability                                                                   83,705       83,705   Non-Affiliate Debt Investments — Technology — 81.4% (8)                                                                               Axiom Space, Inc. (2)(12)   Communications   Term Loan     13.00 % Prime     6.00 %     9.25 %     -       2.50 %   June 1, 2026     7,500       7,455       7,455           Term Loan     13.00 % Prime     6.00 %     9.25 %     -       2.50 %   June 1, 2026     7,500       7,455       7,455           Term Loan     13.00 % Prime     6.00 %     9.25 %     -       2.50 %   June 1, 2026     7,500       7,455       7,455           Convertible Note     3.00 %                                     July 1, 2023     250       250       306   Alula Holdings, Inc. (2)(12)   Consumer-related Technologies   Term Loan     13.75 % Prime     6.75 %     10.00 %     -       3.00 %   January 1, 2025     5,000       4,966       4,966           Term Loan     13.75 % Prime     6.75 %     10.00 %     -       3.00 %   January 1, 2025     5,000       4,966       4,966           Term Loan     13.75 % Prime     6.75 %     10.00 %     -       3.00 %   January 1, 2025     3,000       2,979       2,979           Term Loan     13.75 % Prime     6.75 %     10.00 %     -       3.00 %   December 1, 2025     1,000       976       976           Term Loan     13.75 % Prime     6.75 %     10.00 %     -       3.00 %   February 1, 2026     1,000       977       977   Better Place Forests Co. (2)(12)(13)   Consumer-related Technologies   Term Loan     13.75 % Prime     6.25 %     9.50 %     -       1.85 %   July 1, 2025     5,000       4,951       3,834           Term Loan     13.75 % Prime     6.25 %     9.50 %     -       1.85 %   October 1, 2025     2,500       2,474       1,916   CAMP NYC, Inc. (2)(12)   Consumer-related Technologies   Term Loan     14.75 % Prime     7.25 %     10.50 %     -       3.00 %   May 1, 2026     3,500       3,461       3,461   Clara Foods Co. (2)(12)   Consumer-related Technologies   Term Loan     12.75 % Prime     5.75 %     9.00 %     -       5.50 %   August 1, 2025     2,500       2,482       2,482           Term Loan     12.75 % Prime     5.75 %     9.00 %     -       5.50 %   August 1, 2025     2,500       2,482       2,482     See Notes to Consolidated Financial Statements   16 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments December 31, 2022 (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)   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       3,478       3,478           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     1,250       1,238       1,238           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     3,750       3,715       3,715           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     1,250       1,238       1,238           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     3,750       3,715       3,715           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     1,250       1,238       1,238           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   January 1, 2028     3,750       3,698       3,698           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   January 1, 2028     3,750       3,698       3,698   Havenly, Inc. (2)(12)   Consumer-related Technologies   Term Loan     12.50 % Prime     5.00 %     5.00 %     -       4.00 %   March 1, 2027     2,000       1,082       1,082           Term Loan     12.50 % Prime     5.00 %     5.00 %     -       4.00 %   March 1, 2027     3,000       1,623       1,623           Term Loan     11.00 % Prime     3.50 %     10.50 %     -       7.78 %   February 1, 2028     2,813       2,813       2,813           Term Loan     11.00 % Prime     3.50 %     10.50 %     -       7.78 %   February 1, 2028     2,813       2,813       2,813   Interior Define, Inc. (2)(12)(13)   Consumer-related Technologies   Term Loan     13.50 % Prime     6.50 %     9.75 %     -       4.00 %   January 1, 2026     3,210       3,151       —           Term Loan     13.50 % Prime     6.50 %     9.75 %     -       4.00 %   January 1, 2026     2,963       2,886       —   Lyrical Foods, Inc. (2)(12)   Consumer-related Technologies   Term Loan     10.00 % Prime     6.75 %     10.00 %     -       -     September 1, 2027     2,500       2,588       2,279   MyForest Foods Co. (2)(12)   Consumer-related Technologies   Term Loan     14.25 % Prime     6.75 %     10.00 %     -       3.00 %   October 1, 2025     5,000       4,954       4,954           Term Loan     14.25 % Prime     6.75 %     10.00 %     -       3.00 %   October 1, 2025     2,500       2,477       2,477   NextCar Holding Company, Inc. (2)(12)   Consumer-related Technologies   Term Loan     12.75 % Prime     5.75 %     9.00 %     -       2.00 %   December 30, 2022     5,000       4,943       4,715           Term Loan     12.75 % Prime     5.75 %     9.00 %     -       2.00 %   December 30, 2022     2,000       1,981       1,890           Term Loan     12.75 % Prime     5.75 %     9.00 %     -       2.00 %   December 30, 2022     2,500       2,477       2,363           Term Loan     12.75 % Prime     5.75 %     9.00 %     -       2.00 %   December 30, 2022     3,000       2,971       2,835           Term Loan     12.75 % Prime     5.75 %     9.00 %     -       2.00 %   December 30, 2022     2,500       2,459       2,345           Term Loan     12.75 % Prime     5.75 %     9.00 %     -       2.00 %   December 30, 2022     2,500       2,459       2,345           Term Loan     12.75 % Prime     5.75 %     9.00 %     -       2.00 %   December 30, 2022     5,000       4,914       4,688           Term Loan     12.75 % Prime     5.75 %     9.00 %     -       2.00 %   December 30, 2022     2,500       2,456       2,342   Optoro, Inc. (2)(12)   Consumer-related Technologies   Term Loan     13.25 % Prime     6.25 %     9.50 %     -       4.00 %   August 1, 2027     2,500       2,347       2,347   Primary Kids, Inc. (2)(12)   Consumer-related Technologies   Term Loan     14.25 % Prime     7.25 %     10.50 %     -       3.00 %   March 1, 2025     2,700       2,673       2,673           Term Loan     14.25 % Prime     7.25 %     10.50 %     -       3.00 %   March 1, 2025     2,700       2,673       2,673           Term Loan     14.25 % Prime     7.25 %     10.50 %     -       3.00 %   September 1, 2025     3,000       2,967       2,967   Unagi, Inc. (2)(12)   Consumer-related Technologies   Term Loan     15.25 % Prime     7.75 %     11.00 %     -       -     July 1, 2025     2,500       2,473       2,473           Term Loan     15.25 % Prime     7.75 %     11.00 %     -       -     July 1, 2025     1,250       1,236       1,236           Term Loan     15.25 % Prime     7.75 %     11.00 %     -       -     July 1, 2025     1,250       1,236       1,236   Liqid, Inc. (2)(12)   Networking   Term Loan     13.25 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     3,333       3,286       3,286           Term Loan     13.25 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     3,333       3,286       3,286           Term Loan     13.25 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     1,667       1,641       1,641           Term Loan     13.25 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     1,667       1,641       1,641           Term Loan     13.25 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     1,667       1,613       1,613   BriteCore Holdings, Inc. (2)(12)   Software   Term Loan     13.75 % Prime     6.75 %     10.00 %     -       5.00 %   March 1, 2026     2,500       2,421       2,421           Term Loan     13.75 % Prime     6.75 %     10.00 %     -       5.00 %   March 1, 2026     2,500       2,487       2,487   Decisyon, Inc. (12)   Software   Term Loan     16.93 % Prime     9.43 %     12.68 %     -       50.43 %   December 31, 2022     3,295       3,295       3,295   Dropoff, Inc. (2)(12)   Software   Term Loan     14.00 % Prime     6.50 %     9.75 %     -       3.50 %   April 1, 2026     6,500       6,347       6,347           Term Loan     14.00 % Prime     6.50 %     9.75 %     -       3.50 %   April 1, 2026     6,000       5,859       5,859           Term Loan     14.00 % Prime     6.50 %     9.75 %     -       3.50 %   August 1, 2026     2,500       2,436       2,436   Engage3, LLC (2)(12)   Software   Term Loan     13.25 % Prime     6.25 %     9.75 %     -       4.50 %   July 1, 2027     3,750       3,678       3,678           Term Loan     13.25 % Prime     6.25 %     9.75 %     -       4.50 %   July 1, 2027     3,750       3,718       3,718   Groundspeed Analytics, Inc. (2)(12)   Software   Term Loan     13.00 % Prime     5.50 %     11.00 %     18.00 %     3.00 %   December 1, 2026     5,000       4,798       4,798           Term Loan     13.00 % Prime     5.50 %     11.00 %     18.00 %     3.00 %   December 1, 2026     5,000       4,948       4,948   Kodiak Robotics, Inc. (2)(12)   Software   Term Loan     13.00 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     10,000       9,826       9,826           Term Loan     13.00 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     10,000       9,826       9,826           Term Loan     13.00 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     5,000       4,913       4,913           Term Loan     13.00 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     5,000       4,913       4,913   Lemongrass Holdings, Inc. (2)(12)   Software   Term Loan     14.00 % Prime     6.50 %     9.75 %     -       2.50 %   March 1, 2026     5,000       4,947       4,947           Term Loan     14.00 % Prime     6.50 %     9.75 %     -       2.50 %   March 1, 2026     2,500       2,474       2,474   Lytics, Inc. (2)(12)   Software   Term Loan     13.00 % Prime     6.00 %     9.25 %     -       3.00 %   July 1, 2025     2,500       2,396       2,396           Term Loan     13.00 % Prime     6.00 %     12.25 %     -       3.00 %   December 1, 2026     1,250       1,231       1,231   Reputation Institute, Inc. (2)(12)   Software   Term Loan     14.25 % Prime     7.25 %     10.50 %     -       3.00 %   August 1, 2025     5,000       4,932       4,932   Slingshot Aerospace, Inc. (2)(12)   Software   Term Loan     13.25 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,870       4,870           Term Loan     13.25 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,933       4,933           Term Loan     13.25 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,933       4,933           Term Loan     13.25 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,933       4,933   Supply Network Visiblity Holdings LLC (2)(12)   Software   Term Loan     13.50 % Prime     6.50 %     9.75 %     -       4.00 %   February 1, 2025     3,500       3,472       3,472           Term Loan     13.50 % Prime     6.50 %     9.75 %     -       4.00 %   February 1, 2025     3,500       3,472       3,472           Term Loan     13.50 % Prime     6.50 %     9.75 %     -       4.00 %   December 1, 2025     2,500       2,472       2,472           Term Loan     13.50 % Prime     6.50 %     9.75 %     -       4.00 %   December 1, 2025     2,500       2,472       2,472   Total Non-Affiliate Debt Investments — Technology                                                           268,468       259,366   Non-Affiliate Debt Investments — Healthcare information and services — 8.1% (8)                                                                               Hound Labs inc. (2) (12)   Diagnostics   Term Loan     13.50 % Prime     6.00 %     9.25 %     -       3.50 %   June 1, 2026     2,500       2,385       2,385           Term Loan     13.50 % Prime     6.00 %     9.25 %     -       3.50 %   June 1, 2026     2,500       2,473       2,473           Term Loan     13.50 % Prime     6.00 %     9.25 %     -       3.50 %   June 1, 2026     5,000       4,946       4,946   Secure Transfusion Services, Inc. (2)(12)(13)   Other Healthcare   Term Loan     13.25 % Prime     5.75 %     9.00 %     -       4.00 %   October 1, 2025     4,943       4,943       1,668           Term Loan     13.25 % Prime     5.75 %     9.00 %     -       4.00 %   December 31, 2025     2,500       2,467       832   BrightInsight, Inc. (2)(12)   Software   Term Loan     12.50 % Prime     5.50 %     9.50 %     -       3.00 %   August 1, 2027     7,000       6,619       6,619           Term Loan     12.50 % Prime     5.50 %     9.50 %     -       3.00 %   August 1, 2027     3,500       3,448       3,448           Term Loan     12.50 % Prime     5.50 %     9.50 %     -       3.00 %   August 1, 2027     3,500       3,448       3,448   Total Non-Affiliate Debt Investments — Healthcare information and services                                                           30,729       25,819   Total Non- Affiliate Debt Investments                                                           701,074       686,458     See Notes to Consolidated Financial Statements   17 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments December 31, 2022 (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 — 9.4% (8)                                 Non-Affiliate Warrants — Life Science — 3.1% (8)                                 Avalo Therapeutics, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     26,442       311       —   Castle Creek Biosciences, Inc. (2)(12)   Biotechnology   Preferred Stock Warrant     7,404       214       335   Corvium, Inc. (2)(12)   Biotechnology   Preferred Stock Warrant     661,956       53       —   Emalex Biosciences, Inc. (2)(12)   Biotechnology   Preferred Stock Warrant     110,402       176       263   Evelo Biosciences, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     463,915       126       125   F-Star Therapeutics, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     21,120       35       —   Greenlight Biosciences, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     47,452       366       —   Imunon, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     16,502       66       —   IMV Inc. (2)(5)(12)(14)   Biotechnology   Common Stock Warrant     39,774       67       —   KSQ Therapeutics, Inc. (2) (12)   Biotechnology   Preferred Stock Warrant     48,077       51       60   Mustang Bio, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     252,161       146       —   Native Microbials, Inc (2) (12)   Biotechnology   Preferred Stock Warrant     103,679       64       162   PDS Biotechnology Corporation (2)(5)(12)   Biotechnology   Common Stock Warrant     299,848       160       3,024   Provivi, Inc. (2)(12)   Biotechnology   Preferred Stock Warrant     203,017       399       648   Rocket Pharmaceuticals Corporation (5)(12)   Biotechnology   Common Stock Warrant     7,051       17       14   Stealth Biotherapeutics Inc. (2)(12)   Biotechnology   Common Stock Warrant     318,181       264       37   vTv Therapeutics Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     95,293       44       —   Xeris Pharmaceuticals, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     126,000       72       3   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       64       1,200   Aerobiotix, LLC (2)(12)   Medical Device   Preferred Stock Warrant     27,330       48       31   Canary Medical Inc. (2)(12)   Medical Device   Preferred Stock Warrant     12,153       84       1,864   Ceribell, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     145,483       69       209   Cognoa, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     775,000       148       179   Conventus Orthopaedics, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     7,972,222       221       226   CSA Medical, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     1,375,727       153       150   CVRx, Inc. (2)(5)(12)   Medical Device   Common Stock Warrant     47,410       76       394   Infobionic, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     317,647       124       113   Magnolia Medical Technologies, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     809,931       194       385   Meditrina, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     233,993       83       101   Robin Healthcare, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     86,066       16       16   Scientia Vascular, Inc (2)(12)   Medical Device   Preferred Stock Warrant     19,662       40       46   Sonex Health, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     605,313       98       123   VERO Biotech LLC (2)(12)   Medical Device   Preferred Stock Warrant     408       53       1   Swift Health Systems Inc. (2)(12)   Medical Device   Preferred Stock Warrant     135,484       71       83   Total Non-Affiliate Warrants — Life Science           4,197       9,792   Non-Affiliate Warrants — Sustainability — 0.6% (8)                                 Aerofarms, Inc. (2)(12)   Other Sustainability   Preferred Stock Warrant     201,537       61       74   LiquiGlide, Inc. (2)(12)   Other Sustainability   Common Stock Warrant     61,539       39       55   Nexii Building Solutions, Inc. (2)(12)(14)   Other Sustainability   Common Stock Warrant     204,832       488       1,061   Soli Organic, Inc. (2)(12)   Other Sustainability   Preferred Stock Warrant     681       214       361   Temperpack Technologies, Inc. (2)(12)   Other Sustainability   Preferred Stock Warrant     35,906       126       268   Total Non-Affiliate Warrants — Sustainability           928       1,819     See Notes to Consolidated Financial Statements   18 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments December 31, 2022 (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 — Technology — 5.1% (8)                                 Axiom Space, Inc. (2)(12)   Communications   Common Stock Warrant     1,991       46       67   Intelepeer Holdings, Inc. (2)(12)   Communications   Preferred Stock Warrant     2,936,535       139       3,265   PebblePost, Inc. (2)(12)   Communications   Preferred Stock Warrant     598,850       92       173   Alula Holdings, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     20,000       93       64   Aterian, Inc. (2)(5)(12)   Consumer-related Technologies   Common Stock Warrant     76,923       195       —   Better Place Forests Co. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     10,690       26       —   Caastle, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     268,591       68       1,069   CAMP NYC, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     17,605       20       61   Clara Foods Co. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     46,745       30       125   Divergent Technologies, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     31,966       56       233   Havenly, Inc. (2)(12)   Consumer-related Technologies   Common Stock Warrant     1,312,500       2,947       2,947   Interior Define, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     553,710       103       —   MyForest Foods Co. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     143       29       37   NextCar Holding Company, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     1,261,253       197       17   Optoro, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     6,600       104       104   Primary Kids, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     553,778       57       429   Quip NYC Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     6,191       325       534   Unagi, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     171,081       32       22   Updater, Inc.(2)(12)   Consumer-related Technologies   Common Stock Warrant     108,333       34       42   CPG Beyond, Inc. (2)(12)   Data Storage   Preferred Stock Warrant     500,000       242       909   Silk, Inc. (2)(12)   Data Storage   Preferred Stock Warrant     442,110       234       407   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       357   Skillshare, Inc. (2)(12)   Internet and Media   Preferred Stock Warrant     139,074       162       802   Liqid, Inc. (2)(12)   Networking   Preferred Stock Warrant     344,102       364       243   Halio, Inc. (2)(12)   Power Management   Preferred Stock Warrant     5,002,574       1,585       2,610   Avalanche Technology, Inc. (2)(12)   Semiconductors   Preferred and Common Stock Warrants     6,081       56       —   BriteCore Holdings, Inc. (2)(12)   Software   Preferred Stock Warrant     77,828       21       69   Decisyon, Inc. (12)   Software   Common Stock Warrant     82,967       46       —   Dropoff, Inc. (2)(12)   Software   Common Stock Warrant     516,732       455       197   E La Carte, Inc. (2)(5)(12)   Software   Common Stock Warrant     147,361       60       3   Groundspeed Analytics, Inc. (2)(12)   Software   Preferred Stock Warrant     86,300       6       6   Kodiak Robotics, Inc. (2)(12)   Software   Preferred Stock Warrant     639,918       273       296   Lemongrass Holdings, Inc. (2)(12)   Software   Preferred Stock Warrant     101,308       34       41   Lotame Solutions, Inc. (2)(12)   Software   Preferred Stock Warrant     288,115       22       312   Lytics, Inc. (2)(12)   Software   Preferred Stock Warrant     80,197       40       44   Reputation Institute, Inc. (2)(12)   Software   Preferred Stock Warrant     3,731       56       39   Revinate Holdings, Inc. (2)(12)   Software   Preferred Stock Warrant     682,034       46       99   Riv Data Corp. (2)(12)   Software   Preferred Stock Warrant     321,428       12       296   SIGNiX, Inc. (12)   Software   Preferred Stock Warrant     186,235       225       —   Skyword, Inc. (12)   Software   Preferred and Common Stock Warrants     301,055       48       1   Slingshot Aerospace, Inc. (2)(12)   Software   Preferred Stock Warrant     309,208       123       133   Supply Network Visiblity Holdings LLC (2)(12)   Software   Preferred Stock Warrant     682       64       83   Topia Mobility, Inc. (2)(12)   Software   Preferred Stock Warrant     3,049,607       138       —   xAd, Inc. (2)(12)   Software   Preferred Stock Warrant     4,343,348       177       12   Total Non-Affiliate Warrants — Technology             9,249       16,148   Non-Affiliate Warrants — Healthcare information and services — 0.6% (8)                         Hound Labs, Inc (2) (12)   Diagnostics   Preferred Stock Warrant     159,893       47       54   Kate Farms, Inc. (2)(12)   Other Healthcare   Preferred Stock Warrant     82,965       102       1,370   Secure Transfusion Services, Inc. (2)(12)   Other Healthcare   Preferred Stock Warrant     77,690       47       —   BrightInsight, Inc. (2)(12)   Software   Preferred Stock Warrant     80,544       160       170   Medsphere Systems Corporation (2)(12)   Software   Preferred Stock Warrant     7,097,792       60       359   Total Non-Affiliate Warrants — Healthcare information and services             416       1,953   Total Non-Affiliate Warrants             14,790       29,712   Non-Affiliate Other Investments — 0.4% (8)                                 Lumithera, Inc. (2)   Medical Device   Royalty Agreement             1,200       1,100   ZetrOZ, Inc. (12)   Medical Device   Royalty Agreement             —       200   Total Non-Affiliate Other Investments             1,200       1,300   Non-Affiliate Equity — 0.8% (8)                                 Castle Creek Biosciences, Inc. (12)   Biotechnology   Common Stock     1,162       250       250   Emalex Biosciences, Inc. (2)(12)   Biotechnology   Common Stock     32,831       356       356   Getaround, Inc. (2)(5)   Consumer-related Technologies   Common Stock     87,082       253       57   SnagAJob.com, Inc. (12)   Consumer-related Technologies   Common Stock     82,974       8       83   Lumithera, Inc. (2)   Medical Device   Common Stock     392,651       2,000       1,700   Tigo Energy, Inc. (2)   Other Sustainability   Preferred     22,313       8       27   Branded Online, Inc. (2)(5)   Software   Common Stock     108,004       1,079       83   Decisyon, Inc. (12)   Software   Preferred and Common Stock     72,638,663       230       —   Total Non-Affiliate Equity             4,184       2,556   Total Non-Affiliate Portfolio Investment Assets           $ 721,248     $ 720,026   Total Portfolio Investment Assets — 226.1% (8)           $ 721,248     $ 720,026                                       ( 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 the 2019 Asset-Backed Notes and/or the 2022  Asset-Backed Notes.   See Notes to Consolidated Financial Statements   19 Table of Contents Horizon Technology Finance Corporation and Subsidiaries     Consolidated Schedule of Investments December 31, 2022 (Dollars in thousands)   ( 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. All debt investments based on the LIBOR are based on one -month LIBOR. For each debt investment, the current interest rate in effect as of  December 31, 2022 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, 2022, 6.5 % and 6.6 % 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. ( 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, 2022 . ( 14 ) Entity is organized under the laws of Canada and has a principal place of business in Canada.   See Notes to Consolidated Financial Statements     20 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.   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 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 2019 Asset-Backed Notes.   Horizon Funding I, LLC (“HFI”) was formed as a Delaware limited liability company on May 9, 2018, with Horizon Secured Loan Fund I LLC, a Delaware limited liability company (“HSLFI”) as its sole member. HFI is a special purpose bankruptcy-remote entity and is a separate legal entity from HSLFI. Any assets conveyed to HFI are not available to creditors of HSLFI or any other entity other than HFI’s lenders. As of April 21, 2020, HSLFI and its subsidiary, HFI, are consolidated by the Company.   The Company formed Horizon Funding 2022‑1 LLC ( “2022‑1 LLC”) as a Delaware limited liability company on September 30, 2022  and Horizon Funding Trust 2022‑1 on October 18, 2022 ( “2022‑1 Trust” and, together with the 2022‑1 LLC, the “2022‑1 Entities”). The 2022‑1 Entities are special purpose bankruptcy remote entities and are separate legal entities from the Company. The Company formed the 2022‑1 Entities for purposes of securitizing the 2022 Asset-Backed Notes.   The Company has established wholly owned subsidiaries, which are structured as Delaware limited liability companies, either to hold assets of portfolio companies acquired in connection with a foreclosure or bankruptcy or to hold equity in portfolio companies which the Company may control. Such wholly-owned subsidiaries are separate legal entities from the Company.   The Company’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 (the “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.     21 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 for the year ended December 31, 2022 .   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.   22 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 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 June 30, 2023 , there were  two investments on nonaccrual status with a cost of $ 25.6  million and a fair value of $ 15.3  million. As of December 31, 2022 , there were  three  investments on non-accrual status with a cost of $ 20.9  million and a fair value of $ 8.3  million. For the three and six months ended June 30, 2023  and 2022, the Company did not recognize any interest income received from debt investments on non-accrual status.   The Company has a limited number of debt investments in its portfolio that contain a PIK provision. Contractual PIK interest, which represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on an accrual basis to the extent such amounts are expected to be collected. The Company will generally cease accruing PIK interest if there is insufficient value to support the accrual or management does not expect the portfolio company to be able to pay all principal and interest due. The Company recorded $ 1.0  million and $ 2.2 million in PIK interest income during the three and six months ended June 30, 2023 , respectively. The Company recorded  no PIK interest income during the three and six months ended June 30, 2022 .   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  June 30, 2023 and 2022 was  3.1 % and 6.8 %, respectively. The proportion of the Company’s total investment income that resulted from the portion of ETPs not received in cash for the six months ended  June 30, 2023 and 2022 was  4.7 % and 8.0 %, 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.   23 Table of Contents 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  June 30, 2023 and  December 31, 2022 was $ 6.9 million and $ 7.1  million, respectively. These amounts are amortized and included in interest expense in the consolidated statements of operations over the life of the borrowings. The accumulated amortization balances as of June 30, 2023 and  December 31, 2022 were $ 5.8 million and $ 4.8  million, respectively. The amortization expense for the three months ended  June 30, 2023 and 2022  was $ 0.5  million and $ 0.4  million, respectively. The amortization expense for the six months ended  June 30, 2023 and 2022  was $ 0.9  million and $ 0.7  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 June 30, 2023 and 2022,  $ 0.2 million and $ 0.1  million, respectively, was accrued for U.S. federal excise tax. For the six months ended June 30, 2023 and 2022,  $ 0.4  million and $ 0.2 million, respectively, was accrued for U.S. federal excise tax.   24 Table of Contents 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 June 30, 2023 and  December 31, 2022 . The Company’s income tax returns for the 2021, 2020  and 2019  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 provides that the Company may offer and sell its shares from time to time through the Sales Agents up to $ 100.0 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 June 30, 2023 , the Company sold  448,175  shares of common stock under the 2021 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 5.1  million, including $ 0.1 million of offering expenses, from these sales.   During the three months ended June 30, 2022 , the Company sold 868,230 shares of common stock under the 2021 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 10.3 million, including $ 0.2 million of offering expenses, from these sales.   During the six months ended June 30, 2023 , the Company sold  1,054,023 shares of common stock under the 2021 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 12.3  million, including $ 0.3  million of offering expenses, from these sales.    During the six months ended June  30,   2022, the Company sold 1,118,401 shares of common stock under the 2021 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 14.2 million, including $ 0.2 million of offering expenses, from these sales.   The Company generally uses net proceeds from these offerings to make investments, to pay down liabilities and for general corporate purposes. As of June 30, 2023 , shares representing approximately $ 18.9  million of its common stock remain available for issuance and sale under the 2021 Equity Distribution Agreement.   On  March 14, 2022,  the Company completed a follow-on public offering of  2,500,000  shares of its common stock at a public offering price of $ 14.35  per share, for total net proceeds to the Company of $ 34.3  million, after deducting underwriting commission and discounts and other offering expenses.   On  June 2, 2023,  the Company completed a follow-on public offering of  3,250,000  shares of its common stock at a public offering price of $ 12.50  per share, for total net proceeds to the Company of $ 38.9 million, after deducting underwriting commission and discounts and other offering expenses.   25 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements   Stock Repurchase Program   On April  28, 2023, 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, 2024 or the repurchase of $5.0 million of the Company’s common stock. During the three and six months ended June 30, 2023 and 2022 , the Company did not make any repurchases of its common stock. From the inception of the stock repurchase program through June 30, 2023 , 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 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 are effective for public companies for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently assessing the impact of ASU 2022 - 03 on its consolidated financial statements.   26 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements     Note   3. Related party transactions   Investment Management Agreement   On October 28, 2022, the Board unanimously approved the renewal of the Investment Management Agreement dated as of March 7, 2019 ( the “2019 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 “New Investment Management Agreement” and collectively with the 2019 Investment Management Agreement, 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 2019 Investment Management Agreement. The 2019 Investment Management and the New Investment Management Agreement contain the same economic terms. 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 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 June 30, 2023 and  December 31, 2022 was $ 1.1 million. The base management fee expense was $ 3.2  million and $ 2.5  million for the three months ended June 30, 2023 and 2022 , respectively. The base management fee expense was $ 6.4 million and $ 4.8 million for the six months ended June 30, 2023 and 2022 , 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.   27 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements   Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter in which the Company incurs a loss. For example, if the Company receives Pre-Incentive Fee Net Investment Income in excess of the quarterly minimum hurdle rate, the Company will pay the applicable incentive fee up to the Incentive Fee Cap, defined below, even if the Company has incurred a loss in that quarter due to realized and unrealized capital losses. The Company’s net investment income used to calculate this part of the incentive fee is also included in the amount of the Company’s gross assets used to calculate the 2.00% base management fee. These calculations are appropriately prorated for any period of less than three  months and adjusted for any share issuances or repurchases during the current quarter.   The incentive fee on Pre-Incentive Fee Net Investment Income is subject to a fee cap and deferral mechanism which is determined based upon a look-back period of up to three  years and is expensed when incurred. For this purpose, the look-back period for the incentive fee based on Pre-Incentive Fee Net Investment Income (the “Incentive Fee Look-back Period”) includes the relevant calendar quarter and the 11 preceding full calendar quarters. Each quarterly incentive fee payable on Pre-Incentive Fee Net Investment Income is subject to a cap (the “Incentive Fee Cap”) and a deferral mechanism through which the Advisor may recoup a portion of such deferred incentive fees (collectively, the “Incentive Fee Cap and Deferral Mechanism”). The Incentive Fee Cap is equal to (a)  20.00% of Cumulative Pre-Incentive Fee Net Return (as defined below) during the Incentive Fee Look-back Period less (b) cumulative incentive fees of any kind paid to the Advisor during the Incentive Fee Look-back Period. To the extent the Incentive Fee Cap is zero or a negative value in any calendar quarter, the Company will not pay an incentive fee on Pre-Incentive Fee Net Investment Income to the Advisor in that quarter. To the extent that the payment of incentive fees on Pre-Incentive Fee Net Investment Income is limited by the Incentive Fee Cap, the payment of such fees will be deferred and paid in subsequent calendar quarters up to three  years after their date of deferment, subject to certain limitations, which are set forth in the Investment Management Agreement. The Company only pays incentive fees on Pre-Incentive Fee Net Investment Income to the extent allowed by the Incentive Fee Cap and Deferral Mechanism. “Cumulative Pre-Incentive Fee Net Return” during any Incentive Fee Look-back Period means the sum of (a) Pre-Incentive Fee Net Investment Income and the base management fee for each calendar quarter during the Incentive Fee Look-back Period and (b) the sum of cumulative realized capital gains and losses, cumulative unrealized capital appreciation and cumulative unrealized capital depreciation during the applicable Incentive Fee Look-back Period.   The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or, upon termination of the Investment Management Agreement, as of the termination date), and equals 20.00% of the Company’s realized capital gains, if any, on a cumulative basis from the date of the election to be a BDC through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis through the end of such year, less all previous amounts paid in respect of the capital gain incentive fee. However, in accordance with GAAP, the Company is required to include the aggregate unrealized capital appreciation on investments in the calculation and accrue a capital gain incentive fee on a quarterly basis, as if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Management Agreement.   The performance based incentive fee expense was $ 0.1 million and $ 2.1  million for the three months ended June 30, 2023 and 2022 , respectively. The performance based incentive fee expense was $ 3.1  million and $ 3.6  million for the six  months ended June 30, 2023 and 2022 , respectively. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap and Deferral Mechanism for the three and six months ended June 30, 2023 , which resulted in $ 3.1  million and $ 3.3 million of reduced expense and additional net investment income, respectively. This deferral represents a contingent future liability and is not accrued until the amount can be reasonably estimated and payment is probable. The deferred amount may be paid up to three years after the date of deferment. The total contingent future liability as of June 30, 2023  was $ 4.4  million, of which $ 1.1  million expires on December 31, 2025, $ 0.2 million expires on March 31, 2026 and $ 3.1 million expires on June 30, 2026, respectively. The incentive fee on Pre-Incentive Fee Net Investment Income was not subject to the Incentive Fee Cap and Deferral Mechanism for the three and six months ended June 30, 2022.  The performance based incentive fee payable as of June 30, 2023 and  December 31, 2022 was $ 0.1 million and $ 1.4  million, respectively. The entire incentive fee payable as of June 30, 2023 and  December 31, 2022 represented part one of the incentive fee.   28 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements   Administration Agreement   The Company entered into an administration agreement (the “Administration Agreement”) with the Advisor to provide administrative services to the Company. For providing these services, facilities and personnel, the Company reimburses the Advisor for the Company’s allocable portion of overhead and other expenses incurred by the Advisor in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions and the Company’s allocable portion of the costs of compensation and related expenses of the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs. The administrative fee expense was $ 0.4  million for the three months ended June 30, 2023 and 2022 . The administrative fee expense was $ 0.8  million and $ 0.7  million for the six months ended June 30, 2023 and 2022 , respectively.     Note   4. Investments   The following table shows the Company’s investments as of June 30, 2023 and  December 31, 2022 :       June 30, 2023     December 31, 2022       Cost     Fair Value     Cost     Fair Value       (In thousands)   Investments                                 Debt   $ 700,162     $ 683,309     $ 701,074     $ 686,458   Warrants     15,061       25,483       14,790       29,712   Other     1,200       1,300       1,200       1,300   Equity     7,210       5,299       4,184       2,556   Total investments   $ 723,633     $ 715,391     $ 721,248     $ 720,026     29 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements   The following table shows the Company’s investments by industry sector as of June 30, 2023 and  December 31, 2022 :       June 30, 2023     December 31, 2022       Cost     Fair Value     Cost     Fair Value       (In thousands)   Life Science                                 Biotechnology   $ 182,489     $ 174,598     $ 193,372     $ 195,006   Medical Device     128,203       130,634       132,803       135,960   Technology                                 Communications     22,922       26,170       22,892       26,176   Consumer-Related     113,903       108,275       121,961       114,050   Data Storage     417       1,060       476       1,316   Internet and Media     329       1,634       329       1,159   Networking     8,391       8,274       11,831       11,710   Power Management     1,585       2,898       1,585       2,610   Semiconductors     57       —       56       —   Software     142,853       139,934       120,157       118,716   Sustainability                                 Energy Efficiency     111       97       8       27   Other Sustainability     86,095       83,942       84,633       85,524   Healthcare Information and Services                                 Diagnostics     9,960       9,969       9,851       9,858   Other     101       1,374       7,559       3,870   Software     26,217       26,532       13,735       14,044   Total investments   $ 723,633     $ 715,391     $ 721,248     $ 720,026       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 June 30, 2023  were as follows:                         Three months ended June 30, 2023                                                                                         Fair value at                     Transfers             Net             Fair value at   Portfolio   March 31,                     in/(out) at     Dividends     unrealized     Net realized     June 30,   Company   2023     Purchases     Sales     fair value     declared     gain/(loss)     gain/(loss)     2023       (In thousands)   Cadrenal Therapeutics, Inc.     846       —       —       —       —       60       —       906   Total non-controlled affiliates   $ 846     $ —     $ —     $ —     $ —     $ 60     $ —     $ 906     Transactions related to investments in non-controlled affiliated companies for the six months ended June 30, 2023  were as follows:                         Six months ended June 30, 2023                       Fair value at                     Transfers             Net             Fair value at   Portfolio   December 31,             Principal     in/(out) at     Discount     unrealized     Net realized     June 30,   Company   2022     Purchases     Payments     fair value     accretion     gain/(loss)     gain/(loss)     2023       (In thousands)   Cadrenal Therapeutics, Inc.   $ —     $ —     $ —     $ —     $ —     $ 906     $ —     $ 906   Total non-controlled affiliates   $ —     $ —     $ —     $ —     $ —     $ 906     $ —     $ 906     For the three and six months ended June 30, 2022 , there were no transactions related to investments in non-controlled affiliated companies.   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).   For the three and six months ended June 30, 2023 , there were no transactions related to investments in controlled affiliated companies.    30 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 June 30, 2022  were as follows:                       Three months ended June 30, 2022                                                                                         Fair value at                     Transfers             Net             Fair value at   Portfolio   March 31,                     in/(out) at     Dividends     unrealized     Net realized     June 30,   Company   2022     Purchases     Sales     fair value     declared     gain/(loss)     gain/(loss)     2022       (In thousands)   HESP LLC     —       —       ( 200 )     —       —       1,400       ( 1,200 )     —   Total controlled affiliates   $ —     $ —     $ ( 200 )   $ —     $ —     $ 1,400     $ ( 1,200 )   $ —     Transactions related to investments in controlled affiliated companies for the six months ended June 30, 2022  were as follows:                       Six months ended June 30, 2022                       Fair value at                     Transfers             Net             Fair value at   Portfolio   December 31,             Principal     in/(out) at     Discount     unrealized     Net realized     June 30,   Company   2021     Purchases     Payments     fair value     accretion     gain/(loss)     gain/(loss)     2022       (In thousands)   HESP LLC     —       —       ( 250 )     —       —       1,450       ( 1,200 )     —   Total controlled affiliates   $ —     $ —     $ ( 250 )   $ —     $ —     $ 1,450     $ ( 1,200 )   $ —       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.   31 Table of Contents 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.   32 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 investments that are carried at fair value and measured at fair value on a recurring basis as of June 30, 2023 and  December 31, 2022 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:       June 30, 2023       Level 1     Level 2     Level 3     Total       (In thousands)   Debt investments   $ —     $ —     $ 683,309     $ 683,309   Warrant investments     —       1,107       24,376       25,483   Other investments     —       —       1,300       1,300   Equity investments     1,040       —       4,259       5,299   Total investments   $ 1,040     $ 1,107     $ 713,244     $ 715,391         December 31, 2022       Level 1     Level 2     Level 3     Total       (In thousands)   Debt investments   $ —     $ —     $ 686,458     $ 686,458   Warrant investments     —       3,567       26,145       29,712   Other investments     —       —       1,300       1,300   Equity investments     140       —       2,416       2,556   Total investments   $ 140     $ 3,567     $ 716,319     $ 720,026     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 June 30, 2023 and  December 31, 2022 . 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.   33 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 June 30, 2023 :   June 30, 2023       Fair   Valuation Techniques/   Unobservable       Weighted   Investment Type   Value   Methodologies   Input   Range   Average(1)             (Dollars in thousands, except per share data)             Debt investments   $ 611,524   Discounted Expected Future Cash Flows   Hypothetical Market Yield   11 % – 24 %     14 %                                   71,785   Multiple Probability Weighted Cash Flow Model   Probability Weighting   5 % - 100 %     50 %                             Warrant investments     24,314   Black-Scholes Valuation Model   Price Per Share   0.00 0 – 1,899 99   $ 59.21                 Average Industry Volatility   28 %     28 %               Marketability Discount   20 %     20 %               Estimated Time to Exit (in years)   1 to 5     3         62   Expected Proceeds   Price Per Share   $ 0.25   $ 0.25                               Other investments     1,300   Multiple Probability Weighted Cash Flow Model   Discount Rate   25 %     25 %               Probability Weighting   100 %     100 %                             Equity investments     4,259   Last Equity Financing   Price Per Share   $0.03– $215.03   $ 27.56                               Total Level 3 investments   $ 713,244                       ( 1 ) Weighted average is calculated by multiplying (a) the unobservable input for each investment in the investment type by (b) ( 1 ) the fair value of the related investment in the investment type divided by ( 2 ) the total fair value of the investment type.   The following table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements as of December 31, 2022 :   December 31, 2022       Fair   Valuation Techniques/   Unobservable       Weighted   Investment Type   Value   Methodologies   Input   Range   Average(1)             (Dollars in thousands, except per share data)             Debt investments   $ 669,617   Discounted Expected Future Cash Flows   Hypothetical Market Yield   3 % – 22 %     14 %                                   16,545   Multiple Probability Weighted Cash Flow Model   Probability Weighting   10 % - 75 %     31 %                                   296   Convertible Note Analysis   Price Per Share   $ 168.93   $ 168.93                               Warrant investments     26,145   Black-Scholes Valuation Model   Price Per Share   0.00 0 – 1.899 99   $ 58.52                 Average Industry Volatility   28 %     28 %               Marketability Discount   20 %     20 %               Estimated Time to Exit (in years)   1 to 5     3                               Other investments     1,300   Multiple Probability Weighted Cash Flow Model   Discount Rate   25 %     25 %               Probability Weighting   100 %     100 %                             Equity investments     2,416   Last Equity Financing   Price Per Share   $1.00– $215.03   $ 26.93                               Total Level 3 investments   $ 716,319                       ( 1 ) Weighted average is calculated by multiplying (a) the unobservable input for each investment in the investment type by (b) ( 1 ) the fair value of the related investment in the investment type divided by ( 2 ) the total fair value of the investment type.   Borrowings: The Key Facility and the NYL Facility approximate fair value due to the variable interest rate of the facilities and are categorized as Level 2 within the fair value hierarchy described above. Additionally, the Company considers its creditworthiness in determining the fair value of such borrowings. The fair value of the fixed-rate 2026 Notes (as defined in Note 7 ) is based on the closing public share price on the date of measurement. On June 30, 2023 , the closing price of the 2026 Notes on the New York Stock Exchange was $ 23.35 per note and had an aggregate fair value of $ 53.7 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 June 30, 2023 , the closing price of the 2027 Notes on the New York Stock Exchange was $ 24.14  per note and had an aggregate fair value of $ 55.5  million. Therefore, the Company has categorized this borrowing as Level 1 within the fair value hierarchy described above. Based on market quotations on June 30, 2023 , the 2019 Asset-Backed Notes were trading at par value, or $ 30.8  million, and are categorized as Level 3 within the fair value hierarchy described above. Based on market quotations on June 30, 2023 , the 2022  Asset-Backed Notes were trading at par value, or $ 100.0 million, and are categorized as Level 3 within the fair value hierarchy described above. These borrowings are not recorded at fair value on a recurring basis.   Off-balance-sheet instruments: Fair values for off-balance-sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standings. Therefore, the Company has categorized these instruments as Level 3 within the fair value hierarchy described above.   34 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 June 30, 2023 :       Three months ended June 30, 2023       Debt     Warrant     Equity     Other               Investments     Investments     Investments     Investments     Total       (In thousands)   Level 3 assets, beginning of period   $ 684,554     $ 24,638     $ 2,915     $ 1,300     $ 713,407   Purchase of investments     40,545       —       —       —       40,545   Warrants and equity received and classified as Level 3     —       515       89       —       604   Principal payments received on investments     ( 24,740 )     —       —       —       ( 24,740 ) Payment-in-kind interest on investments     950       —       —       —       950   Proceeds from sale of investments     ( 528 )     ( 1,458 )     —       —       ( 1,986 ) Net realized (loss) gain on investments     ( 17,672 )     1,287       ( 127 )     —       ( 16,512 ) Unrealized appreciation (depreciation) included in earnings     2,118       ( 606 )     ( 1,307 )     —       205   Transfer out of Level 3     —       —       ( 111 )     —       ( 111 ) Transfer out of debt investments     ( 2,800 )     —       2,800       —       —   Other     882       —       —       —       882   Level 3 assets, end of period   $ 683,309     $ 24,376     $ 4,259     $ 1,300     $ 713,244     During the three months ended June 30, 2023 , there was  one  transfer out of Level 3. The 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.   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 June 30, 2022 :       Three months ended June 30, 2022       Debt     Warrant     Equity     Other               Investments     Investments     Investments     Investments     Total       (In thousands)   Level 3 assets, beginning of period   $ 492,194     $ 21,645     $ 203     $ 200     $ 514,242   Purchase of investments     158,985       —       250       —       159,235   Warrants received and classified as Level 3     —       669       —       —       669   Principal payments received on investments     ( 73,096 )     —       —       ( 232 )     ( 73,328 ) Proceeds from sale of investments     ( 21,750 )     ( 396 )     —       —       ( 22,146 ) Net realized gain (loss) on investments     —       239       —       ( 1,168 )     ( 929 ) Unrealized (depreciation) appreciation included in earnings     ( 3,797 )     3,010       —       1,400       613   Other     ( 976 )     —       —       —       ( 976 ) Level 3 assets, end of period   $ 551,560     $ 25,167     $ 453     $ 200     $ 577,380     During the three months ended June 30, 2022 , there were no transfers in or out of Level 3.   35 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 six months ended June 30, 2023 :       Six months ended June 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     87,543       —       10       —       87,553   Warrants and equity received and classified as Level 3     —       656       89       —       745   Principal payments received on investments     ( 64,496 )     —       —       —       ( 64,496 ) Payment-in-kind interest on investments     2,154       —       —       —       2,154   Proceeds from sale of investments     ( 7,036 )     ( 1,470 )     —       —       ( 8,506 ) Net realized (loss) gain on investments     ( 17,665 )     1,146       ( 127 )     —       ( 16,646 ) Unrealized depreciation included in earnings     ( 2,448 )     ( 2,096 )     ( 1,118 )     —       ( 5,662 ) Transfer out of Level 3     —       —       ( 111 )     —       ( 111 ) Transfer out of debt investments     ( 3,095 )     ( 5 )     3,100       —       —   Other     1,894       —       —       —       1,894   Level 3 assets, end of period   $ 683,309     $ 24,376     $ 4,259     $ 1,300     $ 713,244     During the six months ended June 30, 2023 , there was  one  transfer out of Level 3. The  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.   The change in unrealized depreciation included in the consolidated statement of operations attributable to Level 3 investments still held at June 30, 2023 includes $ 13.1 million in unrealized depreciation on debt investments, $ 1.9 million in unrealized depreciation on warrant investments and $ 1.3 million in unrealized depreciation on equity investments.   The following table shows a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the six months ended June 30, 2022 :       Six months ended June 30, 2022       Debt     Warrant     Equity     Other               Investments     Investments     Investments     Investments     Total       (In thousands)   Level 3 assets, beginning of period   $ 437,317     $ 19,837     $ 203     $ 200     $ 457,557   Purchase of investments     253,470       —       250       —       253,720   Warrants received and classified as Level 3     —       1,477       —       —       1,477   Principal payments received on investments     ( 87,191 )     —       —       ( 282 )     ( 87,473 ) Proceeds from sale of investments     ( 43,000 )     ( 426 )     —       —       ( 43,426 ) Net realized gain (loss) on investments     —       269       —       ( 1,168 )     ( 899 ) Unrealized (depreciation) appreciation included in earnings     ( 6,967 )     4,010       —       1,450       ( 1,507 ) Other     ( 2,069 )     —       —       —       ( 2,069 ) Level 3 assets, end of period   $ 551,560     $ 25,167     $ 453     $ 200     $ 577,380     During the six months ended June 30, 2022 , there were no transfers in or out of Level 3.   The change in unrealized depreciation included in the consolidated statement of operations attributable to Level 3 investments still held at June 30, 2022 includes $ 7.0 million in unrealized depreciation on debt investments and $ 4.7 million in unrealized appreciation on warrant investments.   36 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements   The Company discloses fair value information about financial instruments, whether or not recognized in the consolidated statement of assets and liabilities, for which it is practicable to estimate that value. Certain financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.   The fair value amounts have been measured as of the reporting date and have not been reevaluated or updated for purposes of these financial statements subsequent to that date. As such, the fair values of these financial instruments subsequent to the reporting date may be different than amounts reported.   As of June 30, 2023 and  December 31, 2022 , 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 will 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 June 30, 2023 and  December 31, 2022 :       June 30, 2023     December 31, 2022       Total     Balance     Unused     Total     Balance     Unused       Commitment     Outstanding     Commitment     Commitment     Outstanding     Commitment       (In thousands)   Key Facility   $ 150,000     $ —     $ 150,000     $ 125,000     $ 5,000     $ 120,000   NYL Facility     250,000       176,750       73,250       200,000       176,750       23,250   2019 Asset-Backed Notes     30,807       30,807       —       42,573       42,573       —   2022 Asset-Backed Notes     100,000       100,000       —       100,000       100,000       —   2027 Notes     57,500       57,500       —       57,500       57,500       —   2026 Notes     57,500       57,500       —       57,500       57,500       —   Total before debt issuance costs     645,807       422,557       223,250       582,573       439,323       143,250   Unamortized debt issuance costs attributable to term borrowings     —       ( 4,541 )     —       —       ( 5,245 )     —   Total borrowings outstanding, net   $ 645,807     $ 418,016     $ 223,250     $ 582,573     $ 434,078     $ 143,250     As of June 30, 2023 , 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 June 30, 2023 , the asset coverage for borrowed amounts was 184 %.   37 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 29, 2023, the Company amended the Key Facility, among other things, to increase the commitment amount to $ 150 million and to increase the amount of the accordion feature which now allows for the potential increase in the total commitment amount to $ 300 million. The Key Facility is collateralized by all debt investments and warrants held by Credit II and permits an advance rate of up to 60 % of eligible debt investments held by Credit II. The Key Facility contains covenants that, among other things, require the Company to maintain a minimum net worth and to restrict the debt investments securing the Key Facility to certain criteria for qualified debt investments and includes portfolio company concentration limits as defined in the related loan agreement. The Company may request advances under the Key Facility through June 22, 2024  and the Key Facility is scheduled to mature on June 22, 2026. The interest rate on the Key Facility is based on the rate of interest published in The Wall Street Journal as the prime rate in the United States plus 0.25 %, with a prime rate floor of 4.25 %. The prime rate was  8.25 % and 7.50 % on June 30, 2023 and  December 31, 2022 , respectively. The average interest rate on the Key Facility for the three months ended June 30, 2023 and 2022  was 8.41 % and 4.25 %, respectively. The average interest rate on the Key Facility for the six months ended June 30, 2023 and 2022 was  8.17 % and 4.25 %, 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 June 30, 2023 and  December 31, 2022 , the Company had borrowing capacity under the Key Facility of $ 150.0  million and $ 120.0  million, respectively. At June 30, 2023 and  December 31, 2022 , $ 61.4  million and $ 40.2 million, respectively, was available for borrowing, subject to existing terms and advance rates.   NYL Facility   On April 21, 2020, the Company purchased all of the limited liability company interests in 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. The notes were issued pursuant to the Indenture. The interest rate on the notes issued under the NYL Facility was based on the three year USD mid-market swap rate plus a margin of between 3.55 % and 5.15 % with an interest rate floor, depending on the rating of such notes at the time of issuance.   On February 25, 2022, the Company amended its NYL Facility to, among other things, reduce the applicable margin used to calculate the credit facility’s interest rate on the Company’s borrowings above $ 100.0 million. Such borrowings were priced at the three -year USD mid-market swap rate plus 3.00 %.   On May 24, 2023, the Company amended its NYL Facility to, among other things, increase the commitment by $ 50.0 million to enable its wholly-owned subsidiary to issue up to $ 250.0 million of secured notes. The amendment to the NYL Facility extends the investment period to June 2024  and the maturity date of all advances to June 2029. In addition, the amendment amended the interest rate for advances made after May 24, 2023, fixing the interest rate at the greater of (i) 4.60% and (ii) the Three Year I Curve plus 3.50%, with the interest rate to be reset on any advance date.    There were $ 176.8  million in advances made by the NYL Noteholders as of June 30, 2023 and  December 31, 2022 . The interest rate as of June 30, 2023 and  December 31, 2022 was 5.62 % and 5.57 %, respectively. As of June 30, 2023 and  December 31, 2022 , the Company had borrowing capacity under the NYL Facility of $ 73.2  million and $ 23.2 million, respectively. At June 30, 2023 and  December 31, 2022 , $ 3.0  million and $ 23.2 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  June 30, 2023 and December 31, 2022 , there were approximately $ 1.3  million and $ 1.0  million, respectively, of restricted investments.   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 has been no change in the rating since 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 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 2019 Asset-Backed Notes will be 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 is September  15, 2027.   As of June 30, 2023 and  December 31, 2022 , the 2019 Asset-Backed Notes had an outstanding principal balance of $ 30.8  million and $ 42.6 million, respectively.   Under the terms of the 2019 Asset-Backed Notes, the Company is required to maintain a reserve cash balance, funded through proceeds from the sale of the 2019 Asset-Backed Notes, which may be used to pay monthly interest and principal payments on the 2019 Asset-Backed Notes. The Company has segregated these funds and classified them as restricted investments in money market funds. At June 30, 2023 and  December 31, 2022 , there were approximately $ 0.5  million and $ 0.6 million of restricted investments, respectively.   38 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements   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  June 30, 2023 and  December 31, 2022 , the 2022 Asset-Backed Notes had an outstanding principal balance of  $100.0  million.   Under the terms of the 2022 Asset-Backed Notes, the Company is required to maintain a reserve cash balance, funded through proceeds from the sale of the 2022 Asset-Backed Notes, which may be used to pay monthly interest and principal payments on the 2022 Asset-Backed Notes. The Company has segregated these funds and classified them as restricted investments in money market funds. At  June 30, 2023 and  December 31, 2022 , there were approximately $ 1.1  million and $ 1.2  million of restricted investments, respectively.   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 June 30, 2023 , 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 June 30, 2023 , 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”.   39 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 $ 143.4  million and $ 190.0 million as of June 30, 2023 and  December 31, 2022 , 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 June 30, 2023 :       June 30, 2023     December 31, 2022               Fair Value of             Fair Value of               Unfunded             Unfunded       Principal     Commitment     Principal     Commitment       Balance     Liability     Balance     Liability       (In thousands)     (In thousands)   BrightInsight, Inc.   $ 18,250     $ 241     $ 21,000     $ 278   Britecore Holdings, Inc.     —       —       5,000       66   Castle Creek Biosciences     4,000       72       4,000       72   Divergent Technologies, Inc.     11,250       118       22,500       236   Engage3, LLC     —       —       8,000       40   Groundspeed Analytics, Inc.     —       —       15,000       150   Hound Labs, Inc.     —       —       7,500       88   KSQ Therapeutics, Inc.     —       —       10,000       100   Lytics, Inc.     4,000       52       5,000       65   Native Microbials, Inc.     —       —       7,500       72   Nexii Building Solutions, Inc.     1,488       —       —       —   Noodle Partners, Inc.     10,000       123       —       —   Optoro, Inc.     11,250       —       15,000       38   PDS Biotechnology Corporation     10,000       158       10,000       158   Robin Healthcare, Inc.     5,000       50       10,000       100   SafelyYou, Inc.     20,000       270       —       —   Scientia Vascular, Inc.     5,000       55       10,000       110   STS (ABC), LLC     140       —       —       —   Slingshot Aerospace, Inc.     5,000       64       5,000       64   Supply Network Visibility Holdings, LLC     10,000       35       —       —   Swift Health Systems Inc.     11,500       —       25,500       105   Temperpack Technologies, Inc.     6,500       14       9,000       19   Viken Detection Corporation     10,000       160       —       —   Total   $ 143,378     $ 1,412     $ 190,000     $ 1,761     The table above also provides the fair value of the Company’s unfunded commitment liability as of June 30, 2023  and December 31, 2022, which totaled $ 1.4  million and $ 1.8 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.     40 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 and fair value, represented 25 % and 23 % of total debt investments outstanding as of June 30, 2023 and  December 31, 2022 .  No single debt investment represented more than 10% of the total debt investments at cost or fair value as of June 30, 2023 and  December 31, 2022 . 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 23 % and 22 % of total interest and fee income on investments for the three months ended June 30, 2023 and 2022 , respectively. Interest income from the five largest debt investments at fair value accounted for 23 % of total interest and fee income on investments for the three months ended June 30, 2023 and 2022 . Interest income from the five largest debt investments at cost accounted for 23 % and 22 % of total interest and fee income on investments for the six months ended June 30, 2023 and 2022 , respectively. Interest income from the five largest debt investments at fair value accounted for 23 % and 22 % of total interest and fee income on investments for the six months ended June 30, 2023 and 2022 , respectively.      41 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 six months ended June 30, 2023  and for the year ended December 31, 2022 :                               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)   Six Months Ended June 30, 2023                                         4/28/2023   8/17/23   9/15/23   $ 0.11     $ —       —     $ —   4/28/2023   7/18/23   8/15/23     0.11       —       —       —   4/28/2023   6/16/23   7/14/23     0.11       3,434       7,424       96   2/23/2023   5/18/23   6/14/23     0.11       3,087       7,128       86   2/23/2023   4/18/23   5/16/23     0.11       3,068       6,705       84   2/23/2023   3/17/23   4/14/23     0.11       3,035       6,894       81               $ 0.66     $ 12,624       28,151     $ 347   Year Ended December 31, 2022                                         10/28/2022   2/17/23   3/15/23   $ 0.11     $ 3,040       6,764     $ 75   10/28/2022   1/18/23   2/15/23     0.11       3,021       5,754       74   10/28/2022   12/19/22   1/13/23     0.11       2,978       5,618       69   10/28/2022   11/17/22   12/15/22     0.05       1,319       2,171       27   7/29/2022   11/17/22   12/15/22     0.10       2,638       4,341       57   7/29/2022   10/18/22   11/15/22     0.10       2,580       4,621       60   7/29/2022   9/19/22   10/14/22     0.10       2,558       7,703       81   4/29/2022   8/18/22   9/15/22     0.10       2,528       4,925       60   4/29/2022   7/19/22   8/16/22     0.10       2,484       3,939       55   4/29/2022   6/17/22   7/15/22     0.10       2,434       4,286       51   2/25/2022   5/18/22   6/15/22     0.10       2,378       4,428       50   2/25/2022   4/19/22   5/16/22     0.10       2,349       4,088       49   2/25/2022   3/18/22   4/14/22     0.10       2,352       3,221       46               $ 1.28     $ 32,659       61,859     $ 754     On July 28, 2023, 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   September 18, 2023   September 19, 2023   October 16, 2023   $ 0.11   October 17, 2023   October 18, 2023   November 15, 2023   $ 0.11   November 16, 2023   November 17, 2023   December 15, 2023   $ 0.11     After paying distributions of $ 0.33  per share and earning net investment income of $ 0.54  per share for the quarter, the Company’s undistributed spillover income as of June 30, 2023 was $ 1.02 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.   42 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements     Note   11. Financial highlights   The following table shows financial highlights for the Company:       Six months ended June 30,         2023       2022         (In thousands, except share and per share data)     Per share data:                     Net asset value at beginning of period   $ 11.47       $ 11.56     Net investment income     1.00         0.62     Realized loss     ( 0.58 )       ( 0.04 )   Unrealized depreciation on investments     ( 0.23 )       ( 0.10 )   Net increase in net assets resulting from operations     0.19         0.48     Distributions declared (1)     ( 0.66 )       ( 0.60 )   From net investment income     ( 0.66 )       ( 0.60 )   From net realized gain on investments     —         —     Return of capital     —         —     Other (2)     0.07         0.25     Net asset value at end of period   $ 11.07       $ 11.69     Per share market value, beginning of period   $ 11.60       $ 15.92     Per share market value, end of period   $ 12.08       $ 11.54     Total return based on a market value (3)     9.8 %       ( 23.7 )%   Shares outstanding at end of period     32,096,259         24,857,104     Ratios to average net assets:                     Expenses without incentive value (4)     14.2 %       10.8 %   Incentive fees (4)     1.9 %       2.6 %   Net expenses (4)     16.1 %       13.4 %   Net investment income with incentive fees (4)     17.5 %       10.5 %   Net assets at the end of the period   $ 355,419       $ 290,605     Average net asset value   $ 331,850       $ 271,976     Average debt per share   $ 15.11       $ 12.81     Portfolio turnover ratio     7.6 % (5)     11.3 % (5)   ( 1 ) Distributions are determined based on taxable income calculated in accordance with income tax regulations, which may differ from amounts determined under GAAP due to (i) changes in unrealized appreciation and depreciation, (ii) temporary and permanent differences in income and expense recognition, and (iii) the amount of spillover income carried over from a given tax year for distribution in the following tax year. The final determination of taxable income for each tax year, as well as the tax attributes for distributions in such tax year, will be made after the close of the tax year.   ( 2 ) Includes the impact of the different share amounts as a result of calculating per share data based on the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date. The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of common stock in the Company’s continuous public offering and pursuant to the Company’s distribution reinvestment plan. The issuance of common stock at an offering price, net of sales commissions and dealer manager fees, that is greater than the net asset value per share results in an increase in net asset value per share.   ( 3 ) The total return equals the change in the ending market value over the beginning of period price per share plus distributions paid per share during the period, divided by the beginning price.   ( 4 ) Annualized.   ( 5 ) Calculated by dividing the lesser of purchases or the sum of ( 1 ) principal prepayments and ( 2 ) maturities by the monthly average debt investment balance.   43 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements     Note   12. Subsequent Events   On  July 6, 2023 ,  the Company funded a $ 0.3  million debt investment to an existing portfolio company, Nexii Building Solutions, Inc. ("Nexii"). On July 25, 2023, the Company funded an additional $ 0.3 million debt investment to Nexii. On July 27, 2023, the Company funded an additional $ 0.2 million debt investment to Nexii.   On July 12, 2023, Evelo Biosciences, Inc. (“Evelo”) paid down $ 5.0 million of the principal amount of its loans outstanding under that certain Venture Loan and Security Agreement by and among the Company, the other lender parties therein and Evelo, dated as of December 15, 2022, as amended (the “Loan Agreement”), and the Company and Evelo converted $ 5.0 million of the principal amount of the loans outstanding under the Loan Agreement into 2,164,502 unregistered shares of Common Stock of Evelo.   On  July 13, 2023 ,  the Company funded a $ 0.8 million equity investment to an existing portfolio company, Better Place Forests Co. (“Better Place”), converted $ 0.5 million of the principal amount of its outstanding debt investments in Better Place into preferred stock of Better Place and converted $ 2.7 million of the principal amount of its outstanding debt investments in Better Place into common stock of Better Place.   On July 18, 2023, the Company funded a $ 0.2 million debt investment to an existing portfolio company, Aerobiotix, LLC.   On July 31, 2023, the Company funded a $ 5.0 million debt investment to a new portfolio company, Tallac Therapeutics, Inc.      44 Table of Contents     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, including our and their ability to achieve our respective objectives as a result of the COVID-19 pandemic;     ● geopolitical turmoil, including the military dispute between Ukraine and Russia and Chinese aggression in the Taiwan Strait, 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;   45 Table of Contents     ● 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, 2022, 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.   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 June 30, 2023, 86.9%, or $593.6 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.   46 Table of Contents   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 June 30, 2023 and December 31, 2022:       June 30, 2023     December 31, 2022                     Percentage of                   Percentage of       Number of     Fair     Total     Number of     Fair     Total       Investments     Value     Portfolio     Investments     Value     Portfolio       (Dollars in thousands)   Debt investments   54     $ 683,309       95.5 %   60     $ 686,458       95.3 % Warrants   85       25,483       3.6     90       29,712       4.1   Other investments   2       1,300       0.2     2       1,300       0.2   Equity   12       5,299       0.7     8       2,556       0.4   Total         $ 715,391       100.0 %         $ 720,026       100.0 %   The following table shows total portfolio investment activity as of and for the three and six months ended June 30, 2023 and 2022:       For the three months ended     For the six months ended       June 30,     June 30,       2023     2022     2023     2022       (In thousands)   Beginning portfolio   $ 715,312     $ 515,009     $ 720,026     $ 458,075   New debt investments     50,545       159,235       97,553       253,720   Less refinanced debt balances     (10,000 )     (25,000 )     (10,000 )     (25,000 ) Net new debt investments     40,545       134,235       87,553       228,720   Principal payments received on investments     (6,075 )     (4,861 )     (12,890 )     (6,956 ) Payment-in-kind interest on investments     950       —       2,154       —   Early pay-offs and principal paydowns     (18,665 )     (43,467 )     (51,606 )     (55,517 ) Accretion of debt investment fees     1,645       1,547       3,093       2,553   New debt investment fees     (502 )     (1,860 )     (802 )     (2,785 ) Equity received in settlement of fee income     89       —       89       —   Proceeds from sale of investments     (1,986 )     (22,146 )     (8,506 )     (43,426 ) Net loss on investments     (16,529 )     (929 )     (16,697 )     (899 ) Net unrealized appreciation (depreciation) on investments     608       (36 )     (6,929 )     (2,273 ) Other     (1 )     —       (94 )     —   Ending portfolio   $ 715,391     $ 577,492     $ 715,391     $ 577,492     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.   47 Table of Contents   The following table shows our debt investments by industry sector as of June 30, 2023 and December 31, 2022:       June 30, 2023     December 31, 2022       Debt     Percentage of     Debt     Percentage of       Investments at     Total     Investments at     Total       Fair Value     Portfolio     Fair Value     Portfolio       (Dollars in thousands)   Life Science                                 Biotechnology   $ 171,256       25.1 %   $ 189,729       27.6 % Medical Device     123,196       18.0       127,839       18.6   Technology                                 Communications     22,386       3.3       22,671       3.3   Consumer-Related     102,521       15.0       108,226       15.8   Networking     8,027       1.2       11,467       1.7   Software     136,929       20.0       117,002       17.0   Sustainability                                 Other Sustainability     83,255       12.2       83,705       12.2   Healthcare Information and Services                                 Diagnostics     9,913       1.4       9,804       1.4   Other Healthcare     —       —       2,500       0.4   Software     25,826       3.8       13,515       2.0   Total   $ 683,309       100.0 %   $ 686,458       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 and fair value represented 25% and 23% of total debt investments outstanding as of June 30, 2023 and December 31, 2022 respectively. No single debt investment at cost or fair value represented more than 10% of our total debt investments as of June 30, 2023 and December 31, 2022.   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 June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022:       June 30, 2023     December 31, 2022               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     11     $ 151,399       22.2 %     8     $ 93,832       13.7 % 3     38       460,125       67.3       47       557,554       81.2   2     4       61,985       9.1       2       26,822       3.9   1     1       9,800       1.4       3       8,250       1.2   Total     54     $ 683,309       100.0 %     60     $ 686,458       100.0 %   As of June 30, 2023, there was one debt investment with an internal credit rating of 1, with an aggregate cost of $17.4 million and an aggregate fair value of $9.8 million. As of December 31, 2022, there were three debt investments with an internal credit rating of 1, with an aggregate cost of $20.9 million and an aggregate fair value of $8.3 million.   48 Table of Contents   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 June 30, 2023 and 2022   The following table shows consolidated results of operations for the three months ended June 30, 2023 and 2022:       For the three months ended       June 30,       2023     2022       (In thousands)   Total investment income   $ 28,117     $ 18,588   Total expenses     11,865       9,900   Net investment income before excise tax     16,252       8,688   Provision for excise tax     179       106   Net investment income     16,073       8,582   Net realized loss     (16,529 )     (929 ) Net unrealized appreciation (depreciation) on investments     608       (36 ) Net increase in net assets resulting from operations   $ 152     $ 7,617   Average debt investments, at fair value   $ 687,529     $ 522,521   Average gross assets less cash   $ 739,141     $ 568,079   Average borrowings outstanding   $ 435,402     $ 324,392     Net increase in net assets resulting from operations can vary substantially from period to period for various reasons, including, without limitation, the recognition of realized gains and losses and unrealized appreciation and depreciation on investments. As a result, quarterly comparisons of net increase in net assets resulting from operations may not be meaningful.   Investment income   Total investment income increased by $9.5 million, or 51.3%, to $28.1 million for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. For the three months ended June 30, 2023, total investment income consisted primarily of $26.6 million in interest income from investments, which included $3.1 million in income from the accretion of origination fees and end of term payments, or ETPs, and $1.5 million in fee income. Interest income on debt investments increased by $8.9 million, or 50.2%, to $26.6 million, for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. Interest income on debt investments for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 increased primarily due to an increase of $165.0 million, or 31.6%, in the average size of our debt investment portfolio and an increase in the prime rate which is the base rate for most of our variable rate debt investments. Fee income, which includes success fee, other fee and prepayment fee income on debt investments, increased by $0.6 million, or 72.0%, to $1.5 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 primarily due to higher fee income earned on prepayments for the three months ended June 30, 2023 compared to the three months ended June 30, 2022.    The following table shows our dollar-weighted annualized yield for the three months ended June 30, 2023 and 2022:       For the three months ended       June 30,   Investment type:   2023     2022   Debt investments (1)     16.3 %     14.2 % All investments (1)     15.6 %     13.6 % (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 23% and 22% of investment income for the three months ended June 30, 2023 and 2022, respectively. Interest income from the five largest debt investments at fair value in the aggregate accounted for 23% of investment income for the three months ended June 30, 2023 and 2022.    49 Table of Contents   Expenses   Total expenses increased by $2.0 million, or 19.8%, to $11.9 million for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. 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 $3.0 million, or 69.9%, to $7.2 million for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. Interest expense, which includes the amortization of debt issuance costs, increased primarily due to an increase in average borrowings of $111.0 million, or 34.2%, for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 and an increase in our effective cost of debt for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.   Base management fee expense increased by $0.7 million, or 27.1%, to $3.2 million for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. Base management fee increased primarily due to an increase of $165.0 million, or 31.6%, in average debt investments for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.    Performance based incentive fee expense decreased by $2.0 million, or 94.5%, to $0.1 million for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. This decrease was due to an Incentive Fee Cap calculated based on the Incentive Fee Cap and Deferral Mechanism in our Investment Management Agreement of $3.1 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. The Incentive Fee Cap and Deferral Mechanism resulted in $3.1 million of reduced incentive fee expense and increased net investment income for the three months ended June 30, 2023. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap for the three months ended June 30, 2023 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 $1.0 million for the three months ended June 30, 2023 and 2022, 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 June 30, 2023, we realized net losses on investments totaling $16.5 million primarily due to the settlement of three 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 June 30, 2022, we realized net losses on investments totaling $0.9 million primarily due to the settlement of one of our other investments.   During the three months ended June 30, 2023, net unrealized appreciation on investments totaled $0.6 million which was primarily due to the reversal of previously recorded unrealized depreciation from the settlement of two of our debt investments offset by (1) the unrealized depreciation on three of our debt investments and (2) the unrealized depreciation on one of our equity investments. During the three months ended June 30, 2022, net unrealized depreciation on investments totaled $0.04 million which was primarily due (1) the unrealized appreciation on our warrant investments and (2) the reversal of previously recorded unrealized depreciation from the settlement of one of our other investments partially offset by the unrealized depreciation on three of our debt investments.       Comparison of the six months ended June 30, 2023 and 2022   The following table shows consolidated results of operations for the six months ended June 30, 2023 and 2022:       For the six months ended       June 30,       2023     2022       (In thousands)   Total investment income   $ 56,154     $ 32,792   Total expenses     26,707       18,275   Net investment income before excise tax     29,447       14,517   Provision for excise tax     363       206   Net investment income     29,084       14,311   Net realized loss     (16,697 )     (899 ) Net unrealized depreciation on investments     (6,929 )     (2,273 ) Net increase in net assets resulting from operations   $ 5,458     $ 11,139   Average debt investments, at fair value   $ 687,996     $ 490,777   Average gross assets less cash   $ 738,484     $ 533,221   Average borrowings outstanding   $ 437,965     $ 296,042     Net increase in net assets resulting from operations can vary substantially from period to period for various reasons, including, without limitation, the recognition of realized gains and losses and unrealized appreciation and depreciation on investments. As a result, quarterly comparisons of net increase in net assets resulting from operations may not be meaningful.   Investment income   Total investment income increased by $23.4 million, or 71.2%, to $56.2 million for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. For the six months ended June 30, 2023, total investment income consisted primarily of $54.0 million in interest income from investments, which included $7.4 million in income from the accretion of origination fees and end of term payments, or ETPs, and $2.1 million in fee income. Interest income on debt investments increased by $22.5 million, or 71.1%, to $54.0 million, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. Interest income on debt investments for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 increased primarily due to an increase of $197.2 million, or 40.2%, in the average size of our debt investment portfolio and an increase in the prime rate which is the base rate for most of our variable rate debt investments. Fee income, which includes success fee, other fee and prepayment fee income on debt investments, increased by $0.9 million, or 74.8%, to $2.1 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to higher fee income earned on prepayments for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.    The following table shows our dollar-weighted annualized yield for the six months ended June 30, 2023 and 2022:       For the six months ended       June 30,   Investment type:   2023     2022   Debt investments (1)     16.3 %     13.4 % All investments (1)     15.5 %     12.8 % (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 and fair value in the aggregate accounted for 23% and 22% of investment income for the six months ended June 30, 2023 and 2022, respectively.   50 Table of Contents   Expenses   Total expenses increased by $8.4 million, or 46.1%, to $26.7 million for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. 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 $6.7 million, or 86.9%, to $14.3 million for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. Interest expense, which includes the amortization of debt issuance costs, increased primarily due to an increase in average borrowings of $141.9 million, or 47.9%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 and an increase in our effective cost of debt for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.   Base management fee expense increased by $1.6 million, or 34.4%, to $6.4 million for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. Base management fee increased primarily due to an increase of $197.2 million, or 40.2%, in average debt investments for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.    Performance based incentive fee expense decreased by $0.5 million, or 13.3%, to $3.1 million for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. This decrease was due to an Incentive Fee Cap calculated based on the Incentive Fee Cap and Deferral Mechanism in our Investment Management Agreement of $3.3 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The Incentive Fee Cap and Deferral Mechanism resulted in $3.3 million of reduced incentive fee expense and increased net investment income for the six months ended June 30, 2023. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap for the six months ended June 30, 2023 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 $2.9 million and $2.3 million for the six months ended June 30, 2023 and 2022, 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 six months ended June 30, 2023, we realized net losses on investments totaling $16.7 million primarily due to the settlement of three 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 six months ended June 30, 2022, we realized net losses on investments totaling $0.9 million primarily due the settlement of one of our other investments.    During the six months ended June 30, 2023, net unrealized depreciation on investments totaled $6.9 million which was primarily due to (1) the unrealized depreciation on three of our debt investments and (2) the unrealized depreciation on one of our equity investments offset by the reversal of previously recorded unrealized depreciation from the settlement of two of our debt investments. During the six months ended June 30, 2022, net unrealized depreciation on investments totaled $2.3 million which was primarily due to the unrealized depreciation on three of our debt investments partially offset by (1) the unrealized appreciation on our warrant investments and (2) the reversal of previously recorded unrealized depreciation from the settlement of one of our other investments.   51 Table of Contents   Liquidity and capital resources   As of June 30, 2023 and December 31, 2022, we had cash and investments in money market funds of $50.3 million and $27.7 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 June 30, 2023 and December 31, 2022, we had $2.9 million and $2.8 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 2019 Asset-Backed Notes, 2022 Asset-Backed Notes, or our NYL Facility. Our primary sources of capital have been from our public and private equity offerings, use of our revolving credit facility (the “Key Facility”) with KeyBank National Association (“Key”) and the Note Funding Agreement (the “NYL Facility”, together with the Key Facility, the “Credit Facilities”) with several entities owned or affiliated with New York Life Insurance Company, and issuance of our public debt securities. In the current economic environment, such avenues for liquidity may not be available, or may be available on less attractive terms.   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 provides that we may offer and sell our shares 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. 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 June 30, 2023, we sold 448,175 shares of common stock under the 2021 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $5.1 million, including $0.1 million of offering expenses, from these sales.   During the three months ended June 30, 2022, we sold 868,230 shares of common stock under the 2021 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $10.3 million, including $0.2 million of offering expenses, from these sales.   During the six months ended June 30, 2023, we sold 1,054,023 shares of common stock under the 2021 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $12.3 million, including $0.3 million of offering expenses, from these sales.   During the six months ended June 30, 2022, we sold 1,118,401 shares of common stock under the 2021 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $14.2 million, including $0.2 million of offering expenses, from these sales.   On March 14, 2022, we completed a follow-on public offering of 2,500,000 shares of our common stock at a public offering price of $14.35 per share, for total net proceeds to us of $34.3 million, after deducting underwriting commission and discounts and other offering expenses.   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.   52 Table of Contents   On April 28, 2023, 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, 2024 or the repurchase of $5.0 million of our common stock. During the three and six months ended June 30, 2023 and 2022, we did not make any repurchases of our common stock. From the inception of the stock repurchase program through June 30, 2023, 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 June 30, 2023, there was no outstanding principal balance under our Key Facility. At December 31, 2022, the outstanding principal balance under our Key Facility was $5.0 million. As of June 30, 2023 and December 31, 2022, we had borrowing capacity under the Key Facility of $150.0 million and $120.0 million, respectively. At June 30, 2023 and December 31, 2022, $61.4 million and $40.2 million, respectively, was available, subject to existing terms and advance rates.   At June 30, 2023 and December 31, 2022, the outstanding principal balance under the NYL Facility was $176.8 million. As of June 30, 2023 and December 31, 2022, we had borrowing capacity under the NYL Facility of $73.2 million and $23.2 million, respectively. At June 30, 2023 and December 31, 2022, $3.0 million and $23.2 million, respectively, was available, subject to existing terms and advance rates.   Our operating activities provided cash of $7.2 million for the six months ended June 30, 2023, and our financing activities provided cash of $15.5 million for the same period. Our operating activities provided cash from principal payments received on our debt investments partially offset by cash used to purchase investments in portfolio companies. Our financing activities provided cash primarily from 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 and the sale of shares through our ATM for net proceeds of $12.3 million, 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 operating activities used cash of $110.7 million for the six months ended June 30, 2022, and our financing activities provided cash of $141.4 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 issuance of the 2027 Notes (as defined below), the completion of a follow-on public offering of 2.5 million shares of common stock for net proceeds of $34.3 million, after deducting underwriting commission and discounts and other offering expenses and advances on our Credit Facilities, partially offset by cash used to repay a portion of the outstanding principal under our Key Facility, to repay our 2019 Asset-Backed Notes and to pay distributions to our stockholders.   Our primary use of available funds is to make debt investments in portfolio companies and for general corporate purposes. We expect to raise additional equity and debt capital opportunistically as needed and, subject to market conditions, to support our future growth to the extent permitted by the 1940 Act.   In order to remain subject to taxation as a RIC, we intend to distribute to our stockholders all or substantially all of our investment company taxable income. In addition, as a BDC, we are required to maintain asset coverage of at least 150%. This requirement limits the amount that we may borrow.   We believe that our current cash, cash generated from operations, and funds available from our Credit Facilities will be sufficient to meet our working capital and capital expenditure commitments for at least the next 12 months.   53 Table of Contents   Current borrowings   The following table shows our borrowings as of June 30, 2023 and December 31, 2022:       June 30, 2023     December 31, 2022       Total     Balance     Unused     Total     Balance     Unused       Commitment     Outstanding     Commitment     Commitment     Outstanding     Commitment       (In thousands)   Key Facility   $ 150,000     $ —     $ 150,000     $ 125,000     $ 5,000     $ 120,000   NYL Facility     250,000       176,750       73,250       200,000       176,750       23,250   2019 Asset-Backed Notes     30,807       30,807       —       42,573       42,573       —   2022 Asset-Backed Notes     100,000       100,000       —       100,000       100,000       —   2027 Notes     57,500       57,500       —       57,500       57,500       —   2026 Notes     57,500       57,500       —       57,500       57,500       —   Total before debt issuance costs     645,807       422,557       223,250       582,573       439,323       143,250   Unamortized debt issuance costs attributable to term borrowings     —       (4,541 )     —       —       (5,245 )     —   Total borrowings outstanding, net   $ 645,807     $ 418,016     $ 223,250     $ 582,573     $ 434,078     $ 143,250     Credit Facilities   Key Facility   We entered into the Key Facility effective November 4, 2013. The interest rate on the Key Facility is based on the rate of interest published in The Wall Street Journal as the prime rate in the United States plus 0.25%, with a prime rate floor of 4.25%. The prime rate was 8.25% and 7.50% as of June 30, 2023 and December 31, 2022, respectively. The interest rates in effect were 8.50% and 7.75% as of June 30, 2023 and December 31, 2022, respectively. The Key Facility requires the payment of an unused line fee in an amount equal to 0.50% of any unborrowed amount available under the facility annually.   On June 29, 2023, we amended the Key Facility to, among other things, increase the commitment amount to $150 million and to increase the amount of the accordion feature which now allows the potential increase in the total commitment amount to $300 million. The Key Facility is collateralized by debt investments held by Credit II and permits an advance rate of up to sixty percent (60%) of eligible debt investments held by Credit II. The Key Facility contains covenants that, among other things, require us to maintain a minimum net worth, to restrict the debt investments securing the Key Facility to certain criteria for qualified debt investments and to comply with portfolio company concentration limits as defined in the related loan agreement. After the period during which we may request advances under the Key Facility (or the “Revolving Period”), we may not request new advances, and we must repay the outstanding advances under the Key Facility as of such date, at such times and in such amounts as are necessary to maintain compliance with the terms and conditions of the Key Facility, particularly the condition that the principal balance of the Key Facility not exceed sixty percent (60%) of the aggregate principal balance of our eligible debt investments to our portfolio companies. The Revolving Period ends on June 22, 2024 and the maturity date of the Key Facility, the date on which all outstanding advances under the Key Facility are due and payable, is June 22, 2026.   NYL Facility   On April 21, 2020, we purchased all of the limited liability company interests in HSLFI. HFI is a wholly-owned subsidiary of HSLFI. HFI entered into the NYL Facility with the NYL Noteholders for an aggregate purchase price of up to $100.0 million, with an accordion feature of up to $200.0 million at the mutual discretion and agreement of HSLFI and the NYL Noteholders. On June 1, 2018, HSLFI sold or contributed to HFI certain secured loans made to certain portfolio companies pursuant to the Sale and Servicing Agreement. Any notes issued by HFI are collateralized by all investments held by HFI and permit an advance rate of up to 67% of the aggregate principal amount of eligible debt investments.   On February 25, 2022, we amended the NYL Facility to, among other things, reduce the applicable margin used to calculate the NYL Facility’s interest rate on our borrowings above $100 million. Such borrowings were priced at the three-year USD mid-market swap rate plus 3.00%.   On May 24, 2023, we amended the NYL Facility to, among other things, increase the commitment by $50.0 million to enable our wholly-owned subsidiary to issue up to $250.0 million of secured notes. The amendment to the NYL Facility extends the investment period to June 2024 and the maturity date of all advances to June 2029. In addition, the amendment amended the interest rate for advances made after May 24, 2023, fixing the interest rate at the greater of (i) 4.60% and (ii) the Three Year I-Curve plus 3.50% with the interest rate to be reset on any advance date.    Under the terms of the NYL Facility, we are required to maintain a reserve cash balance, which may be used to pay monthly interest and principal payments on the NYL Facility. We have segregated these funds and classified them as restricted investments in money market funds. At June 30, 2023, and December 31, 2022, there were approximately $1.3 million and $1.0 million, respectively, of restricted investments.   There were $176.8 million in notes issued to the NYL Noteholders as of June 30, 2023 and December 31, 2022 at an interest rate of 5.62% and 5.57%, respectively. As of June 30, 2023 and December 31, 2022, we had borrowing capacity under the NYL Facility of $73.2 million and $23.3 million, respectively. At June 30, 2023 and December 31, 2022, $3.0 million and $23.2 million, respectively, was available for borrowing, subject to existing terms and advance rates.   54 Table of Contents   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 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 2019 Asset-Backed Notes will be paid, to the extent of funds available, at a fixed rate of 4.21% per annum. The 2019 Asset-Backed Notes had a two-year reinvestment period and a stated maturity of September 15, 2027. The 2019 Asset-Backed Notes were rated A+(sf) by Morningstar Credit Ratings, LLC on August 13, 2019. There has been no change in the rating since August 13, 2019.   At June 30, 2023, and December 31, 2022, the 2019 Asset-Backed Notes had an outstanding principal balance of $30.8 million and $42.6 million, respectively.   Under the terms of the 2019 Asset-Backed Notes, we are required to maintain a reserve cash balance, funded through proceeds from the sale of the 2019 Asset-Backed Notes, which may be used to pay monthly interest and principal payments on the 2019 Asset-Backed Notes. We have segregated these funds and classified them as restricted investments in money market funds. At June 30, 2023, and December 31, 2022, there were approximately $0.5 million and $0.6 million, respectively, of restricted investments.   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.   As of June 30, 2023 and December 31, 2022, the 2022 Asset-Backed Notes had an outstanding principal balance of $100.0 million.   Under the terms of the 2022 Asset-Backed Notes, we are required to maintain a reserve cash balance, funded through proceeds from the sale of the 2022 Asset-Backed Notes, which may be used to pay monthly interest and principal payments on the 2022 Asset-Backed Notes. We have segregated these funds and classified them as restricted investments in money market funds. At June 30, 2023, and December 31, 2022, there were approximately $1.1 million and $1.2 million, respectively, of restricted investments.   Unsecured Notes   2026 Notes   On March 30, 2021, we issued and sold an aggregate principal amount of $57.5 million of 4.875% notes due in 2026, or 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 June 30, 2023, 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 June 30, 2023, 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”.   55 Table of Contents       Other assets   As of June 30, 2023 and December 31, 2022, other assets were $4.0 million and $2.8 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 June 30, 2023:       Payments due by period               Less than     1 – 3     3 – 5     After 5       Total     1 year     Years     Years     years       (In thousands)   Borrowings   $ 422,557     $ 42,934     $ 272,457     $ 107,166     $ —   Unfunded commitments     143,380       118,380       25,000       —       —   Incentive fee deferral     4,376       —       4,376       —       —   Total   $ 570,313     $ 161,314     $ 301,833     $ 107,166     $ —     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 June 30, 2023, we had unfunded commitments of $143.4 million. This includes no undrawn revolver commitments. These commitments are subject to the same underwriting and ongoing portfolio maintenance requirements as are the financial instruments that we hold on our balance sheet. In addition, these commitments are often subject to financial or non-financial milestones and other conditions to borrowing that must be achieved before the commitment can be drawn. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. We regularly monitor our unfunded commitments and anticipated refinancings, maturities and capital raising, to ensure that we have sufficient liquidity to fund unfunded commitments. As of June 30, 2023, 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.   56 Table of Contents   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 and six months ended June 30, 2023, the Incentive Fee Cap and Deferral Mechanism resulted in deferral of $3.1 million and $3.3 million, respectively, of incentive fee which may become subject to payment up to three years after the date of deferment. As of June 30, 2023, the total amount subject to recoupment was $4.4 million.   Distributions   In order to qualify and be subject to tax as a RIC, we must meet certain source-of-income, asset diversification and annual distribution requirements. Generally, in order to qualify as a RIC, we must derive at least 90% of our gross income for each tax year from dividends, interest, payments with respect to certain securities, loans, gains from the sale or other disposition of stock, securities or foreign currencies, income derived from certain publicly traded partnerships, or other income derived with respect to our business of investing in stock or other securities. We must also meet certain asset diversification requirements at the end of each quarter of each tax year. Failure to meet these diversification requirements on the last day of a quarter may result in us having to dispose of certain investments quickly in order to prevent the loss of RIC status. Any such dispositions could be made at disadvantageous prices or times, and may cause us to incur substantial losses.   In addition, in order to be subject to tax as a RIC and to avoid the imposition of corporate-level tax on the income and gains we distribute to our stockholders in respect of any tax year, we are required under the Code to distribute as dividends to our stockholders out of assets legally available for distribution each tax year an amount generally at least equal to 90% of the sum of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any. Additionally, in order to avoid the imposition of a U.S. federal excise tax, we are required to distribute, in respect of each calendar year, dividends to our stockholders of an amount at least equal to the sum of 98% of our calendar year net ordinary income (taking into account certain deferrals and elections); 98.2% of our capital gain net income (adjusted for certain ordinary losses) for the one year period ending on October 31 of such calendar year; and any net ordinary income and capital gain net income for preceding calendar years that were not distributed during such calendar years and on which we previously did not incur any U.S. federal income tax. If we fail to qualify as a RIC for any reason and become subject to corporate tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and our stockholders. In addition, we could be required to recognize unrealized gains, incur substantial taxes and interest and make substantial distributions in order to re-qualify as a RIC. We cannot assure stockholders that they will receive any distributions.   To the extent our taxable earnings in a tax year fall below the total amount of our distributions made to stockholders in respect of such tax year, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our income or gains. Stockholders should review any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is our ordinary income or gains.   We have adopted an “opt out” dividend reinvestment plan, or DRIP, for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock unless a stockholder specifically “opts out” of our DRIP. If a stockholder opts out, that stockholder will receive cash distributions. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes, stockholders participating in our DRIP will not receive any corresponding cash distributions with which to pay any such applicable taxes. If our common stock is trading above NAV, a stockholder receiving distributions in the form of additional shares of our common stock will be treated as receiving a distribution of an amount equal to the fair market value of such shares of our common stock. We