Horizon Technology Finance Corp 10-Q

hrzn20230930_10q.htm     Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549   Form   10-Q   (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION   13 OR 15(d)   OF THE SECURITIES EXCHANGE ACT OF 1934     FOR THE QUARTERLY PERIOD ENDED September 30, 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 October 31, 2023 was 33,330,529 .   Securities registered pursuant to Section 12(b) of the Act:   Title of each class   Ticker symbol(s)   Name of each exchange on which registered Common Stock, par value $0.001 per share   HRZN   The Nasdaq Stock Market LLC 4.875% Notes due 2026   HTFB   The New York Stock Exchange 6.25% Notes due 2027   HTFC   The New York Stock Exchange       Table of Contents     HORIZON TECHNOLOGY FINANCE CORPORATION   FORM   10 ‑ Q TABLE OF CONTENTS     Page PART   I Item 1 Consolidated Financial Statements. 3         Consolidated Statements of Assets and Liabilities as of September 30, 2023 (unaudited) and December 31, 2022 3   Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (unaudited) 4   Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2023 and 2022 (unaudited) 5   Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited) 6   Consolidated Schedules of Investments as of September 30, 2023 (unaudited) and December 31, 2022 7   Notes to the Consolidated Financial Statements (unaudited) 22 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 47 Item 3. Quantitative and Qualitative Disclosures About Market Risk 63 Item 4. Controls and Procedures 64       PART   II Item 1. Legal Proceedings 64 Item 1A. Risk Factors 64 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 65 Item 3. Defaults Upon Senior Securities 65 Item 4. Mine Safety Disclosures 65 Item 5. Other Information 65 Item 6. Exhibits 65   Signatures 66 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)       September 30,     December 31,       2023     2022       (Unaudited)           Assets                 Non-affiliate investments at fair value (cost of $ 700,932 and $ 721,248 , respectively)   $ 695,423     $ 720,026   Non-controlled affiliate investments at fair value (cost of $ 39,666 and $ 0 , respectively) (Note 5)     20,485       —   Controlled affiliate investments at fair value (cost of $ 14,216 and $ 0 , respectively) (Note 5)     13,145       —   Total investments at fair value (cost of $ 754,814 and $ 721,248 , respectively) (Note 4)     729,053       720,026   Cash     34,816       20,612   Investments in money market funds     12,457       7,066   Restricted investments in money market funds     2,838       2,788   Interest receivable     14,135       13,573   Other assets     3,945       2,761   Total assets   $ 797,244     $ 766,826                     Liabilities                 Borrowings (Note 7)   $ 435,500     $ 434,078   Distributions payable     10,991       9,159   Base management fee payable (Note 3)     1,080       1,065   Incentive fee payable (Note 3)     —       1,392   Other accrued expenses     3,098       2,684   Total liabilities     450,669       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 September 30, 2023 and December 31, 2022     —       —   Common stock, par value $ 0.001 per share, 100,000,000 shares authorized, 33,474,423 and 27,920,838 shares issued and 33,306,958 and 27,753,373 shares outstanding as of September 30, 2023 and December 31, 2022, respectively     35       29   Paid-in capital in excess of par     451,722       385,921   Distributable loss     ( 105,182 )     ( 67,502 ) Total net assets     346,575       318,448   Total liabilities and net assets   $ 797,244     $ 766,826   Net asset value per common share   $ 10.41     $ 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 Nine Months Ended       September 30,     September 30,       2023     2022     2023     2022                                     Investment income                                 From non-affiliate investments:                                 Interest income   $ 23,825     $ 22,745     $ 75,695     $ 54,317   Fee income     124       509       2,255       1,729   Payment-in-kind interest income     3,777       —       5,930       —   From non-controlled affiliate investments:                                 Interest income     1,246       —       1,246       —   From controlled affiliate investments:                                 Interest income     8       —       8       —   Payment-in-kind interest income     158       —       158       —   Total investment income     29,138       23,254       85,292       56,046   Expenses                                 Interest expense     7,107       5,339       21,407       12,987   Base management fee (Note 3)     3,213       2,788       9,621       7,555   Performance based incentive fee (Note 3)     —       2,784       3,094       6,353   Administrative fee (Note 3)     441       412       1,249       1,147   Professional fees     452       314       1,558       1,163   General and administrative     392       381       1,384       1,088   Total expenses     11,605       12,018       38,313       30,293   Net investment income before excise tax     17,533       11,236       46,979       25,753   Provision for excise tax     179       100       542       306   Net investment income     17,354       11,136       46,437       25,447   Net realized and unrealized loss                                 Net realized loss on non-affiliate investments     ( 11,816 )     ( 8,665 )     ( 28,513 )     ( 8,364 ) Net realized gain on non-controlled affiliate investments     —       30       —       30   Net realized gain (loss) on controlled affiliate investments     —       50       —       ( 1,150 ) Net realized loss on investments     ( 11,816 )     ( 8,585 )     ( 28,513 )     ( 9,484 ) Net unrealized appreciation (depreciation) on non-affiliate investments     180       3,442       ( 7,656 )     ( 281 ) Net unrealized depreciation on non-controlled affiliate investments     ( 19,055 )     —       ( 18,149 )     —   Net unrealized appreciation on controlled affiliate investments     1,357       —       1,357       1,450   Net unrealized (depreciation) appreciation on investments     ( 17,518 )     3,442       ( 24,448 )     1,169   Net realized and unrealized loss     ( 29,334 )     ( 5,143 )     ( 52,961 )     ( 8,315 ) Net (decrease) increase in net assets resulting from operations   $ ( 11,980 )   $ 5,993     $ ( 6,524 )   $ 17,132   Net investment income per common share   $ 0.53     $ 0.43     $ 1.54     $ 1.06   Net (decrease) increase in net assets resulting from operations per common share   $ ( 0.37 )   $ 0.23     $ ( 0.22 )   $ 0.71   Distributions declared per share   $ 0.33     $ 0.30     $ 0.99     $ 0.90   Weighted average shares outstanding     32,451,900       25,738,054       30,155,287       23,995,369     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 (Loss)     Assets   Balance at June 30, 2022     24,857,104     $ 26     $ 350,173       ( 59,594 )   $ 290,605   Issuance of common stock, net of offering costs     1,523,519       1       18,995       —       18,996   Net increase in net assets resulting from operations, net of excise tax:                                         Net investment income, net of excise tax     —       —       —       11,136       11,136   Net realized loss on investments     —       —       —       ( 8,585 )     ( 8,585 ) Net unrealized appreciation on investments     —       —       —       3,442       3,442   Issuance of common stock under dividend reinvestment plan     13,150       —       166       —       166   Distributions declared     —       —       —       ( 8,073 )     ( 8,073 ) Balance at September 30, 2022     26,393,773       27       369,334       ( 61,674 )     307,687                                             Balance at June 30, 2023     32,096,259       34       437,561       ( 82,176 )     355,419   Issuance of common stock, net of offering costs     1,186,303       1       13,854       —       13,855   Net increase in net assets resulting from operations, net of excise tax:                                         Net investment income, net of excise tax     —       —       —       17,354       17,354   Net realized loss on investments     —       —       —       ( 11,816 )     ( 11,816 ) Net unrealized depreciation on investments     —       —       —       ( 17,518 )     ( 17,518 ) Issuance of common stock under dividend reinvestment plan     24,396       —       307       —       307   Distributions declared     —       —       —       ( 11,026 )     ( 11,026 ) Balance at September 30, 2023     33,306,958     $ 35     $ 451,722     $ ( 105,182 )   $ 346,575                           Paid-In Capital                       Common Stock     in Excess of     Distributable     Total Net       Shares     Amount     Par     Earnings (Loss)     Assets   Balance at December 31, 2021     21,217,460     $ 22     $ 301,359     $ ( 56,046 )   $ 245,335   Issuance of common stock, net of offering costs     5,141,920       5       67,519       —       67,524   Net increase in net assets resulting from operations, net of excise tax:                                         Net investment income, net of excise tax     —       —       —       25,447       25,447   Net realized loss on investments     —       —       —       ( 9,484 )     ( 9,484 ) Net unrealized appreciation on investments     —       —       —       1,169       1,169   Issuance of common stock under dividend reinvestment plan     34,393       —       456       —       456   Distributions declared     —       —       —       ( 22,760 )     ( 22,760 ) Balance at September 30, 2022     26,393,773       27       369,334       ( 61,674 )     307,687                                             Balance at December 31, 2022     27,753,373       29       385,921       ( 67,502 )     318,448   Issuance of common stock, net of offering costs     5,490,326       6       65,025       —       65,031   Net increase in net assets resulting from operations, net of excise tax:                                         Net investment income, net of excise tax     —       —       —       46,437       46,437   Net realized loss on investments     —       —       —       ( 28,513 )     ( 28,513 ) Net unrealized depreciation on investments     —       —       —       ( 24,448 )     ( 24,448 ) Issuance of common stock under dividend reinvestment plan     63,259       —       776       —       776   Distributions declared     —       —       —       ( 31,156 )     ( 31,156 ) Balance at September 30, 2023     33,306,958     $ 35     $ 451,722     $ ( 105,182 )   $ 346,575     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 nine months ended September 30,       2023     2022   Cash flows from operating activities:                 Net (decrease) increase in net assets resulting from operations   $ ( 6,524 )   $ 17,132   Adjustments to reconcile net (decrease) increase in net assets resulting from operations to net cash used in operating activities:                 Amortization of debt issuance costs     1,433       1,142   Net realized loss on investments     28,513       9,484   Net unrealized depreciation on investments     24,448       ( 1,169 ) Purchase of investments     ( 154,488 )     ( 348,347 ) Principal payments received on investments     90,222       114,433   Payment-in-kind interest on investments     ( 6,088 )     —   Proceeds from sale of investments     11,063       49,681   Equity received in settlement of fee income     ( 89 )     —   Warrants received in settlement of fee income     ( 80 )     —   Changes in assets and liabilities:                 Decrease (increase) in interest receivable     1,491       ( 2,175 ) Increase in end-of-term payments     ( 1,960 )     ( 3,003 ) Decrease in unearned income     ( 2,621 )     ( 274 ) (Increase) decrease in other assets     ( 837 )     115   Increase in other accrued expenses     414       193   Increase in base management fee payable     15       1,164   (Decrease) increase in incentive fee payable     ( 1,392 )     769   Net cash used in operating activities     ( 16,480 )     ( 160,855 ) Cash flows from financing activities:                 Proceeds from issuance of 2027 Notes     —       57,500   Repayment of 2019 Asset-Backed Notes     ( 23,876 )     ( 27,041 ) Proceeds from issuance of common stock, net of offering costs     65,031       67,525   Advances on Credit Facilities     59,250       119,000   Repayment of Credit Facilities     ( 35,000 )     ( 47,000 ) Debt issuance costs     ( 732 )     ( 2,470 ) Distributions paid     ( 28,548 )     ( 20,752 ) Net cash provided by financing activities     36,125       146,762   Net increase (decrease) in cash, cash equivalents and restricted cash     19,645       ( 14,093 ) Cash, cash equivalents and restricted cash:                 Beginning of period     30,466       47,281   End of period   $ 50,111     $ 33,188                     Supplemental disclosure of cash flow information:                 Cash paid for interest   $ 19,956     $ 11,543   Supplemental non-cash investing and financing activities:                 Warrant investments received and recorded as unearned income   $ 1,870     $ 2,969   Distributions payable   $ 10,991     $ 7,918   End-of-term payments receivable   $ 11,743     $ 8,240   Non-cash income   $ 12,861     $ 4,504         September 30,       2023     2022   Cash   $ 34,816     $ 23,839   Investments in money market funds     12,457       7,732   Restricted investments in money market funds     2,838       1,617   Total cash, cash equivalents and restricted cash   $ 50,111     $ 33,188     See Notes to Consolidated Financial Statements   6 Table of Contents Horizon Technology Finance Corporation and Subsidiaries     Consolidated Schedule of Investments (Unaudited) September 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 — 200.7% (8)                                                                                 Non-Affiliate Debt Investments — 191.4% (8)                                                                                 Non-Affiliate Debt Investments — Life Science — 69.7% (8)                                                                                 Castle Creek Biosciences, Inc. (2)(12)   Biotechnology   Term Loan     13.25 %   Prime     4.75 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,903       4,903           Term Loan     13.25 %   Prime     4.75 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,975       4,975           Term Loan     13.25 %   Prime     4.75 %     9.55 %     13.50 %     5.50 %   May 1, 2026     3,000       2,985       2,985           Term Loan     13.25 %   Prime     4.75 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,975       4,975           Term Loan     13.25 %   Prime     4.75 %     9.55 %     13.50 %     5.50 %   May 1, 2026     5,000       4,975       4,975           Term Loan     13.25 %   Prime     4.75 %     9.55 %     13.50 %     5.50 %   May 1, 2026     3,000       2,985       2,985   Emalex Biosciences, Inc. (2)(12)   Biotechnology   Term Loan     13.22 %   Prime     4.72 %     9.75 %     -       5.00 %   June 1, 2024     1,979       1,971       1,971           Term Loan     13.22 %   Prime     4.72 %     9.75 %     -       5.00 %   June 1, 2024     1,979       1,972       1,972           Term Loan     13.22 %   Prime     4.72 %     9.75 %     -       5.00 %   November 1, 2025     5,000       4,943       4,943           Term Loan     13.22 %   Prime     4.72 %     9.75 %     -       5.00 %   May 1, 2026     5,000       4,939       4,939   Greenlight Biosciences, Inc. (2)(12)   Biotechnology   Term Loan     14.25 %   Prime     5.75 %     9.00 %     -       3.00 %   July 1, 2025     3,500       3,399       3,365           Term Loan     14.25 %   Prime     5.75 %     9.00 %     -       3.00 %   July 1, 2025     1,750       1,699       1,684   KSQ Therapeutics, Inc. (2)(12)   Biotechnology   Term Loan     13.25 %   Prime     4.75 %     8.50 %     -       5.50 %   May 1, 2027     6,250       6,193       6,193           Term Loan     13.25 %   Prime     4.75 %     8.50 %     -       5.50 %   May 1, 2027     6,250       6,193       6,193   Native Microbials, Inc (2)(12)   Biotechnology   Term Loan     13.75 %   Prime     5.25 %     8.50 %     -       5.00 %   November 1, 2026     3,750       3,716       3,716           Term Loan     13.75 %   Prime     5.25 %     8.50 %     -       5.00 %   November 1, 2026     2,500       2,478       2,478   PDS Biotechnology Corporation (2)(5)(12)   Biotechnology   Term Loan     14.25 %   Prime     5.75 %     9.75 %     -       3.75 %   September 1, 2026     10,000       9,898       9,898           Term Loan     14.25 %   Prime     5.75 %     9.75 %     -       3.75 %   September 1, 2026     3,750       3,712       3,712           Term Loan     14.25 %   Prime     5.75 %     9.75 %     -       3.75 %   September 1, 2026     3,750       3,712       3,712   Provivi, Inc. (2)(12)   Biotechnology   Term Loan     13.86 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     4,667       4,594       4,594           Term Loan     13.86 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     4,667       4,594       4,594           Term Loan     13.86 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,286       2,286           Term Loan     13.86 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,286       2,286           Term Loan     13.86 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,282       2,282           Term Loan     13.86 %   Prime     5.36 %     9.50 %     -       5.50 %   December 1, 2024     2,333       2,282       2,282   Stealth Biotherapeutics Inc. (2)(12)   Biotechnology   Term Loan     14.00 %   Prime     5.50 %     8.75 %     -       6.00 %   October 1, 2025     4,500       4,434       4,434           Term Loan     14.00 %   Prime     5.50 %     8.75 %     -       6.00 %   October 1, 2025     2,250       2,217       2,217   Tallac Therapeutics, Inc. (2)(12)   Biotechnology   Term Loan     12.75 %   Prime     4.25 %     12.25 %     -       4.00 %   August 1, 2027     2,500       2,226       2,226           Term Loan     12.75 %   Prime     4.25 %     12.25 %     -       4.00 %   August 1, 2027     2,500       2,455       2,455   Aerobiotix, LLC (2)(12)   Medical Device   Term Loan     9.00 %   Fixed     -       -       -       18.00 %   April 1, 2028     2,500       2,466       2,344           Term Loan     9.00 %   Fixed     -       -       -       18.00 %   April 1, 2028     2,500       2,466       2,344           Term Loan     9.00 %   Fixed     -       -       -       18.00 %   June 30, 2024     200       200       190   Candesant Biomedical, Inc. (2)(12)   Medical Device   Term Loan     12.00 %   Prime     3.50 %     11.50 %     -       5.00 %   September 1, 2027     5,000       4,751       4,751           Term Loan     12.00 %   Prime     3.50 %     11.50 %     -       5.00 %   September 1, 2027     2,500       2,451       2,451           Term Loan     12.00 %   Prime     3.50 %     11.50 %     -       5.00 %   September 1, 2027     2,500       2,451       2,451   Ceribell, Inc. (2)(12)   Medical Device   Term Loan     12.00 %   Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     5,000       4,985       4,985           Term Loan     12.00 %   Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     5,000       4,985       4,985           Term Loan     12.00 %   Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     2,500       2,488       2,488           Term Loan     12.00 %   Prime     3.50 %     8.25 %     -       5.50 %   October 1, 2024     2,500       2,488       2,488   Cognoa, Inc. (2)(12)   Medical Device   Term Loan     14.00 %   Prime     5.50 %     8.75 %     -       6.00 %   August 1, 2026     4,722       4,678       4,678           Term Loan     14.00 %   Prime     5.50 %     8.75 %     -       6.00 %   August 1, 2026     2,361       2,339       2,339   Conventus Orthopaedics, Inc. (2)(12)   Medical Device   Term Loan     13.32 %   Prime     4.82 %     9.25 %     -       10.36 %   July 1, 2025     3,960       3,916       3,916           Term Loan     13.32 %   Prime     4.82 %     9.25 %     -       10.36 %   July 1, 2025     3,960       3,916       3,916   CSA Medical, Inc. (2)(12)   Medical Device   Term Loan     13.59 %   Prime     5.09 %     10.00 %     -       5.00 %   January 1, 2024     750       739       739           Term Loan     13.59 %   Prime     5.09 %     10.00 %     -       5.00 %   January 1, 2024     50       49       49           Term Loan     13.59 %   Prime     5.09 %     10.00 %     -       5.00 %   March 1, 2024     1,067       1,052       1,052   InfoBionic, Inc. (2)(12)   Medical Device   Term Loan     14.75 %   Prime     6.25 %     9.50 %     -       4.00 %   October 1, 2024     2,771       2,733       2,733           Term Loan     14.75 %   Prime     6.25 %     9.50 %     -       4.00 %   June 1, 2025     1,000       982       982   Magnolia Medical Technologies, Inc. (2)(12)   Medical Device   Term Loan     13.50 %   Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,960       4,960           Term Loan     13.50 %   Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,960       4,960           Term Loan     13.50 %   Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,956       4,956           Term Loan     13.50 %   Prime     5.00 %     9.75 %     -       4.00 %   March 1, 2025     5,000       4,956       4,956           Term Loan     13.50 %   Prime     5.00 %     9.75 %     -       4.00 %   January 1, 2027     5,000       4,934       4,934           Term Loan     13.50 %   Prime     5.00 %     9.75 %     -       4.00 %   January 1, 2027     5,000       4,934       4,934     See Notes to Consolidated Financial Statements   7 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) September 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)   Robin Healthcare, Inc. (2)(12)(13)   Medical Device   Term Loan     14.00 %   Prime     5.50 %     10.25 %     -       4.00 %   November 1, 2026     3,500       3,468       1,749           Term Loan     14.00 %   Prime     5.50 %     10.25 %     -       4.00 %   November 1, 2026     3,500       3,468       1,749   Scientia Vascular, Inc. (2)(12)   Medical Device   Term Loan     13.25 %   Prime     4.75 %     8.50 %     -       5.00 %   January 1, 2027     3,750       3,663       3,663           Term Loan     13.25 %   Prime     4.75 %     8.50 %     -       5.00 %   January 1, 2027     3,750       3,718       3,718           Term Loan     13.75 %   Prime     5.25 %     9.00 %     -       5.00 %   March 1, 2027     5,000       4,938       4,938   Sonex Health, Inc. (2)(12)   Medical Device   Term Loan     12.00 %   Prime     3.50 %     11.75 %     -       8.00 %   September 1, 2027     2,500       2,295       2,295           Term Loan     12.00 %   Prime     3.50 %     11.75 %     -       8.00 %   September 1, 2027     2,500       2,471       2,471           Term Loan     12.00 %   Prime     3.50 %     11.75 %     -       8.00 %   September 1, 2027     5,000       4,943       4,943           Term Loan     12.00 %   Prime     3.50 %     11.75 %     -       8.00 %   September 1, 2027     5,000       4,943       4,943   Spineology, Inc. (2)(12)   Medical Device   Term Loan     15.50 %   Prime     7.00 %     10.25 %     -       1.00 %   October 1, 2025     5,000       4,975       4,975           Term Loan     15.50 %   Prime     7.00 %     10.25 %     -       1.00 %   April 1, 2026     2,500       2,487       2,487   Swift Health Systems Inc. (2)(12)   Medical Device   Term Loan     13.75 %   Prime     5.25 %     9.00 %     -       5.00 %   July 1, 2027     3,500       3,464       3,464           Term Loan     13.75 %   Prime     5.25 %     9.00 %     -       5.00 %   July 1, 2027     3,500       3,464       3,464           Term Loan     13.75 %   Prime     5.25 %     9.00 %     -       5.00 %   July 1, 2027     3,500       3,453       3,453           Term Loan     13.75 %   Prime     5.25 %     9.00 %     -       5.00 %   July 1, 2027     3,500       3,453       3,453   Total Non-Affiliate Debt Investments — Life Science                                                                     245,317       241,576   Non-Affiliate Debt Investments — Sustainability — 23.8% (8)                                                                                 New Aerofarms, Inc. assignee of Aerofarms, Inc. (2)(12)(15)   Other Sustainability   Term Loan     15.25 %   Prime     6.75 %     10.00 %     -       4.33 %   December 1, 2026     3,750       3,675       3,675           Term Loan     15.25 %   Prime     6.75 %     10.00 %     -       4.33 %   December 1, 2026     3,750       3,675       3,675   Nexii Building Solutions, Inc. (2)(12)(14)   Other Sustainability   Term Loan     15.50 % (11)   Prime     7.00 %     10.25 %     -       2.50 %   September 1, 2025     8,102       8,009       6,754           Term Loan     15.50 % (11)   Prime     7.00 %     10.25 %     -       2.50 %   September 1, 2025     8,102       8,009       6,754           Term Loan     15.50 % (11)   Prime     7.00 %     10.25 %     -       2.50 %   September 1, 2025     8,102       8,009       6,754           Term Loan     15.50 % (11)   Prime     7.00 %     10.25 %     -       2.50 %   July 1, 2026     5,402       5,332       4,496           Term Loan     15.50 % (11)   Prime     7.00 %     10.25 %     -       2.50 %   July 1, 2026     5,402       5,332       4,496           Term Loan     15.50 % (11)   Prime     7.00 %     10.25 %     -       2.50 %   September 30, 2023     707       707       596           Term Loan     15.50 % (11)   Prime     7.00 %     10.25 %     -       2.50 %   September 30, 2023     564       564       475           Term Loan     15.50 % (11)   Prime     7.00 %     10.25 %     -       2.50 %   September 30, 2023     281       281       237           Term Loan     15.50 % (11)   Prime     7.00 %     10.25 %     -       2.50 %   September 30, 2023     279       279       235           Term Loan     15.50 % (11)   Prime     7.00 %     10.25 %     -       2.50 %   September 30, 2023     167       167       141   Soli Organic, Inc. (2)(12)   Other Sustainability   Term Loan     15.25 %   Prime     6.75 %     10.00 %     -       2.75 %   April 1, 2026     5,000       4,951       4,951           Term Loan     15.25 %   Prime     6.75 %     10.00 %     -       2.75 %   April 1, 2026     2,500       2,475       2,475           Term Loan     15.25 %   Prime     6.75 %     10.00 %     -       2.75 %   May 1, 2026     5,000       4,948       4,948           Term Loan     15.25 %   Prime     6.75 %     10.00 %     -       2.75 %   May 1, 2026     2,500       2,474       2,474           Term Loan     14.00 %   Prime     5.50 %     11.75 %     -       2.75 %   December 1, 2026     5,000       4,926       4,926           Term Loan     14.00 %   Prime     5.50 %     11.75 %     -       2.75 %   December 1, 2026     2,500       2,463       2,463   Temperpack Technologies, Inc. (2)(12)   Other Sustainability   Term Loan     15.25 %   Prime     6.75 %     10.00 %     -       2.50 %   April 1, 2028     3,750       3,678       3,678           Term Loan     15.25 %   Prime     6.75 %     10.00 %     -       2.50 %   April 1, 2028     3,750       3,692       3,692           Term Loan     15.25 %   Prime     6.75 %     10.00 %     -       2.50 %   April 1, 2028     7,500       7,374       7,374           Term Loan     15.25 %   Prime     6.75 %     10.00 %     -       2.50 %   April 1, 2028     3,750       3,687       3,687           Term Loan     15.25 %   Prime     6.75 %     10.00 %     -       2.50 %   April 1, 2028     3,750       3,687       3,687   Total Non-Affiliate Debt Investments — Sustainability                                                                     88,394       82,643     See Notes to Consolidated Financial Statements   8 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) September 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 Debt Investments — Technology — 80.5% (8)                                                                               Axiom Space, Inc. (2)(12)   Communications   Term Loan     14.50 % Prime     6.00 %     9.25 %     -       2.50 %   June 1, 2026     6,875       6,840       6,840           Term Loan     14.50 % Prime     6.00 %     9.25 %     -       2.50 %   June 1, 2026     6,875       6,840       6,840           Term Loan     14.50 % Prime     6.00 %     9.25 %     -       2.50 %   June 1, 2026     6,875       6,840       6,840   CAMP NYC, Inc. (2)(12)   Consumer-related Technologies   Term Loan     15.75 % Prime     7.25 %     10.50 %     -       3.00 %   May 1, 2026     3,500       3,470       3,470   Clara Foods Co. (2)(12)   Consumer-related Technologies   Term Loan     14.25 % Prime     5.75 %     9.00 %     -       5.50 %   August 1, 2025     1,833       1,821       1,821           Term Loan     14.25 % Prime     5.75 %     9.00 %     -       5.50 %   August 1, 2025     1,833       1,821       1,821   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       3,605       3,605           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     1,250       1,241       1,241           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     3,750       3,723       3,723           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     1,250       1,241       1,241           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     3,750       3,723       3,723           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2027     1,250       1,241       1,241           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   January 1, 2028     3,750       3,709       3,709           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   January 1, 2028     3,750       3,703       3,703           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   April 1, 2028     3,750       3,709       3,709           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2028     3,750       3,705       3,705           Term Loan     11.25 % Prime     6.00 %     9.50 %     11.25 %     3.00 %   July 1, 2028     3,750       3,705       3,705   Havenly, Inc. (2)(12)   Consumer-related Technologies   Term Loan     13.50 % Prime     5.00 %     5.00 %     -       4.00 %   March 1, 2027     2,000       1,335       1,335           Term Loan     13.50 % Prime     5.00 %     5.00 %     -       4.00 %   March 1, 2027     3,000       2,003       2,003           Term Loan     12.00 % Prime     3.50 %     10.50 %     -       7.78 %   February 1, 2028     2,813       2,813       2,813           Term Loan     12.00 % Prime     3.50 %     10.50 %     -       7.78 %   February 1, 2028     2,813       2,813       2,813   Lyrical Foods, Inc. (2)(12)   Consumer-related Technologies   Term Loan     11.00 % Prime     2.50 %     8.00 %     -       -     September 1, 2027     2,598       2,589       2,351   MyForest Foods Co. (2)(12)   Consumer-related Technologies   Term Loan     15.25 % Prime     6.75 %     10.00 %     -       3.00 %   October 1, 2025     4,000       3,975       3,975           Term Loan     15.25 % Prime     6.75 %     10.00 %     -       3.00 %   October 1, 2025     2,000       1,987       1,987   NextCar Holding Company, Inc. (2)(12)   Consumer-related Technologies   Term Loan     14.25 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     5,547       5,505       4,894           Term Loan     14.25 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     2,219       2,204       1,960           Term Loan     14.25 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     2,774       2,759       2,453           Term Loan     14.25 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     3,328       3,310       2,943           Term Loan     14.25 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     2,774       2,747       2,443           Term Loan     14.25 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     2,774       2,747       2,443           Term Loan     14.25 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     5,547       5,493       4,884           Term Loan     14.25 % (11) Prime     5.75 %     9.00 %     -       5.25 %   October 31, 2023     2,774       2,746       2,441   Optoro, Inc. (2)(12)   Consumer-related Technologies   Term Loan     14.75 % Prime     6.25 %     9.50 %     -       4.00 %   August 1, 2027     2,500       2,408       2,408           Term Loan     14.75 % Prime     6.25 %     9.50 %     -       4.00 %   July 1, 2028     1,875       1,783       1,783   Primary Kids, Inc. (2)(12)   Consumer-related Technologies   Term Loan     15.75 % Prime     7.25 %     10.50 %     -       3.00 %   March 1, 2025     1,700       1,683       1,683           Term Loan     15.75 % Prime     7.25 %     10.50 %     -       3.00 %   March 1, 2025     1,700       1,683       1,683           Term Loan     15.75 % Prime     7.25 %     10.50 %     -       3.00 %   September 1, 2025     2,300       2,277       2,277   Unagi, Inc. (2)(12)(13)   Consumer-related Technologies   Term Loan     16.25 % (11) Prime     7.75 %     11.00 %     -       -     May 1, 2027     1,108       1,086       872           Term Loan     16.25 % (11) Prime     7.75 %     11.00 %     -       -     May 1, 2027     554       543       436           Term Loan     16.25 % (11) Prime     7.75 %     11.00 %     -       -     May 1, 2027     554       543       436   Liqid, Inc. (2)(12)   Networking   Term Loan     14.75 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     1,833       1,807       1,807           Term Loan     14.75 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     1,833       1,807       1,807           Term Loan     14.75 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     917       903       903           Term Loan     14.75 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     917       903       903           Term Loan     14.75 % Prime     6.25 %     9.50 %     -       4.00 %   September 1, 2024     917       887       887   BriteCore Holdings, Inc. (2)(12)   Software   Term Loan     14.00 % Prime     5.50 %     14.00 %     -       3.00 %   October 1, 2028     5,000       4,857       4,857           Term Loan     14.00 % Prime     5.50 %     14.00 %     -       3.00 %   October 1, 2028     2,500       2,464       2,464           Term Loan     14.00 % Prime     5.50 %     14.00 %     -       3.00 %   October 1, 2028     2,500       2,464       2,464           Term Loan     14.00 % Prime     5.50 %     14.00 %     -       3.00 %   October 1, 2028     2,500       2,464       2,464     See Notes to Consolidated Financial Statements   9 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) September 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     15.00 % (11) Prime     6.50 %     9.75 %     -       3.50 %   April 1, 2026     6,550       6,432       6,377           Term Loan     15.00 % (11) Prime     6.50 %     9.75 %     -       3.50 %   April 1, 2026     6,046       5,937       5,886           Term Loan     15.00 % (11) Prime     6.50 %     9.75 %     -       3.50 %   August 1, 2026     2,519       2,472       2,451   Engage3, LLC (2)(12)   Software   Term Loan     14.75 % Prime     6.25 %     9.75 %     -       4.50 %   July 1, 2027     3,750       3,726       3,726           Term Loan     14.75 % Prime     6.25 %     9.75 %     -       4.50 %   July 1, 2027     3,750       3,726       3,726   Kodiak Robotics, Inc. (2)(12)   Software   Term Loan     14.00 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     10,000       9,877       9,877           Term Loan     14.00 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     10,000       9,877       9,877           Term Loan     14.00 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     5,000       4,939       4,939           Term Loan     14.00 % Prime     5.50 %     10.25 %     -       4.00 %   April 1, 2026     5,000       4,939       4,939   Lemongrass Holdings, Inc. (2)(12)   Software   Term Loan     15.00 % Prime     6.50 %     9.75 %     -       2.50 %   March 1, 2026     5,000       4,965       4,965           Term Loan     15.00 % Prime     6.50 %     9.75 %     -       2.50 %   March 1, 2026     2,500       2,483       2,483   Lytics, Inc. (2)(12)   Software   Term Loan     14.50 % Prime     6.00 %     14.25 %     -       4.00 %   November 1, 2026     2,500       2,418       2,350           Term Loan     14.50 % Prime     6.00 %     14.25 %     -       4.00 %   December 1, 2026     1,250       1,236       1,201           Term Loan     14.50 % Prime     6.00 %     14.25 %     -       4.00 %   April 1, 2027     1,000       993       966   Mirantis, Inc. (2)(12)   Software   Term Loan     12.00 % Prime     3.50 %     11.75 %     -       4.00 %   October 1, 2028     5,000       4,774       4,774           Term Loan     12.00 % Prime     3.50 %     11.75 %     -       4.00 %   October 1, 2028     5,000       4,910       4,910           Term Loan     12.00 % Prime     3.50 %     11.75 %     -       4.00 %   October 1, 2028     5,000       4,910       4,910           Term Loan     12.00 % Prime     3.50 %     11.75 %     -       4.00 %   October 1, 2028     5,000       4,910       4,910   Noodle Partners, Inc. (2)(12)   Software   Term Loan     13.50 % Prime     5.00 %     12.00 %     -       3.00 %   March 1, 2027     10,000       9,814       9,814           Term Loan     13.50 % Prime     5.00 %     12.00 %     -       3.00 %   March 1, 2027     5,000       4,938       4,938           Term Loan     13.50 % Prime     5.00 %     12.00 %     -       3.00 %   March 1, 2027     5,000       4,939       4,939   Reputation Institute, Inc. (2)(12)   Software   Term Loan     15.75 % Prime     7.25 %     10.50 %     -       3.00 %   August 1, 2025     3,833       3,785       3,785   Slingshot Aerospace, Inc. (2)(12)   Software   Term Loan     14.25 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,952       4,952           Term Loan     14.25 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,952       4,952           Term Loan     14.25 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,952       4,952           Term Loan     14.25 % Prime     5.75 %     9.75 %     -       5.00 %   August 1, 2026     5,000       4,952       4,952   Supply Network Visibility Holdings LLC (2)(12)   Software   Term Loan     12.75 % Prime     4.25 %     12.00 %     -       2.50 %   June 1, 2028     2,500       2,457       2,457           Term Loan     12.75 % Prime     4.25 %     12.00 %     -       2.50 %   June 1, 2028     3,500       3,489       3,489           Term Loan     12.75 % Prime     4.25 %     12.00 %     -       2.50 %   June 1, 2028     2,500       2,492       2,492           Term Loan     12.75 % Prime     4.25 %     12.00 %     -       2.50 %   June 1, 2028     1,500       1,495       1,495   Viken Detection Corporation (2)(12)   Software   Term Loan     12.50 % Prime     4.00 %     11.75 %     -       3.50 %   June 1, 2027     5,000       4,768       4,768           Term Loan     12.50 % Prime     4.00 %     11.75 %     -       3.50 %   June 1, 2027     2,500       2,464       2,464           Term Loan     12.50 % Prime     4.00 %     11.75 %     -       3.50 %   June 1, 2027     2,500       2,464       2,464   Total Non-Affiliate Debt Investments — Technology                                                                 282,962       278,989   Non-Affiliate Debt Investments — Healthcare information and services — 17.4% (8)                                                                               Hound Labs inc. (2) (12)   Diagnostics   Term Loan     14.50 % Prime     6.00 %     9.25 %     -       3.50 %   June 1, 2026     2,500       2,481       2,481           Term Loan     14.50 % Prime     6.00 %     9.25 %     -       3.50 %   June 1, 2026     2,500       2,481       2,481           Term Loan     14.50 % Prime     6.00 %     9.25 %     -       3.50 %   June 1, 2026     5,000       4,962       4,962   BrightInsight, Inc. (2)(12)   Software   Term Loan     14.00 % Prime     5.50 %     9.50 %     -       3.00 %   August 1, 2027     7,000       6,677       6,677           Term Loan     14.00 % Prime     5.50 %     9.50 %     -       3.00 %   August 1, 2027     3,500       3,459       3,459           Term Loan     14.00 % Prime     5.50 %     9.50 %     -       3.00 %   August 1, 2027     3,500       3,459       3,459           Term Loan     14.00 % Prime     5.50 %     9.50 %     -       3.00 %   April 1, 2028     2,750       2,708       2,708   Elligo Health Research, Inc. (2)(12)   Software   Term Loan     12.00 % Prime     3.50 %     11.75 %     -       4.00 %   October 1, 2027     10,000       9,647       9,647           Term Loan     12.00 % Prime     3.50 %     11.75 %     -       4.00 %   October 1, 2027     5,000       4,921       4,921           Term Loan     12.00 % Prime     3.50 %     11.75 %     -       4.00 %   October 1, 2027     5,000       4,921       4,921           Term Loan     12.00 % Prime     3.50 %     11.75 %     -       4.00 %   October 1, 2027     5,000       4,921       4,921   SafelyYou, Inc. (2)(12)   Software   Term Loan     11.75 % Prime     3.25 %     11.00 %     -       5.00 %   June 1, 2027     5,000       4,642       4,642           Term Loan     11.75 % Prime     3.25 %     11.00 %     -       5.00 %   June 1, 2027     5,000       4,912       4,912   Total Non-Affiliate Debt Investments — Healthcare information and services                                                                   60,191       60,191   Total Non- Affiliate Debt Investments                                                                   676,864       663,399     See Notes to Consolidated Financial Statements   10 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) September 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 — 7.6% (8)                                 Non-Affiliate Warrants — Life Science — 2.0% (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       214       348   Emalex Biosciences, Inc. (2)(12)   Biotechnology   Preferred Stock Warrant     110,402       176       269   Imunon, Inc. (2)(5)(12)   Biotechnology   Common Stock Warrant     19,671       65       —   KSQ Therapeutics, Inc. (2) (12)   Biotechnology   Preferred Stock Warrant     48,076       50       60   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       165   PDS Biotechnology Corporation (2)(5)(12)   Biotechnology   Common Stock Warrant     299,848       162       667   Provivi, Inc. (2)(12)   Biotechnology   Preferred Stock Warrant     345,327       487       205   Stealth Biotherapeutics Inc. (2)(12)   Biotechnology   Common Stock Warrant     318,181       264       127   Tallac Therapeutics, Inc. (2)(12)   Biotechnology   Preferred Stock Warrant     1,600,002       194       194   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       17   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       1,210   Aerobiotix, LLC (2)(12)   Medical Device   Preferred Stock Warrant     8,800       48       10   Canary Medical Inc. (2)(12)   Medical Device   Preferred Stock Warrant     12,153       86       1,307   Candesant Biomedical, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     93,336       152       152   Ceribell, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     145,483       69       213   Cognoa, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     4,106,174       148       184   Conventus Orthopaedics, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     7,972,222       218       236   CSA Medical, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     1,730,746       172       176   CVRx, Inc. (2)(5)(12)   Medical Device   Common Stock Warrant     47,410       76       272   Infobionic, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     317,647       124       59   Magnolia Medical Technologies, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     809,931       194       395   Meditrina, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     233,993       83       104   Robin Healthcare, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     86,066       16       —   Scientia Vascular, Inc (2)(12)   Medical Device   Preferred Stock Warrant     27,036       59       230   Sonex Health, Inc. (2)(12)   Medical Device   Preferred Stock Warrant     2,637,043       275       304   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       40   Total Non-Affiliate Warrants — Life Science                     4,183       6,945     See Notes to Consolidated Financial Statements   11 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) September 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)                                 New Aerofarms, Inc. assignee of Aerofarms, Inc. (2)(12)(15)   Other Sustainability   Preferred Stock Warrant     400,000       81       81   LiquiGlide, Inc. (2)(12)   Other Sustainability   Common Stock Warrant     61,359       41       59   Nexii Building Solutions, Inc. (2)(12)(14)   Other Sustainability   Common Stock Warrant     217,726       490       —   Soli Organic, Inc. (2)(12)   Other Sustainability   Preferred Stock Warrant     681       214       371   Temperpack Technologies, Inc. (2)(12)   Other Sustainability   Preferred Stock Warrant     46,311       175       322   Total Non-Affiliate Warrants — Sustainability           1,001       833   Non-Affiliate Warrants — Technology — 4.7% (8)                                 Axiom Space, Inc. (2)(12)   Communications   Common Stock Warrant     1,991       46       69   Intelepeer Holdings, Inc. (2)(12)   Communications   Preferred Stock Warrant     2,936,535       138       3,283   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       —   Caastle, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     268,591       68       1,060   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       31       128   CZV, Inc. (2)(12)   Consumer-related Technologies   Common Stock Warrant     65,569       81       81   Divergent Technologies, Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     37,294       92       279   Havenly, Inc. (2)(12)   Consumer-related Technologies   Common Stock Warrant     1,312,500       2,945       2,676   MyForest Foods Co. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     250       29       63   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       596   Quip NYC Inc. (2)(12)   Consumer-related Technologies   Preferred Stock Warrant     6,191       325       538   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       —   CPG Beyond, Inc. (2)(12)   Data Storage   Preferred Stock Warrant     500,000       242       917   Silk, Inc. (2)(12)   Data Storage   Preferred Stock Warrant     394,110       175       153   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       336   Skillshare, Inc. (2)(12)   Internet and Media   Preferred Stock Warrant     139,074       162       1,216   Liqid, Inc. (2)(12)   Networking   Preferred Stock Warrant     344,102       364       251   Halio, Inc. (2)(12)   Power Management   Preferred Stock Warrant     5,002,574       1,585       2,901   Avalanche Technology, Inc. (2)(12)   Semiconductors   Preferred and Common Stock Warrant     6,081       56       —   BriteCore Holdings, Inc. (2)(12)   Software   Preferred Stock Warrant     161,215       98       147   Dropoff, Inc. (2)(12)   Software   Common Stock Warrant     516,732       455       54   Mirantis, Inc. (2)(12)   Software   Common Stock Warrant     948,275       223       223   E La Carte, Inc. (2)(5)(12)   Software   Common Stock Warrant     147,361       60       —   Everstream Holdings, LLC (2)(12)   Software   Preferred Stock Warrant     350,000       70       71   Kodiak Robotics, Inc. (2)(12)   Software   Preferred Stock Warrant     639,918       273       124   Lemongrass Holdings, Inc. (2)(12)   Software   Preferred Stock Warrant     101,308       32       43   Lotame Solutions, Inc. (2)(12)   Software   Preferred Stock Warrant     71,305       18       44   Lytics, Inc. (2)(12)   Software   Preferred Stock Warrant     85,543       43       1   Noodle Partners, Inc. (2)(12)   Software   Preferred Stock Warrant     84,037       115       79   Reputation Institute, Inc. (2)(12)   Software   Preferred Stock Warrant     3,731       56       48   Revinate Holdings, Inc. (2)(12)   Software   Preferred Stock Warrant     682,034       44       103   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       146   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       122   xAd, Inc. (2)(12)   Software   Preferred Stock Warrant     4,343,348       177       12   Total Non-Affiliate Warrants — Technology             9,744       16,313     See Notes to Consolidated Financial Statements   12 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) September 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       15   Kate Farms, Inc. (2)(12)   Other Healthcare   Preferred Stock Warrant     82,965       102       1,379   BrightInsight, Inc. (2)(12)   Software   Preferred Stock Warrant     85,066       167       —   Elligo Health Research, Inc. (2)(12)   Software   Preferred Stock Warrant     652,250       189       191   Medsphere Systems Corporation (2)(12)   Software   Preferred Stock Warrant     7,097,792       61       346   SafelyYou, Inc. (2)(12)   Software   Preferred Stock Warrant     150,353       163       167   Total Non-Affiliate Warrants — Healthcare information and services             729       2,098   Total Non-Affiliate Warrants             15,657       26,189   Non-Affiliate Other Investments — Life Science — 0.3% (8)                                 Lumithera, Inc. (12)   Medical Device   Royalty Agreement             1,200       1,100   ZetrOZ, Inc. (12)   Medical Device   Royalty Agreement             —       —   Total Non-Affiliate Other Investments             1,200       1,100   Non-Affiliate Equity — 1.4% (8)                                 Cadrenal Therapeutics, Inc. (5)   Biotechnology   Common Stock     600,000       —       408   Castle Creek Biosciences, Inc. (12)   Biotechnology   Common Stock     1,162       250       250   Emalex Biosciences, Inc. (12)   Biotechnology   Common Stock     32,831       355       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)   Other Sustainability   Common Stock     5,205       111       36   Branded Online, Inc. (2)(5)   Software   Common Stock     5,398       1,079       3   Decisyon, Inc. (12)   Software   Preferred Stock     280,000       2,800       1,281   Lotame, Inc. (12)   Software   Preferred Stock     66,127       4       193   Axiom Space, Inc. (12)   Technology   Preferred Stock     1,810       261       306   Total Non-Affiliate Equity             7,211       4,735   Total Non-Affiliate Portfolio Investment Assets           $ 700,932     $ 695,423     See Notes to Consolidated Financial Statements   13 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) September 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-Controlled Affiliate Investments — 5.9% (8)                                                                             Non-Controlled Affiliate Debt Investments — Life Sciences — 3.5% (8)                                                                             Evelo Biosciences, Inc. (2)(5)(12)(13)   Biotechnology   Term Loan     12.75 % Prime     4.25 %     11.00 %     -       4.25 % January 1, 2028     7,778       7,672       2,666           Term Loan     12.75 % Prime     4.25 %     11.00 %     -       4.25 % January 1, 2028     11,667       11,509       3,997           Term Loan     12.75 % Prime     4.25 %     11.00 %     -       4.25 % January 1, 2028     4,681       4,618       1,604           Term Loan     12.75 % Prime     4.25 %     11.00 %     -       4.25 % January 1, 2028     4,667       4,603       1,597           Term Loan     12.75 % Prime     4.25 %     11.00 %     -       4.25 % January 1, 2028     3,111       3,069       1,068           Term Loan     12.75 % Prime     4.25 %     11.00 %     -       4.25 % January 1, 2028     3,111       3,069       1,068   Total Non-Controlled Affiliate Debt Investments                                                         34,540       12,000                         Cost of     Fair   Portfolio Company (1)(3)   Sector   Type of Investment (7)   Number of Shares     Investments (6)(9)     Value (9)   Non-controlled Affiliate Equity — Life Sciences — 2.4% (8)                                 Aulea Medical, Inc. (12)(16)   Medical Device   Common Stock     660,537       —       —   Evelo Biosciences, Inc. (5)   Biotechnology   Common Stock     2,164,502       5,000       8,485   Total Non-Controlled Affiliate Equity                   5,000       8,485   Non-controlled Affiliate Warrants — Life Sciences — 0.0% (8)                                 Evelo Biosciences, Inc. (2)(5)(12)   Biotechnology   Common Stock     23,196       126       —   Total Non-Controlled Affiliate Warrants                     126       —   Total Non-Controlled Affiliate Portfolio Investment Assets                   $ 39,666     $ 20,485     Portfolio Company (1)(3)   Sector   Type of Investment (7)   Cash Rate (4)   Index   Margin     Floor     Ceiling     ETP (10)   Maturity Date   Principal Amount     Cost of Investments (6)(9)     Fair Value (9)   Controlled Affiliate Investments — 3.8% (8)                                                                             Controlled Affiliate Debt Investments — Technology — 1.3% (8)                                                                             Better Place Forests Co. (12)   Consumer-related Technologies   Term Loan     12.25 % (11) Prime     3.75 %     12.00 %     -       2.78 % August 1, 2029     3,604       3,556       3,006           Term Loan     12.25 % (11) Prime     3.75 %     12.00 %     -       2.78 % August 1, 2029     1,719       1,695       1,433   Total Controlled Affiliate Debt Investments                                                         5,251       4,439                         Cost of     Fair   Portfolio Company (1)(3)   Sector   Type of Investment (7)   Number of Shares     Investments (6)(9)     Value (9)   Controlled Affiliate Equity — Technology — 0.7% (8)                                 Better Place Forests Co. (12)   Technology   Preferred and Common Stock     2,551,596       2,811       2,552   Total Controlled Affiliate Equity                     2,811       2,552   Controlled Affiliate Other Investments — Life Sciences — 1.8% (8)                                 HIMV LLC (12)(17)   Biotechnology   Other Investment             6,154       6,154   Total Controlled Affiliate Equity                     6,154       6,154   Total Controlled Affiliate Portfolio Investment Assets                   $ 14,216     $ 13,145   Total Portfolio Investment Assets — 210.4% (8)                   $ 754,814     $ 729,053     ( 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  September 30, 2023 is provided. ( 5 ) Portfolio company is a public company.   See Notes to Consolidated Financial Statements   14 Table of Contents Horizon Technology Finance Corporation and Subsidiaries   Consolidated Schedule of Investments (Unaudited) September 30, 2023 (Dollars in thousands)   ( 6 ) For debt investments, represents principal balance less unearned income. ( 7 ) Warrants, Equity and Other Investments are non-income producing. ( 8 ) Value as a percent of net assets. ( 9 ) As of September 30, 2023 , 4.5 % and  3.9 % 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 September 30, 2023 . ( 14 ) Entity is organized under the laws of Canada and has a principal place of business in Canada. ( 15 ) On or about September 13, 2023, in connection with New Aerofarms, Inc. purchase of substantially all of the assets of Aerofarms, Inc.in a bankruptcy process, New Aerofarms, Inc. assumed all of the debt investments of Horizon in Aerofarms, Inc.   ( 16 ) On July 31, 2023, pursuant to a certain Secured Party Bill of Sale and Transfer Agreement, the Company sold substantially all of the assets of Corinth MedTech, Inc., a borrower of the Company, to Aulea Medical Inc. (“Aulea”) in consideration of 660,537 shares of the common stock of  Aulea.  ( 17 ) By an Order of the Supreme Court of Nova Scotia made May 1, 2023, as amended and restated by an Order of the CCAA Court made May 5, IMV, Inc. (“IMV”) commenced proceedings  (the “CCAA Proceedings”) under the Companies' Creditors Arrangement Act , R.S.C. 1985, c. C- 36, as amended to seek creditor protection for IMV and on June 2, 2023, IMV obtained recognition of the CCAA Proceedings under Chapter 15 of the United States Bankruptcy Code in proceedings before the United States Bankruptcy Court for the District of Delaware. In September 2023, the Company, with its co-lender to IMV, credit-bid and acquired substantially all of the assets of IMV through HIMV LLC, an entity formed to acquire the assets of IMV. HIMV LLC is 70% owned by HRZN and 30% owned by the co-lender.   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)   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   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)   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   17 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 Visibility 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   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 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   19 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 Visibility 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   20 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     21 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, together with its co-lender to IMV, established HIMV LLC, a Delaware limited liability company to purchase and sell the assets of IMV, a borrower of the Company. HIMV LLC is 70 % owned by the Company and 30 % owned by the co-lender.   The Company’s investment strategy is to maximize the investment portfolio’s return by generating current income from the debt investments the Company makes and capital appreciation from the warrants the Company receives when making such debt investments. The Company has entered into an investment management agreement (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.     22 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.   23 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 September 30, 2023 , there were  three investments on nonaccrual status with a cost of $ 43.6  million and a fair value of $ 17.2  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 nine months ended September 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 $ 3.9  million and $ 6.1  million in PIK interest income during the three and nine months ended September 30, 2023 , respectively. The Company recorded  no PIK interest income during the three and nine  months ended September 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  September 30, 2023 and 2022 was  5.1 % and 7.0 %, respectively. The proportion of the Company’s total investment income that resulted from the portion of ETPs not received in cash for the nine  months ended  September 30, 2023 and 2022 was  4.9 % and 7.5 %, 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.   24 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  September 30, 2023 and  December 31, 2022 was $ 6.4 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 September 30, 2023 and  December 31, 2022 were $ 6.3 million and $ 4.8  million, respectively. The amortization expense for the three months ended  September 30, 2023 and 2022  was $ 0.5  million and $ 0.4  million, respectively. The amortization expense for the nine months ended  September 30, 2023 and 2022  was $ 1.4  million and $ 1.1  million, respectively.    Income taxes   As a BDC, the Company has elected to be treated as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify as a RIC and to avoid the imposition of corporate-level income tax on the portion of its taxable income distributed to stockholders, among other things, the Company is required to meet certain source of income and asset diversification requirements and to timely distribute dividends out of assets legally available for distribution to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax year. The Company, among other things, has made and intends to continue to make the requisite distributions to its stockholders, which generally relieves the Company from corporate-level U.S. federal income taxes. Accordingly, no provision for federal income tax has been recorded in the financial statements. Differences between taxable income and net increase in net assets resulting from operations either can be temporary, meaning they will reverse in the future, or permanent. In accordance with ASC Topic 946, Financial Services — Investment Companies , as amended, of the Financial Accounting Standards Board (“FASB”), permanent tax differences, such as non-deductible excise taxes paid, are reclassified from distributions in excess of net investment income and net realized loss on investments to paid-in-capital at the end of each fiscal year. These permanent book-to-tax differences are reclassified on the consolidated statements of changes in net assets to reflect their tax character but have no impact on total net assets.    Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year and incur a 4 % U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the  three months ended September 30, 2023 and 2022,  $ 0.2 million and $ 0.1 million, respectively, was accrued for U.S. federal excise tax. For the nine months ended September 30, 2023 and 2022,  $ 0.5  million and $ 0.3  million, respectively, was accrued for U.S. federal excise tax.   25 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 September 30, 2023 and  December 31, 2022 . The Company’s income tax returns for the 2022, 2021  and 2020  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.   On September 22, 2023, the Company terminated the 2021 Equity Distribution Agreement and entered into a new ATM sales agreement (the “2023 Equity Distribution Agreement”), with the Sales Agents. The remaining shares available under the 2021 Equity Distribution Agreement are no longer available for issuance. The 2023 Equity Distribution Agreement provides that the Company may offer and sell its shares from time to time through the Sales Agents up to $ 150.0 million worth of its common stock, in amounts and at times to be determined by the Company. Sales of the Company’s common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market,” as defined in Rule  415 under the Securities Act, including sales made directly on the Nasdaq or similar securities exchange or sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices.   During the three months ended September 30, 2023 , the Company sold  1,186,303  shares of common stock under the 2023 Equity Distribution Agreement and the 2021 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 13.9  million, including $ 0.4 million of offering expenses, from these sales.   During the three months ended September 30, 2022 , the Company sold  1,523,519  shares of common stock under the  2021  Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 19.0  million, including $ 0.4  million of offering expenses, from these sales.   During the nine months ended September 30, 2023 , the Company sold  2,240,326 shares of common stock under the  2023 Equity Distribution Agreement and the 2021 Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 26.1  million, including $ 0.7  million of offering expenses, from these sales.    During the nine  months ended September 30,  2022, the Company sold  2,641,920  shares of common stock under the  2021  Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $ 33.2  million, including $ 0.6  million of offering expenses, from these sales.   The Company generally uses net proceeds from these sales to make investments, to pay down liabilities and for general corporate purposes. As of September 30, 2023 , shares representing approximately $ 146.8  million of its common stock remain available for issuance and sale under the 2023  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.   26 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 nine months ended September 30, 2023 and 2022 , the Company did not make any repurchases of its common stock. From the inception of the stock repurchase program through September 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.   27 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 on June 30, 2023. 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 September 30, 2023 and  December 31, 2022 was $ 1.1 million. The base management fee expense was $ 3.2  million and $ 2.8  million for the three months ended September 30, 2023 and 2022 , respectively. The base management fee expense was $ 9.6 million and $ 7.6 million for the nine months ended September 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.   28 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.   There was no performance based incentive fee expense for the three months ended September 30, 2023. The performance based incentive fee expense was $ 2.8  million for the three months ended September 30, 2022. The performance based incentive fee expense was $ 3.1  million and $ 6.4  million for the nine months ended September 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 nine months ended September 30, 2023, which resulted in $ 3.5  million and $ 6.8  million of reduced expense and additional net investment income. This deferral represents a contingent future liability and is not accrued until the amount can be reasonably estimated and payment is probable. The remaining deferred amount may be paid up to three years after the date of deferment. The total contingent future liability as of September 30, 2023  was $ 7.8 million, of which $ 1.0 million expires on December 31, 2025, $ 0.2 million expires on March 31, 2026, $ 3.1 million expires on June 30, 2026, and $ 3.5 million expires on September 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 nine months ended September 30, 2022. There was no performance based incentive fee payable as of September 30, 2023. The performance based incentive fee payable as of  December 31, 2022 was $ 1.4  million. The entire incentive fee payable as of  December 31, 2022 represented part one of the incentive fee.   29 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 September 30, 2023 and 2022 . The administrative fee expense was $ 1.2  million and $ 1.1  million for the nine months ended September 30, 2023 and 2022 , respectively.     Note   4. Investments   The following table shows the Company’s investments as of September 30, 2023 and  December 31, 2022 :       September 30, 2023     December 31, 2022       Cost     Fair Value     Cost     Fair Value       (In thousands)   Investments                                 Debt   $ 716,655     $ 679,838     $ 701,074     $ 686,458   Warrants     15,783       26,189       14,790       29,712   Other     7,354       7,254       1,200       1,300   Equity     15,022       15,772       4,184       2,556   Total investments   $ 754,814     $ 729,053     $ 721,248     $ 720,026     30 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 September 30, 2023 and  December 31, 2022 :       September 30, 2023     December 31, 2022       Cost     Fair Value     Cost     Fair Value       (In thousands)   Life Science                                 Biotechnology   $ 158,953     $ 139,935     $ 193,372     $ 195,006   Medical Device     140,172       139,039       132,803       135,960   Technology                                 Communications     21,057       24,317       22,892       26,176   Consumer-Related     110,245       106,559       121,961       114,050   Data Storage     417       1,070       476       1,316   Internet and Media     329       1,615       329       1,159   Networking     6,671       6,558       11,831       11,710   Power Management     1,585       2,901       1,585       2,610   Semiconductors     56       —       56       —   Software     164,903       161,258       120,157       118,716   Sustainability                                 Energy Efficiency     111       36       8       27   Other Sustainability     89,395       83,476       84,633       85,524   Healthcare Information and Services                                 Diagnostics     9,971       9,939       9,851       9,858   Other     102       1,379       7,559       3,870   Software     50,847       50,971       13,735       14,044   Total investments   $ 754,814     $ 729,053     $ 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 September 30, 2023  were as follows:                         Three months ended September 30, 2023                                                                                                         Fair value at                     Transfers             Net             Fair value at           Portfolio   June 30,             Principal     in/(out) at     Discount     unrealized     Net realized     September 30,     Interest   Company   2023     Purchases     Payments     fair value     accretion     gain/(loss)     gain/(loss)     2023     income       (In thousands)   Aulea Medical, Inc.   $ —     $ —     $ —     $ —     $ —     $ —     $ —     $ —     $ —   Cadrenal Therapeutics, Inc. (1)     906       —       —       ( 906 )     —       —       —       —       —   Evelo Biosciences, Inc.     —       —       —       7,665       8       ( 5,007 )     —       2,666       277         —       —       —       11,496       11       ( 7,510 )     —       3,997       415         —       —       —       4,612       5       ( 3,013 )     —       1,604       166         —       —       —       4,598       3       ( 3,004 )     —       1,597       163         —       —       —       3,067       4       ( 2,003 )     —       1,068       114         —       —       —       3,067       4       ( 2,003 )     —       1,068       111         —       —       —       5,000       —       3,485       —       8,485       —   Total non-controlled affiliates   $ 906     $ —     $ —     $ 38,599     $ 35     $ ( 19,055 )   $ —     $ 20,485     $ 1,246   ( 1 ) As of September 30, 2023, the Company no longer owns 5 % or more of the portfolio company.    Transactions related to investments in non-controlled affiliated companies for the nine months ended  September 30, 2023 were as follows:                         Nine months ended September 30, 2023                               Fair value at                     Transfers             Net             Fair value at           Portfolio   December 31,             Principal     in/(out) at     Discount     unrealized     Net realized     September 30,     Interest   Company   2022     Purchases     Payments     fair value     accretion     gain/(loss)     gain/(loss)     2023     income       (In thousands)   Aulea Medical, Inc.   $ —     $ —     $ —     $ —     $ —     $ —     $ —     $ —     $ —   Cadrenal Therapeutics, Inc. (1)     —       —       —       ( 906 )     —       906       —       —       —   Evelo Biosciences, Inc.     —       —       —       7,665       8       ( 5,007 )     —       2,666       277         —       —       —       11,496       11       ( 7,510 )     —       3,997       415         —       —       —       4,612       5       ( 3,013 )     —       1,604       166         —       —       —       4,598       3       ( 3,004 )     —       1,597       163         —       —       —       3,067       4       ( 2,003 )     —       1,068       114         —       —       —       3,067       4       ( 2,003 )     —       1,068       111         —       —       —       5,000       —       3,485       —       8,485       —   Total non-controlled affiliates   $ —     $ —     $ —     $ 38,599     $ 35     $ ( 18,149 )   $ —     $ 20,485     $ 1,246   ( 1 ) As of September 30, 2023, the Company no longer owns 5% or more of the portfolio company.    31 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements   Transactions related to investments in non-controlled affiliated companies for the three months ended September 30, 2022  were as follows:                        Three months ended September 30, 2022                                                                                                         Fair value at                     Transfers             Net             Fair value at           Portfolio   June 30,                     in/(out) at     Discount     unrealized     Net realized     September 30,     Interest   Company   2022     Purchases     Sales     fair value     Accretion     gain/(loss)     gain/(loss)     2022     income       (In thousands)   MVI (ABC) LLC fka StereoVision, Inc.     —       —       ( 30 )     —       —       —       30       —       —   Total non-controlled affiliates   $ —     $ —     $ ( 30 )   $ —     $ —     $ —     $ 30     $ —     $ —     Transactions related to investments in non-controlled affiliated companies for the nine  months ended September 30, 2022  were as follows:                        Nine months ended September 30, 2022                                                                                                         Fair value at                     Transfers             Net             Fair value at           Portfolio   December 31,                     in/(out) at     Discount     unrealized     Net realized     September 30,     Interest   Company   2021     Purchases     Sales     fair value     Accretion     gain/(loss)     gain/(loss)     2022     income       (In thousands)   MVI (ABC) LLC fka StereoVision, Inc.     —       —       ( 30 )     —       —       —       30       —       —   Total non-controlled affiliates   $ —     $ —     $ ( 30 )   $ —     $ —     $ —     $ 30     $ —     $ —     A controlled affiliated company is generally a portfolio company in which the Company owns more than 25% of such portfolio company’s voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement).   Transactions related to investments in controlled affiliated companies for the three months ended  September 30, 2023 were as follows:                       Three months ended September 30, 2023                                                                                                                 Fair value at                             Transfers             Net             Fair value at           Portfolio   June 30,             Principal             in/(out) at     Discount     unrealized     Net realized     September 30,     Interest   Company   2023     Purchases     Payments     PIK     fair value     accretion     gain/(loss)     gain/(loss)     2023     income       (In thousands)   Better Place Forests Co.   $ —     $ 59     $ —     $ 105     $ 1,759     $ 2     $ 1,080     $ —     $ 3,005     $ 111         —       —       —       53       844       1       536       —       1,434       55         —       —       —       —       2,061       —       —       —       2,061       —         —       750       —       —       —       —       ( 259 )     —       491       —   HIMV LLC     —       —       —       —       6,154       —       —       —       6,154       —   Total controlled affiliates   $ —     $ 809     $ —     $ 158     $ 10,818     $ 3     $ 1,357     $ —     $ 13,145     $ 166     Transactions related to investments in controlled affiliated companies for the nine  months ended  September 30, 2023 were as follows:                       Nine months ended September 30, 2023                                                                                                                 Fair value at                             Transfers             Net             Fair value at           Portfolio   December 31,             Principal             in/(out) at     Discount     unrealized     Net realized     September 30,     Interest   Company   2022     Purchases     Payments     PIK     fair value     accretion     gain/(loss)     gain/(loss)     2023     income       (In thousands)   Better Place Forests Co.   $ —     $ 59     $ —     $ 105     $ 1,759     $ 2     $ 1,080     $ —     $ 3,005     $ 111         —       —       —       53       844       1       536       —       1,434       55         —       —       —       —       2,061       —       —       —       2,061       —         —       750       —       —       —       —       ( 259 )     —       491       —   HIMV LLC     —       —       —       —       6,154       —       —       —       6,154       —   Total controlled affiliates   $ —     $ 809     $ —     $ 158     $ 10,818     $ 3     $ 1,357     $ —     $ 13,145     $ 166     32 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements   Transactions related to investments in controlled affiliated companies for the three months ended September 30, 2022  were as follows:                       Three months ended September 30, 2022                                                                                                         Fair value at                     Transfers             Net             Fair value at           Portfolio   June 30,                     in/(out) at     Discount     unrealized     Net realized     September 30,     Interest   Company   2022     Purchases     Sales     fair value     Accretion     gain/(loss)     gain/(loss)     2022     income       (In thousands)   HESP LLC     —       —       ( 50 )     —       —       —       50       —       —   Total controlled affiliates   $ —     $ —     $ ( 50 )   $ —     $ —     $ —     $ 50     $ —     $ —     Transactions related to investments in controlled affiliated companies for the nine  months ended September 30, 2022 were as follows:                       Nine months ended September 30, 2022                               Fair value at                     Transfers             Net             Fair value at           Portfolio   December 31,                   in/(out) at     Discount     unrealized     Net realized     September 30,     Interest   Company   2021     Purchases     Sales     fair value     accretion     gain/(loss)     gain/(loss)     2022     income       (In thousands)   HESP LLC     —       —       ( 300 )     —       —       1,450       ( 1,150 )     —       —   Total controlled affiliates   $ —     $ —     $ ( 300 )   $ —     $ —     $ 1,450     $ ( 1,150 )   $ —     $ —       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.   33 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.   34 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 September 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:       September 30, 2023       Level 1     Level 2     Level 3     Total       (In thousands)   Debt investments   $ —     $ —     $ 679,838     $ 679,838   Warrant investments     —       956       25,233       26,189   Other investments     —       —       7,254       7,254   Equity investments     8,962       —       6,810       15,772   Total investments   $ 8,962     $ 956     $ 719,135     $ 729,053         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 September 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.   35 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements   The following table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements as of September 30, 2023 :   September 30, 2023       Fair   Valuation Techniques/   Unobservable       Weighted   Investment Type   Value   Methodologies   Input   Range   Average(1)             (Dollars in thousands, except per share data)             Debt investments   $ 607,193   Discounted Expected Future Cash Flows   Hypothetical Market Yield   11 % – 20 %     14 %                                   72,645   Multiple Probability Weighted Cash Flow Model   Probability Weighting   20 % - 100 %     50 %                             Warrant investments     25,171   Black-Scholes Valuation Model   Price Per Share   0.00 0 – 1,899 99   $ 58.11                 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     7,254   Multiple Probability Weighted Cash Flow Model   Discount Rate   25 %     25 %               Probability Weighting   30 % – 100 %     83 %                             Equity investments     6,810   Last Equity Financing   Price Per Share   0.03 3 – 215.03 03   $ 18.30                               Total Level 3 investments   $ 719,135                       ( 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 – 1.89 89   $ 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 September 30, 2023 , the closing price of the 2026 Notes on the New York Stock Exchange was $ 23.60 per note and had an aggregate fair value of $ 54.3 million. Therefore, the Company has categorized this borrowing as Level 1 within the fair value hierarchy described above. The fair value of the fixed-rate 2027 Notes (as defined in Note 7 ) is based on the closing public share price on the date of measurement. On September 30, 2023 , the closing price of the 2027 Notes on the New York Stock Exchange was $ 24.18  per note and had an aggregate fair value of $ 55.6  million. Therefore, the Company has categorized this borrowing as Level 1 within the fair value hierarchy described above. Based on market quotations on September 30, 2023 , the 2019 Asset-Backed Notes were trading at par value, or $ 18.7  million, and are categorized as Level 3 within the fair value hierarchy described above. Based on market quotations on September 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.   36 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements   The following table shows a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the three months ended September 30, 2023 :       Three months ended September 30, 2023       Debt     Warrant     Equity     Other               Investments     Investments     Investments     Investments     Total       (In thousands)   Level 3 assets, beginning of period   $ 683,309     $ 24,376     $ 4,259     $ 1,300     $ 713,244   Purchase of investments     66,185       —       750       —       66,935   Warrants received and classified as Level 3     —       1,294       —       —       1,294   Principal payments received on investments     ( 25,726 )     —       —       —       ( 25,726 ) Payment-in-kind interest on investments     3,934       —       —       —       3,934   Proceeds from sale of investments     ( 2,528 )     ( 23 )     ( 6 )     —       ( 2,557 ) Net realized (loss) gain on investments     ( 11,440 )     ( 118 )     6       —       ( 11,552 ) Unrealized depreciation included in earnings     ( 18,877 )     ( 296 )     ( 1,349 )     ( 200 )     ( 20,722 ) Transfer out of Level 3     ( 5,000 )     —       —       —       ( 5,000 ) Transfer out of debt investments     ( 9,304 )     —       3,150       6,154       —   Other     ( 715 )     —       —       —       ( 715 ) Level 3 assets, end of period   $ 679,838     $ 25,233     $ 6,810     $ 7,254     $ 719,135     During the three months ended September 30, 2023 , there was  one  transfer out of Level 3. The one transfer out of Level 3 related to debt investments held in one portfolio company with an aggregate fair value of $ 5.0  million that were transferred to Level 1 upon the conversion into shares of common stock of a public company.   The following table shows a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the three months ended September 30, 2022 :       Three months ended September 30, 2022       Debt     Warrant     Equity     Other               Investments     Investments     Investments     Investments     Total       (In thousands)   Level 3 assets, beginning of period   $ 551,560     $ 25,167     $ 453     $ 200     $ 577,380   Purchase of investments     94,627       —       —       —       94,627   Warrants received and classified as Level 3     —       964       —       —       964   Principal payments received on investments     ( 26,929 )     —       —       ( 31 )     ( 26,960 ) Proceeds from sale of investments     ( 6,088 )     ( 38 )     —       —       ( 6,126 ) Net realized (loss) gain on investments     ( 8,492 )     266       —       31       ( 8,195 ) Unrealized appreciation (depreciation) included in earnings     8,095       ( 3,348 )     ( 420 )     ( 100 )     4,227   Transfer out of Level 3     —       ( 1,117 )     —       —       ( 1,117 ) Transfer out of debt investments     ( 3,200 )     —       2,000       1,200       —   Other     ( 541 )     —       —       —       ( 541 ) Level 3 assets, end of period   $ 609,032     $ 21,894     $ 2,033     $ 1,300     $ 634,259     During the three months ended September 30, 2022 , there were  two  transfers out of Level  3 .  One transfer out of Level  3  related to warrants held in  one  portfolio company with an aggregate fair value of $ 0.04  million that was transferred to Level  2  upon the portfolio company becoming a public company. One transfer out of Level  3  related to warrants held in  one  portfolio company with an aggregate fair value of $ 1.1  million that was transferred to Level  1  upon the portfolio company becoming a public company.   37 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements     The following table shows a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the nine months ended September 30, 2023 :       Nine months ended September 30, 2023       Debt     Warrant     Equity     Other               Investments     Investments     Investments     Investments     Total       (In thousands)   Level 3 assets, beginning of period   $ 686,458     $ 26,145     $ 2,416     $ 1,300     $ 716,319   Purchase of investments     153,728       —       760       —       154,488   Warrants and equity received and classified as Level 3     —       1,950       89       —       2,039   Principal payments received on investments     ( 90,222 )     —       —       —       ( 90,222 ) Payment-in-kind interest on investments     6,088       —       —       —       6,088   Proceeds from sale of investments     ( 9,564 )     ( 1,493 )     ( 6 )     —       ( 11,063 ) Net realized (loss) gain on investments     ( 29,105 )     1,028       ( 121 )     —       ( 28,198 ) Unrealized depreciation included in earnings     ( 21,325 )     ( 2,392 )     ( 2,467 )     ( 200 )     ( 26,384 ) Transfer out of Level 3     ( 5,000 )     —       ( 111 )     —       ( 5,111 ) Transfer out of debt investments     ( 12,399 )     ( 5 )     6,250       6,154       —   Other     1,179       —       —       —       1,179   Level 3 assets, end of period   $ 679,838     $ 25,233     $ 6,810     $ 7,254     $ 719,135     During the nine months ended September 30, 2023 , there were two  transfers out of Level 3. One transfer out of Level 3 related to equity held in one portfolio company with an aggregate fair value of $ 0.1  million that was transferred to Level 1 upon the portfolio company becoming a public company. One transfer related to debt investments held in one portfolio company with an aggregate fair value of $ 5.0 million that were transferred to Level 1 upon the conversion into shares of common stock of a public company.   The change in unrealized depreciation included in the consolidated statement of operations attributable to Level 3 investments still held at September 30, 2023 includes $ 33.6 million in unrealized depreciation on debt and other investments, $ 2.1 million in unrealized depreciation on warrant investments and $ 1.6 million in unrealized depreciation on equity investments.   The following table shows a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the nine months ended September 30, 2022 :       Nine months ended September 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     348,097       —       250       —       348,347   Warrants received and classified as Level 3     —       2,441       —       —       2,441   Principal payments received on investments     ( 114,120 )     —       —       ( 313 )     ( 114,433 ) Proceeds from sale of investments     ( 49,088 )     ( 464 )     —       —       ( 49,552 ) Net realized (loss) gain on investments     ( 8,492 )     535       —       ( 1,137 )     ( 9,094 ) Unrealized appreciation (depreciation) included in earnings     1,128       662       ( 420 )     1,350       2,720   Transfer out of Level 3     —       ( 1,117 )     —       —       ( 1,117 ) Transfer out of debt investments     ( 3,200 )     —       2,000       1,200       —   Other     ( 2,610 )     —       —       —       ( 2,610 ) Level 3 assets, end of period   $ 609,032     $ 21,894     $ 2,033     $ 1,300     $ 634,259     During the nine months ended September 30, 2022 , there were  two  transfers out of Level  3 .  One transfer out of Level  3  related to warrants held in  one  portfolio company with an aggregate fair value of $ 0.04  million that was transferred to Level  2  upon the portfolio company becoming a public company. One transfer out of Level  3  related to warrants held in  one  portfolio company with an aggregate fair value of $ 1.1  million that was transferred to Level  1  upon the portfolio company becoming a public company.   The change in unrealized appreciation included in the consolidated statement of operations attributable to Level 3 investments still held at September 30, 2022 includes $ 3.5  million in unrealized depreciation on debt and other investments, $ 1.2  million in unrealized appreciation on warrant investments and $ 0.4  million in unrealized depreciation on equity investments.   38 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 September 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 September 30, 2023 and  December 31, 2022 :       September 30, 2023     December 31, 2022       Total     Balance     Unused     Total     Balance     Unused       Commitment     Outstanding     Commitment     Commitment     Outstanding     Commitment       (In thousands)   Key Facility   $ 150,000     $ 25,000     $ 125,000     $ 125,000     $ 5,000     $ 120,000   NYL Facility     250,000       181,000       69,000       200,000       176,750       23,250   2019 Asset-Backed Notes     18,696       18,696       —       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     633,696       439,696       194,000       582,573       439,323       143,250   Unamortized debt issuance costs attributable to term borrowings     —       (4,196 )     —       —       (5,245 )     —   Total borrowings outstanding, net   $ 633,696     $ 435,500     $ 194,000     $ 582,573     $ 434,078     $ 143,250     As of September 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 September 30, 2023 , the asset coverage for borrowed amounts was 179 %.   39 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  8.50 % and 7.50 % on September 30, 2023 and  December 31, 2022 , respectively. The average interest rate on the Key Facility for the three months ended September 30, 2023 and 2022  was 8.68 % and 5.60 %, respectively. The average interest rate on the Key Facility for the nine months ended September 30, 2023 and 2022 was  8.34 % and 4.75 %, respectively. The Key Facility requires the payment of an unused line fee in an amount up to 0.50 % on an annualized basis of any unborrowed amount available under the facility. As of September 30, 2023 and  December 31, 2022 , the Company had borrowing capacity under the Key Facility of $ 125.0  million and $ 120.0  million, respectively. At September 30, 2023 and  December 31, 2022 , $ 38.3  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 $ 181.0  million and $ 176.8  million in advances made by the NYL Noteholders as of September 30, 2023 and  December 31, 2022 . The interest rate as of September 30, 2023 and  December 31, 2022 was 5.85 % and 5.57 %, respectively. As of September 30, 2023 and  December 31, 2022 , the Company had borrowing capacity under the NYL Facility of $ 69.0  million and $ 23.2 million, respectively. At September 30, 2023 and  December 31, 2022 , $ 5.1  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  September 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 September 30, 2023 and  December 31, 2022 , the 2019 Asset-Backed Notes had an outstanding principal balance of $ 18.7  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 September 30, 2023 and  December 31, 2022 , there were approximately $ 0.4  million and $ 0.6 million of restricted investments, respectively.   40 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  September 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  September 30, 2023 and  December 31, 2022 , there were approximately $ 1.2  million of restricted investments.   Unsecured Notes   2026 Notes   On March 30, 2021, the Company issued and sold an aggregate principal amount of $ 57.5 million of 4.875 % notes due in 2026 (the “2026 Notes”). The amount of 2026 Notes issued and sold included the full exercise by the underwriters of their option to purchase $ 7.5 million in aggregate principal of additional notes. The 2026 Notes have a stated maturity of March 30, 2026 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or after March 30, 2023 at a redemption price of $ 25 per security plus accrued and unpaid interest. The 2026 Notes bear interest at a rate of 4.875% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year. The 2026 Notes are the Company’s direct unsecured obligations and (i) rank equally in right of payment with the Company’s current and future unsecured indebtedness; (ii) are senior in right of payment to any of the Company’s future indebtedness that expressly provides it is subordinated to the 2026 Notes; (iii) are effectively subordinated to all of the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to the extent of the value of the assets securing such indebtedness, and (iv) are structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries. As of September 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 September 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”.   41 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 $ 181.8  million and $ 190.0 million as of September 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 September 30, 2023  and December 31, 2022 :       September 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       72       5,000       66   Candesant Biomedical Corporation     10,000       151       —       —   Castle Creek Biosciences     4,000       72       4,000       72   Divergent Technologies, Inc.     11,250       118       22,500       236   Elligo Healthcare Research, Inc.     15,000       194       —       —   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   Mirantis, Inc.     15,000       136       —       —   Native Microbials, Inc.     —       —       7,500       72   Noodle Partners, Inc.     5,000       61       —       —   Optoro, Inc.     6,250       —       15,000       38   PDS Biotechnology Corporation     —       —       10,000       158   Robin Healthcare, Inc.     —       —       10,000       100   SafelyYou, Inc.     20,000       270       —       —   Scientia Vascular, Inc.     5,000       55       10,000       110   Slingshot Aerospace, Inc.     —       —       5,000       64   Sonex Health, Inc.     15,000       176       —       —   Supply Network Visibility Holdings, LLC     10,000       35       —       —   Swift Health Systems Inc.     11,500       —       25,500       105   Tallac Therapeutics, Inc.     10,000       229       —       —   Temperpack Technologies, Inc.     6,500       14       9,000       19   Viken Detection Corporation     10,000       160       —       —   Total   $ 181,750     $ 2,036     $ 190,000     $ 1,761     The table above also provides the fair value of the Company’s unfunded commitment liability as of September 30, 2023  and December 31, 2022, which totaled $ 2.0  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.     42 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements     Note   9. Concentrations of credit risk   The Company’s debt investments consist primarily of loans to development-stage companies at various stages of development in the technology, life science, healthcare information and services and sustainability industries. Many of these companies may have relatively limited operating histories and also may experience variation in operating results. Many of these companies conduct business in regulated industries and could be affected by changes in government regulations. Most of the Company’s borrowers will need additional capital to satisfy their continuing working capital needs and other requirements, and in many instances, to service the interest and principal payments on the loans.   The Company’s largest debt investments may vary from period to period as new debt investments are recorded and existing debt investments are repaid. The Company’s five largest debt investments at cost represented 23 % of total debt investments outstanding as of September 30, 2023 and  December 31, 2022 . The Company’s five largest debt investments at fair value represented 22 % and 23 % of total debt investments outstanding as of September 30, 2023 and  December 31, 2022, respectively. No single debt investment represented more than 10% of the total debt investments at cost or fair value as of September 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 24 % and 18 % of total interest and fee income on investments for the three months ended September 30, 2023 and 2022 , respectively. Interest income from the five largest debt investments at fair value accounted for 22 % and 18 % of total interest and fee income on investments for the three months ended September 30, 2023 and 2022, respectively. Interest income from the five largest debt investments at cost accounted for  23 % and 18 % of total interest and fee income on investments for the nine months ended September 30, 2023 and 2022 , respectively. Interest income from the five largest debt investments at fair value accounted for  21 % and 18 % of total interest and fee income on investments for the nine months ended September 30, 2023 and 2022, respectively.   43 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements     Note   10. Distributions   The Company’s distributions are recorded on the declaration date. The following table summarizes the Company’s distribution activity for the nine months ended September 30, 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)   Nine Months Ended September 30, 2023                                         7/28/2023   11/17/23   12/15/23   $ 0.11     $ —       —     $ —   7/28/2023   10/18/23   11/15/23     0.11       —       —       —   7/28/2023   9/19/23   10/16/23     0.11       3,445       15,067       184   4/28/2023   8/17/23   9/15/23     0.11       3,458       8,665       106   4/28/2023   7/18/23   8/15/23     0.11       3,427       8,307       105   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               $ 0.99     $ 22,954       60,190     $ 742   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 October 27, 2023, the Board declared monthly distributions per share and a special distribution per share, payable as set forth in the following table:   Monthly distributions   Ex-Dividend Date   Record Date   Payment Date   Distributions Declared   February 15, 2024   February 16, 2024   March 15, 2024   $ 0.11   January 17, 2024   January 18, 2024   February 14, 2024   $ 0.11   December 18, 2023   December 19, 2023   January 16, 2024   $ 0.11     Special distribution   Ex-Dividend Date   Record Date   Payment Date   Distributions Declared   November 16, 2023   November 17, 2023   December 15, 2023   $ 0.05     After paying distributions of $ 0.33  per share and earning net investment income of $ 0.53  per share for the quarter, the Company’s undistributed spillover income as of September 30, 2023 was $ 1.23 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.   44 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:       Nine months ended September 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     1.54         1.06     Realized loss     ( 0.95 )       ( 0.40 )   Unrealized (depreciation) appreciation on investments     ( 0.81 )       0.05     Net increase in net assets resulting from operations     ( 0.22 )       0.71     Distributions declared (1)     ( 0.99 )       ( 0.90 )   From net investment income     ( 0.99 )       ( 0.90 )   From net realized gain on investments     —         —     Return of capital     —         —     Other (2)     0.15         0.29     Net asset value at end of period   $ 10.41       $ 11.66     Per share market value, beginning of period   $ 11.60       $ 15.92     Per share market value, end of period   $ 11.88       $ 10.01     Total return based on a market value (3)     10.9 %       ( 31.5 )%   Shares outstanding at end of period     33,306,958         26,393,773     Ratios to average net assets:                     Expenses without incentive value (4)     14.0 %       11.4 %   Incentive fees (4)     1.2 %       3.0 %   Net expenses (4)     15.2 %       14.4 %   Net investment income with incentive fees (4)     18.5 %       12.1 %   Net assets at the end of the period   $ 346,575       $ 307,687     Average net asset value   $ 335,531       $ 280,904     Average debt per share   $ 14.29       $ 13.32     Portfolio turnover ratio     10.0 % (5)     14.9 % (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.   45 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Notes to Consolidated Financial Statements     Note   12. Subsequent Events   On  October 27, 2023 ,  Evelo Biosciences, Inc. (“Evelo”) paid down $11.0  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.    As of October 30, 2023, the fair value of the Company’s equity investment in Evelo is $ 1.1 million, compared to the fair value of $ 8.5 million shown on the Schedule of Investments as of September 30, 2023 above.     46 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;   47 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 September 30, 2023, 87.4%, or $594.1 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.   48 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 September 30, 2023 and December 31, 2022:       September 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   56     $ 679,838       93.2 %   60     $ 686,458       95.3 % Warrants   85       26,189       3.6     90       29,712       4.1   Other investments   3       7,254       1.0     2       1,300       0.2   Equity   14       15,772       2.2     8       2,556       0.4   Total         $ 729,053       100.0 %         $ 720,026       100.0 %   The following table shows total portfolio investment activity as of and for the three and nine months ended September 30, 2023 and 2022:       For the three months ended     For the nine months ended       September 30,     September 30,       2023     2022     2023     2022       (In thousands)   Beginning portfolio   $ 715,391     $ 577,492     $ 720,026     $ 458,075   New debt and equity investments     89,435       94,627       186,988       348,347   Less refinanced debt balances     (22,500 )     —       (32,500 )     (25,000 ) Net new debt and equity investments     66,935       94,627       154,488       323,347   Principal payments received on investments     (9,121 )     (4,960 )     (22,011 )     (11,916 ) Payment-in-kind interest on investments     3,934       —       6,088       —   Early pay-offs and principal paydowns     (16,605 )     (22,000 )     (68,211 )     (77,517 ) Accretion of debt investment fees     1,925       1,980       5,018       4,533   New debt investment fees     (1,595 )     (1,474 )     (2,397 )     (4,259 ) Warrants and equity received in settlement of fee income     80       —       169       —   Proceeds from sale of investments     (2,557 )     (6,255 )     (11,063 )     (49,681 ) Net loss on investments     (11,816 )     (8,228 )     (28,513 )     (9,127 ) Net unrealized (depreciation) appreciation on investments     (17,518 )     3,442       (24,448 )     1,169   Other     —       —       (93 )     —   Ending portfolio   $ 729,053     $ 634,624     $ 729,053     $ 634,624     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.   49 Table of Contents   The following table shows our debt investments by industry sector as of September 30, 2023 and December 31, 2022:       September 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   $ 122,230       18.0 %   $ 189,729       27.6 % Medical Device     131,346       19.3       127,839       18.6   Technology                                 Communications     20,520       3.0       22,671       3.3   Consumer-Related     98,172       14.4       108,226       15.8   Networking     6,307       0.9       11,467       1.7   Software     158,429       23.3       117,002       17.0   Sustainability                                 Other Sustainability     82,643       12.2       83,705       12.2   Healthcare Information and Services                                 Diagnostics     9,924       1.5       9,804       1.4   Other Healthcare     —       —       2,500       0.4   Software     50,267       7.4       13,515       2.0   Total   $ 679,838       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 represented 23% of total debt investments outstanding as of September 30, 2023 and December 31, 2022. Our five largest debt investments at fair value represented 22% and 23% of total debt investments outstanding as of September 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 September 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 September 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 September 30, 2023 and December 31, 2022:       September 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     12     $ 150,882       22.2 %     8     $ 93,832       13.7 % 3     37       437,158       64.3       47       557,554       81.2   2     5       76,298       11.2       2       26,822       3.9   1     2       15,500       2.3       3       8,250       1.2   Total     56     $ 679,838       100.0 %     60     $ 686,458       100.0 %   As of September 30, 2023, there were two debt investments with an internal credit rating of 1, with an aggregate cost of $41.5 million and an aggregate fair value of $15.5 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.   50 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 September 30, 2023 and 2022   The following table shows consolidated results of operations for the three months ended September 30, 2023 and 2022:       For the three months ended       September 30,       2023     2022       (In thousands)   Total investment income   $ 29,138     $ 23,254   Total expenses     11,605       12,018   Net investment income before excise tax     17,533       11,236   Provision for excise tax     179       100   Net investment income     17,354       11,136   Net realized loss     (11,816 )     (8,585 ) Net unrealized (depreciation) appreciation on investments     (17,518 )     3,442   Net (decrease) increase in net assets resulting from operations   $ (11,980 )   $ 5,993   Average debt investments, at fair value   $ 679,763     $ 583,184   Average gross assets less cash   $ 740,836     $ 634,614   Average borrowings outstanding   $ 417,220     $ 364,714     Net (decrease) 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 $5.9 million, or 25.3%, to $29.1 million for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. For the three months ended September 30, 2023, total investment income consisted primarily of $29.0 million in interest income from investments, which included $4.7 million in income from the accretion of origination fees and end of term payments, or ETPs, and $0.1 million in fee income. Interest income on debt investments increased by $6.3 million, or 27.6%, to $29.0 million, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. Interest income on debt investments for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 increased primarily due to an increase of $96.6 million, or 16.6%, 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, decreased by $0.4 million, or 75.6%, to $0.1 million for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to lower fee income earned on prepayments for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.    The following table shows our dollar-weighted annualized yield for the three months ended September 30, 2023 and 2022:       For the three months ended       September 30,   Investment type:   2023     2022   Debt investments (1)     17.1 %     15.9 % All investments (1)     16.1 %     15.3 % (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 24% and 18% of investment income for the three months ended September 30, 2023 and 2022, respectively. Interest income from the five largest debt investments at fair value in the aggregate accounted for 22% and 18% of investment income for the three months ended September 30, 2023 and 2022, respectively.    51 Table of Contents   Expenses   Total expenses decreased by $0.4 million, or 3.4%, to $11.6 million for the three months ended September 30, 2023 as compared to the three months ended September 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 $1.8 million, or 33.1%, to $7.1 million for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. Interest expense, which includes the amortization of debt issuance costs, increased primarily due to an increase in average borrowings of $52.5 million, or 14.4%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 and an increase in our effective cost of debt for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.   Base management fee expense increased by $0.4 million, or 15.2%, to $3.2 million for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. Base management fee increased primarily due to an increase of $96.6 million, or 16.6%, in average debt investments for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.    There was no performance based incentive fee expense for the three months ended September 30, 2023. Performance based incentive fee expense decreased by $2.8 million for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. This decrease was due to an Incentive Fee Cap and Deferral Mechanism in our Investment Management Agreement of $3.5 million for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. The Incentive Fee Cap and Deferral Mechanism resulted in $3.5 million of reduced incentive fee expense and increased net investment income for the three months ended September 30, 2023. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap for the three months ended September 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 $1.3 million and $1.1 million for the three months ended September 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 September 30, 2023, we realized net losses on investments totaling $11.8 million primarily due to the settlement of one of our debt investments. Such net realized losses were primarily the result of portfolio companies ceasing operations due to their inability to raise additional capital and the sale of their assets for less than the cost of their debt investments. During the three months ended September 30, 2022, we realized net losses on investments totaling $8.6 million primarily due to the settlement of one of our debt investments.   During the three months ended September 30, 2023, net unrealized depreciation on investments totaled $17.5 million which was primarily due to the unrealized depreciation on two of our debt investments offset by (1) the reversal of previously recorded unrealized depreciation from the settlement of one of our debt investments and (2) the unrealized appreciation on one of our equity investments. During the three months ended September 30, 2022, net unrealized appreciation on investments totaled $3.4 million which was primarily due the reversal of previously recorded unrealized depreciation from the settlement of one of our debt investments partially offset by the unrealized depreciation on our warrant and equity investments.      Comparison of the nine months ended September 30, 2023 and 2022   The following table shows consolidated results of operations for the nine months ended September 30, 2023 and 2022:       For the nine months ended       September 30,       2023     2022       (In thousands)   Total investment income   $ 85,292     $ 56,046   Total expenses     38,313       30,293   Net investment income before excise tax     46,979       25,753   Provision for excise tax     542       306   Net investment income     46,437       25,447   Net realized loss     (28,513 )     (9,484 ) Net unrealized (depreciation) appreciation on investments     (24,448 )     1,169   Net (decrease) increase in net assets resulting from operations   $ (6,524 )   $ 17,132   Average debt investments, at fair value   $ 685,171     $ 521,661   Average gross assets less cash   $ 739,268     $ 567,019   Average borrowings outstanding   $ 430,974     $ 319,623     Net (decrease) 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.   52 Table of Contents   Investment income   Total investment income increased by $29.2 million, or 52.2%, to $85.3 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. For the nine months ended September 30, 2023, total investment income consisted primarily of $83.0 million in interest income from investments, which included $12.1 million in income from the accretion of origination fees and ETPs and $2.3 million in fee income. Interest income on debt investments increased by $28.7 million, or 52.9%, to $83.0 million, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. Interest income on debt investments for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 increased primarily due to an increase of $163.5 million, or 31.3%, 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 $0.5 million, or 30.4%, to $2.3 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily due to higher fee income earned on prepayments for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.    The following table shows our dollar-weighted annualized yield for the nine months ended September 30, 2023 and 2022:       For the nine months ended       September 30,   Investment type:   2023     2022   Debt investments (1)     16.5 %     14.3 % All investments (1)     15.7 %     13.7 % (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 18% of investment income for the nine months ended September 30, 2023 and 2022, respectively. Interest income from the five largest debt investments at fair value in the aggregate accounted for 21% and 18% of investment income for the nine months ended September 30, 2023 and 2022, respectively.   Expenses   Total expenses increased by $8.0 million, or 26.5%, to $38.3 million for the nine months ended September 30, 2023 as compared to the nine months ended September 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 $8.4 million, or 64.8%, to $21.4 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. Interest expense, which includes the amortization of debt issuance costs, increased primarily due to an increase in average borrowings of $111.4 million, or 34.8%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 and an increase in our effective cost of debt for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.   Base management fee expense increased by $2.1 million, or 27.3%, to $9.6 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. Base management fee increased primarily due to an increase of $163.5 million, or 31.3%, in average debt investments for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.    Performance based incentive fee expense decreased by $3.3 million, or 51.3%, to $3.1 million for the nine months ended September 30, 2023 as compared to the nine months ended September 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 $6.8 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The Incentive Fee Cap and Deferral Mechanism resulted in $6.8 million of reduced incentive fee expense and increased net investment income for the nine months ended September 30, 2023. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap for the nine months ended September 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 $4.2 million and $3.4 million for the nine months ended September 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 nine months ended September 30, 2023, we realized net losses on investments totaling $28.5 million primarily due to the settlement of four of our debt investments. Such net realized losses were primarily the result of portfolio companies ceasing operations due to their inability to raise additional capital and the sale of their assets for less than the cost of their debt investments. During the nine months ended September 30, 2022, we realized net losses on investments totaling $9.5 million primarily due the settlement of one of our debt investments and the settlement of one of our other investments.   During the nine months ended September 30, 2023, net unrealized depreciation on investments totaled $24.4 million which was primarily due to (1) the unrealized depreciation on four of our debt investments and (2) the unrealized depreciation on two of our equity investments offset by (1) the reversal of previously recorded unrealized depreciation from the settlement of three of our debt investments and (2) the unrealized appreciation on one of our equity investments. During the nine months ended September 30, 2022, net unrealized appreciation on investments totaled $1.2 million which was primarily due to the reversal of previously recorded unrealized depreciation from the settlement of one of our debt investments and the settlement of one of our other investments partially offset by (1) the unrealized depreciation on one of our debt investments and (2) the unrealized depreciation on our equity investments.   53 Table of Contents   Liquidity and capital resources   As of September 30, 2023 and December 31, 2022, we had cash and investments in money market funds of $47.3 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 September 30, 2023 and December 31, 2022, we had $2.8 million 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.    On September 22, 2023, we terminated the 2021 Equity Distribution Agreement and entered into a new ATM sales agreement (the “2023 Equity Distribution Agreement”) with the Sales Agents. The remaining shares available under the 2021 Equity Distribution Agreement are no longer available for issuance. The 2023 Equity Distribution Agreement provides that we may offer and sell our shares from time to time through the Sales Agents up to $150.0 million worth of our common stock, in amounts and at times to be determined by us. Sales of our common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market,” as defined in Rule 415 under the Securities Act, including sales made directly on the NASDAQ or similar securities exchange or sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices.   During the three months ended September 30, 2023, we sold 1,186,303 shares of common stock under the 2023 Equity Distribution Agreement and the 2021 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $13.9 million, including $0.4 million of offering expenses, from these sales.   During the three months ended September 30, 2022, we sold 1,523,519 shares of common stock under the 2021 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $19.0 million, including $0.4 million of offering expenses, from these sales.   During the nine months ended September 30, 2023, we sold 2,240,326 shares of common stock under the 2023 Equity Distribution Agreement and the 2021 Equity Distribution Agreement. For the same period, we received total accumulated net proceeds of approximately $26.1 million, including $0.7 million of offering expenses, from these sales.   During the nine months ended September 30, 2022, we sold 2,641,920 shares of common stock under the 202