Horizon Technology Finance Corp 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are subject to financial market risks, including changes in interest rates. During the periods covered by our financial statements, the interest rates on the debt investments within our portfolio were primarily at floating rates. We expect that our debt investments in the future will primarily have floating interest rates. As of December 31, 2020 and 2019, 100% and 99%, respectively, of the outstanding principal amount of our debt investments bore interest at floating rates. The initial commitments to lend to our portfolio companies are usually based on a floating LIBOR index or the Prime Rate as published in the Wall Street Journal. Based on our December 31, 2020 consolidated statement of assets and liabilities (without adjustment for potential changes in the credit market, credit quality, size and composition of assets on the consolidated statement of assets and liabilities or other business developments that could affect net income) and the base index rates at December 31, 2020, the following table shows the annual impact on the change in net assets resulting from operations of changes in interest rates, which assumes no changes in our investments and borrowings: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment Interest Change in Net Change in basis points ​ Income ​ Expense ​ Assets (1) ​ ​ (In thousands) Up 300 basis points ​ $ 5,685 ​ $ 610 ​ $ 5,075 Up 200 basis points ​ $ 2,670 ​ $ 326 ​ $ 2,344 Up 100 basis points ​ $ 1,046 ​ $ 43 ​ $ 1,003 Down 300 basis points ​ $ — ​ $ — ​ $ — Down 200 basis points ​ $ — ​ $ — ​ $ — Down 100 basis points ​ $ — ​ $ — ​ $ — (1) Excludes the impact of incentive fees based on pre-incentive fee net investment income. While our 2022 Notes and our Asset-Backed Notes bear interest at a fixed rate, our Credit Facilities have a floating interest rate provision. The Key Facility is subject to a floor of 1.00% per annum, based on a LIBOR index which resets monthly and the NYL Facility is 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. Any other credit facilities into which we enter in the future may have floating interest rate provisions. We have used hedging instruments in the past to protect us against interest rate fluctuations, and we may use them in the future. Such instruments may include caps, swaps, futures, options and forward contracts. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio with fixed interest rates. Engaging in commodity interest transactions such as swap transactions or futures contracts for the Company may cause the Investment Adviser to fall within the definition of “commodity pool operator” 89 Table of Contents under the Commodity Exchange Act (the “CEA”) and related Commodity Futures Trading Commission (the “CFTC”) regulations. On January 31, 2020, the Investment Adviser claimed an exclusion from the definition of the term “commodity pool operator” under the CEA and the CFTC regulations in connection with its management of the Company and, therefore, is not subject to CFTC registration or regulation under the CEA as a commodity pool operator with respect to its management of the Company. Because we currently fund, and expect to continue to fund, our investments with borrowings, our net income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest the funds borrowed. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net income. In periods of rising interest rates, our cost of funds could increase, which would reduce our net investment income. ​ 90 Table of Contents Item 8. Consolidated Financial Statements and Supplementary Data Index to Consolidated Financial Statements ​ Page Management’s Report on Internal Control over Financial Reporting 92 Report of Independent Registered Public Accounting Firm 93 Consolidated Statements of Assets and Liabilities as of December 31, 2020 and 2019 95 Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018 96 Consolidated Statements of Changes in Net Assets for the Years Ended December 31, 2020, 2019 and 2018 97 Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018 98 Consolidated Schedules of Investments as of December 31, 2020 and 2019 99 Notes to the Consolidated Financial Statements 111 ​ ​ ​ ​ 91 Table of Contents Management’s Report on Internal Control over Financial Reporting Management of Horizon Technology Finance Corporation (the “Company”) is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting. The Company’s internal control system is a process designed to provide reasonable assurance to management and the board of directors regarding the preparation and fair presentation of published financial statements. The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions recorded necessary to permit the preparation of financial statements in accordance with U.S. generally accepted accounting principles. The Company’s policies and procedures also provide reasonable assurance that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company, and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness as to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework issued in 2013. Based on the assessment, management believes that, as of December 31, 2020, the Company’s internal control over financial reporting is effective based on those criteria. Pursuant to rules established by the SEC, this annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. ​ 92 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Horizon Technology Finance Corporation ​ Opinion on the Financial Statements We have audited the accompanying consolidated statements of assets and liabilities of Horizon Technology Finance Corporation and its subsidiaries (the Company), including the consolidated schedules of investments, as of December 31, 2020 and 2019, the related consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations, changes in net assets, and cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of December 31, 2020 and 2019, by correspondence with the custodian and/or brokers or the underlying investee. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Level 3 investments The fair value of the Company’s Level 3 investments was $350.0 million as of December 31, 2020. As described in Notes 2 and 6 to the consolidated financial statements, there is not a readily available market value for most of the investments in the Company’s portfolio. Such investments include debt, warrant, equity, and other investments in venture capital and private equity backed companies. The valuation techniques used in estimating the fair value of these investments may vary based on the specific characteristics of the investments and require the use of certain significant unobservable inputs, such as the Company’s internally developed credit risk ratings, discounted expected future cash flows, hypothetical market 93 Table of Contents yields, multiple probability weighted expected cash flow scenarios, and portfolio company financial performance, among others. We identified the valuation of Level 3 investments as a critical audit matter due to the subjective nature of the judgments necessary for management to select valuation techniques and the use of significant unobservable inputs to estimate the fair value. Auditing the reasonableness of management’s selection of valuation technique and the related unobservable inputs required a high degree of auditor judgement and increased audit effort, including evaluation of the nature of audit evidence obtained and the use of internal valuation specialists. The primary procedures we performed to address this critical audit matter included the following, among others: We obtained an understanding of the relevant controls related to management’s internally developed credit risk ratings and tested such controls for design and operating effectiveness. We assessed the reasonableness of a sample of management’s credit risk ratings by inspecting underlying source data and comparing to the Company’s credit risk policy. We assessed the reasonableness of discounted expected future cash flows, multiple probability weighted scenarios, and portfolio management company performance used in the Company’s valuation models through comparison to internal and external data. With the assistance of our internal valuation specialists, we evaluated the reasonableness of the hypothetical market yields used by the Company by comparing to market data for comparable companies. With the assistance of our internal valuation specialists, we evaluated the appropriateness of the selected valuation techniques, and any changes to selected valuation techniques from prior periods, used for Level 3 investments. We evaluated management’s historical ability to estimate fair value through comparison of previous estimates to the transaction price of available transactions occurring subsequent to the previous valuation date. /s/ RSM US LLP ​ ​ We have served as the Company's auditor since 2008. ​ ​ New Haven, Connecticut March 2, 2021 ​ ​ ​ ​ 94 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Statements of Assets and Liabilities (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2020 2019 Assets (Unaudited) ​ Non-affiliate investments at fair value (cost of $343,158 and $295,256, respectively) ​ $ 343,498 ​ $ 294,304 Non-controlled affiliate investments at fair value (cost of $6,854 and $6,891, respectively) (Note 5) ​ 7,547 ​ 8,597 Controlled affiliate investments at fair value (cost of $1,500 and $16,684, respectively) (Note 5) ​ 1,500 ​ 16,650 Total investments at fair value (cost of $351,512 and $318,831, respectively) (Note 4) ​ 352,545 ​ 319,551 Cash ​ 19,502 ​ 6,465 Investments in money market funds ​ 27,199 ​ 9,787 Restricted investments in money market funds ​ 1,057 ​ 1,133 Interest receivable ​ 4,946 ​ 5,530 Other assets ​ 1,908 ​ 1,535 Total assets ​ $ 407,157 ​ $ 344,001 ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ Borrowings (Note 7) ​ $ 185,819 ​ $ 152,050 Distributions payable ​ 5,786 ​ 4,669 Base management fee payable (Note 3) ​ 563 ​ 519 Incentive fee payable (Note 3) ​ 975 ​ 1,613 Other accrued expenses ​ 1,417 ​ 1,095 Total liabilities ​ 194,560 ​ 159,946 ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 8) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net assets ​ ​ Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, zero shares issued and outstanding as of December 31, 2020 and 2019 ​ — ​ — Common stock, par value $0.001 per share, 100,000,000 shares authorized, 19,453,821 and 15,730,755 shares issued and 19,286,356 and 15,563,290 shares outstanding as of December 31, 2020 and 2019, respectively ​ 19 ​ 16 Paid-in capital in excess of par ​ 271,287 ​ 226,660 Distributable earnings ​ (58,709) ​ (42,621) Total net assets ​ 212,597 ​ 184,055 Total liabilities and net assets ​ $ 407,157 ​ $ 344,001 Net asset value per common share ​ $ 11.02 ​ $ 11.83 See Notes to Consolidated Financial Statements ​ 95 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Statements of Operations (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2020 2019 2018 Investment income ​ ​ ​ Interest income on investments ​ ​ ​ Interest income on non-affiliate investments ​ $ 41,503 ​ $ 36,247 ​ $ 28,061 Interest income on affiliate investments ​ 689 ​ 839 ​ 725 Total interest income on investments ​ 42,192 ​ 37,086 ​ 28,786 Fee income ​ ​ ​ Prepayment fee income on non-affiliate investments ​ ​ 2,345 ​ ​ 2,296 ​ ​ 1,159 Fee income on non-affiliate investments ​ 1,335 ​ 1,490 ​ 867 Fee income on affiliate investments ​ 45 ​ 17 ​ 23 Total fee income ​ 3,725 ​ 3,803 ​ 2,049 Dividend income ​ ​ ​ Dividend income on controlled affiliate investments ​ 118 ​ 2,236 ​ 255 Total dividend income ​ 118 ​ 2,236 ​ 255 Total investment income ​ 46,035 ​ 43,125 ​ 31,090 Expenses ​ ​ ​ Interest expense ​ 9,673 ​ 8,330 ​ 6,363 Base management fee (Note 3) ​ 6,458 ​ 5,556 ​ 4,578 Performance based incentive fee (Note 3) ​ 5,187 ​ 6,966 ​ 4,393 Administrative fee (Note 3) ​ 1,016 ​ 907 ​ 708 Professional fees ​ 1,540 ​ 1,537 ​ 1,343 General and administrative ​ 1,190 ​ 968 ​ 989 Total expenses ​ 25,064 ​ 24,264 ​ 18,374 Performance based incentive fee waived (Note 3) ​ — ​ (1,848) ​ (1,184) Net expenses ​ 25,064 ​ 22,416 ​ 17,190 Net investment income before excise tax ​ 20,971 ​ 20,709 ​ 13,900 Provision for excise tax (Note 8) ​ 222 ​ 239 ​ 34 Net investment income ​ 20,749 ​ 20,470 ​ 13,866 Net realized and unrealized loss on investments ​ ​ ​ Net realized (loss) gain on non-affiliate investments ​ (14,686) ​ (4,173) ​ 645 Net realized loss on controlled affiliate investments ​ ​ (12) ​ ​ — ​ ​ — Net realized (loss) gain on investments ​ (14,698) ​ (4,173) ​ 645 Net unrealized appreciation (depreciation) on non-affiliate investments ​ 1,585 ​ 1,196 ​ (1,445) Net unrealized (depreciation) appreciation on non-controlled affiliate investments ​ (1,014) ​ 2,019 ​ (37) Net unrealized depreciation on controlled affiliate investments ​ (258) ​ (14) ​ (19) Net unrealized appreciation (depreciation) on investments ​ 313 ​ 3,201 ​ (1,501) Net realized and unrealized loss on investments ​ (14,385) ​ (972) ​ (856) Net increase in net assets resulting from operations ​ $ 6,364 ​ $ 19,498 ​ $ 13,010 Net investment income per common share ​ $ 1.18 ​ $ 1.52 ​ $ 1.20 Net increase in net assets per common share ​ $ 0.36 ​ $ 1.45 ​ $ 1.13 Distributions declared per share ​ $ 1.25 ​ $ 1.20 ​ $ 1.20 Weighted average shares outstanding ​ 17,534,528 ​ 13,478,234 ​ 11,527,777 ​ See Notes to Consolidated Financial Statements ​ ​ 96 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Statements of Changes in Net Assets (In thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Paid-In Capital ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ in Excess of ​ Distributable ​ Total Net ​ Shares Amount Par Earnings Assets Balance at December 31, 2017 11,520,406 ​ $ 12 ​ $ 179,641 ​ $ (44,578) ​ $ 135,075 Net increase in net assets resulting from operations, net of excise tax: ​ ​ ​ ​ Net investment income, net of excise tax — ​ — ​ — ​ 13,866 ​ 13,866 Net realized gain on investments — ​ — ​ — ​ 645 ​ 645 Net unrealized depreciation on investments — ​ — ​ — ​ (1,501) ​ (1,501) Financing costs — ​ — ​ (155) ​ — ​ (155) Issuance of common stock under dividend reinvestment plan 14,723 ​ — ​ 164 ​ — ​ 164 Distributions declared — ​ — ​ — ​ (13,837) ​ (13,837) Reclassification of permanent tax differences (Note 2) — ​ — ​ (34) ​ 34 ​ — Balance at December 31, 2018 11,535,129 ​ $ 12 ​ $ 179,616 ​ $ (45,371) ​ $ 134,257 Issuance of common stock, net of offering costs ​ 4,012,844 ​ $ 4 ​ $ 47,097 ​ $ — ​ $ 47,101 Net increase in net assets resulting from operations, net of excise tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net investment income, net of excise tax — ​ ​ — ​ ​ — ​ ​ 20,470 ​ ​ 20,470 Net realized loss on investments — ​ — ​ — ​ (4,173) ​ (4,173) Net unrealized appreciation on investments — ​ — ​ — ​ 3,201 ​ 3,201 Issuance of common stock under dividend reinvestment plan 15,317 ​ — ​ 186 ​ — ​ 186 Distributions declared — ​ — ​ — ​ (16,987) ​ (16,987) Reclassification of permanent tax differences (Note 2) — ​ — ​ (239) ​ 239 ​ — Balance at December 31, 2019 15,563,290 ​ $ 16 ​ $ 226,660 ​ $ (42,621) ​ $ 184,055 Issuance of common stock, net of offering costs 3,702,500 ​ $ 3 ​ $ 44,608 ​ $ — ​ $ 44,611 Net increase in net assets resulting from operations, net of excise tax: ​ ​ ​ ​ Net investment income, net of excise tax — ​ — ​ — ​ 20,749 ​ 20,749 Net realized loss on investments — ​ — ​ — ​ (14,698) ​ (14,698) Net unrealized appreciation on investments — ​ — ​ — ​ 313 ​ 313 Issuance of common stock under dividend reinvestment plan 20,566 ​ — ​ 241 ​ — ​ 241 Distributions declared — ​ — ​ — ​ (22,674) ​ (22,674) Reclassification of permanent tax differences (Note 2) — ​ — ​ (222) ​ 222 ​ — Balance at December 31, 2020 19,286,356 ​ $ 19 ​ $ 271,287 ​ $ (58,709) ​ $ 212,597 ​ See Notes to Consolidated Financial Statements ​ 97 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Statements of Cash Flow (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2020 2019 ​ 2018 Cash flows from operating activities: ​ ​ ​ Net increase in net assets resulting from operations ​ $ 6,364 ​ $ 19,498 ​ $ 13,010 Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities: ​ ​ ​ ​ ​ Amortization of debt issuance costs ​ 1,018 ​ 726 ​ 554 Net realized loss (gain) on investments ​ 14,698 ​ 4,173 ​ (645) Net unrealized (appreciation) depreciation on investments ​ (313) ​ (3,201) ​ 1,501 Purchase of investments ​ (198,561) ​ (200,832) ​ (101,257) Principal payments received on investments ​ 146,258 ​ 129,190 ​ 84,439 Proceeds from sale of investments ​ ​ 8,335 ​ ​ 4,578 ​ ​ 4,453 Investment in controlled affiliate investments ​ — ​ (1,900) ​ (13,262) Distributions from controlled affiliate investment ​ — ​ 715 ​ 255 Dividends from controlled affiliate investment ​ (118) ​ (2,236) ​ (255) Equity received in settlement of fee income ​ (45) ​ — ​ (299) Warrants received in settlement of fee income ​ (978) ​ — ​ (161) Changes in assets and liabilities: ​ ​ ​ Decrease (increase) in interest receivable ​ 887 ​ (679) ​ 99 Increase in end-of-term payments ​ (1,066) ​ (885) ​ (79) Decrease in unearned income ​ (1,408) ​ (1,586) ​ (1,043) Increase in other assets ​ (189) ​ (16) ​ (6) Increase in other accrued expenses ​ 430 ​ 330 ​ 145 Increase in base management fee payable ​ 44 ​ 97 ​ 43 (Decrease) increase in incentive fee payable ​ (638) ​ 622 ​ 450 Net cash used in operating activities ​ (25,282) ​ (51,406) ​ (12,058) Cash flows from financing activities: ​ ​ ​ Proceeds from issuance of common stock, net of offering costs ​ 44,611 ​ 47,101 ​ — Proceeds from Asset-Backed Notes ​ — ​ 100,000 ​ — Advances on credit facilities ​ 80,250 ​ 51,500 ​ 52,500 Repayment of credit facilities ​ (47,000) ​ (125,000) ​ (20,000) Debt issuance costs ​ ​ (890) ​ ​ (1,808) ​ ​ (622) Distributions paid ​ (21,316) ​ (15,593) ​ (13,668) Financing costs ​ — ​ — ​ (155) Net cash provided by financing activities ​ 55,655 ​ 56,200 ​ 18,055 Net increase in cash, cash equivalents and restricted cash ​ 30,373 ​ 4,794 ​ 5,997 Cash, cash equivalents and restricted cash: ​ ​ ​ Beginning of period ​ 17,385 ​ 12,591 ​ 6,594 End of period ​ $ 47,758 ​ $ 17,385 ​ $ 12,591 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of cash flow information: ​ ​ ​ Cash paid for interest ​ $ 8,593 ​ $ 7,671 ​ $ 5,671 Supplemental non-cash investing and financing activities: ​ ​ ​ Warrant investments received and recorded as unearned income ​ $ 1,829 ​ $ 2,723 ​ $ 1,457 Distributions payable ​ $ 5,786 ​ $ 4,669 ​ $ 3,461 Acquisition of controlled affiliate investment ​ $ 16,498 ​ $ — ​ $ — End-of-term payments receivable ​ $ 4,203 ​ $ 3,900 ​ $ 3,015 Non-cash income ​ $ 5,124 ​ $ 3,584 ​ ​ 3,124 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2020 2019 2018 Cash ​ $ 19,502 ​ $ 6,465 ​ $ 12,591 Investments in money market funds ​ 27,199 ​ 9,787 ​ — Restricted investments in money market funds ​ 1,057 ​ 1,133 ​ — Total cash, cash equivalents and restricted cash ​ $ 47,758 ​ $ 17,385 ​ $ 12,591 ​ See Notes to Consolidated Financial Statements ​ ​ 98 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2020 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal Cost of Fair Portfolio Company (1)(3) ​ Sector ​ Type of Investment (4)(7)(9)(10) Amount Investments (6) Value Non-Affiliate Investments — 161.6% (8) ​ ​ ​ Non-Affiliate Debt Investments — 154.2% (8) ​ ​ ​ Non-Affiliate Debt Investments — Life Science — 71.4% (8) ​ ​ ​ Castle Creek Pharmaceuticals Holdings, Inc.(2)(12) ​ Biotechnology ​ Term Loan (9.30% cash (Libor + 7.50%; Floor 9.30%), 5.00% ETP, Due 3/1/24) ​ $ 5,000 ​ $ 4,884 ​ $ 4,884 ​ ​ ​ ​ Term Loan (9.30% cash (Libor + 7.50%; Floor 9.30%), 5.00% ETP, Due 3/1/24) ​ ​ 5,000 ​ ​ 4,938 ​ ​ 4,938 ​ ​ ​ ​ Term Loan (9.30% cash (Libor + 7.50%; Floor 9.30%), 5.00% ETP, Due 3/1/24) ​ ​ 5,000 ​ ​ 4,938 ​ ​ 4,938 ​ ​ ​ ​ Term Loan (9.30% cash (Libor + 7.50%; Floor 9.30%), 5.00% ETP, Due 3/1/24) ​ ​ 5,000 ​ ​ 4,938 ​ ​ 4,938 Celsion Corporation (2)(5)(12) Biotechnology Term Loan (9.63% cash (Libor + 7.63%; Floor 9.63%), 5.50% ETP, Due 4/1/23) ​ ​ 2,500 ​ 2,477 ​ ​ 2,477 ​ ​ Term Loan (9.63% cash (Libor + 7.63%; Floor 9.63%), 5.50% ETP, Due 4/1/23) ​ 2,500 ​ ​ 2,525 ​ ​ 2,483 Emalex Biosciences, Inc. (2)(12) ​ Biotechnology ​ Term Loan (9.75% cash (Libor + 7.90%; Floor 9.75%), 5.00% ETP, Due 12/1/23) ​ ​ 2,500 ​ ​ 2,354 ​ ​ 2,354 ​ ​ ​ ​ Term Loan (9.75% cash (Libor + 7.90%; Floor 9.75%), 5.00% ETP, Due 12/1/23) ​ ​ 2,500 ​ ​ 2,457 ​ ​ 2,457 LogicBio, Inc.(2)(5)(12) ​ Biotechnology ​ Term Loan (8.75% cash (Libor + 6.25%; Floor 8.75%), 4.50% ETP, Due 6/1/24) ​ ​ 5,000 ​ ​ 4,977 ​ ​ 4,977 Provivi, Inc. (2)(12) ​ Biotechnology ​ Term Loan (9.50% cash (Libor + 8.50%; Floor 9.50%), 5.50% ETP, Due 12/1/24) ​ ​ 5,000 ​ ​ 4,763 ​ ​ 4,763 ​ ​ ​ ​ Term Loan (9.50% cash (Libor + 8.50%; Floor 9.50%), 5.50% ETP, Due 12/1/24) ​ ​ 5,000 ​ ​ 4,912 ​ ​ 4,912 Bardy Diagnostics, Inc. (2)(12) ​ Medical Device ​ Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24) ​ ​ 5,000 ​ ​ 4,943 ​ ​ 4,943 ​ ​ ​ ​ Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24) ​ ​ 5,000 ​ ​ 4,943 ​ ​ 4,943 ​ ​ ​ ​ Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24) ​ ​ 1,000 ​ ​ 989 ​ ​ 989 ​ ​ ​ ​ Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24) ​ ​ 1,000 ​ ​ 989 ​ ​ 989 ​ ​ ​ ​ Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24) ​ ​ 1,000 ​ ​ 989 ​ ​ 989 ​ ​ ​ ​ Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24) ​ ​ 1,000 ​ ​ 989 ​ ​ 989 ​ ​ ​ ​ Term Loan (8.90% cash (Libor + 7.00%; Floor 8.90%), 5.00% ETP, Due 9/1/24) ​ ​ 1,000 ​ ​ 989 ​ ​ 989 Canary Medical Inc. (2)(12) ​ Medical Device ​ Term Loan (9.00% cash (Prime + 5.75%; Floor 9.00%), 7.00% ETP, Due 11/1/24) ​ ​ 2,500 ​ ​ 2,346 ​ ​ 2,346 Ceribell, Inc. (2)(12) ​ Medical Device ​ Term Loan (8.25% cash (Libor + 6.70%; Floor 8.25%), 5.50% ETP, Due 10/1/24) ​ ​ 5,000 ​ ​ 4,878 ​ ​ 4,878 ​ ​ ​ ​ Term Loan (8.25% cash (Libor + 6.70%; Floor 8.25%), 5.50% ETP, Due 10/1/24) ​ ​ 5,000 ​ ​ 4,942 ​ ​ 4,942 Conventus Orthopaedics, Inc. (2)(12) Medical Device Term Loan (9.25% cash (Libor + 8.00%; Floor 9.25%), 10.36% ETP, Due 7/1/25) ​ 5,086 ​ 5,025 ​ 5,025 ​ ​ Term Loan (9.25% cash (Libor + 8.00%; Floor 9.25%), 10.36% ETP, Due 7/1/25) ​ 5,086 ​ 5,025 ​ ​ 5,025 Corinth Medtech, Inc. (2)(12) ​ Medical Device ​ Term Loan (8.50% cash (Prime + 5.25%; Floor 8.50%), 20.00% ETP, Due 4/1/22) ​ ​ 2,500 ​ ​ 2,475 ​ ​ 2,475 ​ ​ ​ ​ Term Loan (8.50% cash (Prime + 5.25%; Floor 8.50%), 20.00% ETP, Due 4/1/22) ​ ​ 2,500 ​ ​ 2,475 ​ ​ 2,475 CSA Medical, Inc. (2)(12) Medical Device Term Loan (10.00% cash (Libor + 8.20%; Floor 10.00%), 5.00% ETP, Due 1/1/24) ​ 3,750 ​ 3,704 ​ 3,704 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 8.20%; Floor 10.00%), 5.00% ETP, Due 1/1/24) ​ ​ 250 ​ ​ 247 ​ ​ 247 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 8.20%; Floor 10.00%), 5.00% ETP, Due 3/1/24) ​ ​ 4,000 ​ ​ 3,955 ​ ​ 3,955 CVRx, Inc. (2)(12) ​ Medical Device ​ Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 10/1/24) ​ ​ 5,000 ​ ​ 4,948 ​ ​ 4,948 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 10/1/24) ​ ​ 5,000 ​ ​ 4,948 ​ ​ 4,948 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 10/1/24) ​ ​ 5,000 ​ ​ 4,948 ​ ​ 4,948 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 10/1/24) ​ ​ 5,000 ​ ​ 4,948 ​ ​ 4,948 ​ See Notes to Consolidated Financial Statements ​ 99 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2020 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal Cost of Fair Portfolio Company (1)(3) ​ Sector ​ Type of Investment (4)(7)(9)(10) Amount ​ Investments (6) ​ Value MacuLogix, Inc. (2)(12) Medical Device Term Loan (10.08% cash (Libor + 7.68%; Floor 10.08%), 5.50% ETP, Due 10/1/23) ​ 7,500 ​ 7,422 ​ 7,147 ​ ​ Term Loan (10.08% cash (Libor + 7.68%; Floor 10.08%), 5.50% ETP, Due 10/1/23) ​ 4,050 ​ 4,008 ​ ​ 3,859 Magnolia Medical Technologies, Inc. (2)(12) ​ Medical Device ​ Term Loan (9.75% cash (Prime + 5.00%; Floor 9.75%), 4.00% ETP, Due 3/1/25) ​ ​ 5,000 ​ ​ 4,937 ​ ​ 4,937 ​ ​ ​ ​ Term Loan (9.75% cash (Prime + 5.00%; Floor 9.75%), 4.00% ETP, Due 3/1/25) ​ ​ 5,000 ​ ​ 4,937 ​ ​ 4,937 ​ ​ ​ ​ Term Loan (9.75% cash (Prime + 5.00%; Floor 9.75%), 4.00% ETP, Due 3/1/25) ​ ​ 5,000 ​ ​ 4,926 ​ ​ 4,926 ​ ​ ​ ​ Term Loan (9.75% cash (Prime + 5.00%; Floor 9.75%), 4.00% ETP, Due 3/1/25) ​ ​ 5,000 ​ ​ 4,926 ​ ​ 4,926 Sonex Health, Inc. (2)(12) ​ Medical Device ​ Term Loan (9.25% cash (Prime + 6.00%; Floor 9.25%), 5.00% ETP, Due 6/1/24) ​ ​ 2,500 ​ ​ 2,379 ​ ​ 2,379 ​ ​ ​ ​ Term Loan (9.25% cash (Prime + 6.00%; Floor 9.25%), 5.00% ETP, Due 6/1/24) ​ ​ 2,500 ​ ​ 2,460 ​ ​ 2,460 ​ ​ ​ ​ Term Loan (9.25% cash (Prime + 6.00%; Floor 9.25%), 5.00% ETP, Due 6/1/24) ​ ​ 2,500 ​ ​ 2,460 ​ ​ 2,460 Total Non-Affiliate Debt Investments — Life Science ​ ​ ​ ​ 152,313 ​ 151,847 Non-Affiliate Debt Investments — Technology — 71.2% (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Alula Holdings, Inc. (2)(12) ​ Consumer-related Technologies ​ Term Loan (10.00% cash (Prime + 6.75%; Floor 10.00%), 3.00% ETP, Due 1/1/25) ​ ​ 5,000 ​ ​ 4,904 ​ ​ 4,904 ​ ​ ​ ​ Term Loan (10.00% cash (Prime + 6.75%; Floor 10.00%), 3.00% ETP, Due 1/1/25) ​ ​ 5,000 ​ ​ 4,932 ​ ​ 4,932 ​ ​ ​ ​ Term Loan (10.00% cash (Prime + 6.75%; Floor 10.00%), 3.00% ETP, Due 1/1/25) ​ ​ 3,000 ​ ​ 2,959 ​ ​ 2,959 Betabrand Corporation (2)(12) ​ Consumer-related Technologies ​ Term Loan (10.05% cash (Libor + 7.50%; Floor 10.05%), 5.75% ETP, Due 9/1/23) ​ ​ 4,250 ​ ​ 4,200 ​ ​ 4,028 ​ ​ ​ ​ Term Loan (10.05% cash (Libor + 7.50%; Floor 10.05%), 5.75% ETP, Due 9/1/23) ​ ​ 4,250 ​ ​ 4,200 ​ ​ 4,028 ​ ​ ​ ​ Term Loan (10.05% cash (Libor + 7.50%; Floor 10.05%), 5.75% ETP, Due 9/1/23) ​ ​ 1,125 ​ ​ 1,097 ​ ​ 1,052 Getaround, Inc. (2)(12) ​ Consumer-related Technologies ​ Term Loan (10.50% cash (Prime + 7.25%; Floor 10.50%), 4.50% ETP, Due 12/1/24) ​ ​ 10,000 ​ ​ 9,625 ​ ​ 9,625 ​ ​ ​ ​ Term Loan (10.50% cash (Prime + 7.25%; Floor 10.50%), 4.50% ETP, Due 12/1/24) ​ ​ 4,000 ​ ​ 3,851 ​ ​ 3,851 ​ ​ ​ ​ Term Loan (10.50% cash (Prime + 7.25%; Floor 10.50%), 4.50% ETP, Due 12/1/24) ​ ​ 4,000 ​ ​ 3,851 ​ ​ 3,851 Updater, Inc. (2)(12) ​ Consumer-related Technologies ​ Term Loan (11.50% cash (Prime + 5.75%; Floor 11.50%, Ceiling 14.00%),0.56% ETP, Due 12/20/24) ​ ​ 5,000 ​ ​ 4,948 ​ ​ 4,948 ​ ​ ​ ​ Term Loan (11.50% cash (Prime + 5.75%; Floor 11.50%, Ceiling 14.00%), 0.56% ETP, Due 12/20/24) ​ ​ 5,000 ​ ​ 4,948 ​ ​ 4,948 ​ ​ ​ ​ Term Loan (11.50% cash (Prime + 5.75%; Floor 11.50%, Ceiling 14.00%), 0.56% ETP, Due 12/20/24) ​ ​ 10,000 ​ ​ 9,896 ​ ​ 9,896 CPG Beyond, Inc. (2)(12) ​ Data Storage ​ Term Loan (11.00% cash (Libor + 8.60%; Floor 11.00%), 2.00% ETP, Due 8/1/23) ​ ​ 5,000 ​ ​ 4,909 ​ ​ 4,909 ​ ​ ​ ​ Term Loan (11.00% cash (Libor + 8.60%; Floor 11.00%), 2.00% ETP, Due 8/1/23) ​ ​ 5,000 ​ ​ 4,908 ​ ​ 4,908 Silk, Inc. (2)(12) Data Storage Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 4.00% ETP, Due 1/1/23) ​ 4,166 ​ 4,125 ​ 4,125 ​ ​ Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 4.00% ETP, Due 1/1/23) ​ 4,166 ​ 4,125 ​ ​ 4,125 ​ ​ ​ ​ Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 4.00% ETP, Due 7/1/23) ​ ​ 5,000 ​ ​ 4,886 ​ ​ 4,886 IgnitionOne, Inc. (2)(12)(13) Internet and Media Term Loan (10.38% cash (Libor + 10.23%; Floor 10.23%), 6.00% ETP, Due 4/1/22) ​ 1,874 ​ 1,789 ​ 1,789 ​ ​ Term Loan (10.38% cash (Libor + 10.23%; Floor 10.23%), 6.00% ETP, Due 4/1/22) ​ 1,874 ​ 1,789 ​ 1,789 ​ See Notes to Consolidated Financial Statements ​ 100 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2020 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal Cost of Fair Portfolio Company (1)(3) ​ Sector ​ Type of Investment (4)(7)(9)(10) Amount ​ Investments (6) ​ Value ​ ​ Term Loan (10.38% cash (Libor + 10.23%; Floor 10.23%), 6.00% ETP, Due 4/1/22) ​ 1,874 ​ 1,722 ​ 1,722 ​ ​ Term Loan (10.38% cash (Libor + 10.23%; Floor 10.23%), 6.00% ETP, Due 4/1/22) ​ 1,874 ​ 1,789 ​ 1,789 The NanoSteel Company, Inc. (2)(12)(13) Materials Term Loan (11.00% cash (Libor + 8.50%; Floor 11.00%), 14.88% ETP, Due 6/1/22) ​ 3,345 ​ 3,303 ​ 846 ​ ​ Term Loan (11.00% cash (Libor + 8.50%; Floor 11.00%), 14.88% ETP, Due 6/1/22) ​ 3,345 ​ 3,479 ​ ​ 891 Liqid, Inc.(2)(12) ​ Networking ​ Term Loan (9.50% cash (Prime + 6.25%; Floor 9.50%), 4.00% ETP, Due 9/1/24) ​ ​ 5,000 ​ ​ 4,842 ​ ​ 4,842 ​ ​ ​ ​ Term Loan (9.50% cash (Prime + 6.25%; Floor 9.50%), 4.00% ETP, Due 9/1/24) ​ ​ 5,000 ​ ​ 4,896 ​ ​ 4,896 BriteCore Holdings, Inc. (2)(12) ​ Software ​ Term Loan (10.50% cash (Prime + 7.25%; Floor 10.50%), 4.00% ETP, Due 10/1/24) ​ ​ 2,500 ​ ​ 2,474 ​ ​ 2,474 ​ ​ ​ ​ Term Loan (10.50% cash (Prime + 7.25%; Floor 10.50%), 4.00% ETP, Due 10/1/24) ​ ​ 2,500 ​ ​ 2,474 ​ ​ 2,474 Keypath Education, LLC (2)(12) ​ Software ​ Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 2.50% ETP, Due 10/1/24) ​ ​ 3,750 ​ ​ 3,583 ​ ​ 3,583 ​ ​ ​ ​ Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 2.50% ETP, Due 10/1/24) ​ ​ 3,750 ​ ​ 3,686 ​ ​ 3,686 ​ ​ ​ ​ Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 2.50% ETP, Due 10/1/24) ​ ​ 2,500 ​ ​ 2,457 ​ ​ 2,457 OutboundEngine, Inc. (2)(12) ​ Software ​ Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.63% ETP, Due 7/1/23) ​ ​ 4,000 ​ ​ 3,949 ​ ​ 3,949 ​ ​ ​ ​ Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.63% ETP, Due 7/1/23) ​ ​ 3,500 ​ ​ 3,456 ​ ​ 3,456 ​ ​ ​ ​ Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.63% ETP, Due 7/1/23) ​ ​ 500 ​ ​ 501 ​ ​ 493 Revinate, Inc. (2)(12) ​ Software ​ Term Loan (9.50% cash (Libor + 7.00%; Floor 9.50%), 4.00% ETP, Due 11/1/23) ​ ​ 4,000 ​ ​ 4,034 ​ ​ 3,819 ​ ​ ​ ​ Term Loan (9.50% cash (Libor + 7.00%; Floor 9.50%), 4.00% ETP, Due 11/1/23) ​ ​ 1,000 ​ ​ 930 ​ ​ 895 ​ ​ ​ ​ Term Loan (9.50% cash (Libor + 7.00%; Floor 9.50%), 4.00% ETP, Due 11/1/23) ​ ​ 5,000 ​ ​ 4,946 ​ ​ 4,761 Topia Mobility, Inc. (2)(12) ​ Software ​ Term Loan (10.00% cash (Prime + 6.75%; Floor 10.00%), 4.00% ETP, Due 9/1/24) ​ ​ 5,000 ​ ​ 4,824 ​ ​ 4,824 ​ ​ ​ ​ Term Loan (10.00% cash (Prime + 6.75%; Floor 10.00%), 4.00% ETP, Due 9/1/24) ​ ​ 5,000 ​ ​ 4,902 ​ ​ 4,902 xAd, Inc. (2)(12) Software Term Loan (10.00% cash (Libor + 8.70%; Floor 10.00%), 5.0% ETP, Due 1/1/22) ​ 3,021 ​ 2,991 ​ 2,991 ​ ​ Term Loan (10.00% cash (Libor + 8.70%; Floor 10.00%), 5.0% ETP, Due 1/1/22) ​ 3,021 ​ 2,991 ​ ​ 2,991 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 8.70%; Floor 10.00%), 5.0% ETP, Due 1/1/22) ​ ​ 1,813 ​ ​ 1,795 ​ ​ 1,795 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 8.70%; Floor 10.00%), 5.0% ETP, Due 1/1/22) ​ 1,208 ​ 1,197 ​ ​ 1,197 Total Non-Affiliate Debt Investments — Technology ​ ​ ​ ​ 157,163 ​ ​ 151,286 Non-Affiliate Debt Investments — Healthcare information and services — 11.6% (8) ​ ​ ​ IDbyDNA, Inc.(2)(12) ​ Diagnostics ​ Term Loan (9.00% cash (Prime + 5.75%; Floor 9.00%), 5.50% ETP, Due 1/1/25) ​ ​ 5,000 ​ ​ 4,846 ​ ​ 4,846 ​ ​ ​ ​ Term Loan (9.00% cash (Prime + 5.75%; Floor 9.00%), 5.50% ETP, Due 1/1/25) ​ ​ 5,000 ​ ​ 4,914 ​ ​ 4,914 Kate Farms, Inc. (2)(12) Other Healthcare Term Loan (9.75% cash (Libor + 7.45%; Floor 9.75%), 5.00% ETP, Due 10/1/23) ​ 5,000 ​ 4,941 ​ 4,941 ​ ​ ​ ​ Term Loan (9.75% cash (Libor + 7.45%; Floor 9.75%), 5.00% ETP, Due 10/1/23) ​ ​ 5,000 ​ ​ 4,941 ​ ​ 4,941 ​ ​ ​ ​ Term Loan (9.75% cash (Libor + 7.45%; Floor 9.75%), 5.00% ETP, Due 10/1/23) ​ ​ 2,500 ​ ​ 2,466 ​ ​ 2,466 ​ ​ Term Loan (9.75% cash (Libor + 7.45%; Floor 9.75%), 5.00% ETP, Due 10/1/23) ​ 2,500 ​ 2,466 ​ ​ 2,466 Total Non-Affiliate Debt Investments — Healthcare information and services ​ ​ 24,574 ​ 24,574 Total Non- Affiliate Debt Investments ​ ​ ​ ​ ​ 334,050 ​ 327,707 Non-Affiliate Warrant Investments — 6.6% (8) ​ ​ ​ Non-Affiliate Warrants — Life Science — 1.8% (8) ​ ​ ​ Alpine Immune Sciences, Inc. (5)(12) Biotechnology 4,632 Common Stock Warrants ​ ​ ​ 122 ​ — Castle Creek Pharmaceuticals, Inc. (2)(12) ​ Biotechnology ​ 2,428 Preferred Stock Warrants ​ ​ ​ ​ ​ 144 ​ ​ 180 Celsion Corporation (2)(5)(12) Biotechnology 295,053 Common Stock Warrants ​ ​ ​ 65 ​ 14 Corvium, Inc. (2)(12) ​ Biotechnology ​ 661,956 Preferred Stock Warrants ​ ​ ​ ​ ​ 52 ​ ​ 25 Emalex Biosciences, Inc. (2)(12) ​ Biotechnology ​ 73,602 Preferred Stock Warrants ​ ​ ​ ​ ​ 107 ​ ​ 135 LogicBio, Inc. (2)(5)(12) ​ Biotechnology ​ 7,843 Common Stock Warrants ​ ​ ​ ​ ​ 7 ​ ​ 3 Mustang Bio, Inc. (2)(5)(12) ​ Biotechnology ​ 252,161 Common Stock Warrants ​ ​ ​ ​ ​ 146 ​ ​ 220 Provivi, Inc. (2)(12) ​ Biotechnology ​ 123,457 Preferred Stock Warrants ​ ​ ​ ​ ​ 147 ​ ​ 426 Rocket Pharmaceuticals Corporation (5)(12) Biotechnology 7,051 Common Stock Warrants ​ ​ ​ 17 ​ 211 Strongbridge U.S. Inc. (2)(5)(12) Biotechnology 160,714 Common Stock Warrants ​ ​ ​ 72 ​ 60 vTv Therapeutics Inc. (2)(5)(12) Biotechnology 95,293 Common Stock Warrants ​ ​ ​ 44 ​ — ​ See Notes to Consolidated Financial Statements 101 Table of Contents Horizon Technology Finance Corporation and Subsidiaries ​ Consolidated Schedule of Investments December 31, 2020 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of Fair Portfolio Company (1)(3) ​ Sector ​ Type of Investment (4)(7)(9)(10) ​ ​ Investments (6) ​ Value AccuVein Inc. (2)(12) Medical Device 1,175 Preferred Stock Warrants ​ ​ ​ 24 ​ — Aerin Medical, Inc. (2)(12) Medical Device 1,818,183 Preferred Stock Warrants ​ ​ ​ 65 ​ 463 Bardy Diagnostics, Inc. (2)(12) ​ Medical Device ​ 346,154 Preferred Stock Warrants ​ ​ ​ ​ ​ 56 ​ ​ 1,180 Canary Medical Inc. (2)(12) ​ Medical Device ​ 7,292 Preferred Stock Warrants ​ ​ ​ ​ ​ 54 ​ ​ 54 Ceribell, Inc. (2)(12) ​ Medical Device ​ 117,521 Preferred Stock Warrants ​ ​ ​ ​ ​ 50 ​ ​ 63 Conventus Orthopaedics, Inc. (2)(12) Medical Device 6,313,788 Preferred Stock Warrants ​ ​ ​ 148 ​ 175 CSA Medical, Inc. (2)(12) Medical Device 1,375,727 Preferred Stock Warrants ​ ​ ​ 153 ​ 152 CVRx, Inc.(2)(12) ​ Medical Device ​ 750,000 Preferred Stock Warrants ​ ​ ​ ​ ​ 76 ​ ​ 76 MacuLogix, Inc. (2)(12) Medical Device 454,460 Preferred Stock Warrants ​ ​ ​ 237 ​ 120 Magnolia Medical Technologies, Inc. (2)(12) ​ Medical Device ​ 378,363 Preferred Stock Warrants ​ ​ ​ ​ ​ 91 ​ ​ 108 Meditrina, Inc. (2)(12) ​ Medical Device ​ 221,510 Preferred Stock Warrants ​ ​ ​ ​ ​ 82 ​ ​ 122 Sonex Health, Inc. (2)(12) ​ Medical Device ​ 484,250 Preferred Stock Warrants ​ ​ ​ ​ ​ 77 ​ ​ 77 VERO Biotech LLC (2)(12) Medical Device 408 Common Stock Warrants ​ ​ ​ 53 ​ 51 Total Non-Affiliate Warrants — Life Science ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,089 ​ ​ 3,915 Non-Affiliate Warrants — Technology — 3.9% (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Intelepeer Holdings, Inc. (2)(12) Communications 3,078,084 Preferred and Common Stock Warrants ​ ​ ​ 177 ​ 186 PebblePost, Inc. (2)(12) Communications 598,850 Preferred Stock Warrants ​ ​ ​ 93 ​ 165 Alula Holdings, Inc. (2)(12) ​ Consumer-related Technologies ​ 20,000 Preferred Stock Warrants ​ ​ ​ ​ ​ 93 ​ ​ 93 Betabrand Corporation (2)(12) ​ Consumer-related Technologies ​ 261,198 Preferred Stock Warrants ​ ​ ​ ​ ​ 106 ​ ​ 13 Caastle, Inc. (2)(12) ​ Consumer-related Technologies ​ 268,591 Preferred Stock Warrants ​ ​ ​ ​ ​ 68 ​ ​ 822 Getaround, Inc. (2)(12) ​ Consumer-related Technologies ​ 605,468 Preferred Stock Warrants ​ ​ ​ ​ ​ 433 ​ ​ 433 Mohawk Group Holdings, Inc. (2)(5)(12) Consumer-related Technologies ​ 76,923 Common Stock Warrants ​ ​ ​ 195 ​ 312 Updater, Inc.(2)(12) ​ Consumer-related Technologies ​ 108,333 Common Stock Warrants ​ ​ ​ ​ ​ 34 ​ ​ 70 CPG Beyond, Inc. (2)(12) ​ Data Storage ​ 500,000 Preferred Stock Warrants ​ ​ ​ ​ ​ 242 ​ ​ 706 Silk, Inc. (2)(12) Data Storage 44,211,003 Preferred and Common Stock Warrants ​ ​ ​ 234 ​ 165 Global Worldwide LLC (2)(12) ​ Internet and Media ​ 245,810 Preferred Stock Warrants ​ ​ ​ ​ ​ 75 ​ ​ 9 Rocket Lawyer Incorporated (2)(12) Internet and Media 261,721 Preferred Stock Warrants ​ ​ ​ 91 ​ 88 Skillshare, Inc. (2)(12) ​ Internet and Media ​ 139,073 Preferred Stock Warrants ​ ​ ​ ​ ​ 162 ​ ​ 2,407 Liqid, Inc.(2)(12) ​ Networking ​ 243,942 Preferred Stock Warrants ​ ​ ​ ​ ​ 164 ​ ​ 164 Kinestral, Inc. (2)(12) Power Management 5,002,574 Preferred Stock Warrants ​ ​ ​ 1,585 ​ 1,326 Avalanche Technology, Inc. (2)(12) Semiconductors 6,753 Preferred and Common Stock Warrants ​ ​ ​ 101 ​ — Soraa, Inc. (2)(12) Semiconductors 203,616 Preferred Stock Warrants ​ ​ ​ 80 ​ — BriteCore Holdings, Inc. (2)(12) ​ Software ​ 12,857 Preferred Stock Warrants ​ ​ ​ ​ ​ 5 ​ ​ 11 Education Elements, Inc. (2)(12) Software 238,121 Preferred Stock Warrants ​ ​ ​ 28 ​ 27 Keypath Education, Inc.(2)(12) ​ Software ​ 900,000 Preferred Stock Warrants ​ ​ ​ ​ ​ 158 ​ ​ 349 Lotame Solutions, Inc. (2)(12) Software 288,115 Preferred Stock Warrants ​ ​ ​ 22 ​ 279 OutboundEngine, Inc. (2)(12) Software 620,000 Preferred Stock Warrants ​ ​ ​ 80 ​ 33 Revinate, Inc. (2)(12) ​ Software ​ 615,475 Preferred Stock Warrants ​ ​ ​ ​ ​ 46 ​ ​ 51 Riv Data Corp. (2)(12) Software 321,428 Preferred Stock Warrants ​ ​ ​ 12 ​ 291 SIGNiX, Inc. (12) Software 186,045 Preferred Stock Warrants ​ ​ ​ 225 ​ — Skyword, Inc. (12) Software 301,055 Preferred and Common Stock Warrants ​ ​ ​ 48 ​ 8 Topia Mobility, Inc. (2)(12) ​ Software ​ 3,049,607 Preferred Stock Warrants ​ ​ ​ ​ ​ 138 ​ ​ 174 Weblinc Corporation (2)(12) Software 195,122 Preferred Stock Warrants ​ ​ ​ 42 ​ — xAd, Inc. (2)(12) Software 4,343,348 Preferred Stock Warrants ​ ​ ​ 177 ​ 3 Total Non-Affiliate Warrants — Technology ​ ​ ​ ​ ​ ​ ​ 4,914 ​ 8,185 Non-Affiliate Warrants — Sustainability — 0.0% (8) ​ ​ ​ ​ Tigo Energy, Inc. (2)(12) Energy Efficiency 804,604 Preferred Stock Warrants ​ ​ ​ 100 ​ — Total Non-Affiliate Warrants — Sustainability ​ ​ ​ ​ ​ ​ 100 ​ — Non-Affiliate Warrants — Healthcare information and services — 0.9% (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ IDbyDNA, Inc.(2)(12) ​ Diagnostics ​ 363,082 Preferred Stock Warrants ​ ​ ​ ​ ​ 90 ​ 90 Kate Farms, Inc. (2)(12) ​ Other Healthcare ​ 82,965 Preferred Stock Warrants ​ ​ ​ ​ ​ 101 ​ ​ 1,171 Watermark Medical, Inc. (2)(12) Other Healthcare 27,373 Preferred Stock Warrants ​ ​ ​ 74 ​ — Medsphere Systems Corporation (2)(12) Software 7,097,792 Preferred Stock Warrants ​ ​ ​ 62 ​ 196 Ontrak, Inc. (2)(5)(12) ​ Software ​ 10,906 Common Stock Warrants ​ ​ ​ ​ ​ 44 ​ ​ 474 Total Non-Affiliate Warrants — Healthcare information and services ​ ​ ​ ​ ​ 371 ​ 1,931 Total Non-Affiliate Warrants ​ ​ ​ ​ ​ ​ 7,474 ​ 14,031 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-Affiliate Other Investments — 0.1% (8) ​ ​ ​ ​ ZetrOZ, Inc. (12) Medical Device Royalty Agreement ​ ​ ​ 14 ​ 200 Total Non-Affiliate Other Investments ​ ​ ​ ​ ​ 14 ​ 200 ​ See Notes to Consolidated Financial Statements ​ 102 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2020 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal Cost of Fair Portfolio Company (1)(3) ​ Sector ​ Type of Investment (4)(7)(9)(10) Amount ​ Investments (6) ​ Value Non-Affiliate Equity — 0.7% (8) ​ ​ ​ ​ Sunesis Pharmaceuticals, Inc. (5) Biotechnology 1,308 Common Stock ​ ​ ​ 83 ​ 3 SnagAJob.com, Inc. (12) Consumer-related Technologies 82,974 Common Stock ​ ​ ​ 9 ​ 82 Zeta Global Holdings Corp. (2)(12) ​ Internet and Media ​ 18,405 Common Stock ​ ​ ​ ​ ​ 240 ​ ​ 240 Formetrix, Inc. (2)(12) Materials 74,286 Common Stock ​ ​ ​ 75 ​ — Clarabridge, Inc. (12) Software 17,142 Preferred Stock ​ ​ ​ 13 ​ 35 Lightspeed POS Inc. (5) ​ Software ​ 17,037 Common Stock ​ ​ ​ ​ ​ 1,200 ​ ​ 1,200 Total Non-Affiliate Equity ​ ​ ​ ​ ​ ​ 1,620 ​ 1,560 Total Non-Affiliate Portfolio Investment Assets ​ ​ ​ ​ ​ $ 343,158 $ 343,498 Non-controlled Affiliate Investments — 3.5% (8) ​ ​ ​ ​ ​ Non-controlled Affiliate Debt Investments — Technology — 2.7% (8) ​ ​ ​ Decisyon, Inc. (12) Software Term Loan (12.50% cash (Libor + 12.308%; Floor 12.50%), 12.00% ETP, Due 6/1/21) ​ $ 1,182 ​ $ 1,181 ​ $ 1,181 ​ ​ Term Loan (12.50% cash (Libor + 12.308%; Floor 12.50%), 12.00% ETP, Due 6/1/21) ​ 646 ​ 626 ​ ​ 626 ​ ​ ​ Term Loan (12.02% cash, Due 6/1/21) ​ ​ 239 ​ ​ 227 ​ ​ 227 ​ ​ Term Loan (12.03% cash, Due 6/1/21) ​ 238 ​ 228 ​ ​ 228 ​ ​ Term Loan (12.24% cash, Due 6/1/21) ​ 705 ​ 685 ​ ​ 685 ​ ​ Term Loan (13.08% cash, Due 6/1/21) ​ 276 ​ 276 ​ ​ 276 ​ ​ Term Loan (13.10% cash, Due 6/1/21) ​ 184 ​ 183 ​ ​ 183 StereoVision Imaging, Inc. (2)(12) Software Term Loan (8.50% Cash (Libor + 7.03%; Floor 8.50%), 15.63% ETP, Due 1/1/22) ​ 2,783 ​ 2,382 ​ 2,382 Total Non-controlled Affiliate Debt Investments — Technology ​ ​ ​ 5,788 ​ 5,788 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-controlled Affiliate Warrants — Technology — 0.0% (8) ​ ​ ​ Decisyon, Inc. (12) Software 82,967 Common Stock Warrants ​ ​ ​ 46 ​ — Total Non-controlled Affiliate Warrants — Technology ​ ​ ​ 46 ​ — Non-controlled Affiliate Equity — Technology — 0.8% (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ Decisyon, Inc. (12) Software ​ 72,638,663 Preferered and Common Stock ​ ​ ​ ​ 229 ​ 120 StereoVision Imaging, Inc. (2)(12) Software ​ 1,943,572 Preferred and Common Stock ​ ​ ​ ​ 791 ​ 1,639 Total Non-controlled Affiliate Equity ​ ​ ​ ​ ​ ​ 1,020 ​ 1,759 Total Non-controlled Affiliate Portfolio Investment Assets ​ ​ ​ ​ ​ ​ ​ $ 6,854 $ 7,547 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Controlled Affiliate Investments — 0.7% (8) ​ ​ ​ ​ ​ Controlled Affiliate Other Investments — Biotechnology — 0.7% (8) ​ ​ ​ ​ ​ HESP LLC (2)(12)(14) ​ Biotechnology ​ Other Investment ​ ​ ​ ​ $ 1,500 ​ $ 1,500 Total Controlled Affiliate Other Investments ​ ​ ​ ​ ​ ​ ​ 1,500 1,500 Total Controlled Affiliate Portfolio Investment Assets ​ ​ ​ $ 1,500 $ 1,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Portfolio Investment Assets — 165.8% (8) ​ ​ ​ ​ ​ ​ ​ $ 351,512 $ 352,545 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short Term Investments — Unrestricted Investments — 12.8% (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ US Bank Money Market Deposit Account ​ ​ ​ ​ ​ ​ ​ ​ $ 27,199 ​ $ 27,199 Total Short Term Investments —Unrestricted Investments ​ ​ ​ ​ ​ ​ ​ ​ $ 27,199 $ 27,199 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short Term Investments — Restricted Investments—0.5% (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ US Bank Money Market Deposit Account ​ ​ ​ ​ ​ ​ ​ ​ $ 1,057 ​ $ 1,057 Total Short Term Investments —Restricted Investments ​ ​ ​ ​ ​ ​ ​ ​ $ 1,057 $ 1,057 (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. (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”) with several entities owned or affiliated with New York Life Insurance Company (“NYL Noteholders”) and/or the term debt securitization in connection with which an affiliate of the Company made an offering of $100.0 million in aggregate principal amount of fixed rate asset-backed notes that were issued in conjunction with the $160.0 million securitization of secured loans the Company completed on August 13, 2019 (“the Asset-Backed Notes”). ​ See Notes to Consolidated Financial Statements ​ 103 Table of Contents ​ (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. All debt investments based on the London InterBank Offered Rate (“LIBOR”) are based on one-month LIBOR. For each debt investment, the current interest rate in effect as of December 31, 2020 is provided. (5) Portfolio company is a public company. (6) For debt investments, represents principal balance less unearned income. (7) Warrants, Equity and Other Investments are non-income producing. (8) Value as a percent of net assets. (9) The Company did not have any non-qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act) as of December 31, 2020. 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. (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, 2020. (14) On July 8, 2020, Espero BioPharma, Inc. and its affiliates, Jacksonville Pharmaceuticals, Inc. and Espero Pharmaceuticals, Inc. (collectively, “Espero”) assigned substantially all of their assets to their respective assignment estates and respectively appointed PSE (ABC), LLC, PS PJAX (ABC), LLC, and PPSE (ABC), LLC (collectively, “Espero ABC”) to administer their respective estates and to facilitate the orderly sale and liquidation of their property and assets. On October 6, 2020, the Court of Chancery of the State of Delaware approved the transfer of the assets of Espero to the Company and Credit II or their designees in consideration for the Company and Credit II’s credit bid at auction of $7.0 million. On October 22, 2020, Espero ABC transferred the assets of Espero to HESP LLC, a Delaware limited liability company, wholly owned by the Company. See Notes to Consolidated Financial Statements ​ 104 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2019 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal ​ Cost of Fair Portfolio Company (1)(3) Sector Type of Investment (4)(7)(9)(10) Amount ​ Investments (6) Value Non-Affiliate Investments — 160.0% (8) ​ ​ ​ Non-Affiliate Debt Investments — 153.5% (8) ​ ​ ​ Non-Affiliate Debt Investments — Life Science — 55.9% (8) ​ ​ ​ Celsion Corporation (2)(5)(12) Biotechnology Term Loan (9.98% cash (Libor + 7.63%; Floor 9.63%), 4.00% ETP, Due 7/1/22) ​ $ 2,500 ​ $ 2,464 ​ $ 2,464 ​ ​ Term Loan (9.98% cash (Libor + 7.63%; Floor 9.63%), 4.00% ETP, Due 7/1/22) ​ 2,500 ​ 2,464 ​ ​ 2,464 Encore Dermatology, Inc. (2)(12) ​ Biotechnology ​ Term Loan (10.00% cash (Libor + 7.50%; Floor 10.00%), 3.00% ETP, Due 4/1/23) ​ ​ 5,000 ​ ​ 4,929 ​ ​ 4,929 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 7.50%; Floor 10.00%), 3.00% ETP, Due 4/1/23) ​ ​ 5,000 ​ ​ 4,929 ​ ​ 4,929 Espero BioPharma, Inc. (2)(12) Biotechnology Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), 5.10% ETP, Due 3/31/20) (11) ​ 5,053 ​ 5,053 ​ 5,053 ​ ​ ​ ​ Term Loan (12.00% cash (Libor + 9.25%; Floor 12.00%), 5.10% ETP, Due 3/31/20) (11) ​ ​ 4,802 ​ ​ 4,802 ​ ​ 4,802 LogicBio, Inc.(2)(5)(12) ​ Biotechnology ​ Term Loan (8.75 % cash (Libor + 6.25%; Floor 8.75%), 4.50% ETP, Due 6/1/24 ​ ​ 5,000 ​ ​ 4,970 ​ ​ 4,970 Mustang Bio, Inc. (2)(5)(12) ​ Biotechnology ​ Term Loan (9.00% cash (Libor + 6.50%; Floor 9.00%), 5.00% ETP, Due 10/1/22) ​ ​ 5,000 ​ ​ 4,827 ​ ​ 4,827 ​ ​ ​ ​ Term Loan (9.00% cash (Libor + 6.50%; Floor 9.00%), 5.00% ETP, Due 10/1/22) ​ ​ 5,000 ​ ​ 4,924 ​ ​ 4,924 vTv Therapeutics Inc. (2)(5)(12) Biotechnology Term Loan (11.69% cash (Libor + 10.00%; Floor 10.50%), 6.00% ETP, Due 5/1/20) ​ 1,042 ​ 1,034 ​ 1,034 ​ ​ Term Loan (11.69% cash (Libor + 10.00%; Floor 10.50%), 6.00% ETP, Due 10/1/20) ​ 1,406 ​ 1,393 ​ ​ 1,393 Titan Pharmaceuticals, Inc. (2)(5)(12) Drug Delivery Term Loan (10.09% cash (Libor + 8.40%; Floor 9.50%), 5.00% ETP, Due 6/1/22) ​ 1,600 ​ 1,533 ​ 1,533 Conventus Orthopaedics, Inc. (2)(12) Medical Device Term Loan (9.69% cash (Libor + 8.00%; Floor 9.25%), 8.33% ETP, Due 7/1/23) ​ 5,311 ​ 5,233 ​ 5,233 ​ ​ Term Loan (9.69% cash (Libor + 8.00%; Floor 9.25%), 8.33% ETP, Due 7/1/23) ​ 5,311 ​ 5,233 ​ ​ 5,233 CSA Medical, Inc. (2)(12) Medical Device Term Loan (10.00% cash (Libor + 8.20%; Floor 10.00%), 5.00% ETP, Due 1/1/24) ​ 3,750 ​ 3,637 ​ 3,637 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 8.20%; Floor 10.00%), 5.00% ETP, Due 1/1/24) ​ ​ 250 ​ ​ 246 ​ ​ 246 CVRx, Inc. (2)(12) ​ Medical Device ​ Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 4/1/24) ​ ​ 5,000 ​ ​ 4,934 ​ ​ 4,934 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 4/1/24) ​ ​ 5,000 ​ ​ 4,934 ​ ​ 4,934 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 4/1/24) ​ ​ 5,000 ​ ​ 4,934 ​ ​ 4,934 ​ ​ ​ ​ Term Loan (10.00% cash (Libor + 7.80%; Floor 10.00%), 3.50% ETP, Due 4/1/24) ​ ​ 5,000 ​ ​ 4,934 ​ ​ 4,934 Lantos Technologies, Inc. (2)(12) Medical Device Term Loan (10.12% cash (Libor + 8.43%; Floor 10.00%), 10.00% ETP, Due 4/1/21) ​ 3,433 ​ 3,143 ​ 3,143 MacuLogix, Inc. (2)(12) Medical Device Term Loan (10.08% cash (Libor + 7.68%; Floor 10.08%), 4.00% ETP, Due 10/1/23) ​ 7,500 ​ 7,356 ​ 7,356 ​ ​ Term Loan (10.08% cash (Libor + 7.68%; Floor 10.08%), 4.00% ETP, Due 10/1/23) ​ 4,050 ​ 3,993 ​ ​ 3,993 Meditrina, Inc. (2)(12) ​ Medical Device ​ Term Loan (9.70% cash (Libor + 7.10%; Floor 9.70%), 4.00% ETP, Due 5/1/20) ​ ​ 3,000 ​ ​ 2,966 ​ ​ 2,966 VERO Biotech LLC (2)(12) Medical Device Term Loan (9.69% cash (Libor + 8.00%; Floor 9.25%), 5.00% ETP, Due 1/1/22) ​ 4,000 ​ 3,967 ​ 3,967 ​ ​ Term Loan (10.35% cash (Libor + 8.00%; Floor 9.25%), 5.00% ETP, Due 1/1/22) ​ 4,000 ​ 3,967 ​ ​ 3,967 Total Non-Affiliate Debt Investments — Life Science ​ ​ ​ ​ ​ 102,799 ​ 102,799 Non-Affiliate Debt Investments — Technology — 84.8% (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Audacy Corporation (2)(12)(15) Communications Term Loan (9.59% cash (Libor + 7.90%; Floor 9.50%), 5.00% ETP, Due 7/1/22) ​ 3,641 ​ 3,580 ​ 1,300 ​ ​ ​ ​ Term Loan (9.59% cash (Libor + 7.90%; Floor 9.50%), Due 2/1/20) ​ ​ 550 ​ ​ 550 ​ ​ 200 Betabrand Corporation (2)(12) ​ Consumer-related Technologies ​ Term Loan (10.05% cash (Libor + 7.50%; Floor 10.05%), 4.50% ETP, Due 9/1/23) ​ ​ 4,250 ​ ​ 4,115 ​ ​ 4,115 ​ ​ ​ ​ Term Loan (10.05% cash (Libor + 7.50%; Floor 10.05%), 4.50% ETP, Due 9/1/23) ​ ​ 4,250 ​ ​ 4,182 ​ ​ 4,182 Mohawk Group Holdings, Inc. (2)(5)(12) Consumer-related Technologies Term Loan (9.90% cash (Libor + 7.40%; Floor 9.90%), 4.00% ETP, Due 1/1/23) ​ 5,000 ​ 4,914 ​ 4,914 ​ ​ ​ ​ Term Loan (9.90% cash (Libor + 7.40%; Floor 9.90%), 4.00% ETP, Due 1/1/23) ​ ​ 5,000 ​ ​ 4,914 ​ ​ 4,914 ​ ​ Term Loan (9.90% cash (Libor + 7.40%; Floor 9.90%), 4.00% ETP, Due 1/1/23) ​ 5,000 ​ ​ 4,914 ​ ​ 4,914 Updater, Inc.(2)(12) ​ Consumer-related Technologies ​ Term Loan (11.50% cash (Prime + 5.75%; Floor 11.50%, Ceiling 14.00%),0.56% ETP, Due 12/20/24) ​ ​ 5,000 ​ ​ 4,935 ​ ​ 4,935 ​ ​ ​ ​ Term Loan (11.50% cash (Prime + 5.75%; Floor 11.50%, Ceiling 14.00%), 0.56% ETP, Due 12/20/24) ​ ​ 5,000 ​ ​ 4,935 ​ ​ 4,935 See Notes to Consolidated Financial Statements ​ 105 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2019 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal Cost of Fair Portfolio Company (1)(3) ​ Sector ​ Type of Investment (4)(7)(9)(10) Amount ​ Investments (6) ​ Value ​ ​ ​ ​ Term Loan (11.50% cash (Prime + 5.75%; Floor 11.50%, Ceiling 14.00%), 0.56% ETP, Due 12/20/24) ​ ​ 10,000 ​ ​ 9,870 ​ ​ 9,870 Canara, Inc. (2)(12) ​ Data Storage ​ Term Loan (11.00% cash (Libor + 8.60%; Floor 11.00%), 1.00% ETP, Due 2/1/23) ​ ​ 5,000 ​ ​ 4,868 ​ ​ 4,868 ​ ​ ​ ​ Term Loan (11.00% cash (Libor + 8.60%; Floor 11.00%), 1.00% ETP, Due 2/1/23) ​ ​ 5,000 ​ ​ 4,868 ​ ​ 4,868 Kaminario, Inc. (2)(12) Data Storage Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 3.00% ETP, Due 1/1/23) ​ 5,000 ​ 4,938 ​ 4,938 ​ ​ Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 3.00% ETP, Due 1/1/23) ​ 5,000 ​ 4,938 ​ ​ 4,938 ​ ​ ​ ​ Term Loan (10.65% cash (Libor + 8.40%; Floor 10.65%), 3.00% ETP, Due 1/1/23) ​ ​ 5,000 ​ ​ 4,840 ​ ​ 4,840 IgnitionOne, Inc. (2)(12) Internet and Media Term Loan (11.92% cash (Libor + 10.23%; Floor 10.23%), 2.00% ETP, Due 4/1/22) ​ 3,000 ​ 2,911 ​ 2,911 ​ ​ Term Loan (11.92% cash (Libor + 10.23%; Floor 10.23%), 2.00% ETP, Due 4/1/22) ​ 3,000 ​ 2,911 ​ 2,911 ​ ​ Term Loan (11.92% cash (Libor + 10.23%; Floor 10.23%), 2.00% ETP, Due 4/1/22) ​ 3,000 ​ 2,812 ​ 2,812 ​ ​ Term Loan (11.92% cash (Libor + 10.23%; Floor 10.23%), 2.00% ETP, Due 4/1/22) ​ 3,000 ​ 2,911 ​ 2,911 Skillshare, Inc.(2)(12) ​ Internet and Media ​ Term Loan (9.50% cash (Libor + 7.50%; Floor 9.50%), 5.00% ETP, Due 1/1/25) ​ ​ 3,000 ​ ​ 2,747 ​ ​ 2,747 ​ ​ ​ ​ Term Loan (9.50% cash (Libor + 7.50%; Floor 9.50%), 5.00% ETP, Due 1/1/25) ​ ​ 3,000 ​ ​ 2,946 ​ ​ 2,946 ​ ​ ​ ​ Term Loan (9.50% cash (Libor + 7.50%; Floor 9.50%), 5.00% ETP, Due 1/1/25) ​ ​ 3,000 ​ ​ 2,946 ​ ​ 2,946 Verve Wireless, Inc. (2)(12) Internet and Media Term Loan (15.80% cash (Libor + 8.80%; Floor 10.80%), 3.33% ETP, Due 9/1/21) ​ 2,400 ​ 2,320 ​ 2,320 The NanoSteel Company, Inc. (2)(12) Materials Term Loan (11.00% cash (Libor + 8.50%; Floor 11.00%), 4.00% ETP, Due 6/1/22) ​ 4,250 ​ 4,205 ​ 4,205 ​ ​ Term Loan (11.00% cash (Libor + 8.50%; Floor 11.00%), 4.00% ETP, Due 6/1/22) ​ 4,250 ​ 4,205 ​ ​ 4,205 Kinestral Technologies, Inc.(2)(12) ​ Power Management ​ Term Loan (9.95% cash (Libor + 7.75%; Floor 9.95%), 5.00% ETP, Due 12/1/22) ​ ​ 6,000 ​ ​ 5,442 ​ ​ 5,442 ​ ​ ​ ​ Term Loan (9.95% cash (Libor + 7.75%; Floor 9.95%), 5.00% ETP, Due 12/1/22) ​ ​ 6,000 ​ ​ 5,765 ​ ​ 5,765 Bridge2 Solutions, LLC. (2)(12) Software Term Loan (11.00% cash (Libor + 8.40%; Floor 11.00%), 2.00% ETP, Due 6/1/23) ​ 6,250 ​ 6,120 ​ 6,120 ​ ​ Term Loan (11.00% cash (Libor + 8.40%; Floor 11.00%), 2.00% ETP, Due 6/1/23) ​ 6,250 ​ 6,120 ​ ​ 6,120 ​ ​ ​ ​ Term Loan (11.00% cash (Libor + 8.40%; Floor 11.00%), 2.00% ETP, Due 9/1/23) ​ ​ 2,000 ​ ​ 1,926 ​ ​ 1,926 New Signature US, Inc. (2)(12)(13) Software Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 3.50% ETP, Due 7/1/22) ​ 2,750 ​ 2,721 ​ 2,721 ​ ​ ​ ​ Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 3.50% ETP, Due 2/1/23) ​ ​ 1,000 ​ ​ 987 ​ ​ 987 OutboundEngine, Inc. (2)(12) ​ Software ​ Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.00% ETP, Due 7/1/23) ​ ​ 4,000 ​ ​ 3,929 ​ ​ 3,929 ​ ​ ​ ​ Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.00% ETP, Due 7/1/23) ​ ​ 3,500 ​ ​ 3,438 ​ ​ 3,438 Revinate, Inc. (2)(12) ​ Software ​ Term Loan (9.50% cash (Libor + 7.00%; Floor 9.50%), 4.00% ETP, Due 6/1/23) ​ ​ 1,000 ​ ​ 928 ​ ​ 928 ​ ​ ​ ​ Term Loan (9.50% cash (Libor + 7.00%; Floor 9.50%), 4.00% ETP, Due 11/1/23) ​ ​ 5,000 ​ ​ 4,932 ​ ​ 4,932 SIGNiX, Inc. (12)(15) Software Term Loan (12.69% cash (Libor + 11.00%; Floor 11.50%), 8.67% ETP, Due 2/1/20) ​ 1,571 ​ 1,569 ​ 500 xAd, Inc. (2)(12) Software Term Loan (10.39% cash (Libor + 8.70%; Floor 10.00%), 4.75% ETP, Due 11/1/21) ​ 4,583 ​ 4,533 ​ 4,533 ​ ​ Term Loan (10.39% cash (Libor + 8.70%; Floor 10.00%), 4.75% ETP, Due 11/1/21) ​ 4,583 ​ 4,533 ​ ​ 4,533 ​ ​ ​ ​ Term Loan (10.39% cash (Libor + 8.70%; Floor 10.00%), 4.75% ETP, Due 11/1/21) ​ ​ 2,750 ​ ​ 2,720 ​ ​ 2,720 ​ ​ ​ ​ Term Loan (10.39% cash (Libor + 8.70%; Floor 10.00%), 4.75% ETP, Due 11/1/21) ​ 1,833 ​ 1,813 ​ ​ 1,813 Total Non-Affiliate Debt Investments — Technology ​ ​ ​ ​ ​ 159,751 ​ ​ 156,052 Non-Affiliate Debt Investments — Healthcare information and services — 12.8% (8) ​ ​ ​ Kate Farms, Inc. (2)(12) Other Healthcare Term Loan (9.75% cash (Libor + 7.45%; Floor 9.75%), 5.00% ETP, Due 10/1/23) ​ 5,000 ​ 4,852 ​ 4,852 ​ ​ Term Loan (9.75% cash (Libor + 7.45%; Floor 9.75%), 5.00% ETP, Due 10/1/23) ​ 5,000 ​ 4,919 ​ ​ 4,919 ​ See Notes to Consolidated Financial Statements ​ 106 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2019 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal Cost of Fair Portfolio Company (1)(3) ​ Sector ​ Type of Investment (4)(7)(9)(10) ​ Amount ​ Investments (6) ​ Value HealthEdge Software, Inc. (2)(12) Software Term Loan (9.94% cash (Libor + 8.25%; Floor 9.25%), 3.00% ETP, Due 7/1/22) ​ 3,571 ​ 3,533 ​ 3,533 ​ ​ Term Loan (9.94% cash (Libor + 8.25%; Floor 9.25%), 3.00% ETP, Due 1/1/23) ​ 3,214 ​ 3,180 ​ ​ 3,180 ​ ​ Term Loan (9.94% cash (Libor + 8.25%; Floor 9.25%), 3.00% ETP, Due 4/1/23) ​ 3,482 ​ 3,444 ​ ​ 3,444 ​ ​ Term Loan (9.94% cash (Libor + 8.25%; Floor 9.25%), 3.00% ETP, Due 1/1/24) ​ 3,750 ​ 3,707 ​ ​ 3,707 Total Non-Affiliate Debt Investments — Healthcare information and services ​ ​ 23,635 ​ 23,635 Total Non- Affiliate Debt Investments ​ ​ ​ ​ ​ 286,185 ​ 282,486 Non-Affiliate Warrant Investments — 5.9% (8) ​ ​ ​ Non-Affiliate Warrants — Life Science — 0.7% (8) ​ ​ ​ Alpine Immune Sciences, Inc. (5)(12) Biotechnology 4,632 Common Stock Warrants ​ ​ ​ 122 ​ — Celsion Corporation (2)(5)(12) Biotechnology 95,057 Common Stock Warrants ​ ​ ​ 65 ​ 6 Corvium, Inc. (2)(12) ​ Biotechnology ​ 661,956 Preferred Stock Warrants ​ ​ ​ ​ ​ 52 ​ ​ 20 Encore Dermatology, Inc. (2)(12) ​ Biotechnology ​ 1,510,878 Preferred Stock Warrants ​ ​ ​ ​ ​ 113 ​ ​ — Espero BioPharma, Inc. (2)(5)(12) Biotechnology 1,507,917 Common Stock Warrants ​ ​ ​ 184 ​ — LogicBio, Inc. (2)(5)(12) ​ Biotechnology ​ 7,843 Common Stock Warrants ​ ​ ​ ​ ​ 8 ​ ​ 3 Mustang Bio, Inc. (2)(5)(12) ​ Biotechnology ​ 216,138 Common Stock Warrants ​ ​ ​ ​ ​ 140 ​ ​ 222 Rocket Pharmaceuticals Corporation (5)(12) Biotechnology 7,051 Common Stock Warrants ​ ​ ​ 17 ​ 16 Palatin Technologies, Inc. (2)(5)(12) Biotechnology 274,725 Common Stock Warrants ​ ​ ​ 20 ​ 16 Revance Therapeutics, Inc. (5)(12) Biotechnology 34,113 Common Stock Warrants ​ ​ ​ 68 ​ 77 Strongbridge U.S. Inc. (2)(5)(12) Biotechnology 160,714 Common Stock Warrants ​ ​ ​ 72 ​ 25 Sunesis Pharmaceuticals, Inc. (5)(12) Biotechnology 2,050 Common Stock Warrants ​ ​ ​ 5 ​ — vTv Therapeutics Inc. (2)(5)(12) Biotechnology 95,293 Common Stock Warrants ​ ​ ​ 44 ​ — Titan Pharmaceuticals, Inc. (2)(5)(12) Drug Delivery 373,333 Common Stock Warrants ​ ​ ​ 95 ​ — AccuVein Inc. (2)(12) Medical Device 1,174,881 Preferred Stock Warrants ​ ​ ​ 24 ​ 29 Aerin Medical, Inc. (2)(12) Medical Device 1,818,183 Preferred Stock Warrants ​ ​ ​ 66 ​ 69 Conventus Orthopaedics, Inc. (2)(12) Medical Device 1,145,000 Preferred Stock Warrants ​ ​ ​ 149 ​ 158 CSA Medical, Inc. (12) Medical Device 1,260,345 Preferred Stock Warrants ​ ​ ​ 147 ​ 146 CVRx, Inc.(2)(12) ​ Medical Device ​ 750,000 Preferred Stock Warrants ​ ​ ​ ​ ​ 76 ​ ​ 84 Lantos Technologies, Inc. (2)(12) Medical Device 560,832 Preferred Stock Warrants ​ ​ ​ 253 ​ 44 MacuLogix, Inc. (2)(12) Medical Device 454,460 Preferred Stock Warrants ​ ​ ​ 238 ​ 154 Meditrina, Inc. (2)(12) ​ Medical Device ​ 221,510 Preferred Stock Warrants ​ ​ ​ ​ ​ 83 ​ ​ 85 NinePoint Medical, Inc. (2)(12) Medical Device 29,102 Preferred Stock Warrants ​ ​ ​ 33 ​ 6 VERO Biotech LLC (2)(12) Medical Device 408 Common Stock Warrants ​ ​ ​ 53 ​ 55 Total Non-Affiliate Warrants — Life Science ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,127 ​ ​ 1,215 Non-Affiliate Warrants — Technology — 4.8% (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Audacy Corporation (2)(12) Communications 1,545,575 Preferred Stock Warrants ​ ​ ​ 193 ​ — Intelepeer Holdings, Inc. (2)(12) Communications 2,134,617 Preferred Stock Warrants ​ ​ ​ 145 ​ 75 PebblePost, Inc. (2)(12) Communications 598,850 Preferred Stock Warrants ​ ​ ​ 93 ​ 159 Betabrand Corporation (2)(12) ​ Consumer-related Technologies ​ 248,210 Preferred Stock Warrants ​ ​ ​ ​ ​ 101 ​ ​ 104 Caastle, Inc. (2)(12) ​ Consumer-related Technologies ​ 268,591 Preferred Stock Warrants ​ ​ ​ ​ ​ 67 ​ ​ 832 Le Tote, Inc. (2)(12) Consumer-related Technologies ​ 202,974 Preferred Stock Warrants ​ ​ ​ 63 ​ 361 Mohawk Group Holdings, Inc. (2)(12) Consumer-related Technologies ​ 76,923 Common Stock Warrants ​ ​ ​ 195 ​ 2 Rhapsody International Inc. (2)(12) Consumer-related Technologies ​ 852,273 Common Stock Warrants ​ ​ ​ 164 ​ — Updater, Inc.(2)(12) ​ Consumer-related Technologies ​ 108,333 Common Stock Warrants ​ ​ ​ ​ ​ 34 ​ ​ 34 Canara, Inc. (2)(12) ​ Data Storage ​ 500,000 Preferred Stock Warrants ​ ​ ​ ​ ​ 242 ​ ​ 288 Kaminario, Inc. (2)(12) Data Storage 18,616,925 Preferred Stock Warrants ​ ​ ​ 234 ​ 272 Global Worldwide LLC (2)(12) ​ Internet and Media ​ 245,810 Preferred Stock Warrants ​ ​ ​ ​ ​ 75 ​ ​ 9 IgnitionOne, Inc. (2)(12) Internet and Media 262,910 Preferred Stock Warrants ​ ​ ​ 672 ​ — Rocket Lawyer Incorporated (2)(12) Internet and Media 261,721 Preferred Stock Warrants ​ ​ ​ 91 ​ 77 Skillshare, Inc. (2)(12) ​ Internet and Media ​ 173,717 Preferred Stock Warrants ​ ​ ​ ​ ​ 162 ​ ​ 162 Verve Wireless, Inc. (2)(12) Internet and Media 112,805 Common Stock Warrants ​ ​ ​ 121 ​ — The NanoSteel Company, Inc. (2)(12) Materials 467,277 Preferred Stock Warrants ​ ​ ​ 233 ​ 7 Kinestral, Inc. (2)(12) Power Management 3,454,774 Preferred Stock Warrants ​ ​ ​ 606 ​ 606 Avalanche Technology, Inc. (2)(12) Semiconductors 202,602 Preferred Stock Warrants ​ ​ ​ 101 ​ 170 Soraa, Inc. (2)(12) Semiconductors 203,616 Preferred Stock Warrants ​ ​ ​ 80 ​ — Bridge2 Solutions, Inc. (2)(12) Software 172,958 Common Stock Warrants ​ ​ ​ 768 ​ 2,230 BSI Platform Holdings, LLC (2)(12)(13) Software 187,500 Preferred Stock Warrants ​ ​ ​ 26 ​ 20 Clarabridge, Inc. (12) Software 53,486 Preferred Stock Warrants ​ ​ ​ 17 ​ 106 Education Elements, Inc. (2)(12) Software 238,121 Preferred Stock Warrants ​ ​ ​ 28 ​ 23 Lotame Solutions, Inc. (2)(12) Software 288,115 Preferred Stock Warrants ​ ​ ​ 22 ​ 280 OutboundEngine, Inc. (2)(12) Software 600,000 Preferred Stock Warrants ​ ​ ​ 77 ​ 83 Revinate, Inc. (2)(12) ​ Software ​ 459,770 Preferred Stock Warrants ​ ​ ​ ​ ​ 36 ​ ​ 38 Riv Data Corp. (2)(12) Software 321,428 Preferred Stock Warrants ​ ​ ​ 12 ​ 253 ​ See Notes to Consolidated Financial Statements ​ 107 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2019 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal Cost of Fair Portfolio Company (1)(3) ​ Sector ​ Type of Investment (4)(7)(9)(10) ​ Amount ​ Investments (6) ​ Value ShopKeep.com, Inc. (2)(12) Software 193,962 Preferred Stock Warrants ​ ​ ​ 118 ​ 116 SIGNiX, Inc. (12) Software 133,560 Preferred Stock Warrants ​ ​ ​ 225 ​ — Skyword, Inc. (12) Software 301,056 Preferred Stock Warrants ​ ​ ​ 48 ​ 4 Sys-Tech Solutions, Inc. (2)(12) Software 375,000 Preferred Stock Warrants ​ ​ ​ 242 ​ 2,331 Weblinc Corporation (2)(12) Software 195,122 Preferred Stock Warrants ​ ​ ​ 42 ​ — xAd, Inc. (2)(12) Software 4,343,348 Preferred Stock Warrants ​ ​ ​ 177 ​ 249 Total Non-Affiliate Warrants — Technology ​ ​ ​ ​ ​ ​ ​ 5,510 ​ 8,891 Non-Affiliate Warrants — Sustainability — 0.1% (8) ​ ​ ​ ​ Tigo Energy, Inc. (2)(12) Energy Efficiency 804,604 Preferred Stock Warrants ​ ​ ​ 100 ​ — Total Non-Affiliate Warrants — Sustainability ​ ​ ​ ​ ​ ​ 100 ​ — Non-Affiliate Warrants — Healthcare information and services — 0.4% (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ ProterixBio, Inc. (2)(12) ​ Diagnostics ​ 2,676 Common Stock Warrants ​ ​ ​ ​ ​ 42 ​ — Kate Farms, Inc. (2)(12) ​ Other Healthcare ​ 69,137 Preferred Stock Warrants ​ ​ ​ ​ ​ 86 ​ ​ 86 Watermark Medical, Inc. (2)(12) Other Healthcare 27,373 Preferred Stock Warrants ​ ​ ​ 74 ​ 63 Catasys, Inc. (2)(5)(12) ​ Software ​ 51,185 Common Stock Warrants ​ ​ ​ ​ ​ 193 ​ ​ 304 HealthEdge Software, Inc. (2)(12) Software 205,481 Preferred Stock Warrants ​ ​ ​ 84 ​ 73 Medsphere Systems Corporation (2)(12) Software 7,097,792 Preferred Stock Warrants ​ ​ ​ 60 ​ 197 Total Non-Affiliate Warrants — Healthcare information and services ​ ​ ​ 539 ​ 723 Total Non-Affiliate Warrants ​ ​ ​ ​ ​ ​ 8,276 ​ 10,829 Non-Affiliate Other Investments — 0.3% (8) ​ ​ ​ ​ ZetrOZ, Inc. (12) Medical Device Royalty Agreement ​ ​ ​ 61 ​ 500 Total Non-Affiliate Other Investments ​ ​ ​ ​ ​ 61 ​ 500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-Affiliate Equity — 0.3% (8) ​ ​ ​ ​ Palatin Technologies, Inc. (2)(5) Biotechnology 5,249 Common Stock ​ ​ ​ 31 ​ 4 Revance Therapeutics, Inc.(5) Biotechnology 5,125 Common Stock ​ ​ ​ 73 ​ 83 Sunesis Pharmaceuticals, Inc. (5) Biotechnology 13,082 Common Stock ​ ​ ​ 83 ​ 4 SnagAJob.com, Inc. (12) Consumer-related Technologies 82,974 Common Stock ​ ​ ​ 9 ​ 84 Verve Wireless, Inc. (2)(12) Internet and Media 100,598 Preferred Stock ​ ​ ​ 224 ​ — Zeta Global Holdings Corp. (2)(12) ​ Internet and Media ​ 18,405 Common Stock ​ ​ ​ ​ ​ 240 ​ ​ 240 Formetrix, Inc. (2)(12) Materials 74,286 Common Stock ​ ​ ​ 74 ​ 74 Total Non-Affiliate Equity ​ ​ ​ ​ ​ ​ 734 ​ 489 Total Non-Affiliate Portfolio Investment Assets ​ ​ ​ ​ ​ $ 295,256 $ 294,304 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-controlled Affiliate Investments — 4.7% (8) ​ ​ ​ ​ Non-controlled Affiliate Debt Investments — Technology — 3.2% (8) ​ ​ ​ Decisyon, Inc. (12) Software Term Loan (13.998% cash (Libor + 12.31%; Floor 12.50%), 12.00% ETP, Due 6/1/21) ​ $ 1,206 ​ $ 1,206 ​ $ 1,206 ​ ​ Term Loan (14.41% cash (Libor + 12.31%; Floor 12.50%), 12.00% ETP, Due 6/1/21) ​ 660 ​ 639 ​ ​ 639 ​ ​ ​ Term Loan (12.02% cash, Due 6/1/21) ​ ​ 234 ​ ​ 234 ​ ​ 234 ​ ​ Term Loan (12.03% cash, Due 6/1/21) ​ 234 ​ 234 ​ ​ 234 ​ ​ Term Loan (12.24% cash, Due 6/1/21) ​ 704 ​ 704 ​ ​ 704 ​ ​ Term Loan (13.08% cash, Due 6/1/21) ​ 283 ​ 283 ​ ​ 283 ​ ​ Term Loan (13.10% cash, Due 6/1/21) ​ 187 ​ 187 ​ ​ 187 StereoVision Imaging, Inc. (12) Software Term Loan (8.72% Cash (Libor + 7.03%; Floor 8.50%), 8.50% ETP, Due 9/1/21) (11) ​ 2,783 ​ 2,382 ​ 2,382 Total Non-controlled Affiliate Debt Investments — Technology ​ ​ ​ 5,869 ​ 5,869 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-controlled Affiliate Warrants — Technology — 0.0% (8) ​ ​ ​ Decisyon, Inc. (12) Software 82,967 Common Stock Warrants ​ ​ ​ 46 ​ — Total Non-controlled Affiliate Warrants — Technology ​ ​ ​ 46 ​ — Non-controlled Affiliate Equity — Technology — 1.5% (8) ​ ​ ​ ​ ​ ​ ​ ​ Decisyon, Inc. (12) Software ​ 45,365,936 Common Stock ​ ​ ​ ​ 185 ​ 75 StereoVision Imaging, Inc. (12) Software ​ 1,943,572 Common Stock ​ ​ ​ ​ 791 ​ 2,653 Total Non-controlled Affiliate Equity ​ ​ ​ ​ ​ ​ 976 ​ 2,728 Total Non-controlled Affiliate Portfolio Investment Assets ​ ​ ​ ​ ​ $ 6,891 $ 8,597 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Controlled Affiliate Investments — 9.0% (8) ​ ​ ​ ​ ​ Controlled Affiliate Equity — Financial — 9.0% (8) ​ ​ ​ ​ ​ Horizon Secured Loan Fund I LLC (12)(14) ​ Investment funds ​ ​ ​ ​ ​ $ 16,684 $ 16,650 Total Controlled Affiliate Equity ​ ​ ​ ​ ​ ​ ​ 16,684 16,650 Total Controlled Affiliate Portfolio Investment Assets ​ ​ ​ $ 16,684 $ 16,650 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Portfolio Investment Assets — 173.7% (8) ​ ​ ​ ​ ​ ​ ​ $ 318,831 $ 319,551 ​ See Notes to Consolidated Financial Statements ​ 108 Table of Contents Horizon Technology Finance Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2019 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of Fair Portfolio Company (1)(3) ​ Sector ​ Type of Investment (4)(7)(9)(10) ​ ​ ​ ​ Investments (6) ​ Value Short Term Investments — Unrestricted Investments — 5.3% (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ US Bank Money Market Deposit Account ​ ​ ​ ​ ​ ​ ​ ​ $ 9,787 ​ $ 9,787 Total Short Term Investments —Unrestricted Investments ​ ​ ​ ​ ​ ​ $ 9,787 $ 9,787 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short Term Investments — Restricted Investments—0.6% (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ US Bank Money Market Deposit Account ​ ​ ​ ​ ​ ​ ​ ​ $ 1,133 ​ $ 1,133 Total Short Term Investments —Restricted Investments ​ ​ ​ ​ ​ ​ $ 1,133 $ 1,133 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (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. (2) Has been pledged as collateral under the Key Facility. (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, 2019 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, 2019, 4.9% and 4.8% 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. See Notes to Consolidated Financial Statements 109 Table of Contents (13) New Signature US, Inc. is a subsidiary of BSI Platform Holdings, LLC. (14) On June 1, 2018, the Company entered into an agreement with Arena Sunset SPV, LLC (“Arena”) to co-invest through Horizon Secured Loan Fund I LLC (“HSLFI”), a joint venture, which is expected to make investments, either directly or indirectly through subsidiaries, primarily in the form of secured loans to development-stage companies in the technology, life science, healthcare information and services and sustainability industries. All HSLFI investment decisions require unanimous approval of a quorum of HSLFI’s board of managers, which consists of two representatives of the Company and Arena. Although the Company owns more than 25% of the voting securities of HSLFI, the Company does not have sole control over significant actions of HSLFI for purposes of the 1940 Act or otherwise. (15) Debt investment is on non-accrual status as of December 31, 2019. See Notes to Consolidated Financial Statements ​ ​ 110 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”. The Company was formed to continue and expand the business of Compass Horizon Funding Company LLC, a Delaware limited liability company, which commenced operations in March 2008 and became the Company’s wholly owned subsidiary upon the completion of the Company’s IPO. 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 Asset-Backed Notes. The Company formed Horizon Funding I, LLC (“HFI”) as a Delaware limited liability company on May 9, 2018, with 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. On April 21, 2020, the Company purchased all of the limited liability company interests of Arena in HSLFI, including, without limitation, undistributed amounts owed to Arena and interest accrued and unpaid on the debt investments of HSLFI through the date of purchase. As of April 21, 2020, HSLFI and its subsidiary, HFI, are consolidated by the Company. The Company has also established an additional wholly owned subsidiary, which is structured as a Delaware limited liability company, to hold the assets of a portfolio company acquired in connection with foreclosure or bankruptcy, which is a separate legal entity from the Company. The Company’s investment strategy is to maximize the investment portfolio’s return by generating current income from the debt investments the Company makes and capital appreciation from the warrants the Company receives when making such debt investments. The Company has entered into an investment management agreement (the “Investment Management Agreement”) with Horizon Technology Finance Management LLC (the “Advisor”) under which the Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company. ​ ​ 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-K 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 111 Table of Contents 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. 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. Although the Company owned more than 25% of the voting securities of HSLFI through April 21, 2020, the Company did not have sole control over significant actions of HSLFI for purposes of the 1940 Act or otherwise, and thus did not consolidate its interest prior to April 21, 2020. 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, 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. 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. 112 Table of Contents Investments Investments are recorded at fair value. The Company’s board of directors (the “Board”) determines the fair value of the Company’s portfolio investments. 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 December 31, 2020, there were two investments on non-accrual status with a cost of $13.9 million and a fair value of $8.8 million. As of December 31, 2019, there were two investments on non-accrual status with a cost of $5.7 million and a fair value of $2.0 million. For the year ended December 31, 2020, the Company recognized, as interest income, payments of $0.03 million received from one portfolio company whose debt investment was on non-accrual status. For the years ended December 31, 2019 and 2018, the Company did not recognize any interest income from debt investments on non-accrual status. The Company receives a variety of fees from borrowers in the ordinary course of conducting its business, including advisory fees, commitment fees, amendment fees, non-utilization fees, success fees and prepayment fees. In a limited number of cases, the Company may also receive a non-refundable deposit earned upon the termination of a transaction. Debt investment origination fees, net of certain direct origination costs, are deferred and, along with unearned income, are amortized as a level-yield adjustment over the respective term of the debt investment. All other income is recognized when earned. Fees for counterparty debt investment commitments with multiple debt investments are allocated to each debt investment based upon each debt investment’s relative fair value. When a debt investment is placed on non-accrual status, the amortization of the related fees and unearned income is discontinued until the debt investment is returned to accrual status. Certain debt investment agreements also require the borrower to make an ETP, that is accrued into interest receivable and taken into income over the life of the debt investment to the extent such amounts are expected to be collected. The Company will generally cease accruing the income if there is insufficient value to support the accrual or the Company does not expect the borrower to be able to pay the ETP when due. The proportion of the Company’s total investment income that resulted from the portion of ETPs not received in cash for the years ended December 31, 2020, 2019 and 2018 was 5.8%, 5.3% and 6.5%, 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. Prior to consolidating the investment in HSLFI on and after April 21, 2020, distributions from HSLFI were evaluated at the time of distribution to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company did not record distributions from HSLFI as dividend income unless there was sufficient accumulated tax-basis earnings and profit in HSLFI prior to distribution. Distributions that were classified as a return of capital were recorded as a reduction in the cost basis of the investment. For the period January 1, 2020 through April 21, 2020, HSLFI made no distributions classified as dividend income or a return of capital to the Company. For the year ended December 31, 2019, HSLFI distributed $0.7 million classified as dividend income to the Company. For the period June 1, 2018 (the commencement of HSLFI’s operations) through December 31, 2018, HSLFI distributed $0.3 million classified as dividend income to the Company. 113 Table of Contents 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 December 31, 2020 and 2019 was $3.2 million and $3.3 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 December 31, 2020 and 2019 were $4.1 million and $3.1 million, respectively. The amortization expense for the years ended December 31, 2020, 2019 and 2018 was $1.0 million, $0.7 million and $0.6 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’s (“FASB’s”), 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. For the years ended December 31, 2020, 2019 and 2018, the Company reclassified $0.2 million, $0.2 million and $0.03 million, respectively, to paid-in capital from distributions in excess of net investment income, which related to excise taxes payable. 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 years ended December 31, 2020, 2019 and 2018, $0.2 million, $0.2 million and $0.03 million, respectively, was recorded for U.S. federal excise tax. 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 December 31, 2020 and 2019. The Company’s income tax returns for the 2019, 2018 and 2017 tax years remain subject to examination by U.S. federal and state tax authorities. 114 Table of Contents 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 March 26, 2019, the Company completed a follow-on public offering of 2,000,000 shares of its common stock at a public offering price of $12.14 per share, for total net proceeds to the Company of $23.1 million, after deducting underwriting commission and discounts and other offering expenses. On August 2, 2019, the Company entered into an At-The-Market (“ATM”) sales agreement (the “Prior Equity Distribution Agreement”), with Goldman Sachs & Co. LLC and B. Riley FBR, Inc. (each a “Sales Agent” and, collectively, the “Sales Agents”). The Prior Equity Distribution Agreement provided that the Company may offer and sell its shares from time to time through the Sales Agents up to $50.0 million worth of its common stock, in amounts and at times to be determined by the Company. On July 30, 2020, the Company terminated the Prior Equity Distribution Agreement and entered into a new ATM sales agreement (the “Equity Distribution Agreement”), with the Sales Agents. The remaining shares available under the Prior Equity Distribution Agreement are no longer available for issuance. The Equity Distribution Agreement provides that the Company may offer and sell its shares from time to time through the Sales Agents up to $100.0 million worth of its common stock, in amounts and at times to be determined by the Company. Sales of the Company’s common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market,” as defined in Rule 415 under the Securities Act, including sales made directly on the NASDAQ or similar securities exchange or sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices. During the year ended December 31, 2020, the Company sold 3,702,500 shares of common stock under the Prior Equity Distribution Agreement and the Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $44.6 million, including $1.0 million of offering expenses, from these sales. During the year ended December 31, 2019, the Company sold 2,012,844 shares of common stock under the Prior Equity Distribution Agreement. For the same period, the Company received total accumulated net proceeds of approximately $24.0 million, including $0.6 million of offering expenses, from these sales. The Company generally uses net proceeds from these offerings to make investments, to pay down liabilities and for general corporate purposes. As of December 31, 2020, shares representing approximately $76.0 million of its common stock remain available for issuance and sale under the Equity Distribution Agreement. Stock Repurchase Program On April 24, 2020, 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, 2021 or the repurchase of $5.0 million of the Company’s common stock. During the years ended December 31, 2020, 2019 and 2018, the Company did not make any repurchases of its common stock. From the inception of the stock repurchase program through December 31, 2020, the 115 Table of Contents 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 March 2020, the FASB issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently assessing the impact of ASU 2020-04 and the LIBOR transition on its consolidated financial statements. ​ Note 3. Related party transactions Investment Management Agreement At a special meeting of the stockholders on October 30, 2018, the stockholders approved a new Investment Management Agreement which became effective on March 7, 2019. The new Investment Management Agreement replaced the previously effective Amended and Restated Investment Management Agreement dated as of October 28, 2010 and amended effective July 1, 2014. On October 26, 2020, the Board unanimously approved the renewal of the Investment Management Agreement. 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. Through October 30, 2018, the base management fee was 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. From and after October 31, 2018, the first date on which the reduced asset coverage requirements in Section 61(a)(2) of the 1940 Act applied to the Company, the base management fee was and will be 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 116 Table of Contents 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 December 31, 2020 and 2019 was $0.6 million and $0.5 million, respectively. The base management fee expense was $6.5 million, $5.6 million and $4.6 million for the years ended December 31, 2020, 2019 and 2018, 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. 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 117 Table of Contents 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. On March 5, 2019, the Advisor irrevocably waived the receipt of incentive fees related to the amounts previously deferred that it may be entitled to receive under the Investment Management Agreement for the period commencing on January 1, 2019 and ending on December 31, 2019. Such waived incentive fees will not be subject to recoupment. During the year ended December 31, 2019, the Advisor waived performance based incentive fees of $1.8 million which the Advisor would have otherwise been paid by the Company. On March 6, 2018, the Advisor irrevocably waived the receipt of incentive fees related to the amounts previously deferred that it may be entitled to receive under the Investment Management Agreement for the period commencing on January 1, 2018 and ending on December 31, 2018. Such waived incentive fees are not subject to recoupment. During the years ended December 31, 2018, the Advisor waived performance based incentive fees of $1.2 million which the Advisor would have otherwise earned. The net performance based incentive fee expense was $5.2 million, $5.1 million and $3.2 million for the years ended December 31, 2020, 2019 and 2018, respectively. The incentive fee on Pre-Incentive Fee Net Investment Income was not subject to the Incentive Fee Cap and Deferral Mechanism for the years ended December 31, 2020 and 2019. The incentive fee on Pre-Incentive Fee Net Investment Income was subject to the Incentive Fee Cap and Deferral Mechanism for the year ended December 31, 2018, which resulted in $0.2 million of reduced expense and additional net investment income. The performance based incentive fee payable at December 31, 2020 and 2019 was $1.0 million and $1.6 million, respectively. The entire incentive fee payable at December 31, 2020 and 2019 represented part one of the incentive fee. 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 $1.0 million, $0.9 million and $0.7 million for years ended December 31, 2020, 2019 and 2018, respectively. ​ 118 Table of Contents Note 4. Investments The following table shows the Company’s investments as of December 31, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ December 31, 2019 ​ Cost Fair Value Cost Fair Value ​ ​ (In thousands) Investments ​ ​ ​ ​ Debt ​ $ 339,838 ​ $ 333,495 ​ $ 292,054 ​ $ 288,355 Warrants ​ 7,520 ​ 14,031 ​ 8,322 ​ 10,829 Other ​ 1,514 ​ 1,700 ​ 61 ​ 500 Equity ​ 2,640 ​ 3,319 ​ 1,710 ​ 3,217 Equity interest in HSLFI ​ — ​ — ​ 16,684 ​ 16,650 Total investments ​ $ 351,512 ​ $ 352,545 ​ $ 318,831 ​ $ 319,551 ​ The following table shows the Company’s investments by industry sector as of December 31, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ December 31, 2019 ​ Cost Fair Value Cost Fair Value ​ ​ (In thousands) Life Science ​ ​ ​ ​ Biotechnology ​ $ 46,669 ​ $ 46,898 ​ $ 42,886 ​ $ 42,265 Drug Delivery ​ — ​ — ​ 1,628 ​ 1,533 Medical Device ​ 109,330 ​ 110,567 ​ 60,660 ​ 60,807 Technology ​ ​ ​ ​ ​ ​ ​ Communications ​ 270 ​ 351 ​ 4,561 ​ 1,734 Consumer-Related ​ 60,349 ​ 60,847 ​ 43,412 ​ 44,196 Data Storage ​ 23,429 ​ 23,824 ​ 24,928 ​ 25,012 Internet and Media ​ 7,657 ​ 9,833 ​ 24,089 ​ 22,992 Materials ​ 6,857 ​ 1,737 ​ 8,717 ​ 8,491 Networking ​ ​ 9,902 ​ ​ 9,902 ​ ​ — ​ ​ — Power Management ​ 1,585 ​ 1,326 ​ 11,813 ​ 11,813 Semiconductors ​ 181 ​ — ​ 181 ​ 170 Software ​ 60,238 ​ 60,755 ​ 54,998 ​ 59,530 Sustainability ​ ​ ​ ​ ​ ​ ​ Energy Efficiency ​ 100 ​ — ​ 100 ​ — Healthcare Information and Services ​ ​ ​ ​ ​ ​ ​ Diagnostics ​ 9,850 ​ 9,850 ​ 42 ​ — Other ​ 14,989 ​ 15,985 ​ 9,931 ​ 9,920 Software ​ 106 ​ 670 ​ 14,201 ​ 14,438 Investment funds ​ ​ ​ ​ ​ ​ ​ HSLFI ​ — ​ — ​ 16,684 ​ 16,650 Total investments ​ $ 351,512 ​ $ 352,545 ​ $ 318,831 ​ $ 319,551 ​ Horizon Secured Loan Fund I LLC On June 1, 2018, the Company and Arena formed a joint venture, HSLFI, to make investments, either directly or indirectly through subsidiaries, primarily in secured loans to development-stage companies in the technology, life science, healthcare information and services and sustainability industries. HSLFI was formed as a Delaware limited liability company and was not consolidated by either the Company or Arena for financial reporting purposes. On April 21, 2020, the Company purchased all of the limited liability company interests of Arena in HSLFI, including, without limitation, undistributed amounts owed to Arena and interest accrued and unpaid on the debt investments of HSLFI through the date of purchase, for $17.1 million. In addition, Arena received 50% of the warrants held by HSLFI or HFI at closing. As of April 21, 2020, HSLFI is wholly-owned by the Company and the assets and liabilities of HSLFI and HFI will be 119 Table of Contents consolidated with the assets and liabilities of the Company. The transaction is accounted for as an asset acquisition under GAAP. Investments held by HSLFI were measured at fair value using the same valuation methodology as described in Note 6. As of December 31, 2019, HSLFI had total assets of $48.3 million. HSLFI’s portfolio consisted of debt investments in eight portfolio companies as of December 31, 2019. As of December 31, 2019, the largest investment in a single portfolio company in the HSLFI’s portfolio in aggregate principal amount was $11.3 million and the five largest investments in portfolio companies in the HSLFI totaled $30.3 million. As of December 31, 2019, HSLFI had no investments on non-accrual status. HSLFI invested in portfolio companies in the same industries in which the Company may directly invest. The Company invested cash or securities in portfolio companies in HSLFI in exchange for limited liability company equity interests in HSLFI. As of December 31, 2019, the Company and Arena each owned 50.0% of the equity interests of HSLFI. The Company had an original commitment to fund $25.0 million of equity interests in HSLFI. As of December 31, 2019, $9.8 million was unfunded. The Company’s investment in HSLFI consisted of an equity contribution of $15.2 million as of December 31, 2019. During the period January 1, 2020 through April 21, 2020, there were no distributions from HSLFI. During the year ended December 31, 2019, HSLFI distributed $1.4 million. 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 a sale and servicing agreement with HFI, as Issuer, and the Company, as Servicer (the “Sale and Servicing Agreement”), as amended by that certain Amendment No. 1 to the Sale and Servicing Agreement, dated June 19, 2019 (the “Amendment No. 1”). Any notes issued by HFI were collateralized by all investments held by HFI and permitted an advance rate of up to 67% of the aggregate principal amount of eligible debt investments. The notes were issued pursuant to that certain indenture by and between HFI and U.S. Bank National Association, dated as of June 1, 2018 (the “Indenture”). Prior to June 5, 2020, 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 2.75% and 3.25% depending on the rating of such notes at the time of issuance. There were $15.0 million in advances made by the NYL Noteholders as of December 31, 2019 at an interest rate of 4.98%. The following table shows HSLFI’s investments as of December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal Cost of Fair Portfolio Company (1) ​ Sector ​ Type of Investment (2)(3)(4) ​ Amount ​ Investments (5) ​ Value (Dollars in thousands) Debt Investments — Life science ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Celsion Corporation (6)(7)(8) Biotechnology Term Loan (9.63% cash (Libor + 7.63%; Floor 9.63%), 4.00% ETP, Due 7/1/22) ​ $ 2,500 ​ $ 2,464 ​ $ 2,464 ​ ​ Term Loan (9.63% cash (Libor + 7.63%; Floor 9.63%), 4.00% ETP, Due 7/1/22) ​ ​ 2,500 ​ ​ 2,464 ​ ​ 2,464 Encore Dermatology, Inc. (6)(7) Biotechnology Term Loan (10.00% cash (Libor + 7.50%; Floor 10.00%), 3.00% ETP, Due 4/1/23) ​ 5,000 ​ 4,929 ​ 4,929 Mustang Bio, Inc. (6)(7)(8) Biotechnology Term Loan (9.00% cash (Libor + 6.50%; Floor 9.00%), 5.00% ETP, Due 10/1/22) ​ 5,000 ​ 4,924 ​ 4,924 Total Debt Investments — Life science ​ ​ ​ ​ 14,781 ​ 14,781 Debt Investments — Technology ​ ​ ​ Bridge2 Solutions, LLC (6)(7) Software Term Loan (11.00% cash (Libor + 8.4%; Floor 11.00%), 2.00% ETP, Due 9/1/23) ​ 500 ​ 481 ​ ​ 481 New Signature US, Inc. (6)(7)(9) Software Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 3.50% ETP, Due 7/1/22) ​ 8,250 ​ 8,163 ​ ​ 8,163 ​ ​ Term Loan (10.50% cash (Libor + 8.50%; Floor 10.50%), 3.50% ETP, Due 2/1/23) ​ 3,000 ​ 2,961 ​ 2,961 OutboundEngine, Inc. (6)(7) Software Term Loan (11.15% cash (Libor + 8.40%; Floor 11.15%), 3.00% ETP, Due 7/1/23) ​ 500 ​ 491 ​ ​ 491 Revinate, Inc. (6)(7) Software Term Loan (9.50% cash (Libor + 7.00%; Floor 9.50%), 3.00% ETP, Due 6/1/23) ​ 4,000 ​ 3,952 ​ 3,952 Total Debt Investments — Technology ​ ​ ​ ​ 16,048 ​ 16,048 Debt Investments — Healthcare information and services ​ ​ ​ HealthEdge Software, Inc. (6)(7) Software Term Loan (9.94% cash (Libor + 8.25%; Floor 9.25%), 3.00% ETP, Due 10/1/23) ​ 3,750 ​ 3,709 ​ 3,709 Total Debt Investments — Healthcare information and services ​ ​ ​ 3,709 ​ 3,709 Total Debt Investments ​ ​ ​ ​ 34,538 ​ 34,538 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Warrant Investments — Life science ​ ​ ​ 120 Table of Contents Celsion Corporation (6)(7)(8) Biotechnology 95,057 Common Stock Warrants ​ ​ ​ ​ 58 ​ 6 Encore Dermatology, Inc. (6)(7) Biotechnology 503,626 Preferred Stock Warrants ​ ​ ​ ​ 38 ​ — Mustang Bio, Inc. (6)(7)(8) Biotechnology 72,046 Common Stock Warrants ​ ​ ​ ​ 45 ​ 74 CSA Medical, Inc. (6)(7) Medical Device 17,751 Preferred Stock Warrants ​ ​ ​ ​ 2 ​ 2 Total Warrant Investments — Life science ​ ​ ​ ​ ​ ​ 143 ​ 82 Warrant Investments — Technology ​ ​ ​ ​ ​ Intelepeer Holdings, Inc. (6)(7) Communications 2,081,934 Preferred Stock Warrants ​ ​ ​ ​ 82 ​ 72 Bridge2 Solutions, LLC (6)(7) ​ Software ​ 2,500 Common Stock Warrants ​ ​ ​ ​ ​ 18 ​ ​ 34 BSI Platform Holdings, LLC (6)(7)(9) Software 562,500 Preferred Stock Warrants ​ ​ ​ ​ 77 ​ 62 OutboundEngine, Inc. (6)(7) ​ Software ​ 40,000 Preferred Stock Warrants ​ ​ ​ ​ ​ 5 ​ ​ 6 Revinate Inc. (6)(7) Software 216,362 Preferred Stock Warrants ​ ​ ​ ​ 16 ​ 18 Total Warrant Investments — Technology ​ ​ ​ ​ ​ ​ 198 ​ 192 Warrant Investments — Healthcare information and services ​ ​ ​ ​ ​ HealthEdge Software, Inc. (6)(7) Software 47,418 Preferred Stock Warrants ​ ​ ​ ​ 16 ​ 17 Total Warrant Investments — Healthcare information and services ​ ​ ​ 16 ​ 17 Total Warrant Investments ​ ​ ​ ​ 357 ​ 291 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Portfolio Investment Assets ​ ​ ​ ​ $ 34,895 ​ $ 34,829 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short Term Investments — Unrestricted Investments ​ ​ ​ ​ US Bank Money Market Deposit Account (6) ​ ​ ​ $ 11,201 ​ $ 11,201 Total Short Term Investments — Unrestricted Investments ​ ​ ​ $ 11,201 ​ $ 11,201 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short Term Investments — Restricted Money Market Funds ​ ​ ​ ​ US Bank Money Market Deposit Account (6) ​ ​ ​ $ 138 ​ $ 138 Total Short Term Investments — Restricted Money Market Funds ​ ​ ​ $ 138 ​ $ 138 (1) All investments of HSLFI are in entities which are organized under the laws of the United States and have a principal place of business in the United States. (2) All interest is payable in cash due monthly in arrears, unless otherwise indicated, and applies only to HSLFI’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 LIBOR are based on one-month LIBOR. For each debt investment, the current interest rate in effect as of December 31, 2019 is provided. (3) 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. (4) Warrants are non-income producing. (5) For debt investments, represents principal balance less unearned income. (6) Has been pledged as collateral under the NYL Facility. (7) The fair value of the investment was valued using significant unobservable inputs. (8) Portfolio company is a public company. (9) New Signature US, Inc. is a subsidiary of BSI Platform Holdings, LLC. 121 Table of Contents The following tables show certain summarized financial information for HSLFI as of December 31, 2019, for the period January 1, 2020 through April 21, 2020, for the year ended December 31, 2019 and for the period June 1, 2018 through December 31, 2018: ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2019 ​ ​ (In thousands) Selected Statement of Assets and Liabilities Information ​ Total investments at fair value (cost of $34,895) ​ $ 34,829 Cash and cash equivalents ​ 503 Investments in money market funds ​ 11,201 Restricted investments in money market funds ​ ​ 138 Interest receivable ​ 477 Other assets ​ 1,109 Total assets ​ $ 48,257 ​ ​ ​ ​ Borrowings ​ $ 14,955 Other liabilities ​ 126 Total liabilities ​ 15,081 Members’ equity ​ 33,176 Total liabilities and members’ equity ​ $ 48,257 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the period ​ ​ ​ For the period ​ ​ January 1, 2020 ​ For the year ​ June 1, 2018 ​ ​ through ​ ended ​ through ​ April 21, 2020 December 31, 2019 December 31, 2018 ​ ​ (In thousands) Selected Statements of Operations Information ​ ​ ​ ​ ​ ​ Interest income on investments ​ $ 1,353 ​ $ 5,291 ​ $ 689 Total investment income ​ $ 1,465 ​ $ 5,699 ​ $ 689 Total expenses ​ $ 1,229 ​ $ 1,227 ​ $ 180 Net investment income ​ $ 236 ​ $ 4,472 ​ $ 509 Net realized gain on investments ​ $ 120 ​ ​ — ​ $ — Net unrealized depreciation on investments ​ $ (392) ​ $ (28) ​ $ (37) Net (decrease) increase in net assets resulting from operations ​ $ (36) ​ $ 4,444 ​ $ 472 ​ ​ 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. 122 Table of Contents Transactions related to investments in non-controlled affiliated companies for the year ended December 31, 2020 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ Fair value at ​ ​ ​ ​ ​ ​ ​ Transfers ​ ​ ​ ​ Net ​ Fair value at ​ ​ ​ ​ ​ Portfolio ​ December 31, ​ ​ ​ ​ Principal ​ in/(out) at ​ Discount ​ unrealized ​ December 31, ​ Net realized ​ Interest Company 2019 Purchases Payments fair value accretion gain/(loss) 2020 gain/(loss) income ​ ​ (In thousands) Decisyon, Inc. ​ $ 1,206 ​ $ — ​ $ (25) ​ $ — ​ $ — ​ $ — ​ $ 1,181 ​ $ — ​ $ 165 ​ ​ 639 ​ (45) ​ (14) ​ — ​ 46 ​ — ​ 626 ​ — ​ 87 ​ ​ 234 ​ — ​ (7) ​ — ​ — ​ — ​ 227 ​ — ​ 27 ​ ​ 234 ​ — ​ (6) ​ — ​ — ​ — ​ 228 ​ — ​ 27 ​ ​ 704 ​ — ​ (19) ​ — ​ — ​ — ​ 685 ​ — ​ 83 ​ ​ 283 ​ — ​ (7) ​ — ​ — ​ — ​ 276 ​ — ​ 35 ​ ​ 187 ​ — ​ (4) ​ — ​ — ​ — ​ 183 ​ — ​ 23 ​ ​ 75 ​ 45 ​ — ​ — ​ — ​ — ​ 120 ​ — ​ — StereoVision, Inc. ​ 2,382 ​ — ​ — ​ — ​ — ​ — ​ 2,382 ​ — ​ 242 ​ ​ 2,653 ​ — ​ — ​ — ​ — ​ (1,014) ​ 1,639 ​ — ​ — Total non-controlled affiliates ​ $ 8,597 ​ $ — ​ $ (82) ​ $ — ​ $ 46 ​ $ (1,014) ​ $ 7,547 ​ $ — ​ $ 689 ​ Transactions related to investments in non-controlled affiliated companies for the year ended December 31, 2019 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2019 ​ ​ ​ ​ ​ ​ ​ ​ Fair value at ​ ​ ​ ​ ​ ​ ​ Transfers ​ ​ ​ ​ Net ​ Fair value at ​ ​ ​ ​ ​ ​ Portfolio ​ December 31, ​ ​ ​ ​ Principal ​ in/(out) at ​ Discount ​ unrealized ​ December 31, ​ Net realized ​ Interest Company 2018 Purchases Payments fair value accretion gain/(loss) 2019 gain/(loss) income ​ ​ (In thousands) Decisyon, Inc. ​ $ 1,464 ​ $ — ​ $ (316) ​ $ — ​ $ — ​ $ 58 ​ $ 1,206 ​ $ — ​ $ 212 ​ ​ 764 ​ — ​ (173) ​ — ​ 17 ​ 31 ​ 639 ​ — ​ 112 ​ ​ 240 ​ — ​ (16) ​ — ​ — ​ 10 ​ 234 ​ — ​ 31 ​ ​ 240 ​ — ​ (16) ​ — ​ — ​ 10 ​ 234 ​ — ​ 31 ​ ​ 721 ​ — ​ (46) ​ — ​ — ​ 29 ​ 704 ​ — ​ 93 ​ ​ 289 ​ — ​ (17) ​ — ​ — ​ 11 ​ 283 ​ — ​ 39 ​ ​ 192 ​ — ​ (13) ​ — ​ — ​ 8 ​ 187 ​ — ​ 26 ​ ​ 75 ​ — ​ — ​ — ​ — ​ — ​ 75 ​ — ​ — StereoVision, Inc. ​ 2,798 ​ — ​ (416) ​ — ​ — ​ — ​ 2,382 ​ — ​ 295 ​ ​ 791 ​ — ​ — ​ — ​ — ​ 1,862 ​ 2,653 ​ — ​ — Total non-controlled affiliates ​ $ 7,574 ​ $ — ​ $ (1,013) ​ $ — ​ $ 17 ​ $ 2,019 ​ $ 8,597 ​ $ — ​ $ 839 ​ 123 Table of Contents 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 year ended December 31, 2020 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value at ​ ​ ​ ​ ​ ​ Transfers ​ ​ ​ ​ Net ​ ​ ​ ​ Fair value at ​ ​ ​ Portfolio December 31, ​ ​ ​ ​ ​ in/(out) at ​ Dividends unrealized ​ Net realized December 31, ​ Dividend Company 2019 Purchases Distributions fair value declared gain/(loss) gain/(loss) 2020 income ​ ​ (In thousands) HSLFI (1) ​ $ 16,650 ​ $ — ​ $ — ​ $ (16,498) ​ $ 118 ​ $ (12) ​ $ (258) ​ $ — ​ $ 118 HESP LLC ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,500 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,500 ​ ​ — Total controlled affiliates ​ $ 16,650 ​ $ — ​ $ — ​ $ (14,998) ​ $ 118 ​ $ (12) ​ $ (258) ​ $ 1,500 ​ $ 118 (1) The Company and Arena were the members of HSLFI, a joint venture formed as a Delaware limited liability company that was not consolidated by either member for financial reporting purposes. The members provided cash or securities in portfolio companies to HSLFI in exchange for limited liability company equity interests. All HSLFI investment decisions required unanimous approval of a quorum of HSLFI’s board of managers, which consisted of two representatives of the Company and Arena. Because management of HSLFI was shared equally between the Company and Arena, the Company did not have sole control over significant actions of HSLFI for purposes of the 1940 Act or otherwise. On April 21, 2020, the Company purchased all of the limited liability company interests of Arena in HSLFI. As of December 31, 2020, HLSFI is consolidated by the Company. Transactions related to investments in controlled affiliated companies for the year ended December 31, 2019 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value at ​ ​ ​ ​ ​ ​ ​ Transfers ​ ​ ​ ​ Net ​ ​ ​ ​ Fair value at ​ ​ ​ Portfolio December 31, ​ ​ ​ ​ ​ ​ in/(out) at ​ Dividends unrealized ​ Net realized December 31, ​ Dividend Company 2018 Purchases Distributions fair value declared gain/(loss) gain/(loss) 2019 income ​ ​ (In thousands) HSLFI (1) ​ $ 13,243 ​ $ 1,900 ​ $ (715) ​ $ — ​ $ 2,236 ​ $ (14) ​ $ — ​ $ 16,650 ​ $ 2,236 Total controlled affiliates ​ $ 13,243 ​ $ 1,900 ​ $ (715) ​ $ — ​ $ 2,236 ​ $ (14) ​ $ — ​ $ 16,650 ​ $ 2,236 (1) The Company and Arena were the members of HSLFI, a joint venture formed as a Delaware limited liability company that was not consolidated by either member for financial reporting purposes. The members provided cash or securities in portfolio companies to HSLFI in exchange for limited liability company equity interests. All HSLFI investment decisions required unanimous approval of a quorum of HSLFI’s board of managers, which consisted of two representatives of the Company and Arena. Because management of HSLFI was shared equally between the Company and Arena, the Company did not have sole control over significant actions of HSLFI for purposes of the 1940 Act or otherwise. ​ Note 6. Fair value The Company uses fair value measurements 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 124 Table of Contents 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. Investments are valued at fair value as determined in good faith by the Board, based on input of management, the audit committee and independent valuation firms which are engaged at the direction of the Board to assist in the valuation of each portfolio investment lacking a readily available market quotation at least once during a trailing twelve-month period under a valuation policy and 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. Because there is not a readily available market value for most of the investments in its portfolio, the Company values substantially all of its portfolio investments at fair value as determined in good faith by the Board, as described herein. 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 year end rates at which similar debt investments would be made to borrowers with similar credit ratings and for the same remaining maturities. At December 31, 2020 and 2019, the hypothetical market yields used ranged from 10% to 23% and 10% to 16%, respectively. Significant increases (decreases) in this unobservable input would result in a significantly 125 Table of Contents 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. ● 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 126 Table of Contents 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 provide a summary of quantitative information about the Company’s Level 3 fair value measurements of its investments as of December 31, 2020 and 2019. 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. 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, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ Fair ​ Valuation Techniques/ ​ Unobservable ​ ​ ​ ​ Weighted Investment Type Value Methodologies Input Range Average (1) ​ ​ ​ ​ (Dollars in thousands, except per share data) ​ ​ ​ ​ ​ ​ Debt investments ​ $ 324,670 Discounted Expected Future Cash Flows Hypothetical Market Yield 10% – 23% ​ ​ 12 % ​ ​ ​ 8,825 ​ Liquidation Scenario ​ Probability Weighting ​ ​ 100% ​ ​ 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Warrant investments ​ ​ 11,556 Black-Scholes Valuation Model Price Per Share ​ ​ $0.00 – $980.00 ​ $ 21.68 ​ ​ ​ ​ ​ ​ ​ ​ Average Industry Volatility ​ ​ 28% ​ ​ 28 % ​ ​ ​ ​ ​ ​ ​ Marketability Discount ​ ​ 20% ​ ​ 20 % ​ ​ ​ ​ ​ ​ Estimated Time to Exit 1 to 4 years ​ ​ 3 years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,180 ​ Estimated Proceeds ​ Price Per Share ​ ​ $3.41 ​ $ 3.41 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other investments ​ ​ 200 Multiple Probability Weighted Cash Flow Model Discount Rate ​ ​ 25% ​ ​ 25 % ​ ​ ​ ​ ​ ​ ​ Probability Weighting ​ ​ 100% ​ ​ 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,500 ​ Liquidation Scenario ​ Probability Weighting ​ ​ 50% ​ ​ 50 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity investments ​ ​ 2,117 Last Equity Financing Price Per Share ​ ​ $0.00 – $13.04 ​ $ 2.49 ​ Total Level 3 investments ​ $ 350,048 ​ ​ ​ ​ ​ ​ ​ ​ ​ (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, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ ​ Fair ​ Valuation Techniques/ ​ Unobservable ​ ​ ​ ​ Weighted Investment Type Value Methodologies Input Range Average (1) ​ ​ ​ ​ ​ (Dollars in thousands, except per share data) ​ ​ ​ ​ ​ ​ Debt investments ​ $ 262,635 Discounted Expected Future Cash Flows Hypothetical Market Yield 10% – 16% ​ ​ 12 % ​ ​ ​ 13,864 ​ Liquidation Scenario ​ Probability Weighting ​ ​ 13% – 100% ​ ​ 50 % ​ ​ ​ 11,856 ​ Multiple Probability Weighted Cash Flow Model ​ Probability Weighting ​ ​ 10% – 60% ​ ​ 38 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Warrant investments ​ ​ 5,598 Black-Scholes Valuation Model Price Per Share ​ ​ $0.00 – $980.00 ​ $ 12.42 ​ ​ ​ ​ ​ ​ ​ ​ Average Industry Volatility ​ ​ 22% ​ ​ 22 % ​ ​ ​ ​ ​ ​ ​ Marketability Discount ​ ​ 20% ​ ​ 20 % ​ ​ ​ ​ ​ ​ Estimated Time to Exit 1 to 4 years ​ ​ 3 years ​ ​ ​ ​ ​ ​ Price Per Share ​ ​ $6.22 – $12.90 ​ $ 9.48 ​ ​ ​ ​ 4,561 Estimated Proceeds Discount Rate ​ ​ 0% – 20% ​ ​ 10 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other investments ​ ​ 500 Multiple Probability Weighted Cash Flow Model Discount Rate ​ ​ 25% ​ ​ 25 % ​ ​ ​ ​ ​ ​ ​ Probability Weighting ​ ​ 100% ​ ​ 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity investments ​ ​ 3,125 Last Equity Financing Price Per Share ​ ​ $0.00 – $13.04 ​ $ 2.71 ​ Total Level 3 investments ​ $ 302,139 ​ ​ ​ ​ ​ ​ ​ ​ ​ (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. 127 Table of Contents 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 2022 Notes (as defined in Note 7) is based on the closing public share price on the date of measurement. On December 31, 2020, the closing price of the 2022 Notes on the New York Stock Exchange was $25.60 per note, or $38.3 million. Therefore, the Company has categorized this borrowing as Level 1 within the fair value hierarchy described above. Based on market quotations on December 31, 2020, the Asset-Backed Notes (as defined in Note 7) 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. The following tables detail the assets that are carried at fair value and measured at fair value on a recurring basis as of December 31, 2020 and 2019 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ Level 1 Level 2 Level 3 Total ​ ​ (In thousands) Investments in money market funds ​ $ — ​ $ 27,199 ​ $ — ​ $ 27,199 Restricted investments in money market funds ​ $ — ​ $ 1,057 ​ $ — ​ $ 1,057 Debt investments ​ $ — ​ $ — ​ $ 333,495 ​ $ 333,495 Warrant investments ​ — ​ 1,295 ​ 12,736 ​ 14,031 Other investments ​ — ​ — ​ 1,700 ​ 1,700 Equity investments ​ 1,202 ​ — ​ 2,117 ​ 3,319 Total investments ​ $ 1,202 ​ $ 1,295 ​ $ 350,048 ​ $ 352,545 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ Level 1 Level 2 Level 3 Total ​ ​ (In thousands) Investments in money market funds ​ $ — ​ $ 9,787 ​ $ — ​ $ 9,787 Restricted investments in money market funds ​ $ — ​ $ 1,133 ​ $ — ​ $ 1,133 Debt investments ​ $ — ​ $ — ​ $ 288,355 ​ $ 288,355 Warrant investments ​ — ​ 670 ​ 10,159 ​ 10,829 Other investments ​ — ​ — ​ 500 ​ 500 Equity investments ​ 92 ​ — ​ 3,125 ​ 3,217 Equity interest in HSLFI (1) ​ — ​ — ​ — ​ 16,650 Total investments ​ $ 92 ​ $ 670 ​ $ 302,139 ​ $ 319,551 (1) The fair value of Company’s equity interest in HSLFI is determined using the net asset value of the Company’s ownership interest in member’s capital. 128 Table of Contents 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 year ended December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2020 ​ Debt Warrant Equity Other ​ ​ ​ ​ Investments ​ Investments ​ Investments ​ Investments ​ Total ​ ​ (In thousands) Level 3 assets, beginning of period ​ $ 288,355 ​ $ 10,159 ​ $ 3,125 ​ $ 500 ​ $ 302,139 Purchase of investments ​ 215,059 ​ — ​ — ​ — ​ 215,059 Warrants and equity received and classified as Level 3 ​ — ​ 2,809 ​ 45 ​ — ​ 2,854 Principal payments received on investments ​ (146,216) ​ — ​ — ​ (42) ​ (146,258) Proceeds from sale of investments ​ (36) ​ (7,995) ​ — ​ — ​ (8,031) Net realized (loss) gain on investments ​ (19,634) ​ 4,656 ​ (225) ​ — ​ (15,203) Unrealized (depreciation) appreciation included in earnings ​ (2,347) ​ 3,049 ​ ​ (842) ​ (258) ​ (398) Transfer of investment ​ (1,500) ​ (14) ​ 14 ​ 1,500 ​ — Other ​ (186) ​ 72 ​ — ​ — ​ (114) Level 3 assets, end of period ​ $ 333,495 ​ $ 12,736 ​ $ 2,117 ​ $ 1,700 ​ $ 350,048 ​ During the year ended December 31, 2020, there were no transfers in or out of Level 3. The change in unrealized appreciation included in the consolidated statement of operations attributable to Level 3 investments still held at December 31, 2020 includes $6.5 million in unrealized depreciation on debt and other investments, $5.0 million in unrealized appreciation on warrant investments and $1.0 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 year ended December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2019 ​ Debt Warrant Equity Other ​ ​ ​ ​ Investments ​ Investments ​ Investments ​ Investments ​ Total ​ ​ (In thousands) Level 3 assets, beginning of period ​ $ 216,401 ​ $ 8,632 ​ $ 1,289 ​ $ 7,640 ​ $ 233,962 Purchase of investments ​ 200,832 ​ — ​ — ​ — ​ 200,832 Warrants and equity received and classified as Level 3 ​ — ​ 2,336 ​ 240 ​ — ​ 2,576 Principal payments received on investments ​ (129,079) ​ — ​ — ​ (111) ​ (129,190) Proceeds from sale of investments ​ — ​ (3,369) ​ (45) ​ (150) ​ (3,564) Net realized gain (loss) on investments ​ — ​ 2,382 ​ 4 ​ (6,994) ​ (4,608) Unrealized (depreciation) appreciation included in earnings ​ (3,004) ​ 407 ​ 1,637 ​ 4,615 ​ 3,655 Transfer out of Level 3 ​ ​ — ​ ​ (190) ​ ​ — ​ ​ — ​ ​ (190) Transfer of investment ​ ​ 4,500 ​ ​ — ​ ​ — ​ ​ (4,500) ​ ​ — Other ​ (1,295) ​ (39) ​ — ​ — ​ (1,334) Level 3 assets, end of period ​ $ 288,355 ​ $ 10,159 ​ $ 3,125 ​ $ 500 ​ $ 302,139 ​ During the year ended December 31, 2019, there was one transfer out of Level 3. The transfer out of Level 3 related to warrants held in one portfolio company with an aggregate fair value of $0.2 million that was transferred to Level 2 upon the portfolio company becoming a public company. During the year ended December 31, 2019, there were no transfers to Level 3. The change in unrealized appreciation included in the consolidated statement of operations attributable to Level 3 investments still held at December 31, 2019 includes $3.1 million in unrealized depreciation on debt and other investments, $1.0 million in unrealized appreciation on warrant investments and $1.6 million in unrealized appreciation on equity investments. 129 Table of Contents 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 December 31, 2020 and 2019, 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 December 31, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ December 31, 2019 ​ Total Balance Unused Total Balance Unused ​ ​ Commitment ​ Outstanding ​ Commitment ​ Commitment ​ Outstanding ​ Commitment ​ ​ (In thousands) Key Facility ​ $ 125,000 ​ $ 28,000 ​ $ 97,000 ​ $ 125,000 ​ $ 17,000 ​ $ 108,000 NYL Facility ​ ​ 100,000 ​ ​ 22,250 ​ ​ 77,750 ​ ​ — ​ ​ — ​ ​ — Asset-Backed Notes ​ 100,000 ​ 100,000 ​ — ​ 100,000 ​ 100,000 ​ — 2022 Notes ​ 37,375 ​ 37,375 ​ — ​ 37,375 ​ 37,375 ​ — Total before debt issuance costs ​ 362,375 ​ 187,625 ​ 174,750 ​ 262,375 ​ 154,375 ​ 108,000 Unamortized debt issuance costs attributable to term borrowings ​ — ​ (1,806) ​ — ​ — ​ (2,325) ​ — Total borrowings outstanding, net ​ $ 362,375 ​ $ 185,819 ​ $ 174,750 ​ $ 262,375 ​ $ 152,050 ​ $ 108,000 ​ On March 23, 2018, the Small Business Credit Availability Act was signed into law as part of an omnibus spending bill, which, among other things, amends the 1940 Act to reduce the minimum required asset coverage applicable to BDCs under the 1940 Act from 200% to 150% if certain approval and disclosure requirements are met. Before such reduced asset coverage requirement can apply to the Company, such reduced asset coverage requirement must be approved by either (a) a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Board, in which case such reduced asset coverage requirement would take effect on the first anniversary of the date of such Board approval, or (b) a majority of votes cast by the stockholders of the Company at a special or annual meeting at which a quorum is present, in which case such reduced asset coverage requirement shall take effect on the day after such approval. On June 7, 2018, a “required majority” of the Board approved the reduced asset coverage requirements and separately recommended that the Company’s stockholders approve the reduced asset coverage requirements at a special meeting of the Company’s stockholders. The Company held a special meeting on October 30, 2018 during which the reduced asset coverage requirements were approved by stockholders. The reduced asset coverage requirements took effect October 31, 2018. As of December 31, 2020, with certain limited exceptions, as a BDC, the Company 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 December 31, 2020, the asset coverage for borrowed amounts was 213%. 130 Table of Contents The Company entered into the Key Facility with Key effective November 4, 2013. On June 29, 2020, the Company amended the Key Facility, among other things, to amend the LIBOR floor from 0.75% to 1.00% and to extend the revolving period to September 30, 2021. The Key Facility has an accordion feature which allows for an increase in the total loan commitment to $150 million from the $125 million commitment. The Key Facility is collateralized by all debt investments and warrants held by Credit II and permits an advance rate of up to 50% 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 Key Facility is scheduled to mature on April 6, 2023. The interest rate is based upon the one-month LIBOR, plus a spread of 3.25%, with a LIBOR floor of 1.00%. The LIBOR rate was 0.14% and 1.76% on December 31, 2020 and 2019, respectively. The average interest rate for the years ended December 31, 2020 and 2019 was 4.38% and 5.51%, 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 December 31, 2020 and 2019, the Company had borrowing capacity under the Key Facility of $97.0 million and $108.0 million, respectively. At December 31, 2020 and 2019, $24.8 million and $24.2 million, respectively, was available for borrowing, subject to existing terms and advance rates. On September 29, 2017, the Company issued and sold an aggregate principal amount of $32.5 million of 6.25% notes due in 2022 and on October 11, 2017, pursuant to the underwriters’ 30 day option to purchase additional notes, the Company sold an additional $4.9 million of such notes (collectively, the “2022 Notes”). The 2022 Notes have a stated maturity of September 15, 2022 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 September 15, 2019 at a redemption price of $25 per security plus accrued and unpaid interest. The 2022 Notes bear interest at a rate of 6.25% per year, payable quarterly on March 15, June 15, September 15 and December 15 of each year. The 2022 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 2022 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 December 31, 2020, the Company was in material compliance with the terms of the 2022 Notes. The 2022 Notes are listed on the New York Stock Exchange under the symbol “HTFA”. 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 Asset-Backed Notes. The 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 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 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 Asset-Backed Notes ends July 15, 2021 and the maturity is September 15, 2027. As of December 31, 2020 and 2019, the Asset-Backed Notes had an outstanding principal balance of $100.0 million. Under the terms of the Asset-Backed Notes, the Company is required to maintain a reserve cash balance, funded through proceeds from the sale of the Asset-Backed Notes, which may be used to pay monthly interest and principal payments on the Asset-Backed Notes. The Company has segregated these funds and classified them as restricted investments in money market funds. At December 31, 2020 and 2019, there was approximately $1.0 million and $1.1 million of restricted investments, respectively. On April 21, 2020, the Company purchased all of the limited liability company interests of Arena in HSLFI, which is a party to the NYL Facility. HFI entered into the NYL Facility with the NYL Noteholders for an aggregate purchase price of up to $100.0 million, with an accordion feature of up to $200.0 million at the mutual discretion and agreement of HSLFI and the NYL Noteholders. On June 1, 2018, HSLFI sold or contributed to HFI certain secured loans made to certain portfolio companies pursuant to the Sale and Servicing Agreement. Any notes issued by HFI are collateralized by all 131 Table of Contents 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. On June 5, 2020, the Company amended the NYL Facility to extend the investment period to June 5, 2022. The investment period will be followed by a five year amortization period. The stated final payment date was extended to June 15, 2027, subject to any extension of the investment period. The interest rate on the notes issued under the NYL Facility is 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. Any obligation to make additional advances was conditioned on the occurrence of certain conditions, which were satisfied June 26, 2020. There were $22.3 million in advances made by the NYL Noteholders as of December 31, 2020 at an interest rate of 4.60%. As of December 31, 2020, the Company had borrowing capacity under the NYL Facility of $77.7 million. At December 31, 2020, $0.9 million was available for borrowing, subject to existing terms and advance rates. The following table shows information about our senior securities as of December 31, 2020, 2019, 2018, 2017 and 2016: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Amount ​ ​ ​ ​ ​ ​ ​ Outstanding ​ ​ ​ ​ Involuntary ​ Average ​ ​ Exclusive of ​ Asset ​ Liquidation ​ Market ​ ​ Treasury ​ Coverage ​ Preference ​ Value per Class and Year ​ Securities (1) ​ per Unit (2) ​ per Unit (3) ​ Unit (4) ​ ​ (In thousands, except unit data) Credit facilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 ​ $ 50,250 ​ $ 7,965 — ​ N/A 2019 ​ $ 17,000 ​ $ 19,908 — ​ N/A 2018 ​ $ 90,500 ​ $ 2,896 — ​ N/A 2017 ​ $ 58,000 ​ $ 3,973 — ​ N/A 2016 ​ $ 63,000 ​ $ 3,733 — ​ N/A 2022 Notes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 ​ $ 37,375 ​ $ 10,708 — ​ $ 24.60 2019 ​ $ 37,375 ​ $ 9,055 — ​ $ 25.53 2018 ​ $ 37,375 ​ $ 7,014 — ​ $ 25.52 2017 ​ $ 37,375 ​ $ 6,166 — ​ $ 25.66 2019 Notes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 ​ — ​ — — ​ — 2019 ​ — ​ — — ​ — 2018 ​ — ​ — — ​ — 2017 ​ ​ — ​ ​ — — ​ ​ ​ 2016 ​ $ 33,000 ​ $ 7,127 — ​ $ 25.42 2019-1 Securitization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 ​ $ 100,000 ​ $ 4,002 — ​ N/A 2019 ​ $ 100,000 ​ $ 3,384 — ​ N/A Total senior securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 ​ $ 187,625 ​ $ 2,133 — ​ N/A 2019 ​ $ 154,375 ​ $ 2,192 — ​ N/A 2018 ​ $ 127,875 ​ $ 2,050 — ​ N/A 2017 ​ $ 95,375 ​ $ 2,416 — ​ N/A 2016 ​ $ 96,000 ​ $ 2,450 — ​ N/A (1) Total amount of senior securities outstanding at the end of the period presented. (2) Asset coverage per unit is the ratio of the original cost less accumulated depreciation, amortization or impairment of the Company’s total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. 132 Table of Contents (3) The amount which the holder of such class of senior security would be entitled upon the voluntary liquidation of the applicable issuer in preference to any security junior to it. The “ — ” in this column indicates that the SEC expressly does not require this information to be disclosed for certain types of securities. (4) Not applicable to the Company’s credit facilities and 2019-1 Securitization because such securities are not registered for public trading. ​ Note 8. Federal income tax The Company has elected to be treated as a RIC under Subchapter M of the Code and to distribute substantially all of its taxable income. Accordingly, no provision for federal, state or local income tax has been recorded in the financial statements. Taxable income differs from net increase in net assets resulting from operations primarily due to unrealized appreciation on investments as investment gains and losses are not included in taxable income until they are realized. The following table reconciles net increase in net assets resulting from operations to taxable income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2020 2019 2018 ​ ​ (In thousands) Net increase in net assets resulting from operations ​ $ 6,364 ​ $ 19,498 ​ $ 13,010 Net unrealized (appreciation) depreciation on investments ​ (313) ​ (3,201) ​ 1,501 Other book-tax differences ​ 782 ​ 988 ​ 199 Change in capital loss carry forward ​ 14,698 ​ 4,173 ​ (645) Taxable income before deductions for distributions ​ $ 21,531 ​ $ 21,458 ​ $ 14,065 ​ The tax characters of distributions paid are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2020 2019 2018 ​ ​ (In thousands) Ordinary income ​ $ 21,952 ​ $ 16,159 ​ $ 13,834 Total ​ $ 21,952 ​ $ 16,159 ​ $ 13,834 ​ The components of undistributed ordinary income earnings on a tax basis were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2020 2019 2018 ​ ​ (In thousands) Undistributed ordinary income ​ $ 6,242 ​ $ 6,536 ​ $ 1,269 Long term capital loss carry forward ​ (59,928) ​ (45,230) ​ (41,057) Unrealized appreciation ​ 9,578 ​ 8,352 ​ 5,237 Unrealized depreciation ​ (8,545) ​ (7,596) ​ (7,717) Other temporary differences ​ 5,983 ​ 4,700 ​ 3,123 Total ​ $ (46,670) ​ $ (33,238) ​ $ (39,145) ​ 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% excise tax on such income, as required. For the years ended December 31, 2020 and 2019, the Company elected to carry forward taxable income in excess of current year distributions of $6.2 million and $6.5 million, respectively. At December 31, 2020 and 2019, a provision for excise tax of $0.2 million was recorded. Capital losses in excess of capital gains earned in a tax year may generally be carried forward, without expiration, and used to offset capital gains, subject to certain limitations. During the years ended December 31, 2020, 2019 and 2018, the Company did not use any of its capital loss carry forward to offset capital gains. 133 Table of Contents For federal income tax purposes, the tax cost of investments at December 31, 2020 and 2019 was $351.5 million and $318.8 million, respectively. The gross unrealized appreciation on investments at December 31, 2020 and 2019 was $9.6 million and $8.4 million, respectively. The gross unrealized depreciation on investments at December 31, 2020 and 2019 was $8.5 million and $7.6 million, respectively. ​ Note 9. 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 $91.5 million and $49.5 million as of December 31, 2020 and 2019, respectively. Commitments to extend credit consist principally of the unused portions of commitments that obligate the Company to extend credit, such as revolving credit arrangements or similar transactions. These commitments are 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. This includes the undrawn revolver commitments discussed in Note 4. The following table provides the Company’s unfunded commitments by portfolio company as of December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ ​ Fair Value of ​ ​ ​ ​ ​ Unfunded ​ ​ Principal Commitment ​ ​ Balance Liability ​ (In thousands) Alula Holdings Inc. ​ $ 2,000 ​ $ 27 Canary Medical Inc. ​ ​ 7,500 ​ ​ 102 Castle Creek Biosciences, Inc. ​ ​ 5,000 ​ ​ 54 Ceribell, Inc. ​ ​ 10,000 ​ ​ 64 Emalex Biosciences, Inc. ​ ​ 10,000 ​ ​ 103 Getaround, Inc. ​ ​ 7,000 ​ ​ 168 IDbyDNA, Inc. ​ ​ 5,000 ​ ​ 68 Keypath Education Holdings, LLC ​ ​ 5,000 ​ ​ 103 Liqid, Inc. ​ ​ 10,000 ​ ​ 54 LogicBio, Inc. ​ ​ 5,000 ​ ​ — Provivi, Inc. ​ ​ 10,000 ​ ​ 149 Revinate, Inc. ​ 5,000 ​ 60 Sonex Health, Inc. ​ ​ 5,000 ​ ​ 81 Topia Mobility Inc. ​ ​ 5,000 ​ ​ 78 Total ​ $ 91,500 ​ $ 1,111 ​ The table above also provides the fair value of the Company’s unfunded commitment liability as of December 31, 2020 which totaled $1.1 million. 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. ​ Note 10. 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. 134 Table of Contents 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 year to year as new debt investments are recorded and existing debt investments are repaid. The Company’s five largest debt investments, at cost, represented 28% of total debt investments outstanding as of December 31, 2020 and 2019. No single debt investment represented more than 10% of the total debt investments as of December 31, 2020 or 2019. Investment income, consisting of interest and fees, can fluctuate significantly upon repayment of large debt investments. Interest income from the five largest debt investments accounted for 23%, 17% and 25% of total interest and fee income on investments for the years ended December 31, 2020, 2019 and 2018, respectively. ​ Note 11. Distributions The Company’s distributions are recorded on the declaration date. The following table summarizes the Company’s distribution activity for the years ended December 31, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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) Year Ended December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10/26/2020 ​ 2/19/21 ​ 3/16/21 ​ $ 0.10 ​ $ — — ​ $ — 10/26/2020 ​ 1/20/21 ​ 2/17/21 ​ 0.10 ​ 1,904 1,681 ​ 25 10/26/2020 ​ 12/17/20 ​ 1/15/21 ​ 0.10 ​ 1,903 1,909 ​ 26 7/24/20 ​ 11/18/20 ​ 12/15/20 ​ ​ 0.10 ​ ​ 1,862 ​ 1,699 ​ ​ 22 7/24/20 ​ 10/20/20 ​ 11/16/20 ​ 0.10 ​ 1,815 1,730 ​ 21 7/24/20 ​ 9/17/20 ​ 10/16/20 ​ 0.10 ​ 1,813 1,674 ​ 22 4/24/20 ​ ​ 8/18/20 ​ 9/15/20 ​ ​ 0.10 ​ ​ 1,745 1,588 ​ ​ 19 4/24/20 ​ ​ 7/17/20 ​ 8/14/20 ​ 0.10 ​ 1,710 1,586 ​ 20 4/24/20 ​ ​ 6/18/20 ​ 7/15/20 ​ 0.10 ​ 1,703 1,710 ​ 20 2/28/20 ​ 5/19/20 ​ 6/16/20 ​ ​ 0.10 ​ ​ 1,667 1,646 ​ ​ 18 2/28/20 ​ 4/17/20 ​ 5/15/20 ​ 0.10 ​ 1,667 1,879 ​ 19 2/28/20 ​ 3/18/20 ​ 4/15/20 ​ 0.15 ​ 2,496 3,144 ​ 30 ​ ​ ​ ​ ​ ​ ​ ​ $ 1.25 ​ $ 20,285 ​ 20,246 ​ $ 242 Year Ended December 31, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10/25/19 ​ 2/19/20 ​ 3/16/20 ​ $ 0.10 ​ $ 1,659 1,561 ​ $ 18 10/25/19 ​ 1/17/20 ​ 2/14/20 ​ 0.10 ​ 1,660 1,234 ​ 17 10/25/19 ​ 12/18/19 ​ 1/15/20 ​ 0.10 ​ 1,519 1,115 ​ 15 7/26/19 ​ 11/19/19 ​ 12/16/19 ​ ​ 0.10 ​ ​ 1,467 ​ 1,215 ​ ​ 15 7/26/19 ​ 10/18/19 ​ 11/15/19 ​ 0.10 ​ 1,442 1,226 ​ 16 7/26/19 ​ 9/19/19 ​ 10/16/19 ​ 0.10 ​ 1,412 1,258 ​ 15 4/26/19 ​ 8/19/19 ​ 9/17/19 ​ 0.10 ​ 1,366 1,274 ​ 15 4/26/19 ​ 7/18/19 ​ 8/15/19 ​ 0.10 ​ 1,339 1,261 ​ 15 4/26/19 ​ 6/19/19 ​ 7/16/19 ​ 0.10 ​ 1,338 1,339 ​ 16 3/1/19 ​ 5/17/19 ​ 6/17/19 ​ 0.10 ​ 1,339 1,308 ​ 15 3/1/19 ​ 4/18/19 ​ 5/15/19 ​ 0.10 ​ 1,332 1,885 ​ 22 3/1/19 ​ 3/19/19 ​ 4/16/19 ​ 0.10 ​ 1,139 1,199 ​ 15 ​ ​ ​ ​ ​ ​ ​ ​ $ 1.20 ​ $ 17,012 ​ 15,875 ​ $ 194 ​ 135 Table of Contents On February 26, 2021, the Board declared monthly distributions per share, payable as set forth in the following table: ​ ​ ​ ​ ​ ​ ​ ​ Ex-Dividend Date Record Date Payment Date Distributions Declared March 17, 2021 ​ March 18, 2021 ​ April 16, 2021 ​ $ 0.10 April 19, 2021 ​ April 20, 2021 ​ May 14, 2021 ​ $ 0.10 May 17, 2021 ​ May 18, 2021 ​ June 15, 2021 ​ $ 0.10 ​ After paying distributions of $1.25 per share deemed paid for tax purposes in 2020, declaring on October 26, 2020 a distribution of $0.10 per share payable January 15, 2021, and taxable earnings of $1.23 per share in 2020, the Company’s undistributed spillover income as of December 31, 2020 was $0.32 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. ​ Note 12. Subsequent events Subsequent to December 31, 2020 pursuant to private foreclosure sales, the Company has received net proceeds of approximately $1.7 million from the sale of substantially all of the assets of The NanoSteel Company, Inc. (“NanoSteel”), which assets collateralized the Company’s debt investment in NanoSteel. The Company does not expect to receive any additional material proceeds from the sale of additional assets of NanoSteel. On January 14, 2021, the Company funded a $5.0 million debt investment to a new portfolio company, Clara Foods Co. On January 15, 2021, the Company funded a $7.0 million debt investment to a new portfolio company, Supply Network Visibility Holdings LLC. On February 23, 2021, the Company funded a $7.0 million debt investment to an existing portfolio company, Getaround, Inc. On February 25, 2021, the Company funded a $6.0 million debt investment to a new portfolio company, Primary Kids, Inc. ​ 136 Table of Contents Note 13. Financial highlights The following table shows financial highlights for the Company: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2020 2019 2018 2017 2016 ​ ​ (In thousands, except share and per share data) ​ Per share data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net asset value at beginning of period $ 11.83 ​ $ 11.64 ​ $ 11.72 ​ $ 12.09 ​ $ 13.85 ​ Net investment income ​ 1.18 ​ 1.52 ​ 1.20 ​ 1.07 ​ 1.48 ​ Realized (loss) gain on investments ​ (0.84) ​ (0.31) ​ 0.06 ​ (1.84) ​ (0.67) ​ Unrealized appreciation (depreciation) on investments ​ 0.02 ​ 0.24 ​ (0.13) ​ 1.60 ​ (1.24) ​ Net increase (decrease) in net assets resulting from operations ​ 0.36 ​ 1.45 ​ 1.13 ​ 0.83 ​ (0.43) ​ Distributions declared (1) ​ (1.25) ​ (1.20) ​ (1.20) ​ (1.20) ​ (1.34) ​ From net investment income ​ (1.25) ​ (1.20) ​ (1.20) ​ (1.20) ​ (1.34) ​ From net realized gain on investments ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Return of capital ​ ​ — ​ — ​ — ​ — ​ — ​ Net accretion from repurchase of common stock ​ — ​ — ​ — ​ — ​ 0.01 ​ Other (2) ​ 0.08 ​ (0.06) ​ (0.01) ​ — ​ — ​ Net asset value at end of period ​ $ 11.02 ​ $ 11.83 ​ $ 11.64 ​ $ 11.72 ​ $ 12.09 ​ Per share market value, beginning of period ​ $ 12.93 ​ $ 11.25 ​ $ 11.22 ​ $ 10.53 ​ $ 11.73 ​ Per share market value, end of period ​ $ 13.24 ​ $ 12.93 ​ 11.25 ​ 11.22 ​ 10.53 ​ Total return based on a market value (3) ​ ​ 12.1 % 25.6 % 11.0 % 17.9 % 1.5 % Shares outstanding at end of period ​ ​ 19,286,356 ​ 15,563,290 ​ 11,535,129 ​ 11,520,406 ​ 11,510,424 ​ Ratios, net of waivers, to average net assets: ​ ​ ​ ​ ​ ​ Expenses without incentive fees ​ ​ 10.0 % 10.8 % 10.4 % 8.6 % 9.2 % Incentive fees ​ 2.6 % 3.2 % 2.4 % 1.2 % 1.4 % Net expenses ​ 12.6 % 14.0 % 12.8 % 9.8 % 10.6 % Net investment income with incentive fees ​ 10.4 % 12.8 % 10.3 % 9.0 % 11.4 % Ratios, without waivers, to average net assets: ​ ​ ​ ​ ​ ​ ​ Expenses without incentive fees (4) ​ ​ 10.0 % 10.8 % 10.4 % 8.6 % 9.2 % Incentive fees (4) ​ 2.6 % 4.4 % 3.3 % 1.3 % 1.4 % Net expenses (4) ​ 12.6 % 15.2 % 13.7 % 9.9 % 10.6 % Net investment income with incentive fees (4) ​ ​ 10.4 % ​ 11.6 % ​ 9.4 % ​ 8.9 % ​ 11.4 % Net assets at the end of the period ​ $ 212,597 ​ $ 184,055 ​ $ 134,257 ​ $ 135,075 ​ $ 139,192 ​ Average net asset value ​ $ 199,302 ​ $ 160,008 ​ $ 134,364 ​ $ 137,293 ​ $ 150,612 ​ Average debt per share ​ $ 9.97 ​ $ 10.05 ​ $ 8.62 ​ $ 6.60 ​ $ 8.91 ​ Portfolio turnover ratio ​ 38.7 % (5) 82.0 % (6) 50.4 % (6) 79.4 % (6) 27.1 % (6) (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. (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) During the years ended December 31, 2019, 2018 and 2017, the Advisor waived $1.8 million, $1.2 million and $0.1 million, respectively, of incentive fee. (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 (6) Calculated by dividing net debt investment purchases by the monthly average debt investment balance. ​ 137 Table of Contents Note 14. Summarized financial information for HSLFI Horizon Secured Loan Fund I Statements of Assets and Liabilities (Dollars in thousands) ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2019 Assets ​ ​ ​ Investments at fair value (cost of $34,895) ​ $ 34,829 Investments in money market funds ​ 11,201 Cash and cash equivalents ​ 503 Restricted investments in money market funds ​ 138 Interest receivable ​ 477 Other assets ​ 1,109 Total assets ​ $ 48,257 Liabilities ​ Borrowings ​ $ 14,955 Other liabilities ​ 126 Total liabilities ​ 15,081 ​ ​ ​ ​ Commitments and contingencies ​ ​ ​ ​ ​ ​ ​ Members’ Capital ​ Members’ capital ​ 33,176 Total members’ capital ​ 33,176 Total liabilities and members’ capital ​ $ 48,257 ​ ​ 138 Table of Contents Horizon Secured Loan Fund I Statements of Operations (Dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the period ​ ​ For the period ​ January 1, 2020 For the year June 1, 2018 ​ through ended through ​ April 21 December 31 December 31 ​ ​ 2020 2019 2018 Investment income ​ ​ ​ Interest income ​ $ 1,353 ​ $ 5,291 ​ $ 689 Prepayment fee income ​ 112 ​ 389 ​ — Fee income ​ — ​ 19 ​ — Total investment income ​ 1,465 ​ 5,699 ​ 689 Expenses ​ ​ ​ Interest expense ​ 1,165 ​ 1,101 ​ 140 General and administrative ​ 64 ​ 126 ​ 40 Total expenses ​ 1,229 ​ 1,227 ​ 180 Net investment income ​ 236 ​ 4,472 ​ 509 Net realized and unrealized loss on investments ​ ​ ​ ​ ​ ​ ​ ​ ​ Net realized gain on investments ​ ​ 120 ​ ​ — ​ ​ — Net realized gain on investments ​ 120 ​ ​ — ​ ​ — Net unrealized depreciation on investments ​ (392) ​ (28) ​ (37) Net unrealized depreciation on investments ​ ​ (392) ​ (28) ​ (37) Net realized and unrealized loss on investments ​ ​ (272) ​ ​ (28) ​ ​ (37) Net (decrease) increase in net assets resulting from operations ​ $ (36) ​ $ 4,444 ​ $ 472 ​ ​ Note 15. Selected quarterly financial data (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ September 30, ​ June 30, ​ March 31, ​ ​ 2020 2020 ​ 2020 ​ 2020 ​ (In thousands, except per share data) Total investment income ​ $ 10,066 $ 12,331 $ 13,524 $ 10,114 Net investment income ​ $ 3,901 ​ $ 5,860 ​ $ 6,706 $ 4,282 Net realized and unrealized (loss) gain ​ $ (1,504) ​ $ (9,110) ​ $ 1,219 $ (4,990) Net increase (decrease) in net asset resulting from operations ​ $ 2,397 ​ $ (3,250) ​ $ 7,925 $ (708) Net investment income per share (1) ​ $ 0.21 ​ $ 0.34 ​ $ 0.40 $ 0.26 Net increase (decrease) in net assets per share (1) ​ $ 0.13 ​ $ (0.19) ​ $ 0.47 $ (0.04) Net asset value per share at period end (2) ​ $ 11.02 ​ $ 11.17 ​ $ 11.64 $ 11.48 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ September 30, ​ June 30, ​ March 31, ​ ​ 2019 2019 ​ 2019 ​ 2019 ​ ​ (In thousands, except per share data) Total investment income ​ $ 12,975 $ 11,375 $ 10,470 $ 8,306 Net investment income ​ $ 6,452 ​ $ 5,773 ​ $ 5,012 $ 3,233 Net realized and unrealized gain (loss) ​ $ 277 ​ $ (567) ​ $ (474) $ (208) Net increase in net asset resulting from operations ​ $ 6,729 ​ $ 5,206 ​ $ 4,538 $ 3,025 Net investment income per share (1) ​ $ 0.43 ​ $ 0.42 ​ $ 0.37 $ 0.28 Net increase in net assets per share (1) ​ $ 0.45 ​ $ 0.38 ​ $ 0.34 $ 0.26 Net asset value per share at period end (2) ​ $ 11.83 ​ $ 11.67 ​ $ 11.60 $ 11.55 (1) Based on weighted average shares outstanding for the respective period. (2) Based on shares outstanding at the end of the respective period. 139 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None ​