[PART I: FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section provides the company's consolidated financial statements, management's discussion, and market risk disclosures [Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Horizon Technology Finance Corporation, including statements of assets and liabilities, operations, changes in net assets, cash flows, and detailed schedules of investments as of June 30, 2021, with comparative data for previous periods. It also includes comprehensive notes to these financial statements [Consolidated Statements of Assets and Liabilities](index=4&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) As of June 30, 2021, total assets increased to $454.1 million from $407.2 million at December 31, 2020, driven by a rise in the fair value of investments. Total liabilities also grew to $229.9 million from $194.6 million, primarily due to increased borrowings. Consequently, total net assets rose to $224.3 million, with net asset value per share increasing to $11.20 from $11.02 Consolidated Statements of Assets and Liabilities (in thousands) | | June 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Total investments at fair value** | $404,121 | $352,545 | | **Total assets** | $454,118 | $407,157 | | **Total liabilities** | $229,854 | $194,560 | | **Total net assets** | $224,264 | $212,597 | | **Net asset value per common share** | $11.20 | $11.02 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2021, total investment income was $13.5 million, nearly flat compared to the same period in 2020. Net investment income was $6.1 million, or $0.31 per share, down from $6.7 million, or $0.40 per share, in Q2 2020. For the six-month period, total investment income rose to $26.7 million from $23.6 million year-over-year, and net investment income increased to $12.1 million from $11.0 million Key Operational Data (in thousands, except per share data) | | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total investment income** | $13,489 | $13,524 | $26,704 | $23,638 | | **Total expenses** | $7,322 | $6,818 | $14,471 | $12,649 | | **Net investment income** | $6,111 | $6,706 | $12,115 | $10,989 | | **Net increase in net assets from operations** | $6,730 | $7,925 | $12,750 | $7,216 | | **Net investment income per common share** | $0.31 | $0.40 | $0.62 | $0.65 | | **Net increase in net assets per common share** | $0.34 | $0.47 | $0.65 | $0.43 | [Consolidated Statements of Changes in Net Assets](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) For the six months ended June 30, 2021, net assets increased from $212.6 million to $224.3 million. This change was driven by a $12.8 million net increase from operations and $10.7 million from the issuance of common stock, offset by $11.9 million in distributions declared - Net assets increased to **$224.3 million** at June 30, 2021, from **$212.6 million** at December 31, 2020[11](index=11&type=chunk) - Key changes in net assets for the six months ended June 30, 2021 include a **$12.8 million** net increase from operations, **$10.7 million** from common stock issuance, and **$11.9 million** in distributions declared[11](index=11&type=chunk)[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash used in operating activities was $38.6 million, primarily due to the purchase of investments. Net cash provided by financing activities was $32.2 million, driven by the issuance of senior notes and common stock, which offset debt repayments and distributions. This resulted in a net decrease in cash of $6.4 million Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(38,611) | $(29,702) | | Net cash provided by financing activities | $32,188 | $50,842 | | Net (decrease) increase in cash | $(6,423) | $21,140 | | Cash, cash equivalents and restricted cash, end of period | $41,335 | $38,525 | [Consolidated Schedules of Investments](index=10&type=section&id=Consolidated%20Schedules%20of%20Investments) As of June 30, 2021, the total investment portfolio had a fair value of $404.1 million, up from $352.5 million at year-end 2020. The portfolio is primarily composed of debt investments (95.5% of fair value), with smaller allocations to warrants, equity, and other investments. The largest sector concentrations are in Life Science (Biotechnology and Medical Devices) and Technology (primarily Consumer-Related and Software) Portfolio Composition by Investment Type (June 30, 2021) | Investment Type | Fair Value (in thousands) | Percentage of Total Portfolio | | :--- | :--- | :--- | | Debt | $385,814 | 95.5% | | Warrants | $16,215 | 4.0% | | Other | $1,700 | 0.4% | | Equity | $392 | 0.1% | | **Total** | **$404,121** | **100.0%** | Portfolio Composition by Industry Sector (June 30, 2021) | Industry Sector | Fair Value (in thousands) | Percentage of Total Portfolio | | :--- | :--- | :--- | | Life Science | $187,217 | 46.3% | | Technology | $152,551 | 37.8% | | Healthcare Information and Services | $11,245 | 2.8% | | Sustainability | $9,237 | 2.3% | | Other | $43,871 | 10.8% | [Notes to the Consolidated Financial Statements](index=23&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies and financial results. Key topics include the company's organization as a BDC and RIC, fair value measurement of investments (especially Level 3 assets), related party transactions with its Advisor, specifics on borrowings and credit facilities, off-balance-sheet commitments, and distribution policies - The company is an externally managed, non-diversified, closed-end investment company regulated as a Business Development Company (BDC) and has elected to be treated as a Regulated Investment Company (RIC) for tax purposes. Its primary business is making secured debt investments to development-stage companies[43](index=43&type=chunk) - The company uses a three-level hierarchy for fair value measurement. As of June 30, 2021, Level 3 assets, which use significant unobservable inputs, totaled **$402.9 million**, primarily consisting of debt investments valued using discounted cash flow models[119](index=119&type=chunk)[124](index=124&type=chunk)[140](index=140&type=chunk) - The company has an Investment Management Agreement with Horizon Technology Finance Management LLC (the Advisor), which earns a base management fee and a two-part incentive fee. For Q2 2021, the base management fee was **$1.8 million** and the performance-based incentive fee was **$1.5 million**[90](index=90&type=chunk)[92](index=92&type=chunk)[99](index=99&type=chunk) - As of June 30, 2021, the company had **$220.2 million** in total borrowings outstanding, net of issuance costs, across its Key Facility, NYL Facility, Asset-Backed Notes, and 2026 Notes. The company redeemed its **6.25% 2022 Notes** in April 2021 and issued new **4.875% 2026 Notes** in March 2021[151](index=151&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - The company had unfunded commitments to extend credit totaling **$96.0 million** as of June 30, 2021, which are subject to financial or non-financial milestones[166](index=166&type=chunk)[167](index=167&type=chunk) - The company's undistributed spillover income was **$0.34 per share** as of June 30, 2021[170](index=170&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results of operations, highlighting the impact of COVID-19, portfolio composition, investment activity, and asset quality. The analysis covers comparisons of operating results for the three and six months ended June 30, 2021 and 2020, liquidity and capital resources, and critical accounting policies [Portfolio Composition and Investment Activity](index=46&type=section&id=Portfolio%20Composition%20and%20Investment%20Activity) As of June 30, 2021, the investment portfolio's fair value was $404.1 million across 39 debt investments and 66 warrant positions, up from $352.5 million at year-end 2020. Debt investments constituted 95.5% of the portfolio. For the six months ended June 30, 2021, the company made $118.7 million in new debt investments and received $65.7 million in principal payments and early pay-offs Portfolio Investment Activity for Six Months Ended June 30 (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Beginning portfolio | $352,545 | $319,551 | | New debt investments | $118,660 | $105,554 | | Principal payments & Early pay-offs | $(65,672) | $(61,168) | | Ending portfolio | $404,121 | $355,880 | - The portfolio's industry concentration at June 30, 2021 was led by Life Sciences (**47.1%**) and Technology (**48.0%**), with the largest sub-sectors being Medical Devices (**31.3%**) and Consumer-Related Technologies (**22.5%**)[189](index=189&type=chunk) [Debt Investment Asset Quality](index=48&type=section&id=Debt%20Investment%20Asset%20Quality) The company uses an internal credit rating system from 1 (high risk) to 4 (highest quality). As of June 30, 2021, the weighted average credit rating of the debt portfolio was 3.1. 94.0% of the debt portfolio at fair value was rated 3 or 4, indicating a standard or high credit quality. There were no investments rated 1 (deteriorating credit quality) Debt Investment Credit Rating Distribution (by Fair Value) | Credit Rating | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | 4 (Highest Quality) | 11.5% | 23.4% | | 3 (Standard Risk) | 82.5% | 72.2% | | 2 (Increased Risk) | 6.0% | 3.9% | | 1 (Deteriorating) | 0.0% | 0.5% | | **Weighted Average** | **3.1** | **3.2** | [Consolidated Results of Operations](index=49&type=section&id=Consolidated%20Results%20of%20Operations) For the six months ended June 30, 2021, total investment income increased 13.0% to $26.7 million, driven by a larger average debt portfolio. Total expenses rose 14.4% to $14.5 million due to higher interest, management, and incentive fees. Net investment income increased to $12.1 million from $11.0 million in the prior-year period - For Q2 2021, total investment income was flat at **$13.5 million** compared to Q2 2020. The increase in interest income from a larger portfolio was offset by a **42.2%** decrease in fee income[199](index=199&type=chunk) - For the six months ended June 30, 2021, total investment income grew by **$3.1 million** (**13.0%**) year-over-year, primarily due to a **14.9%** increase in the average size of the debt investment portfolio[215](index=215&type=chunk) - For the six months ended June 30, 2021, the company realized a net loss on investments of **$3.7 million**, primarily from the settlement of one debt investment. This contrasts with a **$2.8 million** net realized gain in the same period of 2020[226](index=226&type=chunk)[228](index=228&type=chunk) - Net unrealized appreciation was **$4.7 million** for the first six months of 2021, a significant reversal from the **$6.5 million** net unrealized depreciation in the same period of 2020[229](index=229&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2021, the company had $39.8 million in cash and money market funds. Primary sources of capital are equity offerings, credit facilities, and public debt. During the first six months of 2021, the company raised $10.7 million in net proceeds from its ATM equity program. Total borrowings stood at $223.3 million, with an additional $159.3 million in unused commitment capacity across its credit facilities - The company sold **727,448 shares** of common stock under its At-The-Market (ATM) program during the six months ended June 30, 2021, raising net proceeds of **$10.7 million**[234](index=234&type=chunk) - The company's Board extended a stock repurchase program for up to **$5.0 million** of its common stock, effective through June 30, 2022. No shares were repurchased in the first half of 2021[235](index=235&type=chunk)[237](index=237&type=chunk) Borrowing Capacity as of June 30, 2021 (in thousands) | Facility | Total Commitment | Balance Outstanding | Unused Commitment | | :--- | :--- | :--- | :--- | | Key Facility | $125,000 | $15,000 | $110,000 | | NYL Facility | $100,000 | $50,750 | $49,250 | | Asset-Backed Notes | $100,000 | $100,000 | $0 | | 2026 Notes | $57,500 | $57,500 | $0 | | **Total** | **$382,500** | **$223,250** | **$159,250** | [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is subject to interest rate risk as its debt investments are primarily floating rate, while some of its borrowings are fixed rate. As of June 30, 2021, 100% of the debt portfolio was at floating rates. The company's net income depends on the spread between the rates at which it borrows and invests. A sensitivity analysis shows that a 100 basis point increase in rates would increase net assets by approximately $2.0 million annually, excluding incentive fees - As of June 30, 2021, **100%** of the outstanding principal amount of the company's debt investments bore interest at floating rates[290](index=290&type=chunk) Annualized Impact of Interest Rate Changes on Net Assets (in thousands) | Change in Basis Points | Change in Net Assets (1) | | :--- | :--- | | Up 300 basis points | $7,863 | | Up 200 basis points | $4,431 | | Up 100 basis points | $2,010 | | Down 100-300 basis points | $0 | - The company's net income is dependent on the difference between its borrowing rates and investment rates. While floating-rate assets provide a hedge against rising rates, the company's cost of funds on its floating-rate credit facilities would also increase[294](index=294&type=chunk) [Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of June 30, 2021, and concluded they were effective. There were no material changes in internal control over financial reporting during the most recently completed fiscal quarter - As of June 30, 2021, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[295](index=295&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the second quarter of 2021[298](index=298&type=chunk) [PART II: OTHER INFORMATION](index=64&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, and exhibits [Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings, nor is it aware of any material legal proceedings being threatened against it or its Advisor - Neither the company nor its Advisor is currently subject to any material legal proceedings[299](index=299&type=chunk) [Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes have occurred during the six months ended June 30, 2021, to the risk factors set forth in the company's annual report on Form 10-K for the year ended December 31, 2020[300](index=300&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) None - None[301](index=301&type=chunk) [Defaults Upon Senior Securities](index=64&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None - None[302](index=302&type=chunk) [Other Information](index=64&type=section&id=Item%205.%20Other%20Information) None - None[303](index=303&type=chunk) [Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which include certifications by the Chief Executive Officer and Chief Financial Officer as required by the Sarbanes-Oxley Act of 2002 - The exhibits filed with this report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[306](index=306&type=chunk)

Horizon Technology Finance (NASDAQ:HRZN) Q1 2021 Earnings Conference Call April 28, 2021 9:00 AM ET Company Participants Megan Bacon - Director of Investor Relations and Marketing Rob Pomeroy - Chairman and Chief Executive Officer Jerry Michaud - President Dan Trolio - Chief Financial Officer Conference Call Participants Sarkis Sherbetchyan - B. Riley FBR Ryan Lynch - KBW Operator Greetings, and welcome to Horizon Technology Finance Corporation First Quarter 2021 Earnings Call. At this time, all participant ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021 OR ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____TO COMMISSION FILE NUMBER: 814-00802 HORIZON TECHNOLOGY FINANCE CORPORATION (Exact name of registrant as specified in its charter) DELA ...

Horizon Technology Finance Corporation (NASDAQ:HRZN) Q4 2020 Results Conference Call March 3, 2021 9:00 AM ET Company Participants Megan Bacon - Investor Relations Rob Pomeroy - Chairman and CEO Jerry Michaud - President Dan Trolio - CFO Conference Call Participants Sarkis Sherbetchyan - B. Riley Ryan Lynch - KBW Operator Greetings and welcome to Horizon Technology. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the presentation. [Operator Instructions] A ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ◻ OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER: 814-00802 HORIZON TECHNOLOGY FINANCE CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 27-21 ...

Financial Data and Key Metrics Changes - The company generated net investment income of $0.34 per share, which exceeded distributions, marking a decrease from $0.42 per share in Q3 2019 [48] - Total investment income for the third quarter was $12.3 million, an 8% increase from $11.4 million in the prior year period, primarily due to a 21% increase in interest income on investments [45] - The debt portfolio yield was 15.1% for the quarter, down from 17.7% in the same quarter last year [46] - The company's NAV as of September 30 was $11.17 per share, a decrease from $11.64 as of June 30, 2020 [51] Business Line Data and Key Metrics Changes - The company made a total of $16 million in investments during the quarter, with an onboarding yield of 11.9% [28] - The debt investment portfolio on a net cost basis stood at $319 million, a 10% reduction from June 30, 2020 [46] - The company experienced $43 million in principal prepayments during the quarter, which significantly contributed to net investment income [29] Market Data and Key Metrics Changes - Approximately $38 billion was invested in VC-backed companies in Q3, which was on par with the prior year quarter despite COVID-19 [37] - $14 billion was raised in VC fundraising during the third quarter, surpassing the total of $55 billion raised in 2019 [38] - The IPO window opened considerably in Q3, with 37 venture-backed IPOs contributing to a total exit value of $104 billion, the second highest total on record [39] Company Strategy and Development Direction - The company maintains a cautious approach to its venture lending strategy, incorporating a COVID-19 impact analysis in underwriting new investments [26] - The company aims to selectively pursue new investment opportunities while managing its portfolio proactively [22] - The company plans to maintain its monthly distribution level at $0.10 per share through March 2021, reflecting its outlook for the remainder of 2020 and early 2021 [23] Management's Comments on Operating Environment and Future Outlook - Management noted that while some portfolio companies faced challenges, others thrived during the pandemic, leading to a mixed impact on the portfolio [14] - The company expects to see growth in the fourth quarter, supported by a strong pipeline of new investment opportunities totaling $372 million [34] - Management expressed confidence in the portfolio's ability to grow despite the economic downturn, with over 90% of portfolio companies having adequate cash resources [21] Other Important Information - The company raised nearly $13 million in low-cost and accretive net equity through its at-the-market stock offering during the quarter [12] - The company downgraded its debt investments in three companies, placing them on nonaccrual status due to uncertain outcomes [16] - The company has a committed backlog of $96 million, with $60 million committed to current life science portfolio companies [33] Q&A Session Summary Question: Expectations for repayments and portfolio growth in Q4 - Management noted that prepayments exceeded originations in Q3 but expressed confidence in portfolio growth for Q4, with a strong pipeline of transactions [60] Question: Current yields and covenants on new investments - Management indicated that pricing has remained consistent during COVID-19, with a stronger covenant position due to ongoing uncertainty [63] Question: Discussion on downgraded credits - The third downgraded credit was Titan Pharmaceuticals, which is in the process of settlement [67] Question: Availability of the New York Life facility - Management explained that the availability decreased due to prepayments and that the facility is in a good position for future originations [73] Question: ATM equity capital raise rationale - Management stated that the equity capital raise was opportunistic, taking advantage of favorable market conditions to support future growth [82]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020 OR ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____TO COMMISSION FILE NUMBER: 814-00802 HORIZON TECHNOLOGY FINANCE CORPORATION (Exact name of registrant as specified in its charter) ...

Horizon Technology Finance (NASDAQ:HRZN) Q2 2020 Earnings Conference Call July 29, 2020 9:00 AM ET Company Participants Megan Bacon – Marketing Support Manager Rob Pomeroy – Chairman and Chief Executive Officer Jerry Michaud – President Dan Trolio – Chief Financial Officer Conference Call Participants Tim Hayes – B. Riley FBR Ryan Lynch – KBW Operator Greetings, and welcome to Horizon Technology Finance Corporation Second Quarter 2020 Earnings Call. At this time all participants are in a listen-only mode. A ...

Debt Investment Portfolio - As of June 30, 2020, the total fair value of the debt investment portfolio was $342.7 million, representing 96.3% of the total portfolio[189] - New debt investments for the three months ended June 30, 2020, amounted to $54.9 million, compared to $55.1 million in the same period of 2019[190] - The ending portfolio value as of June 30, 2020, was $355.9 million, an increase from $274.8 million as of June 30, 2019[190] - The largest sector in the debt investment portfolio as of June 30, 2020, was Medical Device, valued at $91.7 million, accounting for 26.8% of the total portfolio[191] - The company received principal payments of $4.9 million on investments during the three months ended June 30, 2020[190] - The net unrealized depreciation on investments for the six months ended June 30, 2020, was $6.5 million[190] - The company’s five largest debt investments represented 25% of total debt investments outstanding as of June 30, 2020[192] - The company has a total of 35 debt investments, unchanged from December 31, 2019[189] - As of June 30, 2020, the weighted average credit rating of the company's debt investments was 2.9, down from 3.1 as of December 31, 2019[194] - The debt investment portfolio as of June 30, 2020, included 35 investments with a fair value of $342.7 million, compared to 35 investments with a fair value of $288.4 million as of December 31, 2019[194] - The percentage of debt investments rated 4 decreased from 15.7% in December 2019 to 6.9% in June 2020, while those rated 3 increased from 75.0% to 77.4%[194] Financial Performance - Total investment income for the three months ended June 30, 2020, was $13,524,000, an increase from $10,470,000 in the same period of 2019, representing a growth of approximately 29.5%[209] - Net investment income for the three months ended June 30, 2020, was $6,706,000, compared to $5,012,000 for the same period in 2019, reflecting an increase of about 33.8%[209] - Average debt investments at fair value increased to $328,036,000 for the three months ended June 30, 2020, up from $239,284,000 in 2019, indicating a growth of approximately 37.2%[209] - Total expenses for the three months ended June 30, 2020, were $6,818,000, compared to $6,166,000 in 2019, which is an increase of about 10.6%[209] - Net unrealized appreciation on investments for the three months ended June 30, 2020, was $1,944,000, compared to $4,124,000 in 2019, showing a decrease of approximately 52.8%[209] - Net increase in net assets resulting from operations for the three months ended June 30, 2020, was $7,925,000, compared to $4,538,000 in 2019, indicating an increase of approximately 74.5%[209] - Total investment income increased by $3.1 million, or 29.2%, to $13.5 million for the three months ended June 30, 2020 compared to the same period in 2019[210] - Interest income on debt investments rose by $2.9 million, or 31.0%, to $12.1 million for the three months ended June 30, 2020, driven by a 37.1% increase in the average size of the debt investment portfolio[210] - Fee income increased by $0.9 million, or 116.4%, to $1.7 million for the three months ended June 30, 2020, primarily due to higher prepayment fee rates and increased amendment fee income[212] - Net expenses increased by $1.4 million, or 24.9%, to $6.8 million for the three months ended June 30, 2020 compared to the same period in 2019[214] - Interest expense increased by $0.4 million, or 21.1%, to $2.6 million for the three months ended June 30, 2020, due to a 41.5% increase in average borrowings[215] - Total investment income for the six months ended June 30, 2020 increased by $4.9 million, or 25.9%, to $23.6 million compared to the same period in 2019[227] - Interest income on debt investments for the six months ended June 30, 2020 increased by $4.8 million, or 28.3%, to $21.7 million, attributed to a 35.2% increase in the average size of the debt investment portfolio[227] - Net expenses for the six months ended June 30, 2020 increased by $2.1 million, or 20.1%, to $12.6 million compared to the same period in 2019[232] - Performance-based incentive fee expense increased by $0.7 million, or 33.3%, to $2.7 million for the six months ended June 30, 2020, due to a 33.3% increase in Pre-Incentive Fee Net Investment Income[236] Borrowings and Capital Structure - The outstanding principal balance under the Key Facility was $45.0 million as of June 30, 2020, compared to $17.0 million as of December 31, 2019[252] - As of June 30, 2020, the company had a borrowing capacity of $86.8 million under the NYL Facility[253] - The Asset-Backed Notes had an outstanding principal balance of $100.0 million as of June 30, 2020[265] - The company has segregated approximately $1.2 million as restricted investments in money market funds to pay monthly interest and principal payments on the Asset-Backed Notes[266] - As of June 30, 2020, the company had $195.6 million in total borrowings, with $14.9 million due within one year and $159.3 million due in 1-3 years[270] - The company had unfunded commitments of $75.9 million as of June 30, 2020, which are not reflected on the balance sheet[270] Management and Operations - The company’s investment objective is to maximize total return through current income and capital appreciation from debt investments and warrants[183] - The company is externally managed and operates as a Business Development Company (BDC) under the Investment Company Act of 1940[184] - The Advisor earned $3.3 million and $6.0 million in management fees during the three and six months ended June 30, 2020, respectively[279] - The company expects to raise additional equity and debt capital opportunistically to support future growth, subject to market conditions[256] - The company intends to distribute all or substantially all of its investment company taxable income to remain subject to taxation as a RIC[257] - The company has adopted an "opt out" dividend reinvestment plan (DRIP) for common stockholders[277] - The company must distribute at least 90% of its net ordinary income and net short-term capital gains to qualify as a RIC[275] - The company has made and intends to continue making requisite distributions to stockholders to qualify for tax treatment applicable to RICs, generally at least 90% of investment company taxable income[297] Tax and Regulatory Considerations - The company may incur a 4% excise tax on taxable income in excess of current year distributions, if applicable[298] - The company evaluates tax positions to determine if they are "more-likely-than-not" to be sustained by tax authorities, with no material uncertain tax positions reported as of June 30, 2020[301] Investment Strategy and Risk Management - The company has used hedging instruments in the past to protect against interest rate fluctuations and may continue to do so in the future[305] - The company expects that a 300 basis point increase in interest rates would result in an increase of $2.948 million in net assets from operations[304] - The company recorded warrants as assets at estimated fair value on the grant date, which are recognized as interest income over the contractual life of the related debt investment[294] - Realized gains or losses on investments are calculated using the specific identification method, reflecting the difference between net proceeds and amortized cost basis[296] - The company expects to continue funding investments with borrowings, making net income dependent on the difference between borrowing rates and investment rates[308]

Horizon Technology Finance (NASDAQ:HRZN) Q1 2020 Earnings Conference Call April 29, 2020 9:00 AM ET Company Participants Megan Bacon – Marketing Support Manager Rob Pomeroy – Chairman and Chief Executive Officer Jerry Michaud – President Dan Trolio – Chief Financial Officer Dan Devorsetz – Chief Investment Officer Conference Call Participants Tim Hayes – B. Riley FBR Ben Zucker – Aegis capital Ryan Lynch – KBW Operator Greetings, and welcome to the Horizon Technology Finance Corporation’s First Quarter 2020 ...