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Note 4 - Investments

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Investment Holdings [Text Block]

Note 4. Investments

The following table shows the Company’s investments as of December 31, 2022 and 2021:

		*December 31, 2022*								*December 31, 2021*
		*Cost*				*Fair Value*				*Cost*				*Fair Value*
		(In thousands)
Investments
Debt		$	701,074			$	686,458			$	441,885			$	437,317
Warrants			14,790				29,712				10,023				20,200
Other			1,200				1,300				1,450				200
Equity			4,184				2,556				479				358
Total investments		$	721,248			$	720,026			$	453,837			$	458,075

The following table shows the Company’s investments by industry sector as of December 31, 2022 and 2021:

		*December 31, 2022*								*December 31, 2021*
		*Cost*				*Fair Value*				*Cost*				*Fair Value*
		(In thousands)
Life Science
Biotechnology		$	193,372			$	195,006			$	109,899			$	107,902
Medical Device			132,803				135,960				88,681				84,567
Technology
Communications			22,892				26,176				22,853				25,920
Consumer-Related			121,961				114,050				92,158				93,194
Data Storage			476				1,316				476				1,047
Internet and Media			329				1,159				569				3,305
Networking			11,831				11,710				17,390				17,964
Power Management			1,585				2,610				1,585				2,609
Semiconductors			56				—				101				—
Software			120,157				118,716				60,902				60,807
Sustainability
Energy Efficiency			8				27				—				—
Other Sustainability			84,633				85,524				46,595				47,011
Healthcare Information and Services
Diagnostics			9,851				9,858				12,393				12,377
Other			7,559				3,870				175				1,177
Software			13,735				14,044				60				195
Total investments		$	721,248			$	720,026			$	453,837			$	458,075

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 consolidated with the assets and liabilities of the Company. The transaction is accounted for as an asset acquisition under GAAP.

During the period January 1, 2020 through April 21, 2020, there were no distributions from HSLFI.

HFI entered into the NYL Facility with the NYL Noteholders for an aggregate purchase price of up to $100.0 million, with an accordion feature of up to $200.0 million at the mutual discretion and agreement of HSLFI and the NYL Noteholders. On June 1, 2018, HSLFI sold or contributed to HFI certain secured loans made to certain portfolio companies pursuant to 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.

The following tables show certain summarized financial information for HSLFI for the period January 1, 2020 through April 21, 2020:

		For the period
		January 1, 2020
		through
		April 21, 2020
		(In thousands)
Selected Statements of Operations Information
Interest income on investments		$	1,353
Total investment income		$	1,465
Total expenses		$	1,229
Net investment income		$	236
Net realized gain on investments		$	120
Net unrealized depreciation on investments		$	(392	)
Net decrease in net assets resulting from operations		$	(36	)