Good morning and welcome to Horizon Technology Finance First Quarter 2014 Conference Call. Today’s call is being recorded. All lines have been placed on mute. We will conduct a question-and-answer session after the opening remarks; instructions will follow at that time. I would now like to turn the call over Megan Began – I’m sorry Bacon of Horizon for introductions and the reading of the Safe Harbor statement. Please go ahead.

Thank you, and welcome to the Horizon Technology Finance first quarter 2014 conference call. Representing the company today are Rob Pomeroy, Chairman and Chief Executive Officer; Gerry Michaud, President; and Chris Mathieu, Chief Financial Officer. Before we begin, I would like to point out that the Q1 press release is available on the company’s website at www.horizontechnologyfinancecorp.com. Now I will read the following Safe Harbor statement. During this conference call, Horizon Technology Finance will make certain forward-looking statements, including statements with regard to the future performance of the company. Words such as believes, expects, anticipates, intends, or similar expressions are used to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements. And some of these factors are detailed in the Risk Factor discussion in the company’s filings with the Securities and Exchange Commission including the company’s Form 10-K for the year ended December 31, 2013. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. At this time, I would like to turn the call over to Rob Pomeroy.

Good morning and thank you all for joining us. During the first quarter, Horizon continued to build its venture debt portfolio having high-quality, high yielding VC-backed loan transactions and increasing the number of warrant positions held to 74. Our NAV increased from $14.14 at the end of 2013, to $14.32 at the end of Q1, as a result of our successfully exiting one of our one rated portfolio companies and the increase in the value of our warrant portfolio. In addition, two of our portfolio companies completed IPOs during the quarter. Further highlighting our performance for the first quarter, we had an increase in net assets from operations of $5.1 million or $0.53 per share. We achieved the dollar-weighted average portfolio yield of 13.6% during the first quarter. Net investment income was $2.5 million or $0.26 per share. We ended the quarter with a venture loan portfolio at fair value of $218 million, as well as warrants and equity investments with an aggregate fair value of $10.2 million, both representing an increase as compared to the end of the fourth quarter. And finally, we continue to reduce our exposure to the cleantech sector by selling two of our non-accrual accounts, which I will discuss in more detail later on the call. in consideration of our first quarter performance and our outlook for the second quarter and beyond, we declared monthly dividends totaling $0.345 per share, payable during the third quarter of 2014. This represents an annualized yield of 9.6% based on our NAV as of March 31. since our IPO, we have now declared cumulative dividends of $5.615 per share. Our dividend strategy remains to pay monthly dividends that are covered by our net investment income over time. maintaining our commitment to provide shareholders with a steady stream of attractive…

Thank you, Rob. Good morning, everyone. During the first quarter of 2014, we experience positive demand for our venture debt products, especially from early in mid stage venture capital-backed technology and life science companies. Our advisor originated a total of approximately $30 million of new loan investments three portfolio companies in the quarter of which Horizon funded approximately $15 million and partnered the remaining $15 million with other lenders Onboarding yields for these transactions remain strong averaging 12.5%. As a reminder, onboarding yield consistent with the interest rate, commitment fees, ETPs, but does not include additional potential returns in the form of warrants, prepayment fees, success fees are acceleration of income from ETPs upon prepayment. Our favorable overall portfolio yield is one of the highest BG sector and warrant positions at 74 portfolio companies to be major contributors to our results throughout 2014 and beyond. At the end of Q1, we were evaluating and negotiating a pipeline of more than $140 million of new investment opportunities. this pipeline will enable Horizon to select those investments, which we believe are of the highest quality. Also, there can be no assurance that we will fund any investments in our pipeline now awarded, proved and committed backlog as of today totals $27.5 million of loans all priced with floating interest rates. Turning to our core markets, we continue to see significant and strong IPO activity in the life science market in the first quarter of 2014 with 24 late-stage life science companies completing IPOs and raising more than $1.5 billion according to the National Venture Capital Association. As we have previously mentioned, we believe that from a venture debt perspective, the late-stage life science market has been overheated, resulting in current pay yields, which were too low for the risk, in addition light…

Thanks Jerry and good morning everyone. Our consolidated financial results for the first quarter 2014 have been presented in our earnings release distributed after the market closed yesterday, and we also filed our Form 10-Q with the SEC last night. For the three months ended March 31, total investment income increased 2.3% to $7.5 million, compared to $7.4 million for the first quarter of 2013. This year-over-year increase was primarily due to higher fee income, partially offset by lower interest income on investments resulted from a decreased average size of the loan portfolio. New loans funded in the first quarter had an average onboarding yield of 12.5%, total investment income for the quarter included $7.2 million from interest income on investments, as well as approximately $350,000 of fee income from five portfolio companies. For the first quarter, our portfolio yield was 13.6%, compared to 12.8% for the first quarter 2013. There were no loan prepayment fees in either periods. The company’s total expenses were $5 million for the first quarter 2014 as compared to $4.6 million for the first of 2013. Interest expense increased year-over-year primarily due to the increase in average borrowings following the issuance in June of 2013 of our asset-backed notes. During the first quarter we reduced the outstanding balance of our asset-backed notes by approximately $3 million. The effective interest rate for all debt outstanding as of March 31 was reduced to 6.8% as compared to 7.2% a year earlier. Interest expense is the current pay coupon plus debt issue costs already paid in connection with securing commitments plus non-used fees on our credit facilities. Management fee expense for the first quarter was flat year-over-year as a result of waver of the management fee on cash. Professional fees for the first quarter increased year-over-year due to…

Thank you. (Operator Instructions) The first question is from Troy Ward of KBW. Your line is open. Troy L. Ward – Keefe, Bruyette, & Woods, Inc.: Thank you and good morning guys. Can you just go back and repeat what you said about the deferred income from extreme power, what was the impact on this quarter and what was the expected benefit in the second quarter?

Sure good question. So, the impact on the first quarter was total of $520,000 and it was spread between recovery of interest income on the portion that was are non-accrual during the fourth quarter, as well as some late fees that were also brought in as part of the recovery. The total $520,000. Troy L. Ward – Keefe, Bruyette, & Woods, Inc.: So, they can through two different so partially.

Correct, right about $200,000 came through other income and the rest came through top-line interest income. [With lot] (ph) regarding the impact on Q2, the $500,000 will be largely in interest income through the acceleration of the final payment, which only I guess booked when the transaction actually was closed, which was the second quarter and then a small amount in other income. Troy L. Ward – Keefe, Bruyette, & Woods, Inc.: Okay. And then, you said you took control of the fixed assets, do you think the liquidation is the March 31 fair value indicate, where will you think that final liquidation will be?

We believe that the fair value that is listed in March 31 is recoverable price. Troy L. Ward – Keefe, Bruyette, & Woods, Inc.: Okay, great. And then, that’s all. I just want to make one comment about, you kind of talked about, you used the phrase intensified discussions at the board level with – trying to better [alignment] (ph) shareholders and just, I applaud you for taking that step and hopefully that there we can come to a decision where, you can see some changes to the structure to better [alignment] (ph) shareholders and also applied you for waving the fee on cash. And that’s all my question.

Thank you.

Thank you. And the next question from Casey Alexander of Gilford Securities. Your line is open. Casey J. Alexander – Gilford Securities Inc.: Can you tell me the actual balance as carried in the portfolio of loans on non-accrual at the end of the quarter?

(Indiscernible) cost basis. I think it was in.

Yes. It is in the… Casey Alexander – Gilford Securities: Not the cost base, the carrying value at the end of the quarter and the portfolio of those that are non-accrual.

Yes. $5.2 million at cost and $3.5 million at fair value, all our (indiscernible) are non-accrual. Casey Alexander – Gilford Securities: Okay, good. Alright, got it. As it relates to the Horizon Funding Trust, what is the – is there a set amortization schedule for that or is it amortizing based upon loans that are in the portfolio covering it as they come due and how do we schedule, how the rate the company is paying that down.

That’s a good question. So, it is a static pool that as the loans pay us, we pay down the debt side. There is an advance rate in the borrowing base that we stay in formulae with. So in the case of loan amortization that is set at the beginning, we know that and it is set and fixed, but the variability is when a loan prepays that will accelerate both the asset and debt side of the equation. Casey Alexander – Gilford Securities: Okay. So, are some of the companies that have been informed you that they are going to prepay located within the trust and therefore we are going to see an accelerated pay down on the trust in the coming quarter or third quarter as if excellent those deal happen to prepay.

Yes. That’s a good observation, that is – so all of those are in the other than the loans I am non-accrual, all the other optional prepaid that we spoke about our in the trust and they will result in accelerated borrowing pay down, which was one of the main catalyst for us getting to our 0.76 target debt to equity by the end of the day. Casey Alexander – Gilford Securities: Okay. Alright, good. That’s very helpful. Thank you. Lastly, a lot of BDC directly, not direct competitors because you are many direct competitors in the eventual lending space and lot of BDCs have been making a sincere effort to increase the amount of floating rate assets that they have on their portfolio. While understanding that, your guys deals have more rapid amortization schedule that maybe justn’t as attractive to take advantage of that. Have you increased the floating rate assets in the portfolio and if so, what percentage of the portfolios in floating rate asset at this time.

This is Gerry, Casey. The answer to the first part of that question is we have in fact, as I look at everything in our pipeline now and awarded, proved and committed and follow that business is floating rate business and we expect to continue to do that. It’s not something that we have problem selling in the marketplace. It does protect us relative to as potential fluctuations in interest rates. So, our portfolio is fairly quickly moving, especially with the other part of our portfolio securitized already being match funded, all of the new business we are putting on in fact practice is the floating rate business. Casey Alexander – Gilford Securities: Okay. Is there a current percentage in the portfolio as of the end of the quarter, did is in floating rate as suppose to fixed rate, the last time I asking I think it was a couple of quarter ago and it was 94% fixed and can 6% floating.

Yes. So, we don’t have that number handy. If you if you see the individual asset that actually have floating rate you can look at the schedule of investments I just on have that handy. But, Gerry is point out substantially everything since the securitization as actually than floating rate. Casey Alexander – Gilford Securities: All right, great. thank you very much for taking my questions.

Thank you. And the next question is from Robert Dodd of Raymond James. Your line is open. Robert J. Dodd – Raymond James & Associates, Inc.: Hi, guys. Several of the questions have already been answered. but one, following-up on Casey, typically floating actively tied with first lean versus fixed with second. so is this an indicator in terms of the pipeline you set for that you’re rotating more towards floating. Is that an indication that you’re also shifting more and more towards, first lean versus second lean. And then, if that’s the case, or kind of following up to that, what’s your view on the Fortress Facility right now, since it is one of the more expensive pieces of capital that you have. it did grant you more access to second lean and principal, but there are truly risk with that. And it’s getting a point that may become economic to just pay that off, given the target is really not to level out with that kind of facility at this point. So what’s your view on that?

This is Gerry. I’ll take the first part of that question. No, we have not changed relative to our first and second lean transactions, as it really held to floating rate. we’re pretty easily transitioned in our market to a floating rate product, without having to concern ourselves with changing other aspects of either underrated deal, or the structure of that deal. So everything that you will see going to our portfolio is floating rate will otherwise be consistent with what we have done in the past, you’ll see some senior security deals for sure and you’ll see some second lean deals as well.

So in terms of Robert, in terms of the Fortress Facility, it does provide a modest amount of leverage we recognized, it has the higher cost associated with it. And we will be looking at the economics of perhaps prepaying that loan in the third quarter, when the prepayment penalty improves on its third anniversary. Robert J. Dodd – Raymond James & Associates, Inc.: Okay. Thanks guys.

Thank you. The next question is from Andrew Kerai of National Securities. Your line is open. Andrew P. Kerai – National Securities Corporation: Good morning, thank you for taking my questions. Just wondered if I could touch on the final legal fees, it was sort of relative to Q1, is there expectation that the fees can remain at the same level in Q2 before normalizing the second half of the year, or just kind of try to put a pin on that number during the second quarter.

That’s a fair question. The legal fees will likely be at more the level of Q1, the $800,000 level, and then after that in the second half be a more normalized to the $300,00, $400,000 level for the second half of the year. Andrew P. Kerai – National Securities Corporation: Okay, great. thank you and then just to talk about as well certainly appreciate the color on you revisiting your advisor agreement. Sort of the range of alternatives you are considering, I know you obviously can’t say anything at this point, I mean is it internally managed something you’re thinking about, or is it simply a fee labor, or how should we kind of think about that going forward?

I’m not going to thank you for that or appreciate that, I’m not going to talk about discuss the details today, but I want to assure you that we are committed to the process. Andrew P. Kerai – National Securities Corporation: Great, that’s certainly good to hear and in terms of the management waiver – management team waiver on cash, that’s some of that we can sort of expect here kind of the interim before you guys make a formal announcement or is that something that you guys just kind of did for Q1 are not going to be looking at in the second quarter?

The same answer is that we’re not going to really talk about the details going forward. All right. Andrew P. Kerai – National Securities Corporation: Okay. Sure. And then I just wanted touch on what are the remaining two loans on non-accrual, if you look at the Semprius loan, I mean it looks like it’s marked pretty close apart, is your expectation kind of full recovery on that or what is your outlook for that at this point?

Semprius is a private company and they’re in the process of raising company. so we respect their confidentiality in doing that. and we think that’s appropriately value based on the scenarios that we used for them going forward. Andrew P. Kerai – National Securities Corporation: Great. Thank you. I certainly appreciate the color.

Thank you. The next question is from Chris York of JMP Securities. Your line is open. Chris J. York – JMP Securities LLC:

First of all, I’m not sure specifically what you’re referring to, but I can tell you, as I mentioned in the competitive side of our comment, we spent last year really solidifying our position as a really good partner for venture capital backed companies and the VC firms response them. our expectation is that those relationships in the marketplace, which have stood the test of time from all kinds of lenders, I remember when GE came into our market long time ago, everyone said oh god we’re dead, they’re going take over the market low cost of capital. The VC – you have to know one thing about our structures, we have a very small part of the overall gap component of these companies we finance. It’s important finance to the VCs, but the relationship with the lender that actually provide it is more important, because they are warrant lenders coming into these portfolio companies that are in development stage, which have an enormous amount of value creation ahead of them and providing problems that are inconsistent with durability to grow. and so over time over the last 20 years, I mean that is one thing has been fairly consistent in our marketplace, if you look at the tech banks that have supported the VC-backed companies and then to back supported the VCs and into some of their partners. Those relationships are correctly important, they’re embedded in what we do everyday and we think we are in probably the best position of any competitor in the marketplace today, relative to our relationship with the varying markets that we serve. and so we think we’re in a great position and we think that the opportunity for our investors going forward create value as we did last year with consistently high yields and adding additional warrants for companies have very good valuations. we’re very excited about that process moving forward. Chris J. York – JMP Securities LLC: Okay. Thanks a lot, Gerry. Last one from me is what we have expected professional fees to be up this quarter still came higher than expected. Their prepared remarks for that professional fees loan normalized in the second half of 2014. what should be our expectations for Q2, maybe a similar like Q1?

Sure, a fair question. we actually said on the last call, I think we actually said what the amount is going to be 80,000, so I think we’re repeating that say that in Q2 will be in the range of 800,000 for Q2 and then after that after the Q2 effort of working on the non-accruals will have a more normalized level in the $300,000 to $400,000 range, so look for a higher level continuing in Q2, they are consistent with Q1. Chris J. York – JMP Securities LLC: Got it. Thanks, Chris. That’s it from me.

You’re welcome.

Ron J. Jewsikow – Wells Fargo Securities LLC: Good morning and thank for taking my questions. I appreciate the color on potentially enhancing or further enhancing alignment with your shareholders. Sorry if I missed this on Q2 access that you forecasted, but did you provide any color on potential end of term payments that might get pulled forward? And how long of these launched on your book from modeling purposes, we can look any potential amortization is being put forward?

So I think we were comfortable disclosing today given that they have not acknowledged their transactions is that there’s one transaction or two transactions ranged from $7 million to $15 million in the aggregate and they were not originated this year, so they have some seasoning to that. Ron J. Jewsikow – Wells Fargo Securities LLC: Okay.

And both transactions have final payments, but not comfortable given the (indiscernible) at this point. Ron J. Jewsikow – Wells Fargo Securities LLC: All right, and that’s all I had. Thanks for taking my question.

Okay. Thank you.

Thank you, there are no further questions at this time. I turn the call back over for closing remarks.

Well, thank you we appreciate your questions and your interest in the Horizon story. We are encouraged by our start to 2014, we believe that the balance of 2014 holds promise for continued positive earnings from our high-yielding portfolio, to maintenance of our dividend, for upside from our maturing warrant portfolio and further recovery from our underperforming assets. We will keep you inform on our progresses we look to enhance shareholder value over the coming months.

Thank you. This concludes Horizon Technology Finance Corporation’s conference call. Thank you and have a great day.