Hercules Capital
HERCULES TECHNOLOGY GROWTH CAPITAL INC (Form: 10-Q, Received: 05/12/2008 12:34:27)
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended March 31, 2008

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 814-00702

 

 

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Maryland   743113410

(State or Jurisdiction of

Incorporation or Organization)

 

(IRS Employer

Identification No.)

 

400 Hamilton Ave., Suite 310 Palo Alto, California 94301   94301
(Address of Principal Executive Offices)   (Zip Code)

(650) 289-3060

(Registrant’s Telephone Number, Including Area Code)

 

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES   x     NO   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer   ¨             Accelerated Filer   x             Non-Accelerated Filer   ¨             Smaller Reporting Company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES   ¨     NO   x

On May 8, 2008, there were 32,857,737 shares outstanding of the Registrant’s common stock, $0.001 par value.

 

 

 


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

FORM 10-Q

TABLE OF CONTENTS

 

PART I.

   FINANCIAL INFORMATION    2

Item 1.

   Consolidated Financial Statements    2
   Consolidated Statement of Assets and Liabilities as of March 31, 2008 (unaudited) and December 31, 2007    2
   Consolidated Schedule of Investments as of March 31, 2008 (unaudited)    3
   Consolidated Schedule of Investments as of December 31, 2007    15
   Consolidated Statement of Operations for the three-month periods ended March 31, 2008 and 2007 (unaudited)    29
  

Consolidated Statement of Changes in Net Assets for the three-month periods ended March 31, 2008 and 2007 (unaudited)

   30
   Consolidated Statement of Cash Flows for the three-month periods ended March 31, 2008 and 2007 (unaudited)    31
   Notes to Consolidated Financial Statements (unaudited)    32

Item 2.

   Management’s Discussion and Analysis of Financial Condition and Results of Operations    43

Item 3.

   Quantitative and Qualitative Disclosures About Market Risk    54

Item 4.

   Controls and Procedures    54

PART II.

   OTHER INFORMATION    54

Item 1.

   Legal Proceedings    55

Item 1a.

   Risk Factors    55

Item 2.

   Unregistered Sales of Equity Securities and Use of Proceeds    55

Item 3.

   Defaults Upon Senior Securities    55

Item 4.

   Submission of Matters to a Vote of Security Holders    55

Item 5.

   Other Information    55

Item 6.

   Exhibits    56

Signatures

   57

 

1


Table of Contents

PART I: FINANCIAL INFORMATION

In this Quarterly Report, the “Company,” “Hercules,” “we,” “us” and “our” refer to Hercules Technology Growth Capital, Inc. and its wholly owned subsidiaries and its affiliated securitization trusts unless the context otherwise requires.

 

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES

(in thousands, except per share data)

 

     March 31,
2008
(unaudited)
    December 31,
2007
 

Assets

    

Investments:

    

Non-affiliate investments (cost of $514,464 and $513,106)

   $ 526,516     $ 525,725  

Affiliate investments (cost of $6,344 and $6,344)

     4,247       4,247  
                

Total investments, at value (cost of $520,808 and $519,450 respectively)

     530,763       529,972  

Deferred loan origination revenue

     (6,969 )     (6,593 )

Cash and cash equivalents

     13,804       7,856  

Interest receivable

     6,833       6,387  

Other assets

     4,513       4,321  
                

Total assets

     548,944       541,943  

Liabilities

    

Accounts payable and accrued liabilities

     3,560       6,956  

Short-term credit facility

     72,900       79,200  

Long-term SBA Debentures

     70,050       55,050  
                

Total liabilities

     146,510       141,206  
                

Net assets

   $ 402,434     $ 400,737  
                

Net assets consist of:

    

Common stock, par value

   $ 33     $ 33  

Capital in excess of par value

     396,623       393,530  

Deferred stock compensation

     (2,748 )     (78 )

Unrealized appreciation on investments

     9,208       10,129  

Accumulated realized gains on investments

     3,777       819  

Distributions in excess of investment income

     (4,459 )     (3,696 )
                

Total net assets

   $ 402,434     $ 400,737  
                

Shares of common stock outstanding ($0.001 par value, 60,000 authorized)

     32,768       32,541  
                

Net asset value per share

   $ 12.28     $ 12.31  
                

See notes to consolidated financial statements (unaudited).

 

2


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Acceleron Pharmaceuticals, Inc. (0.68%)* (4)

 

Drug Discovery

 

Senior Debt
Matures June 2009
Interest rate 10.25%

  $ 2,935   $ 2,889   $ 2,889
   

Preferred Stock Warrants

      69     707
   

Preferred Stock Warrants

      35     130

Acceleron Pharmaceuticals, Inc. (0.33%)

   

Preferred Stock

      1,243     1,805
                 

Total Acceleron Pharmaceuticals, Inc.

          4,236     5,531

Aveo Pharmaceuticals, Inc. (2.02%) (4)

 

Drug Discovery

 

Senior Debt
Matures September 2009
Interest rate 10.75%

  $ 10,925     10,845     10,845
   

Preferred Stock Warrants

      144     193
   

Preferred Stock Warrants

      46     72
                 

Total Aveo Pharmaceuticals, Inc.

          11,035     11,110

Elixir Pharmaceuticals, Inc. (2.42%) (4)

 

Drug Discovery

 

Senior Debt
Matures June 2010
Interest rate Prime + 2.45%

  $ 12,973     12,829     12,829
   

Preferred Stock Warrants

      217     453
                 

Total Elixir Pharmaceuticals, Inc.

          13,046     13,282

EpiCept Corporation (1.11%) (4)

 

Drug Discovery

 

Senior Debt
Matures August 2009
Interest rate 11.70%

  $ 6,354     5,989     5,989
   

Common Stock Warrants

      423     128
                 

Total EpiCept Corporation

          6,412     6,117

Horizon Therapeutics, Inc. (0.22%)

 

Drug Discovery

 

Senior Debt
Matures April 2011
Interest rate 8.75%

  $ 12,000     1,038     1,038
   

Preferred Stock Warrants

      179     183
                 

Total Horizon Therapeutics, Inc.

          1,217     1,221

Inotek Pharmaceuticals Corp. (0.27%)

 

Drug Discovery

 

Preferred Stock

      1,500     1,500
                 

Total Inotek Pharmaceuticals Corp.

          1,500     1,500

Memory Pharmaceticals Corp. (2.52%) (4)

 

Drug Discovery

 

Senior Debt
Matures December 2010
Interest rate 11.45%

  $ 15,000     13,731     13,731
   

Common Stock Warrants

      1,751     131
                 

Total Memory Pharmaceticals Corp.

          15,482     13,862

Merrimack Pharmaceuticals, Inc. (0.21%) (4)

 

Drug Discovery

 

Convertible Senior Debt
Matures October 2008
Interest rate 11.15%

  $ 591     572     572
   

Preferred Stock Warrants

      155     575

Merrimack Pharmaceuticals, Inc. (0.51%)

   

Preferred Stock

      2,000     2,787
                 

Total Merrimack Pharmaceuticals, Inc.

          2,727     3,934

Neosil, Inc. (1.08%)

 

Drug Discovery

 

Senior Debt
Matures May 2010
Interest rate 10.75%

  $ 5,800     5,742     5,742
   

Preferred Stock Warrants

      83     208
                 

Total Neosil, Inc.

          5,825     5,950

 

3


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(continued)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Paratek Pharmaceuticals, Inc. (0.27%) (4)

 

Drug Discovery

 

Senior Debt
Matures June 2008
Interest rate 11.10%

  $ 1,498   1,490   1,490
   

Preferred Stock Warrants

    137   —  

Paratek Pharmaceuticals, Inc. (0.18%)

   

Preferred Stock

    1,000   1,000
             

Total Paratek Pharmaceuticals, Inc.

        2,627   2,490

Portola Pharmaceuticals, Inc. (2.78%) (4)

 

Drug Discovery

 

Senior Debt
Matures September 2010
Interest rate Prime + 1.75%

  $ 15,000   14,904   14,904
   

Preferred Stock Warrants

    152   339
             

Total Portola Pharmaceuticals, Inc.

        15,056   15,243

Sirtris Pharmaceuticals, Inc. (1.66%) (4)

 

Drug Discovery

 

Senior Debt
Matures April 2011
Interest rate 10.60%

  $ 8,505   8,451   8,451
   

Common Stock Warrants

    89   668

Sirtris Pharmaceuticals, Inc. (0.13%)

   

Common Stock

    500   736
             

Total Sirtris Pharmaceuticals, Inc.

        9,040   9,855
             

Total Drug Discovery (16.39%)

        88,203   90,095
             

E-band Communications, Inc. (0.36%) (6)

 

Communications &

Networking

 

Preferred Stock

    2,000   2,000
             

Total E-Band Communications, Inc.

        2,000   2,000

IKANO Communications, Inc. (3.43%) (4)

 

Communications &

Networking

 

Senior Debt
Matures March 2011
Interest rate 11.00%

  $ 18,384   18,384   18,384
   

Preferred Stock Warrants

    45   188
   

Preferred Stock Warrants

    72   286
             

Total IKANO Communications, Inc.

        18,501   18,858

Neonova Holding Company (1.64%)

 

Communications &

Networking

 

Senior Debt
Matures September 2012
Interest rate Prime + 3.25%

  $ 9,000   8,906   8,906
   

Preferred Stock Warrants

    94   93

Neonova Holding Company (0.05%)

   

Preferred Stock

    250   250
             

Total Neonova Holding Company

        9,250   9,249

Ping Identity Corporation (0.25%) (4)

 

Communications &

Networking

 

Senior Debt
Matures June 2009
Interest rate 11.50%

  $ 1,378   1,360   1,360
   

Preferred Stock Warrants

    52   5
             

Total Ping Identity Corporation

        1,412   1,365

Purcell Systems, Inc. (1.51%)

 

Communications &

Networking

 

Senior Debt
Matures June 2009
Interest rate Prime + 3.50%

  $ 2,091   2,002   2,002
   

Revolving Line of Credit
Matures June 2008
Interest rate Prime + 2.00%

  $ 6,000   6,000   6,000
   

Preferred Stock Warrants

    123   260
             

Total Purcell Systems, Inc.

        8,125   8,262

Rivulet Communications, Inc. (0.54%) (4)

 

Communications &

Networking

 

Senior Debt
Matures September 2009
Interest rate 10.60%

  $ 2,976   2,954   2,954
   

Preferred Stock Warrants

    51   —  

Rivulet Communications, Inc. (0.05%)

   

Preferred Stock

    250   250
             

Total Rivulet Communications, Inc.

        3,255   3,204

 

4


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(continued)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Seven Networks, Inc. (1.97%) (4)

  Communications & Networking  

Senior Debt
Matures April 2010
Interest rate Prime + 3.75%

  $ 8,517   8,405   8,405
   

Revolving Line of Credit
Matures April 2008
Interest rate Prime + 3.00%

  $ 2,000   2,000   2,000
   

Preferred Stock Warrants

    174   437
             

Total Seven Networks, Inc.

  10,579   10,842

Simpler Networks Corp. (0.47%) (4)

  Communications & Networking  

Senior Debt
Matures July 2009
Interest rate 11.75%

  $ 4,112   4,058   2,558
   

Preferred Stock Warrants

    160   —  

Simpler Networks Corp. (0.00%)

   

Preferred Stock

    500   —  
             

Total Simpler Networks Corp.

  4,718   2,558

Stoke, Inc. (0.43%)

  Communications & Networking  

Senior Debt
Matures August 2010
Interest rate 10.55%

  $ 2,250   2,208   2,208
   

Preferred Stock Warrants

    53   127
             

Total Stoke, Inc.

  2,261   2,335

Tectura Corporation (3.78%) (4)

  Communications & Networking  

Senior Debt
Matures March 2012
Interest rate LIBOR + 6.15%

  $ 8,684   8,643   8,643
   

Revolving Line of Credit
Matures March 2008
Interest rate LIBOR + 5.15%

  $ 12,000   12,000   12,000
   

Preferred Stock Warrants

    51   104
             

Total Tectura Corporation

  20,694   20,747

Teleflip, Inc. (0.00%)

  Communications & Networking  

Senior Debt
Matures May 2010
Interest rate Prime + 2.75%

  $ 938   930   —  
   

Preferred Stock Warrants

    11   —  
             

Total Teleflip, Inc.

  941   —  

Wireless Channels, Inc. (2.20%)

  Communications & Networking  

Senior Debt - Second Lien
Matures April 2010
Interest rate Prime + 4.25%

  $ 1,570   1,570   1,570
   

Senior Debt - Second Lien
Matures April 2010
Interest rate Prime + 4.25%

  $ 10,246   10,147   10,147
   

Preferred Stock Warrants

    155   340
             

Total Wireless Channels, Inc.

  11,872   12,057

Zayo Bandwith, Inc. (4.55%) (4)

  Communications & Networking  

Senior Debt
Matures April 2013
Interest rate Prime + 3.50%

  $ 25,000   25,000   25,000
             

Total Zayo Bandwith, Inc.

  25,000   25,000
             

Total Communications & Networking (21.23%)

        118,608   116,477
             

Atrenta, Inc. (0.63%) (4)

  Software  

Senior Debt
Matures June 2009
Interest rate 11.50%

  $ 3,143   3,108   3,108
   

Preferred Stock Warrants

    102   250
   

Preferred Stock Warrants

    34   82

Atrenta, Inc. (0.05%)

   

Preferred Stock

    250   250
             

Total Atrenta, Inc.

        3,494   3,690

 

5


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(continued)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Blurb, Inc. (0.42%)

 

Software

 

Senior Debt
Matures December 2009
Interest rate 9.55%

  $ 2,310   2,293   2,293
   

Preferred Stock Warrants

    25   34
             

Total Blurb, Inc.

  2,318   2,327

Bullhorn, Inc. (0.18%)

 

Software

 

Senior Debt
Matures March 2010
Interest rate Prime + 3.75%

  $ 1,000   963   963
   

Preferred Stock Warrants

    43   53
             

Total Bullhorn, Inc.

  1,006   1,016

Cittio, Inc. (0.18%)

 

Software

 

Senior Debt
Matures April 2010
Interest rate 11.00%

  $ 1,000   1,000   1,000
             

Total Cittio, Inc.

  1,000   1,000

Forescout Technologies, Inc. (0.43%) (4)

 

Software

 

Senior Debt
Matures August 2009
Interest rate 11.15%

  $ 1,736   1,671   1,671
   

Revolving Line of Credit
Matures August 2007
Interest rate Prime + 1.49%

  $ 500   500   500
   

Preferred Stock Warrants

    99   176
             

Total Forescout Technologies, Inc.

  2,270   2,347

GameLogic, Inc. (0.56%) (4)

 

Software

 

Senior Debt
Matures December 2009
Interest rate Prime + 4.125%

  $ 3,000   2,947   2,947
   

Preferred Stock Warrants

    92   139
             

Total GameLogic, Inc.

  3,039   3,086

Gomez, Inc. (0.09%) (4)

 

Software

 

Preferred Stock Warrants

    35   491
             

Total Gomez, Inc.

  35   491

HighRoads, Inc. (0.01%) (4)

 

Software

 

Preferred Stock Warrants

    44   71
             

Total HighRoads, Inc.

  44   71

Intelliden, Inc. (0.40%)

 

Software

 

Senior Debt
Matures February 2010
Interest rate 13.20%

  $ 2,131   2,122   2,122
   

Preferred Stock Warrants

    18   77
             

Total Intelliden, Inc.

  2,140   2,199

Oatsystems, Inc. (0.69%) (4)

 

Software

 

Senior Debt
Matures September 2009
Interest rate 11.00%

  $ 3,800   3,768   3,768
   

Preferred Stock Warrants

    67   1
             

Total Oatsystems, Inc.

  3,835   3,769

Proficiency, Inc. (0.27%) (5)(6)

 

Software

 

Senior Debt
Matures July 2008
Interest rate 12.00%

  $ 1,500   1,497   1,497
   

Preferred Stock Warrants

    96   —  

Proficiency, Inc. (0.14%)

   

Preferred Stock

    2,750   750
             

Total Proficiency, Inc.

  4,343   2,247

PSS Systems, Inc. (0.65%) (4)

 

Software

 

Senior Debt
Matures March 2010
Interest rate 10.74%

  $ 3,500   3,467   3,467
   

Preferred Stock Warrants

    51   108
             

Total PSS Systems, Inc.

        3,518   3,575

 

6


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(continued)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Savvion, Inc. (1.14%) (4)

  Software  

Senior Debt
Matures March 2009
Interest rate Prime + 3.45%

  $ 1,043   1,043   1,043
   

Revolving Line of Credit
Matures March 2008
Interest rate Prime + 3.45%

  $ 3,189   3,188   3,188
   

Revolving Line of Credit
Matures March 2008
Interest rate Prime + 2.00%

  $ 1,797   1,797   1,797
   

Preferred Stock Warrants

    52   251
             

Total Savvion, Inc.

        6,080   6,279

Sportvision, Inc. (0.01%)

  Software  

Preferred Stock Warrants

    39   59
             

Total Sportvision, Inc.

        39   59

Talisma Corp. (0.08%) (4)

  Software  

Preferred Stock Warrants

    49   422
             

Total Talisma Corp.

        49   422

WildTangent, Inc. (0.39%)

  Software  

Senior Debt
Matures March 2011
Interest rate 9.65%

  $ 2,000   1,788   1,788
   

Preferred Stock Warrants

    238   339
             

Total WildTangent, Inc.

        2,026   2,127
             

Total Software (6.32%)

        35,236   34,705
             

Agami Systems, Inc. (0.84%) (4)

  Electronics & Computer Hardware  

Senior Debt
Matures August 2009
Interest rate 11.00%

  $ 4,433   4,394   4,394
   

Preferred Stock Warrants

    86   218
             

Total Agami Systems, Inc.

        4,480   4,612

Luminus Devices, Inc. (2.18%) (4)

  Electronics & Computer Hardware  

Senior Debt
Matures August 2009
Interest rate 12.8750%

  $ 11,792   11,354   11,354
   

Preferred Stock Warrants

    183   135
   

Preferred Stock Warrants

    84   74
   

Preferred Stock Warrants

    334   420
             

Total Luminus Devices, Inc.

        11,955   11,983

Maxvision Holding, LLC. (2.05%) (4)

  Electronics & Computer Hardware  

Senior Debt
Matures April 2012
Interest rate Prime + 5.50%

  $ 5,038   4,956   4,956
   

Senior Debt
Matures April 2012
Interest rate Prime + 2.25%

  $ 5,500   5,500   5,500
   

Revolving Line of Credit
Matures September 2012
Interest rate Prime +2.25%

  $ 821   821   821

Maxvision Holding, LLC. (0.01%) (4)

   

Preferred Stock

    81   81
             

Total Maxvision Holding, LLC

        11,358   11,358

NetEffect, Inc. (0.43%)

  Electronics & Computer Hardware  

Senior Debt
Matures May 2010
Interest rate 11.95%

  $ 2,282   2,244   2,244
   

Preferred Stock Warrants

    47   120
             

Total NetEffect, Inc.

        2,291   2,364

 

7


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(continued)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Shocking Technologies, Inc. (0.05%)

  Electronics & Computer Hardware  

Senior Debt
Matures December 2010
Interest rate 9.75%

  $ 250   192   192
   

Prefered Stock Warrants

    63   95
             

Total Shocking Technologies, Inc.

        255   287

SiCortex, Inc. (1.83%)

  Electronics & Computer Hardware  

Senior Debt
Matures December 2010
Interest rate 10.95%

  $ 9,743   9,615   9,615
   

Preferred Stock Warrants

    164   446
             

Total SiCortex, Inc.

        9,779   10,061

Spatial Photonics, Inc. (0.71%) (4)

  Electronics & Computer Hardware  

Senior Debt
Matures May 2011
Interest rate 10.75%

  $ 3,751   3,634   3,634
   

Preferred Stock Warrants

    130   274

Spatial Photonics, Inc. (0.09%)

   

Preferred Stock

    500   500
             

Total Spatial Photonics Inc.

        4,264   4,408

VeriWave, Inc. (0.88%)

  Electronics & Computer Hardware  

Senior Debt
Matures May 2010
Interest rate 10.75%

  $ 3,747   3,710   3,710
   

Revolving Line of Credit
Matures May 2008
Interest rate Prime +1.00%

  $ 990   990   990
   

Preferred Stock Warrants

    54   128
             

Total VeriWave, Inc.

        4,754   4,828

ViDeOnline Communications, Inc. (0.05%) (4)

  Electronics & Computer Hardware  

Preferred Stock Warrants

    298   289
             

Total ViDeOnline Communications, Inc.

        298   289
             

Total Electronics & Computer Hardware (9.12%)

        49,434   50,190
             

Aegerion Pharmaceuticals, Inc. (1.66%) (4)

  Specialty Pharmaceuticals  

Senior Debt
Matures August 2010
Interest rate Prime + 2.50%

  $ 8,924   8,877   8,877
   

Preferred Stock Warrants

    69   237

Aegerion Pharmaceuticals, Inc. (0.18%) (4)

   

Preferred Stock

    1,000   1,000
             

Total Aegerion Pharmaceuticals, Inc.

        9,946   10,114

Panacos Pharmaceuticals, Inc. (3.55%) (4)

  Specialty Pharmaceuticals  

Senior Debt
Matures January 2011
Interest rate 11.20%

  $ 20,000   19,332   19,332
   

Common Stock Warrants

    876   132

Panacos Pharmaceuticals, Inc. (0.03%)

   

Common Stock

    410   140
             

Total Panacos Pharmaceuticals, Inc.

        20,618   19,604

Quatrx Pharmaceuticals Company (2.40%) (4)

  Specialty Pharmaceuticals  

Senior Debt
Matures January 2010
Interest rate Prime + 3.00%

  $ 13,135   13,038   13,038
   

Preferred Stock Warrants

    220   144

Quatrx Pharmaceuticals Company (0.14%)

   

Preferred Stock

    750   750
             

Total Quatrx Pharmaceuticals Company

        14,008   13,932
             

Total Specialty Pharmaceuticals (7.96%)

        44,572   43,650
             

 

8


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(continued)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Annie's, Inc. (0.73%)

  Consumer & Business Products  

Senior Debt
Matures April 2011
Interest rate LIBOR + 6.50%

  $ 4,000   3,679   3,679
   

Preferred Stock Warrants

    321   323
             

Total Annie's, Inc.

        4,000   4,002

BabyUniverse, Inc. (0.03%) (4)

  Consumer & Business Products  

Common Stock

    267   145
             

Total BabyUniverse, Inc.

        267   145

Market Force Information, Inc. (0.01%) (4)

  Consumer & Business Products  

Preferred Stock Warrants

    24   53

Market Force Information, Inc. (0.09%)

   

Preferred Stock

    500   500
             

Total Market Force Information, Inc.

        524   553

Wageworks, Inc. (0.10%) (4)

  Consumer & Business Products  

Preferred Stock Warrants

    252   562

Wageworks, Inc. (0.04%)

   

Preferred Stock

    250   209
             

Total Wageworks, Inc.

        502   771
             

Total Consumer & Business Products (1.00%)

        5,293   5,471
             

Custom One Design, Inc. (0.19%)

  Semiconductors  

Senior Debt
Matures September 2010
Interest rate 11.50%

  $ 1,000   985   985
   

Common Stock Warrants

    18   53
             

Total Custom One Design, Inc.

        1,003   1,038

iWatt Inc. (0.84%) (4)

  Semiconductors  

Senior Debt
Matures September 2009
Interest rate Prime + 2.75%

  $ 1,264   1,130   1,130
   

Revolving Line of Credit
Matures September 2007
Interest rate Prime + 1.75%

  $ 3,235   3,235   3,235
   

Preferred Stock Warrants

    46   114
   

Preferred Stock Warrants

    51   59
   

Preferred Stock Warrants

    73   73
             

Total iWatt Inc.

        4,535   4,611

NEXX Systems, Inc. (2.31%) (4)

  Semiconductors  

Senior Debt
Matures February 2010
Interest rate Prime + 2.75%

  $ 4,098   3,992   3,992
   

Revolving Line of Credit
Matures December 2009
Interest rate Prime + 1.75%

  $ 5,000   5,000   5,000
   

Revolving Line of Credit
Matures December 2009
Interest rate Prime + 3.75%

  $ 3,000   3,000   3,000
   

Preferred Stock Warrants

    165   670
             

Total NEXX Systems, Inc.

        12,157   12,662

Quartics, Inc. (0.84%) (4)

  Semiconductors  

Senior Debt
Matures August 2010
Interest rate 11.05%

  $ 300   259   259
   

Senior Debt
Matures August 2010
Interest rate 8.80%

  $ 4,200   4,200   4,200
   

Preferred Stock Warrants

    53   142
             

Total Quartics, Inc.

        4,512   4,601

 

9


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(continued)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Solarflare Communications, Inc. (0.15%)

  Semiconductors  

Senior Debt
Matures August 2010
Interest rate 11.75%

  $ 625   560   560
   

Preferred Stock Warrants

    83   241

Solarflare Communications, Inc. (0.09%)

   

Preferred Stock

    500   500
             

Total Solarflare Communications, Inc.

        1,143   1,301
             

Total Semiconductors (4.42%)

        23,350   24,213
             

Labopharm USA, Inc. (2.91%) (5)

  Drug Delivery  

Senior Debt
Matures July 2008
Interest rate 11.95%

  $ 15,000   14,587   14,587
   

Common Stock Warrants

    458   1,363
             

Total Labopharm USA, Inc.

        15,045   15,950

Transcept Pharmaceuticals, Inc. (1.16%) (4)

  Drug Delivery  

Senior Debt
Matures October 2009
Interest rate 10.69%

  $ 6,119   6,077   6,077
   

Preferred Stock Warrants

    36   116
   

Preferred Stock Warrants

    51   162

Transcept Pharmaceuticals, Inc. (0.09%) (4)

   

Preferred Stock

    500   500
             

Total Transcept Pharmaceuticals, Inc.

        6,664   6,855
             

Total Drug Delivery (4.16%)

        21,709   22,805
             

BARRX Medical, Inc. (0.14%)

  Therapeutic        
   

Preferred Stock

    1,500   758
             

Total BARRX Medical, Inc.

        1,500   758

EKOS Corporation (1.00%)

  Therapeutic  

Senior Debt
Matures November 2010
Interest rate Prime + 2.00%

  $ 5,000   4,733   4,733
   

Preferred Stock Warrants

    175   495
   

Preferred Stock Warrants

    153   263
             

Total EKOS Corporation

        5,061   5,491

Gynesonics, Inc. (0.09%) (4)

  Therapeutic  

Preferred Stock Warrants

    18   507

Gynesonics, Inc. (0.05%)

   

Preferred Stock

    250   250
             

Total Gynesonics, Inc.

        268   757

Novasys Medical, Inc. (1.16%) (4)

  Therapeutic  

Senior Debt
Matures January 2010
Interest rate 9.70%

  $ 6,614   6,370   6,370
             

Total Novasys Medical, Inc.

        6,370   6,370

Power Medical Interventions, Inc. (0.00%)

  Therapeutic  

Common Stock Warrants

    21   22
             

Total Power Medical Interventions, Inc.

        21   22
             

Total Therapeutic (2.44%)

        13,220   13,398
             

Invoke Solutions, Inc. (0.36%) (4)

  Internet Consumer & Business Services  

Senior Debt
Matures December 2008
Interest rate Prime + 3.75%

  $ 1,902   1,862   1,862
   

Preferred Stock Warrants

    56   98
   

Preferred Stock Warrants

    26   30
             

Total Invoke Solutions, Inc.

        1,944   1,990

Prism Education Group Inc. (0.38%)

  Internet Consumer & Business Services  

Senior Debt
Matures December 2010
Interest rate 11.25%

  $ 2,000   1,967   1,967
   

Preferred Stock Warrants

    43   97
             

Total Prism Education Group Inc.

        2,010   2,064

 

10


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(continued)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

RazorGator Interactive Group, Inc. (0.94%)

  Internet Consumer & Business Services  

Revolving Line of Credit
Matures January 2009
Interest rate Prime + 1.80%

  $ 1,000   1,000   1,000
   

Preferred Stock Warrants

    13   3,834
   

Preferred Stock Warrants

    28   319

RazorGator Interactive Group, Inc. (0.90%)

   

Preferred Stock

    1,000   4,935
             

Total RazorGator Interactive Group, Inc.

        2,041   10,088

Serious USA, Inc. (0.55%)

  Internet Consumer & Business Services  

Senior Debt
Matures February 2011
Interest rate Prime + 3.00%

  $ 2,450   2,377   2,377
   

Revolving Line of Credit
Matures July 2008
Interest rate Prime + 2.00%

  $ 654   654   654
   

Preferred Stock Warrants

    93   8
             

Total Serious USA, Inc.

        3,124   3,039
             

Total Internet Consumer & Business Services (3.13%)

        9,119   17,181
             

Lilliputian Systems, Inc. (1.20%) (4)

  Energy  

Senior Debt Matures
March 2010
Interest rate 9.75%

  $ 6,495   6,472   6,472
   

Preferred Stock Warrants

    48   100
             

Total Lilliputian Systems, Inc.

        6,520   6,572
             

Total Energy (1.20%)

        6,520   6,572
             

Active Response Group, Inc. (1.84%)

  Information Services  

Senior Debt
Matures March 2012
Interest rate LIBOR + 6.55%

  $ 10,000   9,892   9,892
   

Preferred Stock Warrants

    92   119
   

Common Stock Warrants

    46   89
             

Total Active Response Group, Inc.

        10,030   10,100

Buzznet, Inc. (0.15%)

  Information Services  

Senior Debt
Matures March 2010
Interest rate 10.25%

  $ 827   821   821
   

Preferred Stock Warrants

    9   14

Buzznet, Inc. (0.05%)

   

Preferred Stock

    250   250
             

Total Buzznet, Inc.

        1,080   1,085

hi5 Networks, Inc. (0.93%)

  Information Services  

Senior Debt
Matures January 2011
Interest rate Prime + 2.5%

  $ 3,000   3,000   3,000
   

Revolving Line of Credit
Matures July 2011
Interest rate 6.50%

  $ 987   987   987
   

Revolving Line of Credit
Matures June 2011
Interest rate 7.75%

  $ 1,000   810   810
   

Preferred Stock Warrants

    213   307
             

Total hi5 Networks, Inc.

        5,010   5,104

 

11


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(continued)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Jab Wireless, Inc. (1.48%)

  Information Services  

Senior Debt
Matures January 2012
Interest rate 10.75%

  $ 3,097   2,856   2,856
   

Senior Debt
Matures January 2012
Interest rate 10.00%

  $ 1,903   1,903   1,903
   

Senior Debt
Matures January 2012
Interest rate 9.50%

  $ 3,000   3,000   3,000
   

Preferred Stock Warrants

    265   378
             

Total Jab Wireless, Inc.

        8,024   8,137

Solutionary, Inc. (1.41%)

  Information Services  

Senior Debt
Matures June 2010
Interest rate LIBOR + 5.50%

  $ 5,547   5,504   5,504
   

Revolving Line of Credit
Matures June 2010
Interest rate LIBOR + 5.00%

  $ 1,516   1,516   1,516
   

Revolving Line of Credit
Matures June 2010
Interest rate LIBOR + 5.50%

  $ 501   501   501
   

Preferred Stock Warrants

    94   225
   

Preferred Stock Warrants

    2   6

Solutionary, Inc. (0.05%)

   

Preferred Stock

    250   250
             

Total Solutionary, Inc.

        7,867   8,002

The Generation Networks, Inc. (2.97%)

  Information Services  

Senior Debt
Matures March 2012
Interest rate Prime + 4.50%

  $ 16,500   16,316   16,316

The Generation Networks, Inc. (0.09%)

   

Preferred Stock

    500   500
             

Total The Generation Networks, Inc.

        16,816   16,816

Wallop Technologies, Inc. (0.04%)

  Information Services  

Senior Debt
Matures March 2010
Interest rate 10.00%

  $ 202   197   197
   

Preferred Stock Warrants

    7   13
             

Total Wallop Technologies, Inc.

        204   210

Zeta Interactive Corporation (2.75%) (4)

  Information Services  

Senior Debt
Matures November 2011
Interest rate Prime +2.00%

  $ 7,000   6,843   6,843
   

Senior Debt
Matures November 2011
Interest rate Prime +3.00%

  $ 8,000   8,000   8,000
   

Preferred Stock Warrants

    172   236

Zeta Interactive Corporation (0.09%)

   

Preferred Stock

    500   500
             

Total Zeta Interactive Corporation

        15,515   15,579
             

Total Information Services (11.85%)

        64,546   65,033
             

Novadaq Technologies, Inc. (0.18%)

  Diagnostic  

Common Stock

    1,626   979
             

Total Novadaq Technologies, Inc.

        1,626   979

Optiscan Biomedical, Corp. (0.02%) (4)

  Diagnostic  

Senior Debt
Matures March 2008
Interest rate 15.00%

  $ 52   52   52
   

Preferred Stock Warrants

    80   63

Optiscan Biomedical, Corp. (0.13%)

   

Preferred Stock

    1,000   722
             

Total Optiscan Biomedical, Corp.

        1,132   837
             

Total Diagnostic (0.33%)

        2,758   1,816
             

 

12


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(continued)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Guava Technologies, Inc. (1.00%) (4)

  Biotechnology Tools  

Senior Debt
Matures July 2009
Interest rate Prime + 3.25%

  $ 3,725   3,393   3,393
   

Convertible Debt

    250   250
   

Revolving Line of Credit
Matures December 2007
Interest rate Prime + 2.00%

  $ 1,575   1,575   1,575
   

Preferred Stock Warrants

    105   220
   

Preferred Stock Warrants

    68   36
             

Total Guava Technologies, Inc.

        5,391   5,474

Kamada, Inc. (2.03%) (5)

  Biotechnology Tools  

Senior Debt
Matures November 2011
Interest rate 10.60%

  $ 11,000   10,572   10,572
   

Common Stock Warrants

    428   555
             

Total Kamada, Inc.

        11,000   11,127

NuGEN Technologies, Inc. (0.36%)

  Biotechnology Tools  

Senior Debt
Matures March 2010
Interest rate 11.70%

  $ 1,706   1,649   1,649
   

Preferred Stock Warrants

    45   316
   

Preferred Stock Warrants

    33   30

NuGEN Technologies, Inc. (0.09%)

   

Preferred Stock

    500   500
             

Total NuGEN Technologies, Inc.

        2,227   2,495
             

Total Biotechnology Tools (3.48%)

        18,618   19,096
             

Crux Biomedical, Inc. (0.28%)

  Surgical Devices  

Senior Debt
Matures October 2010
Interest rate Prime + 1.75%

  $ 1,500   1,470   1,470
   

Preferred Stock Warrants

    37   63

Crux Biomedical, Inc. (0.05%)

   

Preferred Stock

    250   250
             

Total Crux Biomedical, Inc.

        1,757   1,783

Diomed Holdings, Inc. (1.09%) (4)

  Surgical Devices  

Senior Debt
Matures July 2010
Interest rate 10.95%%

  $ 6,000   5,966   5,966
   

Common Stock Warrants

    43   —  
             

Total Diomed Holdings, Inc.

        6,009   5,966

Light Science Oncology, Inc. (0.03%)

  Surgical Devices  

Preferred Stock Warrants

    99   173
             

Total Light Science Oncology, Inc.

        99   173
             

Total Surgical Devices (1.45%)

        7,865   7,922
             

Glam Media, Inc. (0.91%)

  Media/Content/ Info  

Revolving Line of Credit
Matures April 2009
Interest rate Prime + 1.25%

  $ 5,000   4,518   4,518

Total Glam Media, Inc.

   

Preferred Stock Warrants

    482   486
             
        5,000   5,004

Waterfront Media Inc. (1.12%) (4)

  Media/Content/ Info  

Senior Debt
Matures December 2010
Interest rate Prime + 3.00%

  $ 3,731   3,697   3,697
   

Revolving Line of Credit
Matures March 2008
Interest rate Prime + 1.25%

  $ 2,000   2,000   2,000
   

Preferred Stock Warrants

    60   438

Waterfront Media Inc. (0.18%)

   

Preferred Stock

    1,000   1,000
             

Total Waterfront Media Inc.

        6,757   7,135
             

Total Media/Content/Info (2.21%)

        11,757   12,139
             

 

13


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2008

(continued)

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Total Investments (96.69%)

        $ 520,808   $ 530,763
                 

 

* Value as a percent of net assets
(1) Preferred and common stock, warrants, and equity interests are generally non-income producing.
(2) Gross unrealized appreciation, gross unrealized depreciation, and net appreciation for federal income tax purposes totaled $20,401, $10,446 and $9,955, respectively.
(3) Except for warrants in eight publicly traded companies and common stock in four publicly traded companies, all investments are restricted at March 31, 2008 and were valued at fair value as determined in good faith by the Board of Directors. No unrestricted securities of the same issuer are outstanding. The Company uses the Standard Industrial Code for classifying the industry grouping of its portfolio companies.
(4) Debt and warrant investments of this portfolio company have been pledged as collateral under the Credit Facility. Citigroup has an equity participation right on loans collateralized under the Credit Facility. The value of their participation right on unrealized gains in the related equity investments was approximately $1.1 million at March 31, 2008 and is included in accrued liabilities and reduces the unrealized gain recognized by the Company at March 31, 2008.
(5) Non-U.S. company or the company's principal place of business is outside the United States.
(6) Affiliate investment that is defined under the Investment Company Act of 1940 as companies in which HTGC owns as least 5% but not more than 25% of the voting securities of the company. All other investments are less than 5% owned.

See notes to consolidated financial statements (unaudited).

 

14


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Acceleron Pharmaceuticals, Inc. (0.94%)* (4)

 

Drug Discovery

 

Senior Debt
Matures June 2009
Interest rate 10.25%

  $ 3,237   $ 3,184   $ 3,184
   

Preferred Stock Warrants

      69     472
   

Preferred Stock Warrants

      35     109

Acceleron Pharmaceuticals, Inc. (0.45%)

   

Preferred Stock

      1,243     1,805
                 

Total Acceleron Pharmaceuticals, Inc.

    4,531     5,569

Aveo Pharmaceuticals, Inc. (3.06%) (4)

 

Drug Discovery

 

Senior Debt
Matures September 2009
Interest rate 10.75%

  $ 12,078     11,984     11,984
   

Preferred Stock Warrants

      144     204
   

Preferred Stock Warrants

      46     74
                 

Total Aveo Pharmaceuticals, Inc.

    12,174     12,262

Elixir Pharmaceuticals, Inc. (3.58%) (4)

 

Drug Discovery

 

Senior Debt
Matures June 2010
Interest rate Prime + 2.45%

  $ 13,997     13,836     13,836
   

Preferred Stock Warrants

      217     510
                 

Total Elixir Pharmaceuticals, Inc.

    14,053     14,347

EpiCept Corporation (1.77%) (4)

 

Drug Discovery

 

Senior Debt
Matures August 2009
Interest rate 11.70%

  $ 7,307     6,878     6,878
   

Common Stock Warrants

      423     215
                 

Total EpiCept Corporation

    7,301     7,092

Horizon Therapeutics, Inc. (0.30%) (4)

 

Drug Discovery

 

Senior Debt
Matures April 2011
Interest rate 8.75%

  $ 12,000     1,022     1,022
   

Preferred Stock Warrants

      179     179
                 

Total Horizon Therapeutics, Inc.

    1,201     1,201

Inotek Pharmaceuticals Corp. (0.37%)

 

Drug Discovery

 

Preferred Stock

      1,500     1,500
                 

Total Inotek Pharmaceuticals Corp.

    1,500     1,500

Memory Pharmaceticals Corp. (3.48%) (4)

 

Drug Discovery

 

Senior Debt
Matures February 2011
Interest rate 11.45%

  $ 15,000     13,608     13,608
   

Common Stock Warrants

      1,751     341
                 

Total Memory Pharmaceticals Corp.

    15,359     13,949

Merrimack Pharmaceuticals, Inc. (0.37%) (4)

 

Drug Discovery

 

Convertible Senior Debt
Matures October 2008
Interest rate 11.15%

  $ 1,024     994     994
   

Preferred Stock Warrants

      155     502

Merrimack Pharmaceuticals, Inc. (0.70%)

   

Preferred Stock

      2,000     2,787
                 

Total Merrimack Pharmaceuticals, Inc.

    3,149     4,283

Neosil, Inc. (1.53%)

 

Drug Discovery

 

Senior Debt
Matures May 2010
Interest rate 10.75%

  $ 6,000     5,936     5,936
   

Preferred Stock Warrants

      83     178
                 

Total Neosil, Inc.

    6,018     6,113

See notes to consolidated financial statements.

 

15


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Paratek Pharmaceuticals, Inc. (0.64%) (4)

 

Drug Discovery

 

Senior Debt
Matures June 2008
Interest rate 11.10%

  $ 2,587   2,568   2,568
   

Preferred Stock Warrants

    137   —  

Paratek Pharmaceuticals, Inc. (0.14%)

   

Preferred Stock

    550   550
             

Total Paratek Pharmaceuticals, Inc.

  3,255   3,118

Portola Pharmaceuticals, Inc. (3.80%) (4)

 

Drug Discovery

 

Senior Debt
Matures September 2010
Interest rate Prime + 1.75%

  $ 15,000   14,894   14,894
   

Preferred Stock Warrants

    152   351
             

Total Portola Pharmaceuticals, Inc.

  15,046   15,245

Sirtris Pharmaceuticals, Inc. (2.46%) (4)

 

Drug Discovery

 

Senior Debt
Matures April 2011
Interest rate 10.60%

  $ 9,079   9,022   9,022
   

Common Stock Warrants

    89   818

Sirtris Pharmaceuticals, Inc. (0.19%)

   

Common Stock

    500   776
             

Total Sirtris Pharmaceuticals, Inc.

  9,610   10,616
             

Total Drug Discovery (23.78%)

  93,198   95,294
             

E-band Communications, Inc. (0.50%) (6)

  Communications & Networking  

Preferred Stock

    2,000   2,000
             

Total E-Band Communications, Inc.

  2,000   2,000

IKANO Communications, Inc. (5.09%) (4)

  Communications & Networking  

Senior Debt
Matures March 2011
Interest rate 11.00%

  $ 19,983   19,983   19,983
   

Preferred Stock Warrants

    45   163
   

Preferred Stock Warrants

    72   256
             

Total IKANO Communications, Inc.

  20,101   20,402

Ping Identity Corporation (0.40%) (4)

  Communications & Networking  

Senior Debt
Matures June 2009
Interest rate 11.50%

  $ 1,630   1,608   1,608
   

Preferred Stock Warrants

    52   10
             

Total Ping Identity Corporation

  1,660   1,619

Purcell Systems, Inc. (2.33%)

  Communications & Networking  

Senior Debt
Matures June 2009
Interest rate Prime + 3.50%

  $ 2,224   3,126   3,126
   

Revolving Line of Credit
Matures June 2008
Interest rate Prime + 2.00%

  $ 7,000   6,000   6,000
   

Preferred Stock Warrants

    123   198
             

Total Purcell Systems, Inc.

  9,248   9,324

 

See notes to consolidated financial statements.

 

16


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Rivulet Communications, Inc. (0.83%) (4)

  Communications & Networking  

Senior Debt
Matures September 2009
Interest rate 10.60%

  $ 3,500   3,272   3,272
   

Preferred Stock Warrants

    51   64

Rivulet Communications, Inc. (0.06%)

   

Preferred Stock

    250   250
             

Total Rivulet Communications, Inc.

  3,572   3,585

Seven Networks, Inc. (2.89%) (4)

  Communications & Networking  

Senior Debt
Matures April 2010
Interest rate Prime + 3.75%

  $ 9,419   9,291   9,291
   

Revolving Line of Credit
Matures April 2008
Interest rate Prime + 3.00%

  $ 2,000   2,000   2,000
   

Preferred Stock Warrants

    174   296
             

Total Seven Networks, Inc.

  11,465   11,587

Simpler Networks Corp. (1.01%) (4)

  Communications & Networking  

Senior Debt
Matures July 2009
Interest rate 11.75%

  $ 4,112   4,046   4,046
   

Preferred Stock Warrants

    160   —  

Simpler Networks Corp. (0.00%)

   

Preferred Stock

    500   —  
             

Total Simpler Networks Corp.

  4,706   4,046

Stoke, Inc. (0.57%)

  Communications & Networking  

Senior Debt
Matures August 2010
Interest rate 10.55%

  $ 2,250   2,204   2,204
   

Preferred Stock Warrants

    53   79
             

Total Stoke, Inc.

  2,257   2,283

Tectura Corporation (5.26%) (4)

  Communications & Networking  

Senior Debt
Matures March 2012
Interest rate LIBOR + 6.15%

  $ 9,051   9,007   9,007
   

Revolving Line of Credit
Matures March 2008
Interest rate LIBOR + 5.15%

  $ 12,000   12,000   12,000
   

Preferred Stock Warrants

    51   82
             

Total Tectura Corporation

  21,059   21,090

Teleflip, Inc. (0.25%)

  Communications & Networking  

Senior Debt
Matures May 2010
Interest rate Prime + 2.75%

  $ 1,000   992   992
   

Preferred Stock Warrants

    11   9
             

Total Teleflip, Inc.

  1,002   1,001

Wireless Channels, Inc. (3.02%)

  Communications & Networking  

Senior Debt -Second Lien
Matures April 2010
Interest rate 9.25%

  $ 11,949   1,719   1,719
   

Senior Debt -Second Lien
Matures April 2010
Interest rate Prime + 4.25%

  $ 10,118   10,118   10,118
   

Preferred Stock Warrants

    155   241
             

Total Wireless Channels, Inc.

  11,992   12,078

 

See notes to consolidated financial statements.

 

17


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Zayo Bandwith, Inc. (6.24%) (4)

 

Communications

& Networking

 

Senior Debt -Second Lien
Matures April 2013
Interest rate Prime + 3.50%

  $ 25,000   25,000   25,000
        —     —  
             

Total Zayo Bandwith, Inc.

  25,000   25,000
             

Total Communications & Networking (28.45%)

  114,062   114,014
             

Atrenta, Inc. (0.98%) (4)

 

Software

 

Senior Debt
Matures June 2009
Interest rate 11.50%

  $ 3,680   3,638   3,638
   

Preferred Stock Warrants

    102   220
   

Preferred Stock Warrants

    34   72

Atrenta, Inc. (0.06%)

   

Preferred Stock

    250   250
             

Total Atrenta, Inc.

  4,024   4,181

Blurb, Inc. (0.63%)

 

Software

 

Senior Debt
Matures December 2009
Interest rate 9.55%

  $ 2,500   2,482   2,482
   

Preferred Stock Warrants

    25   43
             

Total Blurb, Inc.

  2,507   2,526

Bullhorn, Inc. (0.25%) (4)

 

Software

 

Senior Debt
Matures March 2010
Interest rate Prime + 3.75%

  $ 1,000   959   959
   

Preferred Stock Warrants

    43   41
             

Total Bullhorn, Inc.

  1,002   1,000

Cittio, Inc. (0.25%)

 

Software

 

Senior Debt
Matures April 2010
Interest rate 11.00%

  $ 1,000   1,000   1,000
             

Total Cittio, Inc.

  1,000   1,000

Compete, Inc. (0.63%) (4)

 

Software

 

Senior Debt
Matures March 2009
Interest rate Prime + 3.50%

  $ 2,409   2,384   2,384
   

Preferred Stock Warrants

    62   136
             

Total Compete, Inc.

  2,446   2,520

Forescout Technologies, Inc. (0.64%) (4)

 

Software

 

Senior Debt
Matures August 2009
Interest rate 11.15%

  $ 1,998   1,970   1,970
   

Revolving Line of Credit
Matures August 2007
Interest rate Prime + 1.49%

  $ 500   500   500
   

Preferred Stock Warrants

    58   76
             

Total Forescout Technologies, Inc.

  2,528   2,546

GameLogic, Inc. (0.74%) (4)

 

Software

 

Senior Debt
Matures December 2009
Interest rate Prime + 4.125%

  $ 3,000   2,887   2,887
   

Preferred Stock Warrants

    92   91
             

Total GameLogic, Inc.

  2,980   2,978

 

See notes to consolidated financial statements.

 

18


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Gomez, Inc. (0.15%) (4)

 

Software

 

Senior Debt
Matures December 2007
Interest rate 12.25%

  $ 98   98   98
   

Preferred Stock Warrants

    35   512
             

Total Gomez, Inc.

  133   611

HighRoads, Inc. (0.01%) (4)

 

Software

 

Preferred Stock Warrants

    44   58
             

Total HighRoads, Inc.

  44   58

Intelliden, Inc. (0.60%)

 

Software

 

Senior Debt
Matures February 2010
Interest rate 13.20%

  $ 2,360   2,349   2,349
   

Preferred Stock Warrants

    18   60
             

Total Intelliden, Inc.

  2,367   2,409

Oatsystems, Inc. (1.08%) (4)

 

Software

 

Senior Debt
Matures September 2009
Interest rate 11.00%

  $ 4,374   4,336   4,336
   

Preferred Stock Warrants

    67   4
             

Total Oatsystems, Inc.

  4,403   4,340

Proficiency, Inc. (0.38%) (4)(6)

 

Software

 

Senior Debt
Matures July 2008
Interest rate 12.00%

  $ 1,500   1,497   1,497
   

Preferred Stock Warrants

    96   —  

Proficiency, Inc. (0.19%)

   

Preferred Stock

    2,750   750
             

Total Proficiency, Inc.

  4,343   2,247

PSS Systems, Inc. (0.89%) (4)

 

Software

 

Senior Debt
Matures March 2010
Interest rate 10.74%

  $ 3,500   3,463   3,463
   

Preferred Stock Warrants

    51   86
             

Total PSS Systems, Inc.

  3,514   3,549

Savvion, Inc. (1.62%) (4)

 

Software

 

Senior Debt
Matures March 2009
Interest rate Prime + 3.45%

  $ 1,268   1,268   1,268
   

Revolving Line of Credit
Matures March 2008
Interest rate Prime + 2.00%

  $ 3,000   3,000   3,000
   

Revolving Line of Credit
Matures March 2008
Interest rate Prime + 3.45%

  $ 1,985   1,985   1,985
   

Preferred Stock Warrants

    52   244
             

Total Savvion, Inc.

  6,305   6,496

Sportvision, Inc. (0.01%)

 

Software

 

Preferred Stock Warrants

    39   50
             

Total Sportvision, Inc.

  39   50

 

See notes to consolidated financial statements.

 

19


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Talisma Corp. (0.11%) (4)

 

Software

 

Preferred Stock Warrants

    49   449
             

Total Talisma Corp.

  49   449

WildTangent, Inc. (0.50%) (4)

 

Software

 

Senior Debt
Matures March 2011
Interest rate 9.65%

  $ 2,000   1,766   1,766
   

Preferred Stock Warrants

    238   238
             

Total WildTangent, Inc.

  2,004   2,004
             

Total Software (9.72%)

  39,688   38,963
             

Agami Systems, Inc. (1.30%) (4)

 

Electronics &

Computer

Hardware

 

Senior Debt
Matures August 2009
Interest rate 11.00%

  $ 5,103   5,056   5,056
   

Preferred Stock Warrants

    86   137
             

Total Agami Systems, Inc.

  5,141   5,193

Luminus Devices, Inc. (2.95%) (4)

 

Electronics &

Computer

Hardware

 

Senior Debt
Matures August 2009
Interest rate 12.50%

  $ 15,115   11,318   11,318
   

Preferred Stock Warrants

    183   113
   

Preferred Stock Warrants

    84   61
   

Preferred Stock Warrants

    334   334
             

Total Luminus Devices, Inc.

  11,919   11,826

Maxvision Holding, LLC. (2.87%) (4)

 

Electronics &

Computer

Hardware

 

Senior Debt
Matures May 2012
Interest rate Prime + 5.50%

  $ 5,012   5,012   5,012
   

Senior Debt
Matures May 2012
Interest rate Prime + 2.25%

  $ 5,500   5,000   5,000
   

Revolving Line of Credit
Matures September 2012
Interest rate Prime +2.25%

  $ 972   1,472   1,472
             

Total Maxvision Holding, LLC

  11,484   11,484

NetEffect, Inc. (0.61%)

 

Electronics &

Computer

Hardware

 

Senior Debt
Matures May 2010
Interest rate 11.95%

  $ 2,431   2,396   2,396
   

Preferred Stock Warrants

    44   50
             

Total NetEffect, Inc.

  2,440   2,446

Shocking Technologies, Inc. (0.02%)

 

Electronics &

Computer

Hardware

 

Preferred Stock Warrants

    63   63
             

Total Shocking Technologies, Inc.

  63   63

 

See notes to consolidated financial statements.

 

20


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

SiCortex, Inc. (2.52%)

 

Electronics &

Computer

Hardware

 

Senior Debt
Matures December 2010
Interest rate 10.95%

  $ 10,000   9,861   9,861
   

Preferred Stock Warrants

    164   230
             

Total SiCortex, Inc.

  10,025   10,091

Spatial Photonics, Inc. (0.93%) (4)

 

Electronics &

Computer

Hardware

 

Senior Debt
Matures May 2011
Interest rate 10.75%

  $ 3,751   3,623   3,623
   

Preferred Stock Warrants

    130   126

Spatial Photonics, Inc. (0.12%)

   

Preferred Stock

    500   500
             

Total Spatial Photonics Inc.

  4,253   4,249

VeriWave, Inc. (1.35%)

 

Electronics &

Computer

Hardware

 

Senior Debt
Matures May 2010
Interest rate 10.75%

  $ 4,250   5,340   5,340
   

Preferred Stock Warrants

    54   85
             

Total VeriWave, Inc.

  5,394   5,425

ViDeOnline Communications, Inc. (0.04%) (4)

 

Electronics &

Computer

Hardware

 

Preferred Stock Warrants

    298   176
             

Total ViDeOnline Communications, Inc.

  298   176
             

Total Electronics & Computer Hardware (12.71%)

  51,017   50,953
             

Aegerion Pharmaceuticals, Inc. (2.48%) (4)

 

Specialty

Pharmaceuticals

 

Senior Debt
Matures August 2010
Interest rate Prime + 2.50%

  $ 9,735   9,682   9,682
   

Preferred Stock Warrants

    69   243

Aegerion Pharmaceuticals, Inc. (0.25%)

   

Preferred Stock

    1,000   1,000
             

Total Aegerion Pharmaceuticals, Inc.

  10,752   10,925

Panacos Pharmaceuticals, Inc. (4.84%) (4)

 

Specialty

Pharmaceuticals

 

Senior Debt
Matures January 2011
Interest rate 11.20%

  $ 20,000   19,270   19,270
   

Common Stock Warrants

    876   137

Panacos Pharmaceuticals, Inc. (0.04%)

   

Common Stock

    410   158
             

Total Panacos Pharmaceuticals, Inc.

  20,556   19,564

Quatrx Pharmaceuticals Company (3.60%) (4)

 

Specialty

Pharmaceuticals

 

Senior Debt
Matures January 2010
Interest rate Prime + 3.00%

  $ 14,324   14,214   14,214
   

Preferred Stock Warrants

    220   193

Quatrx Pharmaceuticals Company (0.19%)

   

Preferred Stock

    750   750
             

Total Quatrx Pharmaceuticals Company

  15,184   15,157
             

Total Specialty Pharmaceuticals (11.40%)

  46,492   45,646
             

 

See notes to consolidated financial statements.

 

21


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

BabyUniverse, Inc. (0.05%) (4)

 

Consumer &

Business

Products

 

Common Stock

    267   219
             

Total BabyUniverse, Inc.

  267   219

Market Force Information, Inc. (0.34%) (4)

 

Consumer &

Business

Products

 

Senior Debt
Matures May 2009
Interest rate 10.45%

  $ 1,294   1,284   1,284
   

Preferred Stock Warrants

    24   92

Market Force Information, Inc. (0.12%)

   

Preferred Stock

    500   500
             

Total Market Force Information, Inc.

  1,807   1,875

Wageworks, Inc. (0.12%) (4)

 

Consumer &

Business

Products

 

Preferred Stock Warrants

    252   513

Wageworks, Inc. (0.05%)

   

Preferred Stock

    250   209
             

Total Wageworks, Inc.

  502   722
             

Total Consumer & Business Products (0.70%)

  2,576   2,817
             

Ageia Technologies, Inc. (1.25%) (4)

  Semiconductors  

Senior Debt
Matures August 2008
Interest rate 10.25%

  $ 5,047   4,904   4,904
   

Convertible Debt

    124   124
   

Preferred Stock Warrants

    99   —  

Ageia Technologies, Inc. (0.00%)

   

Preferred Stock

    500   —  
             

Total Ageia Technologies

  5,627   5,028

Custom One Design, Inc. (0.26%)

  Semiconductors  

Senior Debt
Matures September 2010
Interest rate 11.50%

  $ 1,000   984   984
   

Common Stock Warrants

    18   43
             

Total Custom One Design, Inc.

  1,002   1,027

iWatt Inc. (1.19%) (4)

 

Semiconductors

 

Senior Debt
Matures September 2009
Interest rate Prime + 2.75%

  $ 1,457   1,382   1,382
   

Revolving Line of Credit
Matures September 2007
Interest rate Prime + 1.75%

  $ 3,235   3,235   3,235
   

Preferred Stock Warrants

    46   100
   

Preferred Stock Warrants

    51   51
             

Total iWatt Inc.

  4,714   4,769

 

See notes to consolidated financial statements.

 

22


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
 Amount 
  Cost (2)   Value (3)

NEXX Systems, Inc. (3.26%) (4)

 

Semiconductors

 

Senior Debt
Matures February 2010
Interest rate Prime + 2.75%

  $ 4,557   4,438   4,438
   

Revolving Line of Credit
Matures December 2009
Interest rate Prime + 1.75%

  $ 5,000   5,000   5,000
   

Revolving Line of Credit
Matures December 2009
Interest rate Prime + 3.75%

  $ 3,000   3,000   3,000
   

Preferred Stock Warrants

    165   623
             

Total NEXX Systems, Inc.

  12,602   13,061

Quartics, Inc. (0.09%) (4)

 

Semiconductors

 

Senior Debt
Matures August 2010
Interest rate 11.05%

  $ 300   254   254
   

Preferred Stock Warrants

    53   114
             

Total Quartics, Inc.

  307   369

Solarflare Communications, Inc. (0.19%)

 

Semiconductors

 

Senior Debt
Matures August 2010
Interest rate 11.75%

  $ 625   553   553
   

Preferred Stock Warrants

    83   194

Solarflare Communications, Inc. (0.12%)

   

Preferred Stock

    500   500
             

Total Solarflare Communications, Inc.

  1,137   1,247
             

Total Semiconductors (6.36%)

  25,390   25,501
             

Labopharm USA, Inc. (3.74%) (4)(5)

 

Drug Delivery

 

Senior Debt
Matures July 2008
Interest rate 11.95%

  $ 15,000   14,547   14,547
   

Preferred Stock Warrants

    458   454
             

Total Labopharm USA, Inc.

  15,006   15,001

Transcept Pharmaceuticals, Inc. (1.80%) (4)

 

Drug Delivery

 

Senior Debt
Matures October 2009
Interest rate 10.69%

  $ 6,993   6,944   6,944
   

Preferred Stock Warrants

    36   107
   

Preferred Stock Warrants

    51   173

Transcept Pharmaceuticals, Inc. (0.13%)

   

Preferred Stock

    500   500
             

Total Transcept Pharmaceuticals, Inc.

  7,530   7,724
             

Total Drug Delivery (5.67%)

  22,536   22,725
             

BARRX Medical, Inc. (0.19%)

 

Therapeutic

 

Preferred Stock

    1,500   758
             

Total BARRX Medical, Inc.

  1,500   758

 

See notes to consolidated financial statements.

 

23


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

EKOS Corporation (1.28%)

 

Therapeutic

 

Senior Debt
Matures November 2010
Interest rate Prime + 2.00%

  $ 5,000   4,707   4,707
   

Preferred Stock Warrants

    175   282
   

Preferred Stock Warrants

    153   150
             

Total EKOS Corporation

  5,035   5,139

Gynesonics, Inc. (0.01%) (4)

  Therapeutic  

Preferred Stock Warrants

    18   40

Gynesonics, Inc. (0.06%)

   

Preferred Stock

    250   250
             

Total Gynesonics, Inc.

  268   290

Novasys Medical, Inc. (1.65%) (4)

  Therapeutic  

Senior Debt
Matures January 2010
Interest rate 9.70%

  $ 6,609   6,609   6,609
             

Total Novasys Medical, Inc.

  6,609   6,609

Power Medical Interventions, Inc. (0.02%)

  Therapeutic  

Common Stock Warrants

    21   58
             

Total Power Medical Interventions, Inc.

  21   58
             

Total Therapeutic (3.21%)

  13,432   12,853
             

Invoke Solutions, Inc. (0.56%) (4)

 

Internet

Consumer

& Business

 

Senior Debt
Matures December 2008
Interest rate 11.25%

  $ 2,187   2,155   2,155
 

Services

 

Preferred Stock Warrants

    56   73
   

Preferred Stock Warrants

    11   10
             

Total Invoke Solutions, Inc.

  2,222   2,239

Prism Education Group Inc. (0.51%)

 

Internet

Consumer

& Business

 

Senior Debt
Matures December 2010
Interest rate 11.25%

  $ 2,000   1,964   1,964
  Services  

Preferred Stock Warrants

    43   66
             

Total Prism Education Group Inc.

  2,007   2,030

RazorGator Interactive Group, Inc. (1.17%) (4)

 

Internet

Consumer

& Business

 

Senior Debt
Matures January 2008
Interest rate 9.95%

  $ 1,134   1,119   1,119
  Services  

Preferred Stock Warrants

    13   3,203
   

Preferred Stock Warrants

    28   362

RazorGator Interactive Group, Inc. (1.23%)

   

Preferred Stock

    1,000   4,935
             

Total RazorGator Interactive Group, Inc.

  2,160   9,619

 

See notes to consolidated financial statements.

 

24


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Serious USA, Inc. (0.75%)

  Internet Consumer & Business Services  

Senior Debt
Matures February 2011
Interest rate Prime + 3.00%

  $ 2,450   2,370   2,370
   

Revolving Line of Credit
Matures July 2008
Interest rate Prime + 2.00%

  $ 654   654   654
   

Preferred Stock Warrants

    93   5
             

Total Serious USA, Inc.

  3,118   3,029
             

Total Internet Consumer & Business Services (4.22%)

  9,507   16,918
             

Lilliputian Systems, Inc. (1.75%) (4)

  Energy  

Senior Debt
Matures March 2010
Interest rate 9.75%

  $ 6,956   6,931   6,931
   

Preferred Stock Warrants

    48   85
             

Total Lilliputian Systems, Inc.

  6,979   7,016
             

Total Energy (1.75%)

  6,979   7,016
             

Active Response Group, Inc. (2.50%)

  Information Services  

Senior Debt
Matures March 2012
Interest rate LIBOR + 6.55%

  $ 10,000   9,885   9,885
   

Preferred Stock Warrants

    92   83
   

Common Stock Warrants

    46   60
             

Total Active Response Group, Inc.

  10,023   10,028

Buzznet, Inc. (0.25%)

  Information Services  

Senior Debt
Matures March 2010
Interest rate 10.25%

  $ 914   908   908
   

Preferred Stock Warrants

    9   86

Buzznet, Inc. (0.06%)

   

Preferred Stock

    250   250
             

Total Buzznet, Inc.

  1,167   1,244

hi5 Networks, Inc. (1.00%)

  Information Services  

Senior Debt
Matures March 2011
Interest rate Prime + 2.5%

  $ 3,000   2,789   2,789
   

Revolving Line of Credit
Matures June 2011
Interest rate 7.75%

    1,000   1,000
   

Preferred Stock Warrants

    213   214
             

Total hi5 Networks, Inc.

  4,002   4,003

Jab Wireless, Inc. (0.78%)

  Information Services  

Senior Debt
Matures March 2012

     
   

Interest rate 10.75%

  $ 3,097   2,834   2,834
   

Preferred Stock Warrants

    265   266
             

Total Jab Wireless, Inc.

  3,098   3,099

 

See notes to consolidated financial statements.

 

25


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Solutionary, Inc. (1.78%)

 

Information Services

 

Senior Debt
Matures June 2010
Interest rate LIBOR + 5.50%

  $ 5,528   5,454   5,454
   

Revolving Line of Credit
Matures June 2010
Interest rate LIBOR + 5.00%

  $ 1,505   1,505   1,505
   

Preferred Stock Warrants

    94   150
   

Preferred Stock Warrants

    2   4

Solutionary, Inc. (0.06%)

   

Preferred Stock

    250   250
             

Total Solutionary, Inc.

  7,305   7,364

The Generation Networks, Inc. (4.12%)

 

Information Services

 

Senior Debt
Matures March 2012
Interest rate Prime + 4.50%

  $ 16,500   16,500   16,500

The Generation Networks, Inc. (0.12%)

   

Preferred Stock

    500   500
             

Total The Generation Networks, Inc.

  17,000   17,000

Wallop Technologies, Inc. (0.06%)

 

Information Services

 

Senior Debt
Matures March 2010
Interest rate 10.00%

  $ 223   218   218
   

Preferred Stock Warrants

    7   9
             

Total Wallop Technologies, Inc.

  225   226

Zeta Interactive Corporation (3.74%) (4)

 

Information Services

 

Senior Debt
Matures November 2011
Interest rate Prime +2.00%

  $ 15,000   6,828   6,828
   

Senior Debt
Matures November 2011
Interest rate Prime +3.00%

    8,000   8,000
   

Preferred Stock Warrants

    172   171

Zeta Interactive Corporation (0.12%)

   

Preferred Stock

    500   500
             

Total Zeta Interactive Corporation

  15,500   15,499
             

Total Information Services (14.59%)

  58,320   58,464
             

Novadaq Technologies, Inc. (0.32%)

 

Diagnostic

 

Common Stock

    1,626   1,284
             

Total Novadaq Technologies, Inc.

  1,626   1,284

Optiscan Biomedical, Corp. (0.08%) (4)

 

Diagnostic

 

Senior Debt
Matures March 2008
Interest rate 15.00%

  $ 271   263   263
   

Preferred Stock Warrants

    80   47

Optiscan Biomedical, Corp. (0.18%)

   

Preferred Stock

    1,000   722
             

Total Optiscan Biomedical, Corp.

  1,344   1,032
             

Total Diagnostic (0.58%)

  2,969   2,316
             

 

See notes to consolidated financial statements.

 

26


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Guava Technologies, Inc. (1.77%) (4)

  Biotechnology Tools  

Senior Debt
Matures July 2009
Interest rate Prime + 3.25%

  $ 4,076   4,790   4,790
   

Convertible Debt

    250   250
   

Revolving Line of Credit
Matures December 2007
Interest rate Prime + 2.00%

  $ 2,598   1,778   1,778
   

Preferred Stock Warrants

    105   200
   

Preferred Stock Warrants

    68   93
             

Total Guava Technologies, Inc.

  6,992   7,111

NuGEN Technologies, Inc. (0.53%)

  Biotechnology Tools  

Senior Debt
Matures March 2010
Interest rate 11.70%

  $ 1,884   1,819   1,819
   

Preferred Stock Warrants

    45   253
   

Preferred Stock Warrants

    33   32

NuGEN Technologies, Inc. (0.12%)

   

Preferred Stock

    500   500
             

Total NuGEN Technologies, Inc.

  2,396   2,603
             

Total Biotechnology Tools (2.42%)

  9,388   9,714
             

Rubicon Technology Inc. (0.69%) (4)

  Advanced Specialty Materials & Chemicals  

Preferred Stock Warrants

    82   2,764
             

Total Rubicon Technology Inc.

  82   2,764
             

Total Advanced Specialty Materials & Chemicals (0.69%)

  82   2,764
             

Crux Biomedical, Inc. (0.15%)

  Surgical Devices  

Senior Debt
Matures December 2010
Interest rate Prime + 3.375%

  $ 600   565   565
   

Preferred Stock Warrants

    37   36

Crux Biomedical, Inc. (0.06%)

   

Preferred Stock

    250   250
             

Total Crux Biomedical, Inc.

  851   851

Diomed Holdings, Inc. (1.49%) (4)

  Surgical Devices  

Senior Debt
Matures July 2010
Interest rate Prime + 3.00%

  $ 6,000   5,962   5,962
   

Common Stock Warrants

    43   8
             

Total Diomed Holdings, Inc.

  6,005   5,970

Light Science Oncology, Inc. (2.50%)

  Surgical Devices  

Senior Debt
Matures July 2011
Interest rate 11.20%

  $ 10,000   9,605   9,605
   

Preferred Stock Warrants

    395   394
             

Total Light Science Oncology, Inc.

  10,000   10,000
             

Total Surgical Devices (4.20%)

  16,857   16,820
             

 

See notes to consolidated financial statements.

 

27


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2007

(dollars in thousands)

 

Portfolio Company

 

Industry

 

Type of Investment (1)

  Principal
Amount
  Cost (2)   Value (3)

Waterfront Media Inc. (1.54%) (4)

 

Media/Content/

Info

 

Senior Debt
Matures December 2010
Interest rate Prime + 3.00%

  $ 3,941     3,898     3,898
   

Revolving Line of Credit
Matures March 2008
Interest rate Prime + 1.25%

  $ 2,000     2,000     2,000
   

Preferred Stock Warrants

      60     294

Waterfront Media Inc. (0.25%)

   

Preferred Stock

      1,000     1,000
                 

Total Waterfront Media Inc.

    6,958     7,193
                 

Total Media/Content/Info (1.79%)

    6,958     7,193
                 

Total Investments (132.24%)

  $ 519,450   $ 529,972
                 

 

* Value as a percent of net assets
(1) Preferred and common stock, warrants, and equity interests are generally non-income producing.
(2) Gross unrealized appreciation, gross unrealized depreciation, and net appreciation for federal income tax purposes totaled $18,555, $8,033 and $10,522, respectively.
(3) Except for warrants in ten publicly traded companies and common stock in four publicly traded companies, all investments are restricted at December 31, 2007 and were valued at fair value as determined in good faith by the Board of Directors. No unrestricted securities of the same issuer are outstanding. The Company uses the Standard Industrial Code for classifying the industry grouping of its portfolio companies.
(4) Debt and warrant investments of this portfolio company have been pledged as collateral under the Credit Facility. Citigroup has an equity participation right on loans collateralized under the Credit Facility. The value of their participation right on unrealized gains in the related equity investments was approximately $690,000 at December 31, 2007 and is included in accrued liabilities and reduces the unrealized gain recognized by the Company at December 31, 2007.
(5) Non-U.S. company or the company’s principal place of business is outside the United States.
(6) Affiliate investment that is defined under the Investment Company Act of 1940 as companies in which HTGC owns as least 5% but not more than 25% of the voting securities of the company. All other investments are less than 5% owned.

 

See notes to consolidated financial statements.

 

28


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

(in thousands, except per share data)

 

     Three Months Ended
March 31,
     2008     2007

Investment income:

    

Interest

   $ 14,239     $ 9,036

Fees

     1,361       643
              

Total investment income

     15,600       9,679

Operating expenses:

    

Interest

     1,851       686

Loan fees

     382       266

General and administrative

     1,241       1,308

Employee Compensation:

    

Compensation and benefits

     2,799       1,940

Stock-based compensation

     327       254
              

Total employee compensation

     3,126       2,194
              

Total operating expenses

     6,600       4,454

Net investment income

     9,000       5,225

Net realized gain on investments

     2,958       290

Net (decrease) increase in unrealized appreciation on investments

     (921 )     816
              

Net realized and unrealized gain

     2,037       1,106
              

Net increase in net assets resulting from operations

   $ 11,037     $ 6,331
              

Net investment income before investment gains and losses per common share:

    

Basic

   $ 0.28     $ 0.23
              

Diluted

   $ 0.28     $ 0.23
              

Change in net assets per common share:

    

Basic

   $ 0.34     $ 0.28
              

Diluted

   $ 0.34     $ 0.27
              

Weighted average shares outstanding

    

Basic

     32,629       22,871
              

Diluted

     32,639       23,120
              

See notes to consolidated financial statements (unaudited).

 

29


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

(unaudited)

(in thousands)

 

    Common Stock   Capital in
excess of
par value
  Deferred Stock
Compensation
    Unrealized
Appreciation

on Investments
    Accumulated
Realized Gains

(Losses)
on Investments
    Distributions
in Excess of

Investment
Income
    Provision for
Income Taxes
on Investment

Gains
    Net
Assets
 
    Shares   Par Value              

Balance at December 31, 2006

  21,927   $ 22   $ 257,235   $ —       $ 2,861     ($ 1,972 )   ($ 2,733 )   $ —       $ 255,413  

Net increase net assets resulting from operations

  —       —       —       —         816       290       5,225       —         6,331  

Issuance of common stock

  12     —       166     —         —         —         —         —         166  

Issuance of common stock in public offering overallotment exercise

  840     1     10,851     —         —         —         —         —         10,852  

Issuance of common stock from warrant exercises

  256     —       2,707     —         —         —         —         —         2,707  

Issuance of common stock under dividend reinvestment plan

  56     —       783     —         —         —         —         —         783  

Dividends declared

  —       —       —       —         —         —         (6,895 )     —         (6,895 )

Conversion to a regulated investment company and other tax items

  —       —       —       —         —         —         —         —         —    

Stock-based compensation

  —       —       254     —         —         —         —         —         254  
                                                               

Balance at March 31, 2007

  23,091   $ 23   $ 271,996   $ —       $ 3,677     ($ 1682 )   ($ 4403 )   $ —       $ 269,611  
                                                               

Balance at December 31, 2007

  32,541   $ 33   $ 393,530   ($ 78 )   $ 10,129     $ 819     ($ 3,557 )   ($ 139 )   $ 400,737  

Net increase in net assets resulting from operations

  —       —       —       —         (921 )     2,958       9,000       —         11,037  

Issuance of common stock

  2     —       21     —         —         —         —         —         21  

Issuance of common stock under dividend reinvestment plan

  —       —       —       —         —         —         —         —         —    

Issuance of common stock under restricted stock plan

  225     —       2,745     (2,745 )     —         —         —         —         —    

Dividends declared

  —       —       —       —         —         —         (9,763 )     —         (9,763 )

Stock-based compensation

  —       —       327     75       —         —         —         —         402  
                                                               

Balance at March 31, 2008

  32,768   $ 33   $ 396,623   ($ 2748 )   $ 9,208     $ 3,777     ($ 4320 )   ($ 139 )   $ 402,434  
                                                               

See notes to consolidated financial statements (unaudited).

 

30


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

(in thousands)

 

     Three Months Ended March 31,  
     2008     2007  

Cash flows from operating activities:

    

Net increase in net assets resulting from operations

   $ 11,037     $ 6,331  

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:

    

Purchase of investments

     (49,791 )     (80,231 )

Principal payments received on investments

     48,875       21,898  

Proceeds from sale of investments

     3,757       873  

Net unrealized appreciation (depreciation) on investments

     578       (871 )

Net unrealized appreciation on investments due to lender

     343       55  

Net realized gain on investments

     (2,958 )     (290 )

Warrant values for loans not funded

     —         (139 )

Accretion of paid-in-kind principal

     (184 )     —    

Accretion of loan discounts

     (1,012 )     (474 )

Accretion of loan exit fees

     (3 )     (283 )

Depreciation

     60       47  

Stock-based compensation

     327       254  

Amortization of restricted stock

     74       —    

Common stock issued in lieu of director compensation

     21       166  

Amortization of deferred loan origination revenue

     (1,042 )     (662 )

Change in operating assets and liabilities:

    

Interest receivable

     (443 )     (786 )

Prepaid expenses and other assets

     117       (751 )

Income tax receivable