Hercules Capital
HERCULES TECHNOLOGY GROWTH CAPITAL INC (Form: 10-Q, Received: 08/11/2008 16:18:46)
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 June 30, 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 August 6, 2008, there were 32,838,904 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      3
    Item 1.   Consolidated Financial Statements    3
  Consolidated Statement of Assets and Liabilities as of June 30, 2008 (unaudited) and December 31, 2007    3
  Consolidated Schedule of Investments as of June 30, 2008 (unaudited)    4
  Consolidated Schedule of Investments as of December 31, 2007    18
  Consolidated Statement of Operations for the three and six-month periods ended June 30, 2008 and 2007 (unaudited)    32
  Consolidated Statement of Changes in Net Assets for the six-month periods ended June 30, 2008 and 2007 (unaudited)    33
  Consolidated Statement of Cash Flows for the six-month periods ended June 30, 2008 and 2007 (unaudited)    34
  Notes to Consolidated Financial Statements (unaudited)    35
    Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations    46
    Item 3.   Quantitative and Qualitative Disclosures About Market Risk    58
    Item 4.   Controls and Procedures    59
PART II.    OTHER INFORMATION    59
    Item 1.   Legal Proceedings    59
  Item 1a.   Risk Factors    59
    Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds    62
    Item 3.   Defaults Upon Senior Securities    62
    Item 4.   Submission of Matters to a Vote of Security Holders    62
    Item 5.   Other Information    62
    Item 6.   Exhibits    63
Signatures    64

 

2


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)

 

     June 30,
2008
(unaudited)
    December 31,
2007
 

Assets

    

Investments:

    

Non-affiliate investments (cost of $589,523 and $513,106)

   $ 597,849     $ 525,725  

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

     4,247       4,247  
                

Total investments, at value (cost of $595,867 and $519,450 respectively)

     602,096       529,972  

Deferred loan origination revenue

     (7,896 )     (6,593 )

Cash and cash equivalents

     13,851       7,856  

Interest receivable

     7,911       6,387  

Other assets

     6,604       4,321  
                

Total assets

     622,566       541,943  

Liabilities

    

Accounts payable and accrued liabilities

     7,534       6,956  

Short-term credit facility

     118,900       79,200  

Long-term SBA Debentures

     95,050       55,050  
                

Total liabilities

     221,484       141,206  
                

Net assets

   $ 401,082     $ 400,737  
                

Net assets consist of:

    

Common stock, par value

   $ 33     $ 33  

Capital in excess of par value

     397,670       393,530  

Deferred stock compensation

     (2,341 )     (78 )

Unrealized appreciation on investments

     5,685       10,129  

Accumulated realized gains on investments

     5,686       819  

Distributions in excess of investment income

     (5,651 )     (3,696 )
                

Total net assets

   $ 401,082     $ 400,737  
                

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

     32,837       32,541  
                

Net asset value per share

   $ 12.21     $ 12.31  
                

See notes to consolidated financial statements (unaudited).

 

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Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Acceleron Pharmaceuticals, Inc. (0.84%)* (4)

   Drug Discovery   

Senior Debt
Matures June 2009
Interest rate 10.25%

   $ 2,588    $ 2,549    $ 2,549
     

Preferred Stock Warrants

        69      702
     

Preferred Stock Warrants

        35      127

Acceleron Pharmaceuticals, Inc. (0.45%)

     

Preferred Stock

        1,243      1,805
                      

Total Acceleron Pharmaceuticals, Inc.

              3,896      5,183

Aveo Pharmaceuticals, Inc. (1.99%) (4)

   Drug Discovery   

Senior Debt
Matures November 2011
Interest rate 11.13%

   $ 7,857      7,741      7,741
     

Preferred Stock Warrants

        144      130
     

Preferred Stock Warrants

        46      46
     

Preferred Stock Warrants

        104      53
                      

Total Aveo Pharmaceuticals, Inc.

              8,035      7,970

Elixir Pharmaceuticals, Inc. (3.05%) (4)

   Drug Discovery   

Senior Debt
Matures December 2010
Interest rate Prime + 2.45%

   $ 11,908      11,780      11,780
     

Preferred Stock Warrants

        217      438
                      

Total Elixir Pharmaceuticals, Inc.

              11,997      12,218

EpiCept Corporation (1.02%) (4)

   Drug Discovery   

Senior Debt
Matures April 2009
Interest rate 15.00%

   $ 3,876      3,573      2,573
     

Senior Debt
Matures June 2009
Interest rate 15.000%

   $ 1,000      1,000      1,000
     

Common Stock Warrants

        423      332
     

Common Stock Warrants

        161      139
     

Common Stock Warrants

        40      35
                      

Total EpiCept Corporation

              5,197      4,079

Horizon Therapeutics, Inc. (0.91%) (4)

   Drug Discovery   

Senior Debt
Matures May 2011
Interest rate 8.75%

   $ 1,200      1,059      1,059
     

Senior Debt
Matures April 2011
Interest rate 6.50%

   $ 2,400      2,400      2,400
     

Preferred Stock Warrants

        178      178
                      

Total Horizon Therapeutics, Inc.

              3,637      3,637

Inotek Pharmaceuticals Corp. (0.37%)

   Drug Discovery   

Preferred Stock

        1,500      1,500
                      

Total Inotek Pharmaceuticals Corp.

              1,500      1,500

Memory Pharmaceticals Corp. (3.39%) (4)

   Drug Discovery   

Senior Debt
Matures December 2010
Interest rate 11.45%

   $ 14,569      13,422      13,422
     

Common Stock Warrants

        1,751      156
                      

Total Memory Pharmaceticals Corp.

              15,173      13,578

Merrimack Pharmaceuticals, Inc. (0.22%) (4)

   Drug Discovery   

Convertible Senior Debt
Matures October 2008
Interest rate 11.15%

   $ 342      334      334
     

Preferred Stock Warrants

        155      549

Merrimack Pharmaceuticals, Inc. (0.69%)

     

Preferred Stock

        2,000      2,787
                      

Total Merrimack Pharmaceuticals, Inc.

              2,489      3,670
                      

Neosil, Inc. (0.00%)

   Drug Discovery   

Preferred Stock Warrants

        83      —  
                      

Total Neosil, Inc.

              83      —  

See notes to consolidated financial statements (unaudited)

 

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Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Paratek Pharmaceuticals, Inc. (0.12%) (4)

   Drug Discovery   

Senior Debt
Matures June 2008
Interest rate 11.10%

   $ 378    378    378
     

Preferred Stock Warrants

      137    122

Paratek Pharmaceuticals, Inc. (0.25%)

     

Preferred Stock

      1,000    1,000
                  

Total Paratek Pharmaceuticals, Inc.

            1,515    1,500

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

   Drug Discovery   

Senior Debt
Matures September 2010
Interest rate Prime + 1.75%

   $ 14,167    14,080    14,080
     

Preferred Stock Warrants

      152    291
                  

Total Portola Pharmaceuticals, Inc.

            14,232    14,371

Recoly, N.V. (0.74%) (5)

   Drug Discovery   

Senior Debt
Matures May 2012
Interest rate Prime + 4.25%

   $ 3,000    3,000    3,000
                  

Total Recoly, N.V.

            3,000    3,000
                  

Total Drug Discovery (17.62%)

            70,754    70,706
                  

Affinity Videonet, Inc. (1.62%) (4)

   Communications & Networking   

Senior Debt
Matures June 2012
Interest rate Prime + 4.50%

   $ 4,000    3,927    3,927
     

Senior Debt
Matures June 2012
Interest rate Prime + 5.50%

   $ 2,000    2,000    2,000
     

Revolving Line of Credit
Matures June 2012
Interest rate Prime + 3.50%

   $ 500    500    500
     

Preferred Stock Warrants

      74    71
                  

Total Affinity Videonet, Inc.

            6,501    6,498

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. (4.26%) (4)

   Communications & Networking   

Senior Debt
Matures March 2011
Interest rate 11.00%

   $ 16,657    16,657    16,657
     

Preferred Stock Warrants

      46    175
     

Preferred Stock Warrants

      72    264
                  

Total IKANO Communications, Inc.

            16,775    17,096

Kadoink, Inc. (0.06%)

   Communications & Networking   

Senior Debt
Matures April 2011
Interest rate Prime + 2.00%

   $ 250    178    178
     

Preferred Stock Warrants

      73    68

Kadoink, Inc. (0.06%)

     

Preferred Stock

      250    250
                  

Total Kadoink, Inc.

            501    496

Neonova Holding Company (2.24%)

   Communications & Networking   

Senior Debt
Matures September 2012
Interest rate Prime + 3.25%

   $ 9,000    8,916    8,916
     

Preferred Stock Warrants

      94    77

Neonova Holding Company (0.06%)

     

Preferred Stock

      250    250
                  

Total Neonova Holding Company

            9,260    9,243

See notes to consolidated financial statements (unaudited)

 

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Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Peerless Network, Inc. (0.37%) (4)

   Communications & Networking   

Senior Debt
Matures June 2011
Interest rate Prime + 3.25%

   $ 1,500    1,415    1,415
     

Preferred Stock Warrants

      95    75

Peerless Network, Inc. (0.25%)

     

Preferred Stock

      1,000    1,000
                  

Total Peerless Network, Inc.

            2,510    2,490

Ping Identity Corporation (0.28%) (4)

   Communications & Networking   

Senior Debt
Matures June 2009
Interest rate 11.50%

   $ 1,118    1,105    1,105
     

Preferred Stock Warrants

      51    6
                  

Total Ping Identity Corporation

            1,156    1,111

Purcell Systems, Inc. (2.16%)

   Communications & Networking   

Senior Debt
Matures June 2009
Interest rate Prime + 3.50%

   $ 1,951    1,872    1,872
     

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

   $ 6,000    6,000    6,000
     

Preferred Stock Warrants

      123    781
                  

Total Purcell Systems, Inc.

            7,995    8,653

Rivulet Communications, Inc. (0.66%) (4)

   Communications & Networking   

Senior Debt
Matures September 2009
Interest rate 10.60%

   $ 2,656    2,633    2,633
     

Preferred Stock Warrants

      51    —  

Rivulet Communications, Inc. (0.00%)

     

Preferred Stock

      250    4
                  

Total Rivulet Communications, Inc.

            2,934    2,637

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

   Communications & Networking   

Senior Debt
Matures April 2010
Interest rate Prime + 3.75%

   $ 7,580    7,483    7,483
     

Preferred Stock Warrants

      174    413
                  

Total Seven Networks, Inc.

            7,657    7,896

Simpler Networks Corp. (1.08%) (4)(7)

   Communications & Networking   

Senior Debt
Matures July 2009
Interest rate 18.25%

   $ 3,914    4,571    4,321
     

Preferred Stock Warrants

      160    —  

Simpler Networks Corp. (0.00%)

     

Preferred Stock

      500    —  
                  

Total Simpler Networks Corp.

            5,231    4,321

Stoke, Inc. (0.86%)

   Communications & Networking   

Senior Debt
Matures August 2010
Interest rate 10.55%

   $ 2,176    2,139    2,139
     

Senior Debt Matures
August 2010
Interest rate Prime + 2.30%

   $ 1,208    1,208    1,208
     

Preferred Stock Warrants

      53    119
                  

Total Stoke, Inc.

            3,400    3,466

See notes to consolidated financial statements (unaudited)

 

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Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Tectura Corporation (5.57%) (4)

   Communications & Networking   

Senior Debt
Matures March 2012
Interest rate LIBOR + 6.15%

   $ 8,187    8,250    8,250
     

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

   $ 12,000    12,000    12,000
     

Revolving Line of Credit
Matures March 2009
Interest rate LIBOR + 7.25%

   $ 2,000    2,000    2,000
     

Preferred Stock Warrants

      51    89
                  

Total Tectura Corporation

            22,301    22,339

Teleflip, Inc. (0.00%) (7)

   Communications & Networking   

Senior Debt
Matures May 2010
Interest rate Prime + 2.75%

   $ 906    900    —  
     

Preferred Stock Warrants

      10    —  
                  

Total Teleflip, Inc.

            910    —  

Wireless Channels, Inc. (3.01%)

   Communications & Networking   

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

   $ 10,000    10,226    10,226
     

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

   $ 1,365    1,365    1,365
     

Preferred Stock Warrants

      156    495
                  

Total Wireless Channels, Inc.

            11,747    12,086

Zayo Bandwith, Inc. (6.24%) (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 (31.25%)

            125,878    125,332
                  

Atrenta, Inc. (2.30%) (4)

   Software   

Senior Debt
Matures January 2010
Interest rate 11.50%

   $ 2,961    2,874    2,874
     

Revolving Line of Credit
Matures October 2009
Interest rate Prime + 2.00%

   $ 6,000    6,000    6,000
     

Preferred Stock Warrants

      102    225
     

Preferred Stock Warrants

      34    73
     

Preferred Stock Warrants

      71    53

Atrenta, Inc. (0.05%)

     

Preferred Stock

      250    220
                  

Total Atrenta, Inc.

            9,331    9,445

Blurb, Inc. (0.70%)

   Software   

Senior Debt
Matures December 2009
Interest rate 9.55%

   $ 2,018    2,005    2,005
     

Senior Debt
Matures June 2011
Interest rate Prime + 3.50%

   $ 750    750    750
     

Preferred Stock Warrants

      25    33
                  

Total Blurb, Inc.

            2,780    2,788

Braxton Technologies, LLC. (2.49%)

   Software   

Senior Debt
Matures July 2012
Interest rate Libor + 7.25%

   $ 10,000    9,813    9,813
     

Preferred Stock Warrants

      189    194
                  

Total Braxton Technologies, LLC.

            10,002    10,007

See notes to consolidated financial statements (unaudited)

 

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Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Bullhorn, Inc. (0.25%)

   Software   

Senior Debt
Matures March 2010
Interest rate Prime + 3.75%

   $ 970    938    938
     

Preferred Stock Warrants

      43    45
                  

Total Bullhorn, Inc.

            981    983

Cittio, Inc. (0.26%)

   Software   

Senior Debt
Matures April 2010
Interest rate 11.00%

   $ 963    940    940
     

Preferred Stock Warrants

      53    113
                  

Total Cittio, Inc.

            993    1,053

Forescout Technologies, Inc. (0.52%) (4)

   Software   

Senior Debt
Matures August 2009
Interest rate 11.15%

   $ 1,467    1,438    1,438
     

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

   $ 500    500    500
     

Preferred Stock Warrants

      99    157
                  

Total Forescout Technologies, Inc.

            2,037    2,095

GameLogic, Inc. (0.67%) (4)

   Software   

Senior Debt
Matures December 2009
Interest rate Prime + 4.125%

   $ 2,734    2,688    2,688
     

Preferred Stock Warrants

      93    —  
                  

Total GameLogic, Inc.

            2,781    2,688

Gomez, Inc. (0.12%) (4)

   Software   

Preferred Stock Warrants

      35    484
                  

Total Gomez, Inc.

            35    484

HighRoads, Inc. (0.01%) (4)

   Software   

Preferred Stock Warrants

      44    58
                  

Total HighRoads, Inc.

            44    58

Infologix, Inc. (4.74%) (4)

   Software   

Senior Debt
Matures May 2012
Interest rate Prime + 4.50%

   $ 10,000    10,000    10,000
     

Revolving Line of Credit
Matures November 2009
Interest rate Prime + 2.50%

   $ 9,000    9,000    9,000
                  

Total Infologix, Inc.

            19,000    19,000

Intelliden, Inc. (0.49%)

   Software   

Senior Debt
Matures February 2010
Interest rate 13.20%

   $ 1,895    1,887    1,887
     

Preferred Stock Warrants

      18    72
                  

Total Intelliden, Inc.

            1,905    1,959

Oatsystems, Inc. (0.00%) (4)

   Software   

Preferred Stock Warrants

      67    —  
                  

Total Oatsystems, Inc.

            67    —  

Proficiency, Inc. (0.37%) (5)(6)

   Software   

Senior Debt
Matures August 2012
Interest rate 8.00%

   $ 1,500    1,497    1,497
     

Preferred Stock Warrants

      97    —  

Proficiency, Inc. (0.19%)

     

Preferred Stock

      2,750    750
                  

Total Proficiency, Inc.

            4,344    2,247

PSS Systems, Inc. (0.82%) (4)

   Software   

Senior Debt
Matures March 2010
Interest rate 10.74%

   $ 3,239    3,210    3,210
     

Preferred Stock Warrants

      51    92
                  

Total PSS Systems, Inc.

            3,261    3,302

See notes to consolidated financial statements (unaudited)

 

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Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Rockyou, Inc. (0.75%)

  

Software

  

Senior Debt
Matures May 2011
Interest rate Prime + 2.50%

   $ 3,000    3,000    3,000
                  

Total Rockyou, Inc.

            3,000    3,000

Savvion, Inc. (1.51%) (4)

  

Software

  

Senior Debt
Matures April 2009
Interest rate Prime + 3.45%

   $ 811    811    811
     

Revolving Line of Credit
Matures March 2009
Interest rate Prime + 4.45%

   $ 3,459    3,459    3,459
     

Revolving Line of Credit
Matures March 2009
Interest rate Prime + 3.00%

   $ 1,526    1,526    1,526
     

Preferred Stock Warrants

      52    243
                  

Total Savvion, Inc.

            5,848    6,039

Sportvision, Inc. (0.01%)

  

Software

  

Preferred Stock Warrants

      39    45
                  

Total Sportvision, Inc.

            39    45

WildTangent, Inc. (0.51%)

  

Software

  

Senior Debt
Matures March 2011
Interest rate 9.65%

   $ 2,000    1,815    1,815
     

Preferred Stock Warrants

      240    206
                  

Total WildTangent, Inc.

            2,055    2,021
                  

Total Software (16.76%)

            68,503    67,214
                  

Agami Systems, Inc. (0.93%) (4)

   Electronics & Computer Hardware   

Senior Debt
Matures August 2009
Interest rate 11.00%

   $ 3,746    3,714    3,714
     

Preferred Stock Warrants

      85    —  
                  

Total Agami Systems, Inc.

            3,799    3,714

Luminus Devices, Inc. (3.00%) (4)

   Electronics & Computer Hardware   

Senior Debt
Matures August 2009
Interest rate 12.8750%

   $ 11,792    11,421    11,421
     

Preferred Stock Warrants

      183    126
     

Preferred Stock Warrants

      83    69
     

Preferred Stock Warrants

      334    399
                  

Total Luminus Devices, Inc.

            12,021    12,015

Maxvision Holding, LLC. (3.09%) (4)

   Electronics & Computer Hardware   

Senior Debt
Matures April 2012
Interest rate Prime + 5.50%

   $ 5,000    5,063    5,063
     

Senior Debt
Matures April 2012
Interest rate Prime + 2.25%

   $ 5,417    5,417    5,417
     

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

   $ 1,972    1,898    1,898

Maxvision Holding, LLC. (0.02%)

     

Preferred Stock

      82    82
                  

Total Maxvision Holding, LLC

            12,460    12,460

NetEffect, Inc. (0.50%)

   Electronics & Computer Hardware   

Senior Debt
Matures May 2010
Interest rate 11.95%

   $ 2,058    2,018    2,018
     

Preferred Stock Warrants

      46    —  
                  

Total NetEffect, Inc.

            2,064    2,018

See notes to consolidated financial statements (unaudited)

 

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Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Shocking Technologies, Inc. (0.07%)

   Electronics & Computer Hardware   

Senior Debt
Matures December 2010
Interest rate 9.75%

   $ 250    201    201
     

Preferred Stock Warrants

      63    90
                  

Total Shocking Technologies, Inc.

            264    291

SiCortex, Inc. (2.34%)

   Electronics & Computer Hardware   

Senior Debt
Matures December 2010
Interest rate 10.95%

   $ 8,971    8,856    8,856
     

Preferred Stock Warrants

      165    525
                  

Total SiCortex, Inc.

            9,021    9,381

Spatial Photonics, Inc. (0.97%) (4)

   Electronics & Computer Hardware   

Senior Debt
Matures May 2011
Interest rate 10.75%

   $ 3,751    3,651    3,651
     

Preferred Stock Warrants

      130    234

Spatial Photonics, Inc. (0.12%)

     

Preferred Stock

      500    500
                  

Total Spatial Photonics Inc.

            4,281    4,385

VeriWave, Inc. (1.06%)

   Electronics & Computer Hardware   

Senior Debt
Matures May 2010
Interest rate 10.75%

   $ 3,359    3,326    3,326
     

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

   $ 922    922    922
     

Preferred Stock Warrants

      55    5
                  

Total VeriWave, Inc.

            4,303    4,253

ViDeOnline Communications, Inc. (0.07.%) (4)

   Electronics & Computer Hardware   

Preferred Stock Warrants

      298    288
                  

Total ViDeOnline Communications, Inc.

            298    288
                  

Total Electronics & Computer Hardware (12.17%)

            48,511    48,805
                  

Aegerion Pharmaceuticals, Inc. (2.06%) (4)

   Specialty Pharmaceuticals   

Senior Debt
Matures August 2010
Interest rate Prime + 2.50%

   $ 8,080    8,038    8,038
     

Preferred Stock Warrants

      69    232

Aegerion Pharmaceuticals, Inc. (0.25%)

     

Preferred Stock

      1,000    1,000
                  

Total Aegerion Pharmaceuticals, Inc.

            9,107    9,270

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

   Specialty Pharmaceuticals   

Senior Debt
Matures January 2011
Interest rate 11.20%

   $ 20,000    19,395    19,395
     

Common Stock Warrants

      876    37

Panacos Pharmaceuticals, Inc. (0.02%)

     

Common Stock

      410    90
                  

Total Panacos Pharmaceuticals, Inc.

            20,681    19,522

Quatrx Pharmaceuticals Company (5.03%) (4)

   Specialty Pharmaceuticals   

Senior Debt
Matures October 2011
Interest rate Prime + 4.85%

   $ 20,000    19,694    19,694
     

Preferred Stock Warrants

      220    205
     

Preferred Stock Warrants

      307    278

Quatrx Pharmaceuticals Company (0.20%)

     

Preferred Stock

      750    750
                  

Total Quatrx Pharmaceuticals Company

            20,971    20,927
                  

Total Specialty Pharmaceuticals (12.40%)

            50,759    49,719
                  

See notes to consolidated financial statements (unaudited)

 

10


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Annie’s, Inc. (1.01%)

   Consumer & Business Products   

Senior Debt - Second Lien
Matures April 2011
Interest rate LIBOR + 6.50%

   $ 4,000    3,721    3,721
     

Preferred Stock Warrants

      321    320
                  

Total Annie’s, Inc.

            4,042    4,041

BabyUniverse, Inc. (0.01%) (4)

   Consumer & Business Products   

Common Stock

      267    52
                  

Total BabyUniverse, Inc.

            267    52

IPA Holdings, LLC. (4.17%) (4)

   Consumer & Business Products   

Senior Debt
Matures November 2012
Interest rate Prime + 3.50%

   $ 10,000    10,000    10,000
     

Senior Debt
Matures May 2013
Interest rate Prime + 6.00%

   $ 6,500    6,507    6,507
     

Revolving Line of Credit
Matures November 2012
Interest rate Prime + 2.50%

   $ 200    200    200

IPA Holding, LLC. (0.12%)

     

Preferred Stock

      500    500
                  

Total IPA Holding, LLC.

            17,207    17,207

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

   Consumer & Business Products   

Preferred Stock Warrants

      24    55

Market Force Information, Inc. (0.07%)

     

Preferred Stock

      500    280
                  

Total Market Force Information, Inc.

            524    335

OnTech Operations, Inc. (0.83%)

   Consumer & Business Products   

Senior Debt
Matures June 2011
Interest rate Prime + 6.375%

   $ 3,000    2,330    2,330
     

Revolving Line of Credit
Matures June 2009
Interest rate Prime +5.625%

   $ 315    315    315
     

Preferred Stock Warrants

      452    462
     

Preferred Stock Warrants

      218    228

OnTech Operations, Inc. (0.25%)

     

Preferred Stock

      1,000    1,000
                  

Total OnTech Operations, Inc.

            4,315    4,335

Wageworks, Inc. (0.14%) (4)

   Consumer & Business Products   

Preferred Stock Warrants

      252    555

Wageworks, Inc. (0.05%)

     

Preferred Stock

      250    179
                  

Total Wageworks, Inc.

            502    734
                  

Total Consumer & Business Products (6.66%)

            26,857    26,704
                  
              

Custom One Design, Inc. (0.25%)

   Semiconductors   

Senior Debt
Matures September 2010
Interest rate 11.50%

   $ 969    956    956
     

Common Stock Warrants

      18    51
                  

Total Custom One Design, Inc.

            974    1,007

Enpirion, Inc. (1.25%)

   Semiconductors   

Senior Debt
Matures August 2011
Interest rate Prime + 4.00%

   $ 5,000    4,897    4,897
     

Preferred Stock Warrants

      105    107
                  

Total Enpirion, Inc.

            5,002    5,004

See notes to consolidated financial statements (unaudited)

 

11


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

iWatt Inc. (1.31%) (4)

   Semiconductors   

Senior Debt
Matures September 2009
Interest rate Prime + 2.75%

   $ 2,963    2,908    2,908
     

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

   $ 1,635    1,635    1,635
     

Preferred Stock Warrants

      46    107
     

Preferred Stock Warrants

      51    56
     

Preferred Stock Warrants

      73    70
     

Preferred Stock Warrants

      459    462

iWatt Inc. (0.24%)

     

Preferred Stock

      490    949
                  

Total iWatt Inc.

            5,662    6,187

NEXX Systems, Inc. (2.25%) (4)

   Semiconductors   

Senior Debt
Matures February 2010
Interest rate Prime + 2.75%

   $ 3,622    3,530    3,530
     

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

   $ 5,725    5,000    5,000
     

Preferred Stock Warrants

      165    510
                  

Total NEXX Systems, Inc.

            8,695    9,040

Quartics, Inc. (1.07%) (4)

   Semiconductors   

Senior Debt
Matures August 2010
Interest rate 11.05%

   $ 281    244    244
     

Senior Debt
Matures August 2010
Interest rate 8.80%

   $ 3,928    3,928    3,928
     

Preferred Stock Warrants

      53    134
                  

Total Quartics, Inc.

            4,225    4,306

Solarflare Communications, Inc. (0.19%) (4)

   Semiconductors   

Senior Debt
Matures August 2010
Interest rate 11.75%

   $ 586    528    528
     

Preferred Stock Warrants

      83    228

Solarflare Communications, Inc. (0.16%)

     

Preferred Stock

      641    641
                  

Total Solarflare Communications, Inc.

            1,252    1,397
                  

Total Semiconductors (6.72%)

            25,810    26,941
                  

Labopharm USA, Inc. (3.90%) (4)(5)

   Drug Delivery   

Senior Debt
Matures July 2008
Interest rate 11.95%

   $ 15,000    14,628    14,628
     

Common Stock Warrants

      458    997
                  

Total Labopharm USA, Inc.

            15,086    15,625

Transcept Pharmaceuticals, Inc. (1.36%) (4)

   Drug Delivery   

Senior Debt
Matures October 2009
Interest rate 10.69%

   $ 5,223    5,189    5,189
     

Preferred Stock Warrants

      36    105
     

Preferred Stock Warrants

      51    146

Transcept Pharmaceuticals, Inc. (0.08%)

     

Preferred Stock

      500    338
                  

Total Transcept Pharmaceuticals, Inc.

            5,776    5,778
                  

Total Drug Delivery (5.34%)

            20,862    21,403
                  

BARRX Medical, Inc. (0.02%)

   Therapeutic   

Preferred Stock Warrants

      63    67

BARRX Medical, Inc. (0.37%)

     

Preferred Stock

      1,500    1,500
                  

Total BARRX Medical, Inc.

            1,563    1,567

EKOS Corporation (1.38%)

   Therapeutic   

Senior Debt
Matures November 2010
Interest rate Prime + 2.00%

   $ 5,000    4,776    4,776
     

Preferred Stock Warrants

      175    497
     

Preferred Stock Warrants

      153    265
                  

Total EKOS Corporation

            5,104    5,538

See notes to consolidated financial statements (unaudited)

 

12


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Gynesonics, Inc. (0.02%) (4)

   Therapeutic   

Preferred Stock Warrants

      18    97

Gynesonics, Inc. (0.07%)

     

Preferred Stock

      250    270
                  

Total Gynesonics, Inc.

            268    367
                  

Light Science Oncology, Inc. (0.04%)

   Therapeutic   

Preferred Stock Warrants

      99    175
                  

Total Light Science Oncology, Inc.

            99    175

Novasys Medical, Inc. (1.33%) (4)

   Therapeutic   

Senior Debt
Matures January 2010
Interest rate 9.70%

   $ 5,142    5,095    5,095
     

Preferred Stock Warrants

      71    169
     

Preferred Stock Warrants

      54    55

Novasys Medical, Inc.(0.14%)

     

Preferred Stock

      556    556
                  

Total Novasys Medical, Inc.

            5,776    5,875

Power Medical Interventions, Inc. (0.00%)

   Therapeutic   

Common Stock Warrants

      20    1
                  

Total Power Medical Interventions, Inc.

            20    1
                  

Total Therapeutic (3.37%)

            12,830    13,523
                  

Cozi Group, Inc. (0.02%)

   Internet Consumer & Business Services   

Preferred Stock Warrants

      147    89

Cozi Group, Inc. (0.06%)

     

Preferred Stock

      177    251
                  

Total Cozi Group, Inc.

            324    340

Invoke Solutions, Inc. (0.42%) (4)

   Internet Consumer & Business Services   

Senior Debt
Matures December 2008
Interest rate Prime + 3.75%

   $ 1,605    1,588    1,588
     

Preferred Stock Warrants

      56    80
     

Preferred Stock Warrants

      26    25
                  

Total Invoke Solutions, Inc.

            1,670    1,693

Prism Education Group Inc. (0.48%)

   Internet Consumer & Business Services   

Senior Debt
Matures December 2010
Interest rate 11.25%

   $ 1,843    1,814    1,814
     

Preferred Stock Warrants

      43    99
                  

Total Prism Education Group Inc.

            1,857    1,913

RazorGator Interactive Group, Inc. (1.71%)

   Internet Consumer & Business Services   

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

   $ 3,000    3,000    3,000
     

Preferred Stock Warrants

      13    3,520
     

Preferred Stock Warrants

      28    345

RazorGator Interactive Group, Inc. (1.37%)

     

Preferred Stock

      1,000    5,487
                  

Total RazorGator Interactive Group, Inc.

            4,041    12,352

Serious USA, Inc. (0.51%)

   Internet Consumer & Business Services   

Senior Debt
Matures Februrary 2011
Interest rate Prime + 3.00%

   $ 2,450    2,383    1,383
     

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

   $ 654    654    654
     

Preferred Stock Warrants

      94    5
                  

Total Serious USA, Inc.

            3,131    2,042

See notes to consolidated financial statements (unaudited)

 

13


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Spa Chakra, Inc. (0.63%)

   Internet Consumer & Business Services   

Senior Debt
Matures June 2010
Interest rate 14.45%

   $ 2,500    2,500    2,500
                  

Total Spa Chakra, Inc.

            2,500    2,500
                  

Total Internet Consumer & Business Services (5.20%)

            13,523    20,840
                  

Lilliputian Systems, Inc. (1.46%) (4)

   Energy   

Senior Debt
Matures March 2010
Interest rate 9.75%

   $ 5,791    5,772    5,772
     

Preferred Stock Warrants

      48    91
                  

Total Lilliputian Systems, Inc.

            5,820    5,863
                  

Total Energy (1.46%)

            5,820    5,863
                  

Active Response Group, Inc. (2.47%)

   Information Services   

Senior Debt
Matures March 2012
Interest rate LIBOR + 6.55%

   $ 9,795    9,694    9,694
     

Preferred Stock Warrants

      92    81
     

Common Stock Warrants

      46    123
                  

Total Active Response Group, Inc.

            9,832    9,898

Box.net, Inc. (0.08%)

   Information Services   

Senior Debt
Matures June 2011
Interest rate Prime + 1.50%

   $ 322    250    250
     

Preferred Stock Warrants

      73    68
                  

Total Box.net, Inc.

            323    318

Buzznet, Inc. (0.19%)

   Information Services   

Senior Debt
Matures March 2010
Interest rate 10.25%

   $ 737    732    732
     

Preferred Stock Warrants

      9    14

Buzznet, Inc. (0.06%)

     

Preferred Stock

      250    250
                  

Total Buzznet, Inc.

            991    996

hi5 Networks, Inc. (2.02%)

   Information Services   

Senior Debt
Matures January 2011
Interest rate Prime + 2.5%

   $ 3,000    3,000    3,000
     

Senior Debt
Matures June 2011
Interest rate Prime + 0.5%

   $ 2,950    2,950    2,950
     

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    835    835
     

Preferred Stock Warrants

      212    331
                  

Total hi5 Networks, Inc.

            7,984    8,103

Jab Wireless, Inc. (3.27%)

   Information Services   

Senior Debt
Matures January 2012
Interest rate 10.75%

   $ 3,097    2,884    2,884
     

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
     

Senior Debt
Matures January 2012
Interest rate 8.50%

   $ 5,000    5,000    5,000
     

Preferred Stock Warrants

      265    310
                  

Total Jab Wireless, Inc.

            13,052    13,097

See notes to consolidated financial statements (unaudited)

 

14


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Solutionary, Inc. (1.94%)

   Information Services   

Senior Debt
Matures June 2010
Interest rate LIBOR + 5.50%

   $ 6,000    6,058    6,058
     

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

   $ 1,500    1,528    1,528
     

Preferred Stock Warrants

      94    202
     

Preferred Stock Warrants

      2    6

Solutionary, Inc. (0.06%)

     

Preferred Stock

      250    250
                  

Total Solutionary, Inc.

            7,932    8,044

The Generation Networks, Inc. (4.02%) (4)

   Information Services   

Senior Debt
Matures March 2012
Interest rate Prime + 4.50%

   $ 16,088    16,108    16,108

The Generation Networks, Inc. (0.12%)

     

Preferred Stock

      500    500
                  

Total The Generation Networks, Inc.

            16,608    16,608

Wallop Technologies, Inc. (0.04%)

   Information Services   

Senior Debt
Matures March 2010
Interest rate 10.00%

   $ 180    176    176
     

Preferred Stock Warrants

      7    —  
                  

Total Wallop Technologies, Inc.

            183    176

Zeta Interactive Corporation (3.72%) (4)

   Information Services   

Senior Debt
Matures November 2011
Interest rate Prime +2.00%

   $ 6,882    6,727    6,727
     

Senior Debt
Matures November 2011
Interest rate Prime +3.00%

   $ 8,000    8,000    8,000
     

Preferred Stock Warrants

      172    203

Zeta Interactive Corporation (0.13%)

     

Preferred Stock

      500    500
                  

Total Zeta Interactive Corporation

            15,399    15,430
                  

Total Information Services (18.12%)

            72,304    72,670
                  

Novadaq Technologies, Inc. (0.11%)

   Diagnostic   

Common Stock

      1,626    436
                  

Total Novadaq Technologies, Inc.

            1,626    436

Optiscan Biomedical, Corp. (2.55%)

   Diagnostic   

Senior Debt
Matures June 2011
Interest rate 10.25%

   $ 10,000    9,329    9,329
     

Preferred Stock Warrants

      760    908

Optiscan Biomedical, Corp. (0.63%)

     

Preferred Stock

      3,000    2,515
                  

Total Optiscan Biomedical, Corp.

            13,089    12,752
                  

Total Diagnostic (3.29%)

            14,715    13,188
                  

Guava Technologies, Inc. (1.29%) (4)

   Biotechnology Tools   

Senior Debt
Matures July 2009
Interest rate Prime + 3.25%

   $ 2,854    2,796    2,796
     

Convertible Debt

      250    250
     

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

   $ 1,875    1,875    1,875
     

Preferred Stock Warrants

      105    179
     

Preferred Stock Warrants

      69    66
                  

Total Guava Technologies, Inc.

            5,095    5,166

Kamada, LTD. (2.73%) (5)

   Biotechnology Tools   

Senior Debt
Matures November 2011
Interest rate 10.60%

   $ 11,000    10,640    10,640
     

Common Stock Warrants

      429    323
                  

Total Kamada, LTD.

            11,069    10,963

See notes to consolidated financial statements (unaudited)

 

15


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

NuGEN Technologies, Inc. (0.75%)

   Biotechnology Tools   

Senior Debt
Matures March 2010
Interest rate Prime + 3.45%

   $ 1,706      1,680      1,680
     

Senior Debt
Matures November 2010
Interest rate Prime + 1.70%

   $ 1,000      1,000      1,000
     

Preferred Stock Warrants

        44      314
     

Preferred Stock Warrants

        33      29

NuGEN Technologies, Inc. (0.12%)

     

Preferred Stock

        500      500
                      

Total NuGEN Technologies, Inc.

              3,257      3,523
                      

Total Biotechnology Tools (4.89%)

              19,421      19,652
                      

Crux Biomedical, Inc. (0.38%)

   Surgical Devices   

Senior Debt
Matures October 2010
Interest rate Prime + 1.75%

   $ 1,500      1,475      1,475
     

Preferred Stock Warrants

        37      64

Crux Biomedical, Inc. (0.06%)

     

Preferred Stock

        250      250
                      

Total Crux Biomedical, Inc.

              1,762      1,789

Diomed Holdings, Inc. (0.00%) (4)

   Surgical Devices   

Common Stock Warrants

        43      —  
                      

Total Diomed Holdings, Inc.

              43      —  

Transmedics, Inc. (1.51%) (4)

   Surgical Devices   

Senior Debt
Matures December 2011
Interest rate Prime + 5.25%

   $ 6,000      5,868      5,868
     

Preferred Stock Warrants

        140      170
                      

Total Transmedics, Inc.

              6,008      6,038
                      

Total Surgical Devices (1.95%)

              7,813      7,827
                      

Glam Media, Inc. (1.23%)

   Media/Content/ Info   

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

   $ 5,000      4,636      4,636
     

Preferred Stock Warrants

        482      299
                      

Total Glam Media, Inc.

              5,118      4,935

Waterfront Media Inc. (1.44%) (4)

   Media/Content/ Info   

Senior Debt
Matures December 2010
Interest rate Prime + 3.00%

   $ 3,362      3,329      3,329
     

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

   $ 2,000      2,000      2,000
     

Preferred Stock Warrants

        60      445

Waterfront Media Inc. (0.25%)

     

Preferred Stock

        1,000      1,000
                      

Total Waterfront Media Inc.

              6,389      6,774
                      

Total Media/Content/Info (2.92%)

              11,507      11,709
                      

Total Investments (150.12%)

            $ 595,867    $ 602,096
                      

See notes to consolidated financial statements (unaudited)

 

16


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2008

(Continued)

 

 

* 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 $15,489, $13,138 and $2,351, respectively. The tax cost of investments is $599,745.
(3) Except for warrants in six publicly traded companies and common stock in three publicly traded companies, all investments are restricted at June 30, 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 $785,000 at June 30, 2008 and is included in accrued liabilities and reduces the unrealized gain recognized by the Company at June 30, 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.
(7) Debt is on non-accrual status at June 30, 2008, and is therefore considered non-income producing.

See notes to consolidated financial statements (unaudited).

 

17


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     1,804
                   

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     511
                   

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     214
                   

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

      82     177
                   

Total Neosil, Inc.

    6,018     6,113

See notes to consolidated financial statements (unaudited).

 

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)

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   350
               

Total Portola Pharmaceuticals, Inc.

  15,046   15,244

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.

  9,611   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.

  20,100   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   11
               

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

    122   198
               

Total Purcell Systems, Inc.

  9,248   9,324

 

See notes to consolidated financial statements (unaudited).

 

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)

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

    50   63

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   295
               

Total Seven Networks, Inc.

  11,465   11,586

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

    52   83
               

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

    10   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 (unaudited).

 

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)

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%)

  114,061   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   73

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   44
               

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

    93   91
               

Total GameLogic, Inc.

  2,980   2,978

 

See notes to consolidated financial statements (unaudited).

 

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)

Gomez, Inc. (0.15%) (4)

  

Software

  

Senior Debt
Matures December 2007
Interest rate 12.25%

  $ 98   98   98
     

Preferred Stock Warrants

    35   513
               

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   243
               

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 (unaudited).

 

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)

Talisma Corp. (0.11%) (4)

 

Software

  

Preferred Stock Warrants

    49   448
              

Total Talisma Corp.

  49   448

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

    85   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 (unaudited).

 

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)

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

    70   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   157
               

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 (unaudited).

 

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)

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

    23   92

Market Force Information, Inc. (0.12%)

     

Preferred Stock

    500   500
               

Total Market Force Information, Inc.

  1,807   1,876

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   101
     

Preferred Stock Warrants

    51   51
               

Total iWatt Inc.

  4,714   4,769

 

See notes to consolidated financial statements (unaudited).

 

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)

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.

  12,603   13,061

Quartics, Inc. (0.09%) (4)

  

Semiconductors

  

Senior Debt
Matures August 2010
Interest rate 11.05%

  $ 300   254   254
     

Preferred Stock Warrants

    53   115
               

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

    84   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

    459   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

    50   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 (unaudited).

 

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)

EKOS Corporation (1.28%)

  

Therapeutic

  

Senior Debt
Matures November 2010
Interest rate Prime + 2.00%

  $ 5,000   4,707   4,707
     

Preferred Stock Warrants

    174   281
     

Preferred Stock Warrants

    153   150
               

Total EKOS Corporation

  5,035   5,138

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   74
     

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

    44   67
               

Total Prism Education Group Inc.

  2,008   2,031

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 (unaudited).

 

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)

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.

  3,117   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

    264   265
               

Total Jab Wireless, Inc.

  3,098   3,099

 

See notes to consolidated financial statements (unaudited).

 

28


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   5

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   227

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.

  1,343   1,032
               

Total Diagnostic (0.58%)

  2,969   2,316
               

 

See notes to consolidated financial statements (unaudited).

 

29


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

    69   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   252
     

Preferred Stock Warrants

    32   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.

  852   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   395
               

Total Light Science Oncology, Inc.

  10,000   10,000
               

Total Surgical Devices (4.20%)

  16,857   16,821
               

 

See notes to consolidated financial statements (unaudited).

 

30


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     295

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 $16,430, $9,009 and $7,421, respectively. The tax cost of investments is $522,551.
(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 (unaudited).

 

31


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

(In thousands, except per share data)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2008     2007     2008     2007  

Investment income:

        

Interest

   $ 16,081     $ 11,792     $ 30,320     $ 20,828  

Fees

     2,941       1,483       4,302       2,126  
                                

Total investment income

     19,022       13,275       34,622       22,954  

Operating expenses:

        

Interest

     2,914       1,763       4,765       2,449  

Loan fees

     564       250       946       517  

General and administrative

     2,211       1,714       3,385       3,022  

Employee Compensation:

        

Compensation and benefits

     2,854       2,015       5,653       3,955  

Stock-based compensation

     507       293       901       546  
                                

Total employee compensation

     3,361       2,308       6,554       4,501  
                                

Total operating expenses

     9,050       6,035       15,650       10,489  

Net investment income