Hercules Capital
HERCULES TECHNOLOGY GROWTH CAPITAL INC (Form: 10-Q, Received: 11/10/2008 15:43:34)
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 September 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 November 7, 2008, there were 32,862,554 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 September 30, 2008 (unaudited) and December 31, 2007    3
  Consolidated Schedule of Investments as of September 30, 2008 (unaudited)    4
  Consolidated Schedule of Investments as of December 31, 2007    18
  Consolidated Statement of Operations for the three and nine-month periods ended September 30, 2008 and 2007 (unaudited)    32
  Consolidated Statement of Changes in Net Assets for the nine-month periods ended September 30, 2008 and 2007 (unaudited)    33
  Consolidated Statement of Cash Flows for the nine-month periods ended September 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    48
    Item 3.   Quantitative and Qualitative Disclosures About Market Risk    61
    Item 4.   Controls and Procedures    61
PART II.     OTHER INFORMATION    61
    Item 1.   Legal Proceedings    61
    Item 1A.   Risk Factors    61
    Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds    66
    Item 3.   Defaults Upon Senior Securities    66
    Item 4.   Submission of Matters to a Vote of Security Holders    66
    Item 5.   Other Information    66
    Item 6.   Exhibits    67
SIGNATURES    68

 

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)

 

     September 30,
2008
(unaudited)
    December 31,
2007
 

Assets

    

Investments:

    

Non-affiliate investments (cost of $621,675 and $513,106)

   $ 632,500     $ 525,725  

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

     4,247       4,247  
                

Total investments, at value (cost of $628,019 and $519,450 respectively)

     636,747       529,972  

Deferred loan origination revenue

     (7,769 )     (6,593 )

Cash and cash equivalents

     20,489       7,856  

Interest receivable

     7,859       6,387  

Other assets

     17,677       4,321  
                

Total assets

     675,003       541,943  

Liabilities

    

Accounts payable and accrued liabilities

     7,213       6,956  

Short-term credit facility

     127,900       79,200  

Long-term credit facility

     10,000       —    

Long-term SBA debentures

     127,200       55,050  
                

Total liabilities

     272,313       141,206  
                

Net assets

   $ 402,690     $ 400,737  
                

Net assets consist of:

    

Common stock, par value

   $ 33     $ 33  

Capital in excess of par value

     397,990       393,530  

Deferred stock compensation

     (2,418 )     (78 )

Unrealized appreciation on investments

     8,105       10,129  

Accumulated realized gains on investments

     5,812       819  

Distributions in excess of investment income

     (6,832 )     (3,696 )
                

Total net assets

   $ 402,690     $ 400,737  
                

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

     32,863       32,541  
                

Net asset value per share

   $ 12.25     $ 12.31  
                

See notes to consolidated financial statements (unaudited).

 

3


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Acceleron Pharmaceuticals, Inc. (0.77%)* (4)

   Drug Discovery   

Senior Debt
Matures January 2010
Interest rate 10.25%

   $ 2,204    $ 2,202    $ 2,202
     

Preferred Stock Warrants

        69      731
     

Preferred Stock Warrants

        35      162

Acceleron Pharmaceuticals, Inc. (0.45%)

     

Preferred Stock

        1,243      1,805
                      

Total Acceleron Pharmaceuticals, Inc.

              3,549      4,900

Aveo Pharmaceuticals, Inc. (3.78%) (4)

   Drug Discovery   

Senior Debt
Matures November 2011
Interest rate 11.13%

   $ 15,000      14,913      14,890
     

Preferred Stock Warrants

        190      252
     

Preferred Stock Warrants

        104      68
     

Preferred Stock Warrants

        24      23
                      

Total Aveo Pharmaceuticals, Inc.

              15,231      15,233

Elixir Pharmaceuticals, Inc. (2.8%) (4)

   Drug Discovery   

Senior Debt
Matures December 2010
Interest rate Prime + 4.50%

   $ 11,000      11,000      11,000
     

Preferred Stock Warrants

        217      260
                      

Total Elixir Pharmaceuticals, Inc.

              11,217      11,260

EpiCept Corporation (0.91%) (4)

   Drug Discovery   

Senior Debt
Matures April 2009
Interest rate 15.00%

   $ 2,768      2,532      2,897
     

Common Stock Warrants

        —        —  
     

Common Stock Warrants

        161      610
     

Common Stock Warrants

        40      154
                      

Total EpiCept Corporation

              2,733      3,661

Horizon Therapeutics, Inc. (1.53%) (4)

   Drug Discovery   

Senior Debt
Matures May 2011
Interest rate Prime + 1.50%

   $ 6,000      5,880      5,880
     

Preferred Stock Warrants

        178      263
                      

Total Horizon Therapeutics, Inc.

              6,058      6,143

Inotek Pharmaceuticals Corp. (0.37%)

   Drug Discovery   

Preferred Stock

        1,500      1,500
                      

Total Inotek Pharmaceuticals Corp.

              1,500      1,500

Memory Pharmaceuticals Corp. (3.04%) (4)

   Drug Discovery   

Senior Debt
Matures December 2010
Interest rate 11.45%

   $ 13,245      12,221      12,221
     

Common Stock Warrants

        1,751      23
                      

Total Memory Pharmaceuticals Corp.

              13,972      12,244

Merrimack Pharmaceuticals, Inc. (0.25%) (4)

   Drug Discovery   

Convertible Senior Debt
Matures October 2008
Interest rate 11.15%

   $ 85      85      85
     

Preferred Stock Warrants

        156      914

Merrimack Pharmaceuticals, Inc. (0.69%)

     

Preferred Stock

        2,000      2,787
                      

Total Merrimack Pharmaceuticals, Inc.

              2,241      3,786

Neosil, Inc. (0.00%)

   Drug Discovery   

Preferred Stock Warrants

        83      —  
                      

Total Neosil, Inc.

              83      —  

Paratek Pharmaceuticals, Inc. (0.10%) (4)

   Drug Discovery   

Preferred Stock Warrants

        137      415

Paratek Pharmaceuticals, Inc. (0.25%)

     

Preferred Stock

        1,000      1,000
                      

Total Paratek Pharmaceuticals, Inc.

              1,137      1,415

See notes to consolidated financial statements (unaudited)

 

4


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

   Industry   

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Portola Pharmaceuticals, Inc. (3.28%) (4)

   Drug Discovery   

Senior Debt
Matures September 2011
Interest rate Prime + 2.16%

   $ 12,917    12,840    12,840
     

Preferred Stock Warrants

      152    350
                  

Total Portola Pharmaceuticals, Inc.

            12,992    13,190

Recoly, N.V. (0.74%) (6)

   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 (18.96%)

            73,713    76,332
                  

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

   Communications &
Networking
  

Senior Debt
Matures June 2012
Interest rate Prime + 4.50%

   $ 4,000    3,935    3,935
     

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    72
                  

Total Affinity Videonet, Inc.

            6,509    6,507

E-band Communications, Inc. (0.50%) (7)

   Communications &
Networking
  

Preferred Stock

      2,000    2,000
                  

Total E-Band Communications, Inc.

            2,000    2,000

IKANO Communications, Inc. (3.88%) (4)

   Communications &
Networking
  

Senior Debt
Matures April 2011
Interest rate 11.00%

   $ 15,196    15,196    15,196
     

Preferred Stock Warrants

      46    175
     

Preferred Stock Warrants

      72    266
                  

Total IKANO Communications, Inc.

            15,314    15,637

Kadoink, Inc. (0.5%) (4)

   Communications &
Networking
  

Senior Debt
Matures April 2011
Interest rate Prime + 2.00%

   $ 2,000    1,952    1,952
     

Preferred Stock Warrants

      73    72

Kadoink, Inc. (0.06%)

     

Preferred Stock

      250    250
                  

Total Kadoink, Inc.

            2,275    2,274

Neonova Holding Company (2.24%)

   Communications &
Networking
  

Senior Debt
Matures September 2012
Interest rate Prime + 3.25%

   $ 9,000    8,924    8,924
     

Preferred Stock Warrants

      94    80

Neonova Holding Company (0.06%)

     

Preferred Stock

      250    250
                  

Total Neonova Holding Company

            9,268    9,254

See notes to consolidated financial statements (unaudited)

 

5


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Peerless Network, Inc. (0.37%) (5)

   Communications & Networking   

Senior Debt
Matures June 2011
Interest rate Prime + 3.25%

   $ 1,500    1,428    1,428
     

Preferred Stock Warrants

      95    75

Peerless Network, Inc. (0.25%)

     

Preferred Stock

      1,000    1,000
                  

Total Peerless Network, Inc.

            2,523    2,503

Ping Identity Corporation (0.21%) (4)

   Communications & Networking   

Senior Debt
Matures June 2009
Interest rate 11.50%

   $ 851    842    842
     

Preferred Stock Warrants

      51    2
                  

Total Ping Identity Corporation

            893    844

Purcell Systems, Inc. (2.47%)

   Communications & Networking   

Senior Debt
Matures June 2010
Interest rate Prime + 3.50%

   $ 1,807    1,739    1,739
     

Revolving Line of Credit
Matures July 2009
Interest rate Prime + 2.75%

   $ 6,000    6,000    6,000
     

Senior Debt
Matures July 2011
Interest rate Prime + 3.50%

   $ 1,600    1,600    1,600
     

Preferred Stock Warrants

      123    613
                  

Total Purcell Systems, Inc.

            9,462    9,952

Rivulet Communications, Inc. (0.57%) (5)

   Communications & Networking   

Senior Debt
Matures April 2010
Interest rate 10.50%

   $ 2,324    2,301    2,301
     

Preferred Stock Warrants

      51    —  

Rivulet Communications, Inc. (0.00%)

     

Preferred Stock

      250    4
                  

Total Rivulet Communications, Inc.

            2,602    2,305

Seven Networks, Inc. (2.57%) (4)

   Communications & Networking   

Senior Debt
Matures April 2010
Interest rate Prime + 6.00%

   $ 6,941    6,859    6,859
     

Revolving Line of Credit
Matures September 2009
Interest rate Prime + 5.00%

   $ 3,000    3,000    3,000
     

Preferred Stock Warrants

      174    500
                  

Total Seven Networks, Inc.

            10,033    10,359

Simpler Networks Corp. (0.98%) (8)

   Communications & Networking   

Senior Debt
Matures July 2010
Interest rate 18.25%

   $ 4,646    4,615    3,966
     

Preferred Stock Warrants

      160    —  

Simpler Networks Corp. (0.00%)

     

Preferred Stock

      500    —  
                  

Total Simpler Networks Corp.

            5,275    3,966

See notes to consolidated financial statements (unaudited)

 

6


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Stoke, Inc. (0.77%)

   Communications & Networking   

Senior Debt
Matures August 2010
Interest rate 10.55%

   $ 3,028    2,995    2,995
     

Preferred Stock Warrants

      53    116
                  

Total Stoke, Inc.

            3,048    3,111

Tectura Corporation (6.32%) (4)

   Communications & Networking   

Senior Debt
Matures April 2012
Interest rate LIBOR + 6.90%

   $ 7,753    7,852    7,852
     

Revolving Line of Credit
Matures April 2009
Interest rate LIBOR + 6.35%

   $ 12,000    12,000    12,000
     

Revolving Line of Credit
Matures March 2009
Interest rate LIBOR + 7.50%

   $ 5,507    5,507    5,507
     

Preferred Stock Warrants

      51    90
                  

Total Tectura Corporation

            25,410    25,449

Teleflip, Inc. (0.16%)

   Communications & Networking   

Senior Debt
Matures June 2010
Interest rate Prime + 2.75%

   $ 906    907    651
     

Preferred Stock Warrants

      11    —  
                  

Total Teleflip, Inc.

            918    651

Wireless Channels, Inc. (3.01%) (4)

   Communications & Networking   

Senior Debt
Matures April 2010
Interest rate Prime + 4.25%

   $ 11,156    11,461    11,461
     

Preferred Stock Warrants

      155    641
                  

Total Wireless Channels, Inc.

            11,616    12,102

Zayo Bandwidth, Inc. (6.21%)

   Communications & Networking   

Senior Debt
Matures November 2013
Interest rate Libor + 5.25%

   $ 25,000    25,000    25,000
                  

Total Zayo Bandwith, Inc.

            25,000    25,000
                  

Total Communications & Networking (32.75%)

            132,146    131,914
                  

Atrenta, Inc. (2.30%) (5)

   Software   

Senior Debt
Matures January 2010
Interest rate 11.50%

   $ 2,961    2,898    2,898
     

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

   $ 6,000    6,000    6,000
     

Preferred Stock Warrants

      102    242
     

Preferred Stock Warrants

      34    79
     

Preferred Stock Warrants

      71    56

Atrenta, Inc. (0.06%)

     

Preferred Stock

      250    240
                  

Total Atrenta, Inc.

            9,355    9,515

Blurb, Inc. (1.67%)

   Software   

Senior Debt
Matures December 2009
Interest rate 9.55%

   $ 1,720    1,709    1,709
     

Senior Debt
Matures June 2011
Interest rate Prime + 3.50%

   $ 5,000    5,000    5,000
     

Preferred Stock Warrants

      25    33
                  

Total Blurb, Inc.

            6,734    6,742

See notes to consolidated financial statements (unaudited)

 

7


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)
   Value (3)

Braxton Technologies, LLC. (2.5%) (5)

   Software   

Senior Debt
Matures July 2012
Interest rate Libor + 7.25%

   $ 10,000    9,863    9,863
     

Preferred Stock Warrants

      188    202
                  

Total Braxton Technologies, LLC.

            10,051    10,065

Bullhorn, Inc. (0.28%)

   Software   

Senior Debt
Matures November 2010
Interest rate Prime + 3.75%

   $ 877    851    851
     

Preferred Stock Warrants

      43    261
                  

Total Bullhorn, Inc.

            894    1,112

Cittio, Inc. (0.22%)

   Software   

Senior Debt
Matures May 2010
Interest rate 11.00%

   $ 849    832    832
     

Preferred Stock Warrants

      53    59
                  

Total Cittio, Inc.

            885    891

Clickfox, Inc. (0.62%)

   Software   

Senior Debt
Matures September 2011
Interest rate 10.25%

   $ 2,500    2,337    2,337
     

Preferred Stock Warrants

      163    161
                  

Total Clickfox, Inc.

            2,500    2,498

Forescout Technologies, Inc. (0.46%) (4)

   Software   

Senior Debt
Matures August 2009
Interest rate 11.15%

   $ 1,191    1,169    1,169
     

Revolving Line of Credit
Matures February 2009
Interest rate Prime + 2.25%

   $ 500    500    500
     

Preferred Stock Warrants

      99    162
                  

Total Forescout Technologies, Inc.

            1,768    1,831

GameLogic, Inc. (0.59%) (4)

   Software   

Senior Debt
Matures September 2010
Interest rate Prime + 4.125%

   $ 2,461    2,369    2,369
     

Preferred Stock Warrants

      93    —  
                  

Total GameLogic, Inc.

            2,462    2,369

Gomez, Inc. (0.13%) (4)

   Software   

Preferred Stock Warrants

      35    526
                  

Total Gomez, Inc.

            35    526

HighJump Acquisition, LLC. (2.98%) (4)

   Software   

Senior Debt
Matures May 2013
Interest rate Prime + 7.50%

   $ 12,000    12,000    12,000
                  

Total HighJump Acquisition, LLC.

            12,000    12,000

HighRoads, Inc. (0.01%) (4)

   Software   

Preferred Stock Warrants

      44    57
                  

Total HighRoads, Inc.

            44    57

Infologix, Inc. (5.21%) (4)

  

 

Software

  

 

Senior Debt
Matures April 2012
Interest rate Prime + 4.50%

   $ 12,000    12,000    12,000
     

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

   $ 9,000    9,000    9,000
                  

Total Infologix, Inc.

            21,000    21,000

See notes to consolidated financial statements (unaudited)

 

8


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Intelliden, Inc. (0.43%)

   Software   

Senior Debt
Matures February 2010
Interest rate 13.20%

   $ 1,652    1,645    1,645
     

Preferred Stock Warrants

      18    72
                  

Total Intelliden, Inc.

            1,663    1,717

Oatsystems, Inc. (0.00%) (4)

   Software   

Preferred Stock Warrants

      67    —  
                  

Total Oatsystems, Inc.

            67    —  

Proficiency, Inc. (0.37%) (6)(7)

   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. (0.72%) (4)

   Software   

Senior Debt
Matures March 2010
Interest rate 10.74%

   $ 2,837    2,813    2,813
     

Preferred Stock Warrants

      51    93
                  

Total PSS Systems, Inc.

            2,864    2,906

Rockyou, Inc. (0.74%) (4)

   Software   

Senior Debt
Matures May 2011
Interest rate Prime + 2.50%

   $ 3,000    2,883    2,883
     

Preferred Stock Warrants

      117    99
                  

Total Rockyou, Inc.

            3,000    2,982

Savvion, Inc. (1.43%) (4)

   Software   

Senior Debt
Matures April 2009
Interest rate Prime + 3.45%

   $ 574    574    574
     

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

   $ 2,078    2,078    2,078
     

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

   $ 2,907    2,855    2,855
     

Preferred Stock Warrants

      52    264
                  

Total Savvion, Inc.

            5,559    5,771

Sportvision, Inc. (0.02%)

   Software   

Preferred Stock Warrants

      39    86
                  

Total Sportvision, Inc.

            39    86

WildTangent, Inc. (0.53%)

   Software   

Senior Debt
Matures March 2011
Interest rate 9.65%

   $ 2,000    1,845    1,845
     

Preferred Stock Warrants

      238    282
                  

Total WildTangent, Inc.

            2,083    2,127
                  

Total Software (21.46%)

            87,347    86,442
                  

See notes to consolidated financial statements (unaudited)

 

9


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Luminus Devices, Inc. (3.07%) (4)

   Electronics & Computer
Hardware
  

Senior Debt
Matures November 2010
Interest rate 12.875%

   $ 7,861    11,474    11,474
     

Preferred Stock Warrants

      183    273
     

Preferred Stock Warrants

      84    142
     

Preferred Stock Warrants

      334    481
                  

Total Luminus Devices, Inc.

            12,075    12,370

Maxvision Holding, LLC. (2.7%) (4)

   Electronics & Computer
Hardware
  

Senior Debt
Matures October 2012
Interest rate Prime + 5.50%

   $ 5,000    5,089    5,089
     

Senior Debt
Matures April 2012
Interest rate Prime + 2.25%

   $ 5,292    5,292    5,292
     

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

   $ 472    502    502

Maxvision Holding, LLC. (0.02%) (4)

     

Preferred Stock

      81    82
                  

Total Maxvision Holding, LLC

            10,964    10,965

NetEffect, Inc. (0.62%)

   Electronics & Computer Hardware   

Senior Debt
Matures May 2010
Interest rate 16.95%

   $ 2,552    2,515    2,515
     

Preferred Stock Warrants

      47    —  
                  

Total NetEffect, Inc.

            2,562    2,515

Shocking Technologies, Inc. (1.01%)

   Electronics & Computer
Hardware
  

Senior Debt
Matures December 2010
Interest rate 9.75%

   $ 4,000    3,959    3,959
     

Preferred Stock Warrants

      63    89
                  

Total Shocking Technologies, Inc.

            4,022    4,048

SiCortex, Inc. (2.08%)

   Electronics & Computer
Hardware
  

Senior Debt
Matures December 2010
Interest rate 10.95%

   $ 8,179    8,077    8,077
     

Preferred Stock Warrants

      164    293
                  

Total SiCortex, Inc.

            8,241    8,370

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

  

 

Electronics & Computer
Hardware

  

 

Senior Debt
Matures April 2011
Interest rate 10.066%

   $ 3,410    3,326    3,326
     

Senior Debt
Mature April 2011
Interest rate 9.217%

   $ 341    341    341
     

Preferred Stock Warrants

      130    237

Spatial Photonics, Inc. (0.12%)

     

Preferred Stock

      500    500
                  

Total Spatial Photonics Inc.

            4,297    4,404

VeriWave, Inc. (0.96%)

   Electronics & Computer
Hardware
  

Senior Debt
Matures May 2010
Interest rate 10.75%

   $ 2,960    2,932    2,932
     

Revolving Line of Credit
Matures September 30
Interest rate Prime +1.00%

   $ 922    922    922
     

Preferred Stock Warrants

      55    5
                  

Total VeriWave, Inc.

            3,909    3,859

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

   Electronics & Computer
Hardware
  

Preferred Stock Warrants

      298    287
                  

Total ViDeOnline Communications, Inc.

            298    287
                  

Total Electronics & Computer Hardware (11.62%)

            46,368    46,818
                  

See notes to consolidated financial statements (unaudited)

 

10


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Aegerion Pharmaceuticals, Inc. (1.96%) (5)

   Specialty Pharmaceuticals   

Senior Debt
Matures August 2011
Interest rate 8.00%

   $ 7,525    7,525    7,525
     

Covertible Senior Debt
Matures December 2009
Interest rate Prime + 2.50%

   $ 76    76    76
     

Preferred Stock Warrants

      70    307

Aegerion Pharmaceuticals, Inc. (0.25%) (4)

     

Preferred Stock

      1,000    1,000
                  

Total Aegerion Pharmaceuticals, Inc.

            8,671    8,908

Panacos Pharmaceuticals, Inc. (4.55%) (4)

   Specialty Pharmaceuticals   

Senior Debt
Matures January 2011
Interest rate 11.20%

   $ 18,839    18,296    18,296
     

Common Stock Warrants

      876    23

Panacos Pharmaceuticals, Inc. (0.02%)

     

Common Stock

      410    62
                  

Total Panacos Pharmaceuticals, Inc.

            19,582    18,381

Quatrx Pharmaceuticals Company (4.99%) (4)

   Specialty Pharmaceuticals   

Senior Debt
Matures October 2011
Interest rate Prime + 4.85%

   $ 20,000    19,728    19,728
     

Preferred Stock Warrants

      220    149
     

Preferred Stock Warrants

      307    219

Quatrx Pharmaceuticals Company (0.19%)

     

Preferred Stock

      750    750
                  

Total Quatrx Pharmaceuticals Company

            21,005    20,846
                  

Total Specialty Pharmaceuticals (11.96%)

            49,258    48,135
                  

Annie’s, Inc. (1.52%)

   Consumer & Business Products   

Senior Debt - Second Lien
Matures April 2011
Interest rate LIBOR + 6.20%

   $ 6,000    5,768    5,768
     

Preferred Stock Warrants

      321    335
                  

Total Annie’s, Inc.

            6,089    6,103

BabyUniverse, Inc. (0.01%) (4)

   Consumer & Business Products   

Common Stock

      267    37
                  

Total BabyUniverse, Inc.

            267    37

IPA Holdings, LLC. (4.16%) (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    6,549    6,549
     

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.

            17,249    17,249

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

  

 

Consumer & Business

Products

  

Preferred Stock Warrants

      24    52

Market Force Information, Inc. (0.07%)

     

Preferred Stock

      500    298
                  

Total Market Force Information, Inc.

            524    350

See notes to consolidated financial statements (unaudited)

 

11


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

OnTech Operations, Inc. (1.76%)

   Consumer & Business Products   

Senior Debt
Matures June 2011
Interest rate Prime + 6.375%

   $ 6,000    5,426    5,426
     

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

   $ 806    806    806
     

Preferred Stock Warrants

      452    556
     

Preferred Stock Warrants

      218    314

OnTech Operations, Inc. (0.25%)

     

Preferred Stock

      1,000    1,000
                  

Total OnTech Operations, Inc.

            7,902    8,102

Wageworks, Inc. (0.25%) (4)

   Consumer & Business Products   

Preferred Stock Warrants

      252    1,018

Wageworks, Inc. (0.07%)

     

Preferred Stock

      250    265
                  

Total Wageworks, Inc.

            502    1,283
                  

Total Consumer & Business Products (8.22%)

            32,533    33,124
                  

Custom One Design, Inc. (0.22%)

   Semiconductors   

Senior Debt
Matures September 2010
Interest rate 11.50%

   $ 874    862    862
     

Common Stock Warrants

      18    5
                  

Total Custom One Design, Inc.

            880    867

Enpirion, Inc. (1.87%)

   Semiconductors   

Senior Debt
Matures August 2011
Interest rate Prime + 4.00%

   $ 7,500    7,372    7,372
     

Preferred Stock Warrants

      157    161
                  

Total Enpirion, Inc.

            7,529    7,533

iWatt Inc. (1.07%) (4)

   Semiconductors   

Senior Debt
Matures September 2009
Interest rate Prime + 2.75%

   $ 859    857    857
     

Senior Debt
Matures September 2009
Interest rate 11.00%

   $ 1,762    1,762    1,762
     

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

   $ 1,000    1,000    1,000
     

Preferred Stock Warrants

      47    103
     

Preferred Stock Warrants

      51    56
     

Preferred Stock Warrants

      73    69
     

Preferred Stock Warrants

      458    458

iWatt Inc. (0.24%)

     

Preferred Stock

      490    949
                  

Total iWatt Inc.

            4,738    5,254

NEXX Systems, Inc. (2.06%) (4)

   Semiconductors   

Senior Debt
Matures February 2010
Interest rate Prime + 3.50

   $ 3,146    3,067    3,067
     

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

   $ 2,546    2,546    2,546
     

Revolving Line of Credit
Matures December 2009
Interest rate Prime + 5.00%

   $ 2,454    2,454    2,454
     

Preferred Stock Warrants

      165    232
                  

Total NEXX Systems, Inc.

            8,232    8,299

See notes to consolidated financial statements (unaudited)

 

12


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Quartics, Inc. (0.93%) (4)

   Semiconductors   

Senior Debt
Matures August 2010
Interest rate 11.05%

   $ 252    220    220
     

Senior Debt
Matures August 2010
Interest rate 8.80%

   $ 3,513    3,513    3,513
     

Preferred Stock Warrants

      53    5
                  

Total Quartics, Inc.

            3,786    3,738

Solarflare Communications, Inc. (0.17%) (4)

   Semiconductors   

Senior Debt
Matures August 2010
Interest rate 11.75%

   $ 526    475    475
     

Preferred Stock Warrants

      83    224

Solarflare Communications, Inc. (0.16%)

     

Preferred Stock

      641    641
                  

Total Solarflare Communications, Inc.

            1,199    1,340
                  

Total Semiconductors (6.72%)

            26,364    27,031
                  

Labopharm USA, Inc. (3.77%) (4)(6)

   Drug Delivery   

Senior Debt
Matures December 2011
Interest rate 10.95%

   $ 15,000    14,670    14,670
     

Common Stock Warrants

      458    507
                  

Total Labopharm USA, Inc.

            15,128    15,177

Transcept Pharmaceuticals, Inc. (1.13%) (5)

   Drug Delivery   

Senior Debt
Matures October 2009
Interest rate 10.69%

   $ 4,301    4,274    4,274
     

Preferred Stock Warrants

      36    116
     

Preferred Stock Warrants

      51    168

Transcept Pharmaceuticals, Inc. (0.12%)

     

Preferred Stock

      500    465
                  

Total Transcept Pharmaceuticals, Inc.

            4,861    5,023
                  

Total Drug Delivery (5.02%)

            19,989    20,200
                  

BARRX Medical, Inc.(0.82%) (4)

   Therapeutic   

Senior Debt
Mature December 2011
Interest rate 11.00%

   $ 3,333    3,270    3,270
     

Preferred Stock Warrants

      63    49

BARRX Medical, Inc. (0.37%)

     

Preferred Stock

      1,500    1,500
                  

Total BARRX Medical, Inc.

            4,833    4,819

EKOS Corporation (1.33%)

   Therapeutic   

Senior Debt
Matures November 2010
Interest rate Prime + 2.00%

   $ 5,000    4,806    4,806
     

Preferred Stock Warrants

      175    347
     

Preferred Stock Warrants

      152    188
                  

Total EKOS Corporation

            5,133    5,341

Gelesis, Inc. (0.37%)

   Therapeutic   

Senior Debt
Matures May 2012
Interest rate Prime + 5.65%

   $ 1,500    1,474    1,474
     

Preferred Stock Warrants

      25    33
                  

Total Gelesis, Inc.

            1,499    1,507

Gynesonics, Inc. (0.03%) (4)

   Therapeutic   

Preferred Stock Warrants

      18    105

Gynesonics, Inc. (0.08%)

     

Preferred Stock

      250    322
                  

Total Gynesonics, Inc.

            268    427

Light Science Oncology, Inc. (0.03%)

   Therapeutic   

Preferred Stock Warrants

      99    124
                  

Total Light Science Oncology, Inc.

            99    124

See notes to consolidated financial statements (unaudited)

 

13


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Novasys Medical, Inc. (1.12%) (4)

   Therapeutic   

Senior Debt
Matures January 2010
Interest rate 9.70%

   $ 4,640    4,351    4,351
     

Preferred Stock Warrants

      71    114
     

Preferred Stock Warrants

      54    40

Novasys Medical, Inc. (0.14%)

     

Preferred Stock

      556    556
                  

Total Novasys Medical, Inc.

            5,032    5,061

Power Medical Interventions, Inc. (0.00%)

   Therapeutic   

Common Stock Warrants

      21    14
                  

Total Power Medical Interventions, Inc.

            21    14
                  

Total Therapeutic (4.29%)

            16,885    17,293
                  

Cozi Group, Inc. (0.03%)

   Internet Consumer & Business Services   

Preferred Stock Warrants

      148    122

Cozi Group, Inc. (0.06%)

     

Preferred Stock

      177    251
                  

Total Cozi Group, Inc.

            325    373

Invoke Solutions, Inc. (0.35%) (4)

   Internet Consumer & Business Services   

Senior Debt
Matures November 2009
Interest rate Prime + 3.75%

   $ 1,298    1,296    1,296
     

Preferred Stock Warrants

      56    80
     

Preferred Stock Warrants

      26    26
                  

Total Invoke Solutions, Inc.

            1,378    1,402

Prism Education Group Inc. (0.44%)

   Internet Consumer & Business Services   

Senior Debt
Matures December 2010
Interest rate 11.25%

   $ 1,682    1,656    1,656
     

Preferred Stock Warrants

      42    102
                  

Total Prism Education Group Inc.

            1,698    1,758

RazorGator Interactive Group, Inc. (1.55%) (5)

   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

      14    2,886
     

Preferred Stock Warrants

      28    352

RazorGator Interactive Group, Inc. (1.19%)

     

Preferred Stock

      1,000    4,791
                  

Total RazorGator Interactive Group, Inc.

            4,042    11,029

Serious USA, Inc. (0.35%)

   Internet Consumer & Business Services   

Senior Debt
Matures February 2011
Interest rate Prime + 3.00%

   $ 2,308    2,247    748
     

Revolving Line of Credit
Interest rate Prime + 2.00%

   $ 654    654    654
     

Preferred Stock Warrants

      94    0
                  

Total Serious USA, Inc.

            2,995    1,402

Spa Chakra, Inc. (1.24%)

   Internet Consumer & Business Services   

Senior Debt
Matures June 2010
Interest rate 14.45%%

   $ 5,000    5,000    5,000
                  

Total Spa Chakra, Inc.

            5,000    5,000
                  

Total Internet Consumer & Business Services (5.21%)

            15,438    20,964
                  

See notes to consolidated financial statements (unaudited)

 

14


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Lilliputian Systems, Inc. (1.28%) (4)

   Energy   

Senior Debt
Matures March 2010
Interest rate 9.75%

   $ 5,068    5,051    5,051
     

Preferred Stock Warrants

      49    86
                  

Total Lilliputian Systems, Inc.

            5,100    5,137
                  

Total Energy (1.28%)

            5,100    5,137
                  

Active Response Group, Inc. (2.34%) (4)

   Information Services   

Senior Debt
Matures March 2012
Interest rate LIBOR + 6.55%

   $ 9,309    9,215    9,215
     

Preferred Stock Warrants

      92    115
     

Common Stock Warrants

      46    84
                  

Total Active Response Group, Inc.

            9,353    9,414

Box.net, Inc. (0.08%)

   Information Services   

Senior Debt
Matures June 2011
Interest rate Prime + 1.50%

   $ 322    262    262
     

Preferred Stock Warrants

      73    59
                  

Total Box.net, Inc.

            335    321

Buzznet, Inc. (0.00%)

   Information Services   

Preferred Stock Warrants

      9    14

Buzznet, Inc. (0.06%)

     

Preferred Stock

      250    250
                  

Total Buzznet, Inc.

            259    264

hi5 Networkss, Inc. (2.34%)

   Information Services   

Senior Debt
Matures December 2010
Interest rate Prime + 2.5%

   $ 3,000    3,000    3,000
     

Senior Debt
Matures June 2011
Interest rate Prime + 0.5%

   $ 6,155    6,155    6,155
     

Preferred Stock Warrants

      212    285
                  

Total hi5 Networks, Inc.

            9,367    9,440

Jab Wireless, Inc. (3.56%) (4)

   Information Services   

Senior Debt
Matures January 2012
Interest rate 10.75%

   $ 2,715    2,715    2,715
     

Senior Debt
Matures January 2012
Interest rate 10.00%

   $ 1,793    1,793    1,793
     

Senior Debt
Matures January 2012
Interest rate 9.50%

   $ 2,824    2,824    2,824
     

Senior Debt
Matures January 2012
Interest rate 8.50%

   $ 6,700    6,700    6,700
     

Preferred Stock Warrants

      264    323
                  

Total Jab Wireless, Inc.

            14,296    14,355

Solutionary, Inc. (1.78%) (4)

   Information Services   

Senior Debt
Matures June 2010
Interest rate LIBOR + 5.50%

   $ 5,305    5,416    5,416
     

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

   $ 1,500    1,540    1,540
     

Preferred Stock Warrants

      94    209
     

Preferred Stock Warrants

      2    6

Solutionary, Inc. (0.06%)

     

Preferred Stock

      250    250
                  

Total Solutionary, Inc.

            7,302    7,421

See notes to consolidated financial statements (unaudited)

 

15


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

The Generation Networks, Inc. (1.47%) (4)

   Information Services   

Senior Debt
Matures March 2012
Interest rate Prime + 4.50%

   $ 6,185    6,012    5,904

The Generation Networks, Inc. (0.13%)

     

Preferred Stock

      500    500
                  

Total The Generation Networks, Inc.

            6,512    6,404

Wallop Technologies, Inc. (0.04%)

   Information Services   

Senior Debt
Matures March 2010
Interest rate 10.00%

   $ 157    153    153
     

Preferred Stock Warrants

      8    —  
                  

Total Wallop Technologies, Inc.

            161    153

Zeta Interactive Corporation (3.62%) (4)

   Information Services   

Senior Debt
Matures November 2011
Interest rate Prime +2.00%

   $ 6,530    6,385    6,385
     

Senior Debt
Matures November 2011
Interest rate Prime +3.00%

   $ 8,000    8,000    8,000
     

Preferred Stock Warrants

      172    208

Zeta Interactive Corporation (0.13%)

     

Preferred Stock

      500    500
                  

Total Zeta Interactive Corporation

            15,057    15,093
                  

Total Information Services (15.61%)

            62,642    62,865
                  

Novadaq Technologies, Inc. (0.12%)

   Diagnostic   

Common Stock

      1,626    477
                  

Total Novadaq Technologies, Inc.

            1,626    477

Optiscan Biomedical, Corp. (2.41%) (4)

   Diagnostic   

Senior Debt
Matures June 2011
Interest rate 10.25%

   $ 10,000    9,437    9,437
     

Preferred Stock Warrants

      760    250

Optiscan Biomedical, Corp. (0.74%)

     

Preferred Stock

      3,000    3,000
                  

Total Optiscan Biomedical, Corp.

            13,197    12,687
                  

Total Diagnostic (3.27%)

            14,823    13,164
                  

Guava Technologies, Inc. (1.08%) (4)

   Biotechnology Tools   

Senior Debt
Matures July 2009
Interest rate Prime + 3.25%

   $ 2,219    2,182    2,182
     

Convertible Debt

      250    250
     

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

   $ 1,875    1,575    1,575
     

Preferred Stock Warrants

      105    278
     

Preferred Stock Warrants

      68    44
                  

Total Guava Technologies, Inc.

            4,180    4,329

Kamada, LTD. (3.69%) (6)

   Biotechnology Tools   

Senior Debt
Matures November 2011
Interest rate 10.60%

   $ 15,000    14,575    14,575
     

Common Stock Warrants

      531    286
                  

Total Kamada, LTD.

            15,106    14,861

NuGEN Technologies, Inc. (0.77%)

   Biotechnology Tools   

Senior Debt
Matures November 2010
Interest rate Prime + 3.45%

   $ 1,706    1,683    1,683
     

Senior Debt
Matures November 2010
Interest rate Prime + 1.70%

   $ 1,000    1,000    1,000
      Preferred Stock Warrants       45    360
      Preferred Stock Warrants       33    43

NuGEN Technologies, Inc. (0.12%)

     

Preferred Stock

      500    500
                  

Total NuGEN Technologies, Inc.

            3,261    3,586
                  

Total Biotechnology Tools (5.66%)

            22,547    22,776
                  

See notes to consolidated financial statements (unaudited)

 

16


Table of Contents

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2008

(unaudited)

(dollars in thousands)

 

Portfolio Company

  

Industry

  

Type of Investment (1)

   Principal
Amount
   Cost (2)    Value (3)

Crux Biomedical, Inc. (0.34%)

   Surgical Devices   

Senior Debt
Matures October 2010
Interest rate Prime + 1.75%

   $ 1,395      1,376      1,376
     

Preferred Stock Warrants

        37      —  

Crux Biomedical, Inc. (0.06%)

     

Preferred Stock

        250      250
                      

Total Crux Biomedical, Inc.

              1,663      1,626
                      

Transmedics, Inc. (1.49%) (5)

   Surgical Devices   

Senior Debt
Matures December 2011
Interest rate Prime + 5.25%

   $ 6,000      5,884      5,884
     

Preferred Stock Warrants

        139      122
                      

Total Transmedics, Inc.

              6,023      6,006
                      

Total Surgical Devices (1.89%)

              7,686      7,632
                      

Glam Media, Inc. (1.55%)

   Media/Content/Info   

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

   $ 5,935      5,681      5,681
     

Preferred Stock Warrants

        482      552
                      

Total Glam Media, Inc.

              6,163      6,233

Waterfront Media Inc. (2.2%) (5)

   Media/Content/Info   

Senior Debt
Matures December 2010
Interest rate Prime + 3.00%

   $ 2,984      2,956      2,956
     

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

   $ 5,000      5,000      5,000
     

Preferred Stock Warrants

        61      903

Waterfront Media Inc. (0.45%)

     

Preferred Stock

        1,000      1,828
                      

Total Waterfront Media Inc.

              9,017      10,687
                      

Total Media/Content/Info (4.2%)

              15,180      16,920
                      

Total Investments (158.12%)

            $ 628,019    $ 636,747
                      

 

* Value as a percent of net assets
(1) Preferred and common stock, warrants, and equity interests are generally non-income producing. Certain floating rate loans may also have interest rate floors.
(2) Gross unrealized appreciation, gross unrealized depreciation, and net appreciation for federal income tax purposes totaled $17,275, $12,659 and $4,616, respectively. The tax cost of investments is $632,130.
(3) Except for warrants in seven publicly traded companies and common stock in three publicly traded companies, all investments are restricted at September 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 $896,000 at September 30, 2008 and is included in accrued liabilities and reduces the unrealized gain recognized by the Company at September 30, 2008.
(5) Debt investments of this portfolio company have been pledged as collateral under the Wells Facility.
(6) Non-U.S. company or the company’s principal place of business is outside the United States.
(7) 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.
(8) Debt is on non-accrual status at September 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 September 30,     Nine Months Ended September 30,  
     2008    2007     2008     2007  

Investment income:

         

Interest

   $ 17,348    $ 13,569     $ 47,669