10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For The Quarterly Period Ended September 30, 2022

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

Commission File Number: 814-00702

HERCULES CAPITAL, INC.

(Exact Name of Registrant as Specified in its Charter)


Maryland		74-3113410
(State or Jurisdiction of Incorporation or Organization)		(IRS Employer Identification Number)
400 Hamilton Ave., Suite 310 Palo Alto, California (Address of Principal Executive Offices)		94301 (Zip Code)
		94301 (Zip Code)

(650) 289-3060

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $0.001 per share	HTGC	New York Stock Exchange
6.25% Notes due 2033	HCXY	New York Stock Exchange

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 that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with a new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On October 27, 2022, there were 130,149,104 shares outstanding of the Registrant’s common stock, $0.001 par value.

HERCULES CAPITAL, INC.

FORM 10-Q TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION		3
Item 1.	Consolidated Financial Statements	3
	Consolidated Statements of Assets and Liabilities as of September 30, 2022 (unaudited) and December 31, 2021	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (unaudited)	4
	Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2022 and 2021 (unaudited)	5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited)	6
	Consolidated Schedule of Investments as of September 30, 2022 (unaudited)	7
	Consolidated Schedule of Investments as of December 31, 2021	18
	Notes to Consolidated Financial Statements (unaudited)	29
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	60
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	76
Item 4.	Controls and Procedures	77
PART II. OTHER INFORMATION		78
Item 1.	Legal Proceedings	78
Item 1A.	Risk Factors	78
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79
Item 3.	Defaults Upon Senior Securities	79
Item 4.	Mine Safety Disclosures	79
Item 5.	Other Information	79
Item 6.	Exhibits and Financial Statement Schedules	80
SIGNATURES		85

PART I: FINANCIAL INFORMATION

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

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

HERCULES CAPITAL, INC.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES


(in thousands, except per share data)	September 30, 2022		December 31, 2021
	(unaudited)
Assets
Investments, at fair value:
Non-control/Non-affiliate investments (cost of $2,782,220 and $2,293,398, respectively)	$	2,745,413	$	2,351,560
Control investments (cost of $87,249 and $84,039, respectively)		80,325		73,504
Affiliate investments (cost of $0 and $13,547, respectively)		—		9,458
Total investments, at fair value (cost of $2,869,469 and $2,390,984, respectively; fair value amounts related to a VIE $236,826 and $0, respectively)		2,825,738		2,434,522
Cash and cash equivalents		57,065		133,115
Restricted cash (amounts related to a VIE $8,346 and $0, respectively)		8,346		3,150
Interest receivable		25,494		17,365
Right of use asset		5,672		6,761
Other assets		2,207		5,100
Total assets	$	2,924,522	$	2,600,013

Liabilities
Debt (net of debt issuance costs - Note 5; amounts related to a VIE $147,810 and $0, respectively)	$	1,521,220	$	1,236,303
Accounts payable and accrued liabilities		34,492		47,781
Operating lease liability		6,092		7,382
Total liabilities	$	1,561,804	$	1,291,466

Net assets consist of:
Common stock, par value	$	131	$	117
Capital in excess of par value		1,288,341		1,091,907
Total distributable earnings		74,246		216,523
Total net assets	$	1,362,718	$	1,308,547
Total liabilities and net assets	$	2,924,522	$	2,600,013

Shares of common stock outstanding ($0.001 par value and 200,000 authorized)		130,191		116,619
Net asset value per share	$	10.47	$	11.22

See notes to consolidated financial statements

HERCULES CAPITAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


(in thousands, except per share data)	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Investment income:
Interest income:
Non-control/Non-affiliate investments	$	80,146		$	62,239		$	207,747		$	185,497
Control investments		1,181			1,072			3,440			2,900
Affiliate investments		81			1			1,204			3
Total interest income		81,408			63,312			212,391			188,400
Fee income:
Non-control/Non-affiliate investments		2,803			6,861			9,059			20,068
Control investments		18			20			51			43
Total fee income		2,821			6,881			9,110			20,111
Total investment income		84,229			70,193			221,501			208,511

Operating expenses:
Interest		14,499			13,069			38,844			42,309
Loan fees		2,183			1,674			5,517			6,694
General and administrative		4,364			4,085			12,504			11,749
Tax expenses		1,602			2,395			4,135			5,579
Employee compensation:
Compensation and benefits		10,968			8,898			30,357			27,051
Stock-based compensation		2,474			3,320			10,559			8,990
Total employee compensation		13,442			12,218			40,916			36,041
Total gross operating expenses		36,090			33,441			101,916			102,372
Expenses allocated to the Adviser Subsidiary		(1,863	)		(1,337	)		(6,335	)		(3,474	)
Total net operating expenses		34,227			32,104			95,581			98,898
Net investment income		50,002			38,089			125,920			109,613

Net realized gain (loss) and net change in unrealized appreciation (depreciation):
Net realized gain (loss):
Non-control/Non-affiliate investments		7,303			22,813			2,703			78,444
Affiliate investments		(2,014	)		—			1,758			(62,143	)
Loss on debt extinguishment		—			(1,702	)		(3,686	)		(1,702	)
Total net realized gain (loss)		5,289			21,111			775			14,599
Net change in unrealized appreciation (depreciation):
Non-control/Non-affiliate investments		(4,149	)		(31,759	)		(94,847	)		(10,662	)
Control investments		(2,571	)		(3,774	)		3,611			(7,327	)
Affiliate investments		4,631			(118	)		4,089			64,220
Total net change in unrealized appreciation (depreciation)		(2,089	)		(35,651	)		(87,147	)		46,231
Total net realized gain (loss) and net change in unrealized appreciation (depreciation)		3,200			(14,540	)		(86,372	)		60,830
Net increase (decrease) in net assets resulting from operations	$	53,202		$	23,549		$	39,548		$	170,443

Net investment income before investment gains and losses per common share:
Basic	$	0.39		$	0.33		$	1.01		$	0.95
Change in net assets resulting from operations per common share:
Basic	$	0.41		$	0.20		$	0.31		$	1.47
Diluted	$	0.41		$	0.20		$	0.30		$	1.46
Weighted average shares outstanding
Basic		127,484			114,805			123,379			114,590
Diluted		129,334			116,239			124,767			115,550
Distributions paid per common share:
Basic	$	0.50		$	0.39		$	1.46		$	1.15

See notes to consolidated financial statements

HERCULES CAPITAL, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)


(amounts in thousands)						Capital in			Distributable
	Common Stock					excess			Earnings			Net
For the Three Months Ended September 30, 2022	Shares			Par Value		of par value			(loss)			Assets
Balance as of June 30, 2022		127,285		$	128	$	1,242,618		$	84,994		$	1,327,740
Net increase (decrease) in net assets resulting from operations		—			—		—			53,202			53,202
Public offering, net of offering expenses		2,866			3		42,851			—			42,854
Issuance of common stock due to stock option exercises		22			—		266			—			266
Retired shares from net issuance		(12	)		—		(176	)		—			(176	)
Issuance of common stock under restricted stock plan		23			—		—			—			—
Retired shares for restricted stock vesting		(56	)		—		(662	)		—			(662	)
Distributions reinvested in common stock		63			—		949			—			949
Distributions		—			—		—			(63,950	)		(63,950	)
Stock-based compensation (1)		—			—		2,495			—			2,495
Balance as of September 30, 2022		130,191		$	131	$	1,288,341		$	74,246		$	1,362,718

For the Nine Months Ended September 30, 2022
Balance as of December 31, 2021		116,619		$	117	$	1,091,907		$	216,523		$	1,308,547
Net increase (decrease) in net assets resulting from operations		—			—		—			39,548			39,548
Public offering, net of offering expenses		11,787			12		189,946			—			189,958
Issuance of common stock due to stock option exercises		59			—		720			—			720
Retired shares from net issuance		(14	)		—		(208	)		—			(208	)
Issuance of common stock under restricted stock plan		811			1		(1	)		—			—
Retired shares for restricted stock vesting		(236	)		—		(5,250	)		—			(5,250	)
Distributions reinvested in common stock		184			—		2,895			—			2,895
Issuance of common stock from conversion of 2022 Convertible Notes		981			1		(1	)		—			—
Distributions		—			—		—			(181,825	)		(181,825	)
Stock-based compensation (1)		—			—		8,333			—			8,333
Balance as of September 30, 2022		130,191		$	131	$	1,288,341		$	74,246		$	1,362,718

(1)

Stock-based compensation includes $36 thousand and $113 thousand of restricted stock and option expense related to director compensation for the three and nine months ended September 30, 2022, respectively.


(amounts in thousands)						Capital in			Distributable
	Common Stock					excess			Earnings			Net
For the Three Months Ended September 30, 2021	Shares			Par Value		of par value			(loss)			Assets
Balance as of June 30, 2021		115,867		$	116	$	1,163,910		$	192,332		$	1,356,358
Net increase (decrease) in net assets resulting from operations		—			—		—			23,549			23,549
Public offering, net of offering expenses		—			—		(10	)		—			(10	)
Issuance of common stock due to stock option exercises		14			—		180			—			180
Retired shares from net issuance		(3	)		—		(52	)		—			(52	)
Issuance of common stock under restricted stock plan		38			—		—			—			—
Retired shares for restricted stock vesting		(46	)		—		(872	)		—			(872	)
Distributions reinvested in common stock		55			—		947			—			947
Distributions		—			—		—			(45,190	)		(45,190	)
Stock-based compensation (1)		—			—		2,622			—			2,622
Balance as of September 30, 2021		115,925		$	116	$	1,166,725		$	170,691		$	1,337,532

For the Nine Months Ended September 30, 2021
Balance as of December 31, 2020		114,726		$	115	$	1,158,198		$	133,391		$	1,291,704
Net increase (decrease) in net assets resulting from operations		—			—		—			170,443			170,443
Public offering, net of offering expenses		—			—		(208	)		—			(208	)
Issuance of common stock due to stock option exercises		277			—		3,813			—			3,813
Retired shares from net issuance		(65	)		—		(1,141	)		—			(1,141	)
Issuance of common stock under restricted stock plan		998			1		(1	)		—			—
Retired shares for restricted stock vesting		(200	)		—		(4,778	)		—			(4,778	)
Distributions reinvested in common stock		189			—		3,057			—			3,057
Distributions		—			—		—			(133,143	)		(133,143	)
Stock-based compensation (1)		—			—		7,785			—			7,785
Balance as of September 30, 2021		115,925		$	116	$	1,166,725		$	170,691		$	1,337,532

(1)

Stock-based compensation includes $36 thousand and $86 thousand of restricted stock and option expense related to director compensation for the three and nine months ended September 30, 2021, respectively.

See notes to consolidated financial statements

HERCULES CAPITAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


(amounts in thousands)	For the Nine Months Ended September 30,
	2022			2021
Cash flows used in operating activities:
Net increase (decrease) in net assets resulting from operations	$	39,548		$	170,443
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments		(1,097,812	)		(1,033,189	)
Fundings assigned to Adviser Funds		247,848			107,793
Principal and fee repayments received and proceeds from the sale of debt investments		378,109			738,321
Proceeds from the sale of equity investments		14,303			98,567
Net unrealized (appreciation) depreciation		87,147			(46,231	)
Net realized (gain) loss on investments		(4,461	)		(16,301	)
Accretion of paid-in-kind principal		(14,888	)		(8,105	)
Accretion of loan discounts		(2,996	)		(2,737	)
Accretion of loan discount on convertible notes		112			504
Accretion of loan exit fees		364			(17,364	)
Change in loan income, net of collections		(18,398	)		21,730
Unearned fees related to unfunded commitments		19,412			(2,367	)
Realized loss on debt extinguishment		3,378			1,702
Amortization of debt issuance costs		4,051			4,957
Depreciation and amortization		160			255
Stock-based compensation and amortization of restricted stock grants (1)		8,333			7,785
Change in operating assets and liabilities:
Interest receivable		(8,039	)		1,218
Other assets		(1,196	)		2,380
Accrued liabilities		(14,856	)		(680	)
Net cash provided by (used in) operating activities		(359,881	)		28,681

Cash flows used in investing activities:
Purchases of capital equipment		(86	)		(12	)
Net cash used in investing activities		(86	)		(12	)

Cash flows provided by (used in) financing activities:
Issuance of common stock		192,011			—
Offering expenses		(2,053	)		(208	)
Retirement of employee shares, net		(4,738	)		(2,106	)
Distributions paid		(178,930	)		(130,086	)
Issuance of debt		1,169,237			1,396,406
Repayment of debt		(878,198	)		(1,272,712	)
Debt issuance costs		(6,581	)		(4,830	)
Fees paid for credit facilities and debentures		(1,635	)		(3,395	)
Net cash provided by (used in) financing activities		289,113			(16,931	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(70,854	)		11,738
Cash, cash equivalents, and restricted cash at beginning of period		136,265			237,622
Cash, cash equivalents, and restricted cash at end of period	$	65,411		$	249,360

Supplemental disclosures of cash flow information and non-cash investing and financing activities:
Interest paid	$	44,382		$	44,985
Income tax, including excise tax, paid	$	7,341		$	3,731
Distributions reinvested	$	2,895		$	3,057

(1)

Stock-based compensation includes $113 thousand and $86 thousand of restricted stock and option expense related to director compensation for the nine months ended September 30, 2022 and 2021, respectively.

The following table presents a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Statements of Assets and Liabilities that sum to the total of the same such amounts in the Consolidated Statements of Cash Flows:


	For the Nine Months Ended September 30,
(Dollars in thousands)	2022		2021
Cash and cash equivalents	$	57,065	$	235,851
Restricted cash		8,346		13,509
Total cash, cash equivalents, and restricted cash presented in the Consolidated Statements of Cash Flows	$	65,411	$	249,360

See “Note 2 – Summary of Significant Accounting Policies” for a description of restricted cash and cash equivalents.

See notes to consolidated financial statements

HERCULES CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2022 (unaudited)

(dollars in thousands)


Portfolio Company	Type of Investment	Maturity Date	Interest Rate and Floor (1)	Principal Amount		Cost (2)		Value		Footnotes
Debt Investments
Communications & Networking
1-5 Years Maturity
Aryaka Networks, Inc.	Senior Secured	July 2026	PRIME + 3.25%, Floor rate 6.75%, PIK Interest 1.05%, 3.55% Exit Fee	$	5,009	$	4,943	$	4,943	(14)(17)(19)
Cytracom Holdings LLC	Senior Secured	February 2025	3-Month LIBOR + 9.31%, Floor rate 10.31%	$	8,933		8,776		8,728	(11)(17)(18)
Rocket Lab Global Services, LLC	Senior Secured	June 2024	PRIME + 4.90%, Floor rate 8.15%, PIK Interest 1.25%, 3.20% Exit Fee	$	84,314		84,877		87,283	(11)(12)(13)(14)(16)
Subtotal: 1-5 Years Maturity							98,596		100,954
Subtotal: Communications & Networking (7.41%)*							98,596		100,954
Consumer & Business Products
1-5 Years Maturity
Grove Collaborative, Inc.	Senior Secured	April 2025	PRIME + 5.50%, Floor rate 8.75%, 8.75% Exit Fee	$	23,520		23,774		24,190	(19)
Subtotal: 1-5 Years Maturity							23,774		24,190
Subtotal: Consumer & Business Products (1.78%)*							23,774		24,190
Diversified Financial Services
1-5 Years Maturity
Gibraltar Business Capital, LLC	Unsecured	September 2026	FIXED 14.50%	$	15,000		14,701		13,033	(7)
	Unsecured	September 2026	FIXED 11.50%	$	10,000		9,844		9,006	(7)
Total Gibraltar Business Capital, LLC				$	25,000		24,545		22,039
Hercules Adviser LLC	Unsecured	June 2025	FIXED 5.00%	$	12,000		12,000		12,000	(7)
Subtotal: 1-5 Years Maturity							36,545		34,039
Subtotal: Diversified Financial Services (2.50%)*							36,545		34,039
Drug Discovery & Development
Under 1 Year Maturity
Chemocentryx, Inc.	Senior Secured	December 2022	PRIME + 3.30%, Floor rate 8.05%, 6.25% Exit Fee	$	11,451		12,677		12,780	(10)(13)
Nabriva Therapeutics	Senior Secured	June 2023	PRIME + 4.30%, Floor rate 9.80%, 9.95% Exit Fee	$	3,077		3,701		3,313	(5)(10)(13)
Subtotal: Under 1 Year Maturity							16,378		16,093
1-5 Years Maturity
Akero Therapeutics, Inc.	Senior Secured	January 2027	PRIME + 3.65%, Floor rate 7.65%, 5.85% Exit Fee	$	5,000		4,966		4,983	(10)(17)
Aldeyra Therapeutics, Inc.	Senior Secured	October 2023	PRIME + 3.10%, Floor rate 8.60%, 6.95% Exit Fee	$	15,000		15,817		15,608	(11)
Alladapt Immunotherapeutics Inc.	Senior Secured	September 2026	PRIME + 3.65%, Floor rate 8.40%, Cap rate 10.90%, 5.30% Exit Fee	$	15,000		14,858		14,858	(17)
Applied Genetic Technologies Corporation	Senior Secured	April 2024	PRIME + 6.50%, Floor rate 9.75%, 6.95% Exit Fee	$	15,609		16,450		16,308	(13)
ATAI Life Sciences N.V.	Senior Secured	August 2026	PRIME + 4.55%, Floor rate 8.55%, 6.95% Exit Fee	$	10,500		10,467		10,467	(5)(10)(17)
Aveo Pharmaceuticals, Inc.	Senior Secured	September 2024	PRIME + 6.40%, Floor rate 9.65%, Cap rate 15.00%, 6.95% Exit Fee	$	40,000		41,439		41,374	(11)(15)
Axsome Therapeutics, Inc.	Senior Secured	October 2026	PRIME + 5.70%, Floor rate 8.95%, Cap rate 10.70%, 5.31% Exit Fee	$	81,725		81,388		79,295	(10)(11)(12)(16)(17)
Bicycle Therapeutics PLC	Senior Secured	July 2025	PRIME + 4.55%, Floor rate 8.05%, Cap rate 9.05%, 5.00% Exit Fee	$	11,500		11,724		11,619	(5)(10)(11)(12)
BiomX, INC	Senior Secured	September 2025	PRIME + 5.70%, Floor rate 8.95%, 6.55% Exit Fee	$	9,000		9,125		9,004	(5)(10)(11)
BridgeBio Pharma, Inc.	Senior Secured	November 2026	FIXED 9.00%, 2.00% Exit Fee	$	37,022		36,694		33,561	(12)(13)(14)
Cellarity, Inc.	Senior Secured	June 2026	PRIME + 5.70%, Floor rate 8.95%, 3.75% Exit Fee	$	30,000		29,734		29,943	(13)(15)
Century Therapeutics, Inc.	Senior Secured	April 2024	PRIME + 6.30%, Floor rate 9.55%, 3.95% Exit Fee	$	10,000		10,197		10,261	(11)
Chemocentryx, Inc.	Senior Secured	February 2025	PRIME + 3.25%, Floor rate 8.50%, 7.15% Exit Fee	$	5,000		5,214		5,408	(10)(13)
Codiak Biosciences, Inc.	Senior Secured	October 2025	PRIME + 5.00%, Floor rate 8.25%, 5.50% Exit Fee	$	25,000		25,681		25,076	(11)

See notes to consolidated financial statements

HERCULES CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2022 (unaudited)

(dollars in thousands)


Portfolio Company	Type of Investment	Maturity Date	Interest Rate and Floor (1)	Principal Amount		Cost (2)		Value		Footnotes
Corium, Inc.	Senior Secured	September 2026	PRIME + 5.70%, Floor rate 8.95%, 7.75% Exit Fee	$	132,675	$	133,069	$	135,828	(13)(16)
Eloxx Pharmaceuticals, Inc.	Senior Secured	April 2025	PRIME + 6.25%, Floor rate 9.50%, 6.55% Exit Fee	$	12,500		12,673		12,408	(15)
enGene, Inc.	Senior Secured	July 2025	PRIME + 5.00%, Floor rate 8.25%, 6.35% Exit Fee	$	11,000		10,994		10,918	(5)(10)(13)
Finch Therapeutics Group, Inc.	Senior Secured	November 2026	PRIME + 4.05%, Floor rate 7.55%, Cap rate 8.80%, 5.50% Exit Fee	$	15,000		14,958		14,241	(17)
G1 Therapeutics, Inc.	Senior Secured	November 2026	PRIME + 5.90%, Floor rate 9.15%, 9.86% Exit Fee	$	58,125		58,472		58,006	(11)(12)(15)(17)
Geron Corporation	Senior Secured	October 2024	PRIME + 5.75%, Floor rate 9.00%, 6.55% Exit Fee	$	18,500		19,003		19,059	(10)(12)(13)
Gritstone Bio, Inc.	Senior Secured	July 2027	PRIME + 3.15%, Floor rate 7.15%, Cap rate 8.65%, PIK Interest 2.00%, 5.75% Exit Fee	$	15,037		14,989		14,989	(14)(17)
Hibercell, Inc.	Senior Secured	May 2025	PRIME + 5.40%, Floor rate 8.65%, 4.95% Exit Fee	$	17,000		17,244		17,225	(13)(15)
HilleVax, Inc.	Senior Secured	May 2027	PRIME + 1.05%, Floor rate 4.55%, Cap rate 6.05%, PIK Interest 2.85%, 7.15% Exit Fee	$	4,043		4,043		4,044	(14)(15)(17)
Iveric Bio Gene Therapy LLC	Senior Secured	August 2027	PRIME + 4.00%, Floor rate 8.75%, Cap rate 10.25%, 4.25% Exit Fee	$	24,750		24,530		24,531	(10)(17)
Locus Biosciences, Inc.	Senior Secured	July 2025	PRIME + 6.10%, Floor rate 9.35%, 4.95% Exit Fee	$	8,000		8,084		8,062	(15)
Madrigal Pharmaceutical, Inc.	Senior Secured	May 2026	PRIME + 3.95%, Floor rate 7.45%, 5.35% Exit Fee	$	34,000		33,807		33,807	(10)
Phathom Pharmaceuticals, Inc.	Senior Secured	October 2026	PRIME + 2.25%, Floor rate 5.50%, PIK Interest 3.35%, 7.50% Exit Fee	$	93,978		93,948		94,006	(10)(12)(14)(15)(16)(17)(22)
Provention Bio, Inc.	Senior Secured	September 2026	PRIME + 2.70%, Floor rate 8.20%, 6.60% Exit Fee	$	25,000		24,552		24,552
Redshift Bioanalytics, Inc.	Senior Secured	January 2026	PRIME + 4.25%, Floor rate 7.50%, 3.80% Exit Fee	$	5,000		4,936		4,935	(15)
Scynexis, Inc.	Senior Secured	March 2025	PRIME + 5.80%, Floor rate 9.05%, 3.95% Exit Fee	$	18,667		18,592		18,524	(12)(13)
Seres Therapeutics, Inc.	Senior Secured	October 2024	PRIME + 6.40%, Floor rate 9.65%, 4.98% Exit Fee	$	37,500		38,509		38,657	(12)(13)
Tarsus Pharmaceuticals, Inc.	Senior Secured	February 2027	PRIME + 5.20%, Floor rate 8.45%, 4.75% Exit Fee	$	8,250		8,255		8,388	(10)(13)(17)
TG Therapeutics, Inc.	Senior Secured	January 2026	PRIME + 2.15%, Floor rate 5.40%, PIK Interest 3.45%, 5.95% Exit Fee	$	47,567		47,267		47,137	(10)(11)(12)(14)
uniQure B.V.	Senior Secured	December 2025	PRIME + 4.70%, Floor rate 7.95%, 7.28% Exit Fee	$	70,000		72,015		73,205	(5)(10)(11)(12)(16)
Unity Biotechnology, Inc.	Senior Secured	August 2024	PRIME + 6.10%, Floor rate 9.35%, 6.25% Exit Fee	$	20,000		20,990		20,844	(13)
Valo Health, LLC	Senior Secured	May 2024	PRIME + 6.45%, Floor rate 9.70%, 3.85% Exit Fee	$	9,583		9,805		9,760	(11)(13)
Viridian Therapeutics, Inc.	Senior Secured	October 2026	PRIME + 4.20%, Floor rate 7.45%, Cap rate 8.95%, 4.76% Exit Fee	$	2,000		2,004		1,969	(10)(13)(17)
X4 Pharmaceuticals, Inc.	Senior Secured	July 2024	PRIME + 3.75%, Floor rate 8.75%, 8.80% Exit Fee	$	32,500		33,464		33,291	(11)(12)(13)
Subtotal: 1-5 Years Maturity							1,039,957		1,036,151
Subtotal: Drug Discovery & Development (77.22%)*							1,056,335		1,052,244
Healthcare Services, Other
1-5 Years Maturity
Better Therapeutics, Inc.	Senior Secured	August 2025	PRIME + 5.70%, Floor rate 8.95%, 5.95% Exit Fee	$	12,000		12,093		11,996	(15)
Blue Sprig Pediatrics, Inc.	Senior Secured	November 2026	1-Month LIBOR + 5.00%, Floor rate 6.00%, PIK Interest 4.45%	$	40,949		40,403		39,332	(11)(13)(14)(17)
Carbon Health Technologies, Inc.	Senior Secured	March 2025	PRIME + 5.60%, Floor rate 8.85%, 4.61% Exit Fee	$	46,125		46,399		46,158	(11)(12)(13)(17)(19)
Elation Health, Inc.	Senior Secured	March 2026	PRIME + 4.25%, Floor rate 9.00%, PIK Interest 1.95%, 3.95% Exit Fee	$	5,000		4,796		4,795	(17)(19)
Equality Health, LLC	Senior Secured	February 2026	PRIME + 6.25%, Floor rate 9.50%, PIK Interest 1.55%	$	53,388		52,928		53,644	(12)(14)
Subtotal: 1-5 Years Maturity							156,619		155,925
Greater than 5 Years Maturity
Oak Street Health, Inc.	Senior Secured	October 2027	PRIME + 2.45%, Floor rate 7.95%, Cap rate 9.45%, PIK Interest 1.00%	$	44,250		43,955		43,955	(10)(17)
Subtotal: Greater than 5 Years Maturity							43,955		43,955
Subtotal: Healthcare Services, Other (14.67%)*							200,574		199,880

See notes to consolidated financial statements

HERCULES CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2022 (unaudited)

(dollars in thousands)


Portfolio Company	Type of Investment	Maturity Date	Interest Rate and Floor (1)	Principal Amount		Cost (2)		Value		Footnotes
Information Services
1-5 Years Maturity
Capella Space Corp.	Senior Secured	November 2024	PRIME + 5.00%, Floor rate 8.25%, PIK Interest 1.10%, 7.00% Exit Fee	$	20,193	$	20,302	$	20,219	(14)(15)(19)
Signal Media Limited	Senior Secured	June 2025	PRIME + 5.50%, Floor rate 9.00%, Cap rate 12.00%, 3.45% Exit Fee	$	750		739		739	(5)(10)(17)
Yipit, LLC	Senior Secured	September 2026	1-Month LIBOR + 9.08%, Floor rate 10.08%	$	31,875		31,345		30,782	(17)(18)
Subtotal: 1-5 Years Maturity							52,386		51,740
Subtotal: Information Services (3.80%)*							52,386		51,740
Internet Consumer & Business Services
Under 1 Year Maturity
Nextroll, Inc.	Senior Secured	July 2023	PRIME + 3.75%, Floor rate 7.75%, PIK Interest 2.95%, 1.95% Exit Fee	$	22,046		21,952		21,952	(12)(14)
SeatGeek, Inc.	Senior Secured	June 2023	PRIME + 5.00%, Floor rate 10.50%, PIK Interest 0.50%	$	60,838		60,529		60,529	(11)(12)(13)(14)(16)
Subtotal: Under 1 Year Maturity							82,481		82,481
1-5 Years Maturity
AppDirect, Inc.	Senior Secured	April 2026	PRIME + 5.50%, Floor rate 8.75%, 9.70% Exit Fee	$	30,790		31,733		31,991	(12)(17)
Carwow LTD	Senior Secured	December 2024	PRIME + 4.70%, Floor rate 7.95%, PIK Interest 1.45%, 4.95% Exit Fee	£	18,798		25,845		21,021	(5)(10)(14)
Convoy, Inc.	Senior Secured	March 2026	PRIME + 3.20%, Floor rate 6.45%, PIK Interest 1.95%, 4.55% Exit Fee	$	73,623		72,447		73,092	(14)(16)(19)
LogicSource	Senior Secured	July 2027	3-Month SOFR + 8.93%, Floor rate 9.93%	$	13,300		13,017		13,017	(17)
Jobandtalent USA, Inc.	Senior Secured	February 2025	1-Month SOFR + 8.86%, Floor rate 9.75%, 3.00% Exit Fee	$	14,000		13,802		13,865	(5)(10)
Rhino Labs, Inc.	Senior Secured	March 2024	PRIME + 5.50%, Floor rate 8.75%, PIK Interest 2.25%	$	16,407		16,180		16,331	(14)(15)
RVShare, LLC	Senior Secured	December 2026	3-Month LIBOR + 5.50%, Floor rate 6.50%, PIK Interest 4.00%	$	20,489		20,138		20,130	(13)(14)(15)(17)
Salary.com, LLC	Senior Secured	September 2027	6-Month SOFR + 8.00%, Floor rate 9.00%	$	18,000		17,640		17,640	(18)
SeatGeek, Inc.	Senior Secured	May 2026	PRIME + 7.00%, Floor rate 10.50%, PIK Interest 0.50%	$	25,040		24,869		25,591	(11)(12)(13)(14)(16)
Skyword, Inc.	Senior Secured	September 2024	PRIME + 3.88%, Floor rate 9.38%, PIK Interest 1.90%, 4.00% Exit Fee	$	12,607		12,922		12,708	(13)(14)
Tectura Corporation	Senior Secured	July 2024	PIK Interest 5.00%	$	10,680		240		—	(7)(8)(14)
	Senior Secured	July 2024	FIXED 8.25%	$	8,250		8,250		8,250	(7)
	Senior Secured	July 2024	PIK Interest 5.00%	$	13,023		13,023		68	(7)(8)(14)
Total Tectura Corporation				$	31,953		21,513		8,318
Thumbtack, Inc.	Senior Secured	April 2026	PRIME + 4.95%, Floor rate 8.95%, PIK Interest 1.50%, 3.95% Exit Fee	$	10,065		9,985		9,938	(12)(14)(17)
Veem, Inc.	Senior Secured	March 2025	PRIME + 4.00%, Floor rate 7.25%, PIK Interest 1.25%, 4.50% Exit Fee	$	5,027		4,959		4,967	(13)(14)
	Senior Secured	March 2025	PRIME + 4.70%, Floor rate 7.95%, PIK Interest 1.50%, 4.50% Exit Fee	$	5,014		4,932		5,055
Total Veem, Inc.				$	10,041		9,891		10,022
Worldremit Group Limited	Senior Secured	February 2025	3-Month LIBOR + 9.25%, Floor rate 10.25%, 3.00% Exit Fee	$	94,500		94,115		92,293	(5)(10)(11)(12)(16)(19)
Subtotal: 1-5 Years Maturity							384,097		365,957
Greater than 5 Years Maturity
Houzz, Inc.	Convertible Debt	May 2028	PIK Interest 5.50%	$	21,252		21,252		20,354	(9)(14)
Subtotal: Greater than 5 Years Maturity							21,252		20,354
Subtotal: Internet Consumer & Business Services (34.40%)*							487,830		468,792
Manufacturing Technology
Under 1 Year Maturity
Bright Machines, Inc.	Senior Secured	November 2022	PRIME + 5.70%, Floor rate 8.95%, 6.95% Exit Fee	$	15,000		15,902		16,045	(11)(19)
Subtotal: Under 1 Year Maturity							15,902		16,045
1-5 Years Maturity
MacroFab, Inc.	Senior Secured	March 2026	PRIME + 4.35%, Floor rate 7.60%, PIK Interest 1.25%, 4.50% Exit Fee	$	17,083		16,616		16,469	(12)(14)
Ouster, Inc.	Senior Secured	May 2026	PRIME + 6.15%, Floor rate 9.40%, 7.45% Exit Fee	$	7,000		6,981		7,040	(10)(13)(17)
Subtotal: 1-5 Years Maturity							23,597		23,509
Subtotal: Manufacturing Technology (2.90%)*							39,499		39,554

See notes to consolidated financial statements

HERCULES CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2022 (unaudited)

(dollars in thousands)


Portfolio Company	Type of Investment	Maturity Date	Interest Rate and Floor (1)	Principal Amount		Cost (2)		Value		Footnotes
Medical Devices & Equipment
1-5 Years Maturity
Lucira Health, Inc.	Senior Secured	February 2026	PRIME + 5.50%, Floor rate 8.75%, 5.25% Exit Fee	$	15,000	$	14,927	$	14,835	(13)
Subtotal: 1-5 Years Maturity							14,927		14,835
Subtotal: Medical Devices & Equipment (1.09%)*							14,927		14,835
Semiconductors
1-5 Years Maturity
Fungible, Inc.	Senior Secured	December 2024	PRIME + 5.00%, Floor rate 8.25%, 4.95% Exit Fee	$	20,000		19,492		19,647	(15)(19)
Subtotal: 1-5 Years Maturity							19,492		19,647
Subtotal: Semiconductors (1.44%)*							19,492		19,647
Software
Under 1 Year Maturity
Kazoo, Inc. (p.k.a. YouEarnedIt, Inc.)	Senior Secured	July 2023	3-Month SOFR + 10.15%, Floor rate 11.15%	$	10,819		10,691		10,691	(18)
Subtotal: Under 1 Year Maturity							10,691		10,691
1-5 Years Maturity
3GTMS, LLC	Senior Secured	February 2025	3-Month LIBOR + 9.28%, Floor rate 10.28%	$	10,808		10,660		10,496	(11)(17)(18)
Agilence, Inc.	Senior Secured	October 2026	1-Month BSBY + 9.00%, Floor rate 10.00%	$	9,330		9,100		8,880	(12)(17)(18)
Annex Cloud	Senior Secured	February 2027	1-Month BSBY + 9.00%, Floor rate 10.00%	$	8,500		8,282		8,148	(13)(17)
Automation Anywhere, Inc.	Senior Secured	September 2027	PRIME + 4.25%, Floor rate 9.00%, 2.50% Exit Fee	$	19,600		19,008		19,008	(17)(19)
Brain Corporation	Senior Secured	April 2025	PRIME + 3.70%, Floor rate 6.95%, PIK Interest 1.00%, 3.95% Exit Fee	$	20,116		20,101		20,196	(13)(14)(15)(17)
Campaign Monitor Limited	Senior Secured	November 2025	3-Month SOFR + 8.90%, Floor rate 9.90%	$	33,000		32,546		32,944	(13)(19)
Catchpoint Systems, Inc.	Senior Secured	June 2026	3-Month SOFR + 8.76%, Floor rate 9.76%	$	10,200		10,034		10,043	(18)
Ceros, Inc.	Senior Secured	September 2026	6-month LIBOR + 8.89%, Floor rate 9.89%	$	19,855		19,420		19,482	(17)(18)
CloudBolt Software, Inc.	Senior Secured	October 2024	PRIME + 6.70%, Floor rate 9.95%, 3.45% Exit Fee	$	10,000		10,021		10,014	(11)(12)(19)
Constructor.io Corporation	Senior Secured	July 2027	1-Month SOFR + 8.44%, Floor rate 9.44%	$	4,688		4,569		4,569	(17)(18)
Copper CRM, Inc	Senior Secured	March 2025	PRIME + 4.50%, Floor rate 8.25%, Cap rate 10.25%, PIK Interest 1.95%, 4.50% Exit Fee	$	10,095		10,058		9,882	(11)(14)
Cutover, Inc.	Senior Secured	October 2025	PRIME + 5.20%, Floor rate 9.95%, 4.95% Exit Fee	$	5,000		4,927		4,927	(5)(10)
Cybermaxx Intermediate Holdings, Inc.	Senior Secured	August 2026	6-month LIBOR + 9.28%, Floor rate 10.28%	$	7,980		7,808		7,732	(13)(17)
Dashlane, Inc.	Senior Secured	July 2025	PRIME + 3.05%, Floor rate 7.55%, PIK Interest 1.10%, 4.95% Exit Fee	$	31,841		32,186		31,580	(11)(13)(14)(17)(19)
Demandbase, Inc.	Senior Secured	August 2025	PRIME + 2.25%, Floor rate 5.50%, PIK Interest 3.00%, 5.00% Exit Fee	$	28,288		28,010		28,187	(13)(14)(17)(19)
Eigen Technologies Ltd.	Senior Secured	April 2025	PRIME + 5.10%, Floor rate 8.35%, 2.95% Exit Fee	$	3,750		3,730		3,726	(5)(10)
Enmark Systems, Inc.	Senior Secured	September 2026	3-Month LIBOR + 6.83%, Floor rate 7.83%, PIK Interest 2.19%	$	8,178		8,001		7,948	(11)(14)(17)(18)
Esentire, Inc.	Senior Secured	May 2024	3-Month LIBOR + 9.96%, Floor rate 10.96%	$	8,468		8,380		8,425	(5)(10)(11)(18)
Esme Learning Solutions, Inc.	Senior Secured	February 2025	PRIME + 5.50%, Floor rate 8.75%, PIK Interest 1.50%, 3.00% Exit Fee	$	5,045		4,890		4,270	(14)
Gryphon Networks Corp.	Senior Secured	January 2026	1-Month LIBOR + 9.69%, Floor rate 10.69%	$	5,232		5,125		5,258	(11)(17)
Ikon Science Limited	Senior Secured	October 2024	3-Month Eurodollar + 9.00%, Floor rate 10.00%	$	6,650		6,510		6,572	(5)(10)(17)(18)

See notes to consolidated financial statements