Filed Pursuant to Rule 424(b)(2)
Registration No. 333-261732

PROSPECTUS SUPPLEMENT

(To prospectus dated December 17, 2021)

 

Up to 17,500,000 Shares of Common Stock

 

 

 

Jefferies LLC                  JMP Securities

       A CITIZENS COMPANY

The date of this prospectus supplement is May 9, 2022.

TABLE OF CONTENTS

 

 

GLOSSARY

 

1940 Act means the Investment Company Act of 1940, as amended   BDC means business development company   Board means the Board of Directors of Hercules Capital, Inc.   Code means the Internal Revenue Code of 1986, as amended   Company, Hercules Capital, Hercules, we, us and our refer to Hercules Capital, Inc. and our wholly owned subsidiaries   Equity Distribution Agreements or Agreements refer to the Equity Distribution Agreements between Hercules Capital, Inc. and each of the Sales Agents, each dated as of May 9, 2022   Exchange Act means the Securities Exchange Act of 1934, as amended		NAV means net asset value   NYSE means the New York Stock Exchange   Offering Materials refers to this prospectus supplement, the accompanying prospectus and any free writing prospectus related to this offering   RIC means Regulated Investment Company   Sales Agents refers to Jefferies LLC and JMP Securities LLC   SBA means the Small Business Administration   SBIC means a Small Business Investment Company   SEC means the U.S. Securities and Exchange Commission   Securities Act means the Securities Act of 1934, as amended

 

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FORWARD-LOOKING STATEMENTS

A forward-looking statement relates to future events or our future financial performance and typically uses words like “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts” “potential” or “continue” and similar expressions, as well as the negative of these words and expressions. We may use forward-looking statements in the Offering Materials, as well as in future oral and written statements by our management. These forward-looking statements are based on management’s current expectations; however, they are based on assumptions regarding, among other things, our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital and the ability to maintain certain debt to asset ratios. All of these assumptions carry substantial risks and uncertainties that could cause actual results to be materially different from the results described in or implied by our forward-looking statements. You should not rely on forward-looking statements when determining whether to invest in our common stock or regard a forward-looking statement as a representation by us that our plans or objectives will be achieved.

Forward-looking statements in the Offering Materials include statements about:

 

 

The forward-looking statements made in the Offering Materials relate only to events as of the date on which the statements are made and are excluded from the safe harbor protection provided by Section 27A of the Securities Act. We are not obligated, and do not plan, to update any forward-looking statement to reflect events or circumstances occurring after the date the statement is made. We encourage you to consult any additional disclosures that we make directly to you or through reports that we file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Before you decide to invest in our common stock, please be sure you have read the accompanying prospectus (including “Risk Factors” and “Forward-Looking Statements” beginning on pages 11 and 13, respectively), our most recent Annual Report on Form 10-K (including “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and any subsequent Quarterly Reports on Form 10-Q.

INDUSTRY AND MARKET DATA

The Offering Materials include certain industry estimates that we have compiled using internally-generated information and data. We believe our estimates are reliable but you should know that they have not been verified by any independent sources. Our estimates are based on a number of assumptions, including increasing investment in venture capital- and private equity-backed companies. Actual results may differ from projections and estimates, and this market may not grow at the rates projected, or at all. If this market fails to grow at projected rates, our business and the market price of our securities, including our common stock, could be materially adversely affected.

 

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S-2

FEES AND EXPENSES

The below table is intended to help you understand the different costs and expenses that an investor in our common stock will bear, both directly and indirectly. Some of the percentages included in this table are only estimates. The footnotes below the table tell you which items in the table are estimates. In general, if this prospectus supplement or the accompanying prospectus says that fees and expenses will be paid by “you” or “us” or that “we” will pay fees or expenses, this means that holders of our common stock will indirectly bear such fees and expenses as investors in Hercules Capital, Inc.

 

Stockholder Transaction Expenses (as a percentage of the public offering price):
Sales load (as a percentage of offering price)(1)			2.00	%
Offering expenses			0.07	%(2)
Dividend reinvestment plan fees			—	(3)
Total stockholder transaction expenses (as a percentage of the public offering price)			2.07	%
Annual Expenses (as a percentage of net assets attributable to common stock):(4)
Operating expenses			4.77	%(5)(6)
Interest and fees paid in connection with borrowed funds			4.05	%(7)
Acquired fund fees and expenses			0.02	%(8)
Total annual expenses			8.84	%(9)

 

 

EXAMPLE

The below example is intended to help you understand the cumulative expenses that you would pay on a $1,000 investment in our common stock over a 1-, 3-, 5- and 10-year period. These hypothetical expenses assume a 5% annual return on your investment, annual operating expenses of 4.77% (from the above table) and that we incur no additional leverage and that all dividends are reinvested in additional shares of common stock. Actual expenses, returns, operating expenses, leverage levels, dividend amounts and dividend treatment may all differ.

 

1 Year		3 Years		5 Years		10 Years
$                  106		$                 266		$                 415		$                 740

 

S-3

USE OF PROCEEDS

Sales of our common stock, if any, under the Offering Materials may be made in negotiated transactions or transactions that are deemed to be “at the market” (as defined in Rule 415 of the Securities Act). “At the market” transactions may be made directly on the NYSE or another securities exchange or through a market maker (other than a securities exchange). There is no guarantee that any such sales will be made.

The last reported sale price on the NYSE of our common stock on May 5, 2022 was $16.89 per share. If we sell all 17,500,000 shares of common stock offered under the Offering Materials at $16.89 per share, we estimate that the net proceeds of this offering will be approximately $289.5 million, after deducting the estimated sales commission payable to the Sales Agents and our estimated offering expenses. Actual sales and net proceeds (if any) may be more or less than these estimated amounts and depend, among other things, the market price of our common stock at the time of any sales.

We intend to use the net proceeds from this offering to fund investments in debt and equity securities in accordance with our investment objectives, to make acquisitions, to retire certain debt obligations and for other general corporate purposes.

We intend to seek to invest the net proceeds received in this offering, consistent with our investment objective, as promptly as practicable after we receive them. We anticipate that substantially all of the net proceeds from any sales of our common stock will be used as described above within 3 to 6 months, depending on market conditions. We anticipate that the remainder will be used for working capital and general corporate purposes, including potential payments or distributions to stockholders. Until we use or invest proceeds in this manner, we will invest a portion of the net proceeds of any sales primarily in cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment. Our ability to achieve our investment objectives may be limited to the extent that the net proceeds of any sales, pending full investment, are held in lower yielding short-term instruments.

 

S-4

CAPITALIZATION

We are offering to sell up to 17,500,000 shares of our common stock from time to time through our Sales Agents, Jefferies LLC and JMP Securities LLC. The below table assumes that we will sell all 17,500,000 shares at a price of $16.89 per share (the last reported sale price per share of our common stock on the NYSE on May 5, 2022). However, there is no guarantee that there will be any sales of our common stock. Actual sales, if any, may be less than as shown in the below table. In addition, the price per share of any such sale may be greater or less than $16.89 depending on the market price of our common stock at the time of any such sale. The following table sets forth our capitalization as of March 31, 2022, on an actual basis and on an as adjusted basis, giving effect to the issuance of 17,500,000 shares of common stock at a price of $16.89 per share, less commissions and expenses. The adjusted information is illustrative only.

This table should be read in conjunction with “Use of Proceeds” included in this prospectus supplement and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and notes thereto included in the accompanying prospectus.

 

		As of March 31, 2022
		Actual				As Adjusted
		(in thousands)
Investments at fair value		$	2,592,334			$	2,592,334
Cash and cash equivalents			59,330				362,004
Liabilities(1):
Accounts payable and accrued liabilities		$	27,228			$	27,228
Operating lease liability			6,876				6,876
SBA Debentures			169,296				169,296
July 2024 Notes			104,311				104,311
February 2025 Notes			49,665				49,665
June 2025 Notes			69,474				69,474
March 2026 A Notes			49,629				49,629
March 2026 B Notes			49,596				49,596
September 2026 Notes			320,622				320,622
January 2027 Notes			343,606				343,606
2033 Notes			38,745				38,745
Union Bank Facility			100,000				100,000
SMBC Facility			29,051				29,051
Total liabilities		$	1,358,099			$	1,358,099
Net assets:
Common stock, par value $0.001 per share; 200,000,000 shares authorized; 123,194,425 shares issued and outstanding, actual, 141,379,248 shares issued and outstanding, as adjusted, respectively		$	124			$	142
Capital in excess of par value			1,178,019				1,480,676
Total distributable earnings (loss)			155,305				216,523
Total net assets		$	1,333,448			$	1,636,123
Total capitalization		$	2,691,547			$	2,994,222

 

 

(1)

The above table reflects the carrying value of indebtedness outstanding as of March 31, 2022. Principal amounts of indebtedness as of March 31, 2022, were as follows:

 

 

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S-7

OUTSTANDING SECURITIES AS OF MAY 5, 2022

 

Title of Class		Amount Authorized		Amount Held by Company for its Account		Amount Outstanding
Common Stock, $0.001 par value per share		200,000,000		—		123,879,248 shares
4.77% Notes due July 2024		105,000,000		—		$105.0*
4.28% Notes due February 2025		50,000,000		—		$50.0*
4.31% Notes due June 2025		70,000,000		—		$70.0*
4.50% Notes A due March 2026		50,000,000		—		$50.0*
4.55% Notes B due March 2026		50,000,000		—		$50.0*
2.625% Notes due September 2026		325,000,000		—		$325.0*
3.375% Notes due January 2027		350,000,000		—		$350.0*
6.25% Notes due 2033		40,000,000		—		$40.0*

* Aggregate principal amount (in millions)

LEGAL MATTERS

Certain legal matters in connection with the securities offered hereby will be passed upon for us by Dechert LLP, New York, NY. Certain legal matters in connection with the securities offered hereby will be passed upon for Jefferies LLC and JMP Securities LLC, as Sales Agents, by Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY.

EXPERTS

The consolidated financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Annual Report on Internal Control over Financial Reporting) incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2021 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

INCORPORATION BY REFERENCE

We incorporate by reference in this prospectus supplement the documents listed below and any future reports and other documents we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, until all of the securities offered by this prospectus supplement have been sold or we otherwise terminate the offering of these securities (such reports and other documents deemed to be incorporated by reference into this prospectus supplement and to be part hereof from the date of filing of such reports and other documents); provided, however, that information “furnished” under Item 2.02 or Item 7.01 of Form 8-K, or other information “furnished” to the SEC pursuant to the Exchange Act will not be incorporated by reference into this prospectus supplement:

 

Document		Reporting Period		Filing Date
Annual Report on Form 10-K		Year ended December 31, 2021		February 22, 2022
Current Report on Form 8-K		January 10, 2022		January 10, 2022
Current Report on Form 8-K		January 14, 2022		January 18, 2022
Current Report on Form 8-K		January 20, 2022		January 21, 2022
Current Report on Form 8-K		January 21, 2022		January 21, 2022
Current Report on Form 8-K		February 1, 2022		February 1, 2022
Current Report on Form 8-K (Item 8.01 only)		February 22, 2022		February 22, 2022
Quarterly Report on Form 10-Q		March 31, 2022		May 5, 2022
Current Report on Form 8-K (Item 8.01 only)		May 3, 2022		May 5, 2022

Any reports filed by us with the SEC before the date that any offering of any securities by means of this prospectus supplement and the accompanying prospectus is terminated will automatically update and, where applicable, supersede any information contained in this prospectus supplement and the accompanying prospectus or incorporated by reference into this prospectus supplement and the accompanying prospectus.

To obtain copies of these filings, see “Available Information” in this prospectus supplement.

 

 

S-8

PROSPECTUS

Hercules Capital, Inc.

Common Stock

Preferred Stock

Warrants

Subscription Rights

Debt Securities

Units

This prospectus relates to the offer, from time to time, in one or more offerings or series of shares of our common stock, par value $0.001 per share, preferred stock, par value $0.001 per share, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, subscription rights, debt securities, or units comprised of any combination of the foregoing, which we refer to, collectively, as the “securities.” The preferred stock, debt securities, subscription rights and warrants (including as part of a unit) offered hereby may be convertible or exchangeable into shares of our common stock. We may sell our securities through underwriters or dealers, “at-the-market” to or through a market maker into an existing trading market or otherwise directly to one or more purchasers, including existing stockholders in a rights offering, or through agents or through a combination of methods of sale, including auctions. The identities of such underwriters, dealers, market makers or agents, as the case may be, will be described in one or more supplements to this prospectus. The securities may be offered at prices and on terms to be described in one or more supplements to this prospectus.

In the event we offer common stock, the offering price per share will not be less than the net asset value per share of our common stock at the time we make the offering except (1) in connection with a rights offering to our existing stockholders, (2) with the consent of the holders of the majority of our voting securities and approval of our Board of Directors, or (3) under such circumstances as the Securities and Exchange Commission may permit. See “Risk Factors” for more information.

We are a specialty finance company focused on providing senior secured loans to high-growth, innovative venture capital-backed and institutional-backed companies in a variety of technology, life sciences and sustainable and renewable technology industries. We source our investments through our principal office located in Palo Alto, CA, as well as through additional offices in Boston, MA, New York, NY, Bethesda, MD, and San Diego, CA. Our goal is to be the leading structured debt financing provider for venture capital-backed companies in technology-related industries requiring sophisticated and customized financing solutions. We invest primarily in structured debt with warrants and, to a lesser extent, in senior debt and equity investments. Our investment objective is to maximize our portfolio total return by generating current income from our debt investments and capital appreciation from our warrant and equity investments.

We use the term “structured debt with warrants” to refer to any debt investment, such as a senior or subordinated secured loan, that is coupled with an equity component, including warrants, options or other rights to purchase or convert into common or preferred stock. Our structured debt with warrants investments typically are secured by some or all of the assets of the portfolio company.

We are an internally-managed, non-diversified closed-end investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. Our common stock is traded on the New York Stock Exchange, or NYSE, under the symbol “HTGC.” On December 16, 2021, the last reported sale price of a share of our common stock on the NYSE, was $16.20. The net asset value per share of our common stock as of September 30, 2021 (the last date prior to the date of this prospectus on which we determined net asset value) was $11.54.

An investment in our securities may be speculative and involves risks including a heightened risk of total loss of investment. In addition, the companies in which we invest are subject to special risks. See “Risk Factors” on page 11 of this prospectus, in our most recent Annual Report on Form 10-K, in our Quarterly Reports on Form 10-Q, in any of our other filings with the Securities and Exchange Commission, and in any applicable prospectus supplement and in any free writing prospectus to read about risks that you should consider before investing in our securities, including the risk of leverage.

Please read this prospectus and any free writing prospectus before investing and keep it for future reference. It contains important information about us that a prospective investor ought to know before investing in our securities. We file annual, quarterly and current reports, proxy statements and other information about us with the Securities and Exchange Commission. The information is available free of charge by contacting us at 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301 or by telephone calling collect at (650) 289-3060 or on our website at www.htgc.com. The Securities and Exchange Commission also maintains a website at www.sec.gov that contains such information.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This prospectus may not be used to consummate sales of any securities unless accompanied by a prospectus supplement.

The date of this prospectus is December 17, 2021

You should rely only on the information contained in this prospectus, any applicable prospectus supplement, any free writing prospectus, the documents incorporated by reference in this prospectus and any applicable prospectus supplement, or any other information which we have referred you. We have not authorized any dealer, salesperson or other person to provide you with different information or to make representations as to matters not stated in this prospectus or in any free writing prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus, any applicable prospectus supplement, and any free writing prospectus do not constitute an offer to sell, or a solicitation of an offer to buy, any securities by any person in any jurisdiction where it is unlawful for that person to make such an offer or solicitation or to any person in any jurisdiction to whom it is unlawful to make such an offer or solicitation. The information in this prospectus, any applicable prospectus supplement, and any free writing prospectus is accurate only as of its date, and under no circumstances should the delivery of this prospectus, any applicable prospectus supplement, or any free writing prospectus or the sale of any securities imply that the information in this prospectus, any applicable prospectus supplement, or any free writing prospectus is accurate as of any later date or that the affairs of Hercules Capital, Inc. have not changed since the date hereof. This prospectus will be updated to reflect material changes.

 

 

TABLE OF CONTENTS

 

		Page
Prospectus Summary			1
Fees and Expenses			7
Financial Highlights			9
Risk Factors			11
Forward-Looking Statements			13
Use of Proceeds			14
Price Range of Common Stock and Distributions			15
Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Portfolio Companies			17
Senior Securities			38
Business			42
Management			43
Certain United States Federal Income Tax Considerations			44
Sales of Common Stock Below Net Asset Value			45
Control Persons and Principal Stockholders			50
Dividend Reinvestment Plan			51
Description of Capital Stock			52
Description of Our Preferred Stock			59
Description of Our Subscription Rights			61
Description of Warrants			63
Description of Our Debt Securities			65
Regulation			78
Plan of Distribution			79
Custodian, Transfer and Dividend Paying Agent and Registrar			81
Legal Matters			81
Experts			81
Incorporation by Reference			81
Available Information			82

 

 

Hercules Capital, Inc., our logo and other trademarks of Hercules Capital, Inc. mentioned in this prospectus are the property of Hercules Capital, Inc. All other trademarks or trade names referred to in this prospectus are the property of their respective owners.

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we have filed with the Securities and Exchange Commission using the “shelf” registration process as a “well-known seasoned issuer,” as defined in Rule 405 under the Securities Act of 1933, as amended, or the Securities Act. Under the shelf registration process, which constitutes a delayed offering in reliance on Rule 415 under the Securities Act, we may offer, from time to time, in one or more offerings or series, our common stock, preferred stock, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, subscription rights or debt securities on the terms to be determined at the time of the offering. We may sell our securities through underwriters or dealers, “at-the-market” to or through a market maker, into an existing trading market or otherwise directly to one or more purchasers, including existing stockholders in a rights offering, or through agents or through a combination of methods of sale. The securities may be offered at prices and on terms described in one or more supplements to this prospectus. This prospectus provides you with a general description of the securities that we may offer. Each time we use this prospectus to offer securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. Such prospectus supplement and/or free writing prospectus (collectively referred to hereinafter as the “prospectus supplement”) may also add, update or change information contained in this prospectus or in the documents we incorporate by reference herein. This prospectus and the prospectus supplement, together with any documents incorporated by reference herein, will include all material information relating to the applicable offering. Please carefully read this prospectus and the prospectus supplement, together with any documents incorporated by reference in this prospectus and the applicable prospectus supplement, any exhibits and the additional information described under the headings “Available Information,” “Incorporation of Certain Information By Reference,” “Prospectus Summary” and “Risk Factors” before you make an investment decision.

 

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5

 

6

FEES AND EXPENSES

The following table is intended to assist you in understanding the various costs and expenses that an investor in our common stock will bear directly or indirectly. However, we caution you that some of the percentages indicated in the table below are estimates and may vary. The footnotes to the fee table state which items are estimates. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “you” or “us” or that “we” will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in Hercules Capital, Inc.

 

Stockholder Transaction Expenses (as a percentage of the public offering price):
Sales load (as a percentage of offering price)(1)			—	%
Offering expenses			—	%(2)
Dividend reinvestment plan fees			—	%(3)
Total stockholder transaction expenses (as a percentage of the public offering price)			—	%(4)
Annual Expenses (as a percentage of net assets attributable to common stock):(5)
Operating expenses			5.01	%(6)(7)
Interest and fees paid in connection with borrowed funds			4.92	%(8)
Acquired fund fees and expenses			0.01	%(10)
Total annual expenses			9.94	%(9)

 

(1)	In the event that our securities are sold to or through underwriters, a corresponding prospectus supplement to this prospectus will disclose the applicable sales load.

(2)	In the event that we conduct an offering of our securities, a corresponding prospectus supplement to this prospectus will disclose the estimated offering expenses.

(3)

The expenses associated with the administration of our dividend reinvestment plan are included in “Operating expenses.” We pay all brokerage commissions incurred with respect to open market purchases, if any, made by the administrator under the plan. For more details about the plan, see “Dividend Reinvestment Plan.”

(4)	Total stockholder transaction expenses may include sales load and will be disclosed in a future prospectus supplement, if any.

(5)	“Net assets attributable to common stock” equals the weighted average net assets for the nine months ended September 30, 2021, which is approximately $1,327.7 million.

(6)	“Operating expenses” represents our estimated operating expenses by annualizing our actual incurred for the nine months ended September 30, 2021, including all fees and expenses of our consolidated subsidiaries and excluding interests and fees on our debt.

(7)	We do not have an investment adviser and are internally managed by our executive officers under the supervision of our Board of Directors. As a result, we do not pay investment advisory fees, but instead we pay the operating costs associated with employing investment management professionals.

(8)	“Interest and fees paid in connection with borrowed funds” represents our estimated interest, fees and credit facility expenses by annualizing our actual interest, fees and credit facility expenses incurred for the nine months ended September 30, 2021.

(9)

“Total annual expenses” is the sum of “operating expenses,” “interest and fees paid in connection with borrowed funds,” and “Acquired fund fees and expenses.” “Total annual expenses” is presented as a percentage of weighted average net assets attributable to common stockholders because the holders of shares of our common stock (and not the holders of our debt securities or preferred stock, if any) bear all of our fees and expenses, including the fees and expenses of our wholly-owned consolidated subsidiaries, all of which are included in this fee table presentation.

(10)	Acquired fund fees and expenses represent the estimated indirect expense incurred due to investments in other investment companies and private funds.

 

7

Example

The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. These amounts are based upon our payment of annual operating expenses at the levels set forth in the table above and assume no additional leverage.

 

		1 Year				3 Years				5 Years				10 Years
You would pay the following expenses on a $1,000 common stock investment, assuming a 5% annual return		$	97			$	277			$	440			$	784

The example and the expenses in the tables above should not be considered a representation of our future expenses, and actual expenses may be greater or lesser than those shown. Moreover, while the example assumes, as required by the applicable rules of the SEC, a 5% annual return, our performance will vary and may result in a return greater or lesser than 5%. In addition, while the example assumes reinvestment of all distributions at NAV, participants in our dividend reinvestment plan may receive shares valued at the market price in effect at that time. This price may be at, above or below NAV. See “Dividend Reinvestment Plan” for additional information regarding our dividend reinvestment plan.

 

8

FINANCIAL HIGHLIGHTS

The financial data set forth in the following table as of and for the years ended December 31, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012 and 2011 are derived from our consolidated financial statements. The financial data as of and for the years ended December 31, 2020, 2019, 2018, 2017 and 2016, are derived from our consolidated financial statements, which have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report thereon is incorporated by reference in this prospectus. The financial data as of and for the years ended December 31, 2015, 2014, 2013, 2012, and 2011 are derived from audited consolidated financial statements not incorporated by reference in this prospectus, which may be obtained from www.sec.gov or upon request. The financial data set forth in the following table as of and for the nine months ended September 30, 2021 is derived from our unaudited consolidated financial statements, but in the opinion of management, reflects all adjustments (consisting only of normal recurring adjustments) that are necessary to present fairly the results of such interim period. Interim results as of and for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. You should read these financial highlights in conjunction with our consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” incorporated by reference into this prospectus, any documents incorporated by reference in this prospectus, our most recent Annual Report on Form 10-K, or our Quarterly Reports on Form 10-Q incorporated by reference herein.

 

9

		As of and for the nine months ended September 30, 2021				Year Ended December 31,
						2020				2019				2018				2017				2016				2015				2014				2013				2012				2011
Per share data(1):
Net asset value at beginning of period		$	11.26			$	10.55			$	9.90			$	9.96			$	9.90			$	9.94			$	10.18			$	10.51			$	9.75			$	9.83			$	9.50
Net investment income			0.95				1.39				1.41				1.20				1.17				1.36				1.06				1.16				1.24				0.98				0.92
Net realized gain (loss)			0.12				(0.50	)			0.16				(0.12	)			(0.32	)			0.06				0.07				0.32				0.25				0.06				0.06
Net unrealized appreciation (depreciation) on investments			0.40				1.13				0.14				(0.23	)			0.11				(0.49	)			(0.51	)			(0.33	)			0.20				(0.09	)			0.11
Total from investment operations			1.47				2.02				1.71				0.85				0.96				0.93				0.62				1.15				1.69				0.95				1.09
Net increase (decrease) in net assets from capital share transactions(1)			(0.11	)			0.01				0.20				0.23				0.26				0.18				0.26				(0.37	)			0.10				(0.14	)			0.07
Distributions of net investment income(6)			(1.06	)			(1.03	)			(1.15	)			(1.26	)			(1.07	)			(1.14	)			(1.26	)			(1.27	)			(1.13	)			(0.98	)			(0.90	)
Distributions of capital gains(6)			(0.09	)			(0.36	)			(0.18	)			—				(0.18	)			(0.11	)			—				—				—				—				—
Stock-based compensation expense included in investment income(2)			0.07				0.07				0.07				0.12				0.09				0.10				0.14				0.16				0.10				0.09				0.07
Net asset value at end of period		$	11.54			$	11.26			$	10.55			$	9.90			$	9.96			$	9.90			$	9.94			$	10.18			$	10.51			$	9.75			$	9.83
Ratios and supplemental data:
Per share market value at end of period		$	16.61			$	14.42			$	14.02			$	11.05			$	13.12			$	14.11			$	12.19			$	14.88			$	16.40			$	11.13			$	9.44
Total return(3)			23.05	%			14.31	%			39.36	%			(7.56	%)			1.47	%			26.87	%			(9.70	%)			(1.75	%)			58.49	%			28.28	%			(0.83	%)
Shares outstanding at end of period			115,925				114,726				107,364				96,501				84,424				79,555				72,118				64,715				61,837				52,925				43,853
Weighted average number of common shares outstanding			114,590				111,985				101,132				90,929				82,519				73,753				69,479				61,862				58,838				49,068				42,988
Net assets at end of period		$	1,337,532			$	1,291,704			$	1,133,049			$	955,444			$	840,967			$	787,944			$	717,134			$	658,864			$	650,007			$	515,968			$	431,041
Ratio of total expense to average net assets(4)			9.93	%			11.30	%			11.95	%			10.73	%			11.37	%			11.25	%			11.55	%			10.97	%			11.06	%			10.28	%			9.61	%
Ratio of net investment income before investment gains and losses to average net assets(4)			11.01	%			13.64	%			13.74	%			11.78	%			11.61	%			13.65	%			10.15	%			10.94	%			12.12	%			10.01	%			9.45	%
Portfolio turnover rate(5)			33.14	%			32.38	%			31.30	%			38.76	%			49.03	%			36.22	%			46.34	%			56.15	%			56.05	%			N/A				N/A
Weighted average debt outstanding		$	1,246,769			$	1,309,903			$	1,177,379			$	826,931			$	784,455			$	635,365			$	615,198			$	535,127			$	580,053			$	360,857			$	238,873
Weighted average debt per common share		$	10.88			$	11.70			$	11.64			$	9.09			$	9.51			$	8.61			$	8.85			$	8.65			$	9.86			$	7.35			$	5.56

 

(1)	All per share activity is calculated based on the weighted average shares outstanding for the relevant period, except net increase (decrease) in net assets from capital share transactions, which is based on the common shares outstanding as of the relevant balance sheet date.

(2)	Stock option expense is a non-cash expense that has no effect on net asset value. Pursuant to ASC Topic 718, net investment income includes the expense associated with the granting of stock options which is offset by a corresponding increase in paid-in capital.

(3)

The total return for the nine months ended September 30, 2021 and the years ended December 31, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012 and 2011 equals to the change in the ending market value over the beginning of the period price per share plus distributions paid per share during the period, divided by the beginning price assuming the distribution is reinvested on the date of the distribution. As such, the total return is not annualized. The total return does not reflect any sales load that must be paid by investors.

(4)	The ratios are calculated based on weighted average net assets for the relevant period and are annualized.

(5)

The portfolio turnover rate for the nine months ended September 30, 2021 and the years ended December 31, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012 and 2011 equals to the lesser of investment portfolio purchases or sales during the period, divided by the average investment portfolio value during the period. As such, portfolio turnover rate is not annualized.

(6)	Includes distributions on unvested restricted stock awards.

 

10

RISK FACTORS

You should carefully consider the risk factors described below, and in the section titled “Risk Factors” in the applicable prospectus supplement and any related free writing prospectus, and the risks discussed in the section titled “Item 1A. Risk Factors” in our Annual Report on Form 10-K, the section titled “Item 1A. Risk Factors,” which are incorporated by reference herein, in our Quarterly Reports on Form 10-Q, which are incorporated by reference herein, and any subsequent filings we have made with the SEC that are incorporated by reference into this prospectus or any prospectus supplement, together with all of the other information included in this prospectus, the accompanying prospectus supplement and any documents incorporated by reference herein, including our consolidated financial statements and the related notes thereto, before you decide whether to make an investment in our securities. The risks set out below and described in such documents are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. If any of the following events occur, our business, financial condition and results of operations could be materially adversely affected. In such case, the net asset value of our common stock and the trading price, if any, of our securities could decline, and you may lose all or part of your investment.

Investors in offerings of our common stock will likely incur immediate dilution upon the closing of such offering.

We generally expect the public offering price of any offering of shares of our common stock to be higher than the book value per share of our outstanding common stock (unless we offer shares pursuant to a rights offering or after obtaining prior approval for such issuance from our stockholders and our independent directors). Accordingly, investors purchasing shares of our common stock in offerings pursuant to this prospectus may pay a price per share that exceeds the tangible book value per share after such offering.

Your interest in us may be diluted if you do not fully exercise your subscription rights in any rights offering. In addition, if the subscription price is less than our net asset value per share, then you will experience an immediate dilution of the aggregate net asset value of your shares.

In the event we issue subscription rights, stockholders who do not fully exercise their subscription rights should expect that they will, at the completion of a rights offering pursuant to this prospectus, own a smaller proportional interest in us than would otherwise be the case if they fully exercised their rights. We cannot state precisely the amount of any such dilution in share ownership because we do not know at this time what proportion of the shares will be purchased as a result of such rights offering.

In addition, if the subscription price is less than the net asset value per share of our common stock, then our stockholders would experience an immediate dilution of the aggregate net asset value of their shares as a result of the offering. The amount of any decrease in net asset value is not predictable because it is not known at this time what the subscription price and net asset value per share will be on the expiration date of a rights offering or what proportion of the shares will be purchased as a result of such rights offering. Such dilution could be substantial. See “Risk Factors—Risks Relating to Our Securities—We have received the approval from our stockholders to issue shares of our common stock at prices below the then current NAV per share of our common stock, subject to certain limitations and with the approval from our independent directors. If we receive such approval from the independent directors, we may periodically issue shares of our common stock at a price below the then current NAV per share of common stock. Any such issuance could materially dilute your interest in our common stock and reduce our NAV per share.” in our most recent Annual Report on Form 10-K and “Sales of Common Stock Below Net Asset Value” below.

We may initially invest a portion of the net proceeds of offerings pursuant to this prospectus primarily in high-quality short-term investments, which will generate lower rates of return than those expected from the interest generated on first and second lien senior secured loans and mezzanine debt.

We may initially invest a portion of the net proceeds of offerings pursuant to this prospectus primarily in cash, cash equivalents, U.S. government securities and other high-quality short-term investments. These

 

11

securities generally earn yields substantially lower than the income that we anticipate receiving once we are fully invested in accordance with our investment objective. As a result, we may not, for a time, be able to achieve our investment objective and/or we may need to, for a time, decrease the amount of any dividend that we may pay to our stockholders to a level that is substantially lower than the level that we expect to

pay when the net proceeds of offerings are fully invested in accordance with our investment objective. If we do not realize yields in excess of our expenses, we may incur operating losses and the market price of our shares may decline.

Our stockholders may receive shares of our common stock as dividends, which could result in adverse cash flow consequences to them.

In order to satisfy the Annual Distribution Requirement applicable to RICs, we have the ability to declare a large portion of a dividend in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion could be as low as 20%) and certain requirements are met, the entire distribution would be treated as a dividend for U.S. federal income tax purposes. As a result, a stockholder would be taxed on 100% of the fair market value of the shares received as part of the dividend on the date a stockholder received it in the same manner as a cash dividend, even though most of the dividend was paid in shares of our common stock.

We cannot predict how tax reform legislation will affect us, our investments, or our stockholders, and any such legislation could adversely affect our business.

Legislative or other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service (“IRS”) and the U.S. Treasury Department. In December 2017, the U.S. House of Representatives and U.S. Senate passed tax reform legislation the Tax Cuts and Jobs Act, which the President signed into law. Such legislation has made many changes to the Code, including significant changes to the taxation of business entities, the deductibility of interest expense, and the tax treatment of capital investment. We cannot predict with certainty how any changes in the tax laws might affect us, our stockholders, or our portfolio investments. New legislation and any U.S. Treasury regulations, administrative interpretations or court decisions interpreting such legislation could significantly and negatively affect our ability to qualify for tax treatment as a RIC or the U.S. federal income tax consequences to us and our stockholders of such qualification, or could have other adverse consequences. Stockholders are urged to consult with their tax advisor regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our securities.

 

12

FORWARD-LOOKING STATEMENTS

The matters discussed in this prospectus, including the documents that we incorporate by reference herein, and any applicable prospectus supplement or free writing prospectus, including the documents we incorporate by reference therein, as well as in future oral and written statements by management of Hercules Capital, Inc., that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this prospectus should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking statements contained in this prospectus and any applicable prospectus supplement or free writing prospectus include statements as to:

 

•

our current and future management structure;

 

•

our future operating results;

 

•

our business prospects and the prospects of our prospective portfolio companies;

 

•

the impact of investments that we expect to make;

 

•

our informal relationships with third parties including in the venture capital industry;

 

•

the expected market for venture capital investments and our addressable market;

 

•

the dependence of our future success on the general economy and its impact on the industries in which we invest;

 

•

our ability to access debt markets and equity markets;

 

•

the current and future effects of the COVID-19 pandemic on us and our portfolio companies;

 

•

the ability of our portfolio companies to achieve their objectives;

 

•

our expected financings and investments;

 

•

our regulatory structure and tax status;

 

•

our ability to operate as a BDC, a SBIC and a RIC;

 

•

the adequacy of our cash resources and working capital;

 

•

the timing of cash flows, if any, from the operations of our portfolio companies;

 

•

the timing, form and amount of any distributions;

 

•

the impact of fluctuations in interest rates on our business;

 

•

the valuation of any investments in portfolio companies, particularly those having no liquid trading market; and

 

•

our ability to recover unrealized depreciation on investments.

You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this prospectus, any free writing prospectus, and the documents incorporated by reference into this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this prospectus.

 

13

USE OF PROCEEDS

We intend to use the net proceeds from selling our securities to fund investments in debt and equity securities in accordance with our investment objectives, to make acquisitions, to retire certain debt obligations and for other general corporate purposes. The supplement to this prospectus or any free writing prospectus relating to an offering will more fully identify the use of proceeds from such offering.

We anticipate that substantially all of the net proceeds from any offering of our securities will be used as described above within twelve months, but in no event longer than two years. Pending such uses and investments, we will invest the net proceeds primarily in cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment. Our ability to achieve our investment objective may be limited to the extent that the net proceeds of any offering, pending full investment, are held in lower yielding short-term instruments.

 

14

PRICE RANGE OF COMMON STOCK AND DISTRIBUTIONS

Our common stock is traded on the NYSE under the symbol “HTGC.”

The following table sets forth the range of high and low closing sales prices of our common stock, the sales price as a percentage of NAV and the distributions declared by us for each fiscal quarter. The stock quotations are interdealer quotations and do not include markups, markdowns or commissions.

 

						Price Range								Premium/ Discount of High Sales Price to NAV				Premium/ Discount of Low Sales Price to NAV				Cash Distribution per Share(2)
		NAV(1)				High				Low
2019
First quarter		$	10.26			$	14.04			$	11.23				36.8	%			9.5	%		$	0.330
Second quarter		$	10.59			$	13.75			$	12.57				29.8	%			18.7	%		$	0.340
Third quarter		$	10.38			$	13.44			$	12.66				29.5	%			22.0	%		$	0.350
Fourth quarter		$	10.55			$	14.44			$	12.98				36.9	%			23.0	%		$	0.400
2020
First quarter		$	9.92			$	15.99			$	6.81				61.2	%			(31.4	)%		$	0.320
Second quarter		$	10.19			$	11.83			$	6.64				16.1	%			(34.8	)%		$	0.320
Third quarter		$	10.26			$	11.97			$	10.02				16.7	%			(2.3	)%		$	0.340
Fourth quarter		$	11.26			$	14.42			$	11.13				28.1	%			(1.2	)%		$	0.370
2021
First quarter		$	11.36			$	16.60			$	14.21				45.4	%			25.1	%		$	0.370
Second quarter		$	11.71			$	17.66			$	15.98				50.8	%			36.5	%		$	0.390
Third quarter		$	11.54			$	17.56			$	16.50				52.2	%			43.0	%		$	0.390
Fourth quarter (through December 16, 2021)			*			$	18.07			$	16.20				*				*			$	0.400

 

(1)	NAV per share is generally determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices. The NAVs shown are based on outstanding shares at the end of each period.

(2)	Represents the dividends or distributions declared in the relevant quarter.

*	NAV has not yet been calculated for this period.

**	Cash distribution per share has not yet been determined for this period.

The last reported price for our common stock on December 16, 2021 was $16.20 per share.

Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stock will trade at a discount from NAV or at premiums that are unsustainable over the long term are separate and distinct from the risk that our NAV will decrease. At times, our shares of common stock have traded at a premium to NAV and at times our shares of common stock have traded at a discount to the net assets attributable to those shares. It is not possible to predict whether the shares offered hereby will trade at, above, or below NAV.

 

15

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our most recent Annual Report on Form 10-K and of our Quarterly Reports on Form 10-Q are incorporated by reference herein.

 

16

PORTFOLIO COMPANIES

The following tables set forth certain information as of September 30, 2021 regarding each portfolio company in which we had a debt or equity investment. Other than these investments, our only formal relationship with our portfolio companies is the offer to make available significant managerial assistance. In addition, we may have board representation or receive rights to observe the Board of Directors’ meetings of our portfolio companies.

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company		Type of Investment(1)		Maturity Date				Interest Rate and Floor(2)		Principal Amount				Cost(3)				Value(4)
Debt Investments
Communications & Networking 1-5 Years Maturity
Cytracom Holdings LLC(11)(17)(18) 450 Century Parkway Allen, TX 75013		Senior Secured			February 2025			Interest rate 3-month LIBOR + 9.25% or Floor rate of 10.31%		$	9,000			$	8,789			$	8,797
Rocket Lab Global Services, LLC(14)(16) 3881 McGowen Street Long Beach, CA 90808		Senior Secured			June 2024			Interest rate PRIME + 4.90% or Floor rate of 8.15%, PIK Interest 1.25%, 3.25% Exit Fee		$	88,263				87,722				87,722
Subtotal: 1-5 Years Maturity															96,511				96,519
Subtotal: Communications & Networking (7.22%)*															96,511				96,519
Consumer & Business Products
1-5 Years Maturity
Grove Collaborative, Inc.(17)(19) 1301 Sansome Street San Francisco, CA 94111		Senior Secured			April 2025			Interest rate PRIME + 5.50% or Floor rate of 8.75%, 6.75% Exit Fee		$	19,600				19,177				19,177
Subtotal: 1-5 Years Maturity															19,177				19,177
Subtotal: Consumer & Business Products (1.43%)*															19,177				19,177
Diversified Financial Services
Under 1 Year Maturity
Newfront(9) 55 2nd Street, Floor 18 San Francisco, CA 94105		Convertible Debt			August 2022			PIK Interest 0.19%		$	403				402				403
Subtotal: Under 1 Year Maturity															402				403
1-5 Years Maturity
Gibraltar Business Capital, LLC(7) 400 Skokie Blvd #375 Northbrook, IL 60062		Unsecured			September 2026			Interest rate FIXED 14.50%		$	15,000				14,651				13,957
		Unsecured		September 2026				Interest rate FIXED 11.50%		$10,000				9,815				9,446
Total Gibraltar Business Capital, LLC										$	25,000				24,466				23,403
Hercules Adviser LLC(7) 400 Hamilton Avenue, Suite 310 Palo Alto, CA 94301		Unsecured			May 2023			Interest rate FIXED 5.00%		$	6,100				6,100				6,100
Subtotal: 1-5 Years Maturity															30,566				29,503
Subtotal: Diversified Financial Services (2.24%)*															30,968				29,906

 

17

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company		Type of Investment(1)		Maturity Date				Interest Rate and Floor(2)		Principal Amount				Cost(3)				Value(4)
Drug Delivery
1-5 Years Maturity
Antares Pharma Inc. (10)(11) 100 Princeton South Suite 300 Ewing, NJ 08628		Senior Secured			July 2024			Interest rate PRIME + 4.50% or Floor rate of 8.50%, 4.03% Exit Fee		$	20,000			$	20,671			$	20,765
Subtotal: 1-5 Years Maturity															20,671				20,765
Subtotal: Drug Delivery (1.55%)*															20,671				20,765
Drug Discovery & Development
Under 1 Year Maturity
Mesoblast (5)(10)(11)(13) 55 Collins Street Melbourne, Victoria, Australia 3000		Senior Secured			March 2022			Interest rate PRIME + 4.95% or Floor rate of 9.70%, 9.40% Exit Fee		$	50,000				54,310				54,310
Petros Pharmaceuticals, Inc. (p.k.a. Metuchen Pharmaceuticals LLC) 11 Commerce Drive Cranford, NJ 07016		Senior Secured			December 2021			Interest rate PRIME + 7.25% or Floor rate of 11.50%, 3.05% Exit Fee		$	1,741				1,740				1,740
TG Therapeutics, Inc.(10)(13) 787 Seventh Avenue New York, NY 10019		Senior Secured			March 2022			Interest rate PRIME + 4.75% or Floor rate of 10.25%, 3.25% Exit Fee		$	15,410				16,298				16,298
Subtotal: Under 1 Year Maturity															72,348				72,348
1-5 Years Maturity
Albireo Pharma, Inc.(10)(11)(17) 50 Milk Street Boston, MA 02109		Senior Secured			July 2024			Interest rate PRIME + 5.90% or Floor rate of 9.15%, 6.95% Exit Fee		$	10,000				10,177				10,268
Aldeyra Therapeutics, Inc.(11) 131 Hartwell Ave Lexington, MA 02421		Senior Secured			October 2023			Interest rate PRIME + 3.10% or Floor rate of 8.60%, 6.95% Exit Fee		$	15,000				15,579				15,773
Applied Genetic Technologies Corporation(11) 14193 Northwest 119th Terrace Alachua, FL 32615		Senior Secured			April 2024			Interest rate PRIME + 6.50% or Floor rate of 9.75%, 6.95% Exit Fee		$	20,000				20,241				20,238
Aveo Pharmaceuticals, Inc.(11)(15) 30 Winter Street Boston, MA 02108		Senior Secured			September 2023			Interest rate PRIME + 6.40% or Floor rate of 9.65%, 6.95% Exit Fee		$	35,000				35,603				35,214
Axsome Therapeutics, Inc.(10)(13) 22 Courtlandt St. New York, NY 10007		Senior Secured			October 2025			Interest rate PRIME + 5.90% or Floor rate of 9.15%, 5.82% Exit Fee		$	50,000				49,627				51,618
Bicycle Therapeutics PLC(5)(10)(11) Meditrina Building, B900 Cambridge, UK CB22 3AT		Senior Secured			October 2024			Interest rate PRIME + 5.60% or Floor rate of 8.85%, 5.00% Exit Fee		$	24,000				24,182				24,153
BiomX, INC (5)(10) 7 Pinhas Sapir St., 2nd Floor Ness Ziona, Israel 7403635		Senior Secured			September 2025			Interest rate PRIME + 5.70% or Floor rate of 8.95%, 6.55% Exit Fee		$	9,000				8,927				8,927
BridgeBio Pharma LLC(12)(13)(16)(17) 421 Kipling Street Palo Alto, CA 94301		Senior Secured			May 2025			Interest rate PRIME + 4.40% or Floor rate of 7.65%, 5.54% Exit Fee		$	100,000				103,238				104,680
Century Therapeutics(11) 3675 Market Street Philadelphia, PA 19104		Senior Secured			April 2024			Interest rate PRIME + 6.30% or Floor rate of 9.55%, 3.95% Exit Fee		$	10,000				10,028				10,397
Chemocentryx, Inc.(10)(11) 850 Maude Avenue Mountain View, CA 94043		Senior Secured			December 2022			Interest rate PRIME + 3.30% or Floor rate of 8.05%, 6.25% Exit Fee		$	18,951				19,958				19,955

 

18

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company		Type of Investment(1)		Maturity Date		Interest Rate and Floor(2)		Principal Amount				Cost(3)				Value(4)
		Senior Secured		February 2024		Interest rate PRIME + 3.25% or Floor rate of 8.50%, 7.15% Exit Fee		$ 5,000				$5,130				$5,131
Total Chemocentryx, Inc.								$	23,951				25,088				25,086
Codiak Biosciences, Inc.(11)(17) 500 Technology Square Cambridge, MA 02139		Senior Secured		October 2025		Interest rate PRIME + 5.00% or Floor rate of 8.25%, 5.50% Exit Fee		$	25,000				25,404				25,374
Corium, Inc.(16) 4558 50th Street, SE Grand Rapids, MI 49512		Senior Secured		September 2026		Interest rate PRIME + 5.70% or Floor rate of 8.95%, 7.75% Exit Fee		$	91,500				90,618				90,618
Eloxx Pharmaceuticals, Inc.(15) 480 Arsenal Way, Suite 130 Watertown, MA 02472		Senior Secured		April 2025		Interest rate PRIME + 6.25% or Floor rate of 9.50%, 6.55% Exit Fee		$	12,500				12,360				12,360
G1 Therapeutics, Inc.(10)(11)(17) 700 Park Offices Drive Research Triangle Park, NC 27709		Senior Secured		June 2025		Interest rate PRIME + 6.20% or Floor rate of 9.45%, 6.95% Exit Fee		$	26,000				26,341				26,524
Geron Corporation(10)(13) 149 Commonwealth Drive Menlo Park, CA 94025		Senior Secured		October 2024		Interest rate PRIME + 5.75% or Floor rate of 9.00%, 6.55% Exit Fee		$	22,750				22,913				22,933
Hibercell, Inc.(15) 619 West 54th Street New York, NY 10019		Senior Secured		May 2025		Interest rate PRIME + 5.40% or Floor rate of 8.65%, 4.95% Exit Fee		$	17,000				16,968				16,968
Humanigen, Inc.(9)(10) 533 Airport Boulevard Burlingame, CA 94010		Senior Secured		March 2025		Interest rate PRIME + 5.50% or Floor rate of 8.75%, 6.75% Exit Fee		$	20,000				20,126				19,957
Kaleido Biosciences, Inc.(13) 65 Hayden Avenue Lexington, MA 02421		Senior Secured		January 2024		Interest rate PRIME + 6.10% or Floor rate of 9.35%, 7.55% Exit Fee		$	22,500				23,351				23,371
Locus Biosciences(15) 523 Davis Drive, Suite 350 Morrisville, NC 27709		Senior Secured		July 2025		Interest rate PRIME + 6.10% or Floor rate of 9.35%, 4.95% Exit Fee		$	8,000				7,938				7,896
Nabriva Therapeutics(5)(10) 25-28 North Wall Quay IFSC, Dublin 1, Ireland		Senior Secured		June 2023		Interest rate PRIME + 4.30% or Floor rate of 9.80%, 6.95% Exit Fee		$	5,000				5,444				5,418
Phathom Pharmaceuticals, Inc.(10)(15)(16) 100 Campus Drive, Suite 102 Florham Park, NJ 07932		Senior Secured		October 2026		Interest rate PRIME + 2.25% or Floor rate of 5.50%, PIK Interest 3.35%, 7.50% Exit Fee		$	86,500				85,035				85,035
Scynexis, Inc. 101 Hudson Street, Suite 3610 Jersey City, NJ 07302		Senior Secured		March 2025		Interest rate PRIME + 5.80% or Floor rate of 9.05%, 3.95% Exit Fee		$	16,000				15,765				15,765
Seres Therapeutics, Inc.(11) 215 First St Cambridge, MA 02142		Senior Secured		November 2023		Interest rate PRIME + 4.40% or Floor rate of 9.65%, 4.85% Exit Fee		$	25,000				25,598				26,265
Syndax Pharmaceutics Inc.(13) 35 Gatehouse Drive Waltham, MA 02451		Senior Secured		September 2023		Interest rate PRIME + 5.10% or Floor rate of 9.85%, 4.99% Exit Fee		$	20,000				20,538				20,872
uniQure B.V.(5)(10)(11)(13)(16)(17) Paasheuvelweg 25a 1105 BP Amsterdam, Netherlands		Senior Secured		June 2023		Interest rate PRIME + 3.35% or Floor rate of 8.85%, 4.95% Exit Fee		$	35,000				35,975				36,345
		Senior Secured		June 2023		Interest rate PRIME + 5.00% or Floor rate of 8.25%, 1.65% Exit Fee		$	35,000				35,354				35,698
Total uniQure B.V.								$	70,000				71,329				72,043

 

19

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company		Type of Investment(1)		Maturity Date				Interest Rate and Floor(2)		Principal Amount				Cost(3)				Value(4)
Unity Biotechnology, Inc.(10)(11) 3280 Bayshore Blvd Brisbane, CA 94005		Senior Secured			August 2024			Interest rate PRIME + 6.10% or Floor rate of 9.35%, 6.25% Exit Fee		$	25,000			$	25,346			$	25,921
Valo Health, LLC (p.k.a. Integral Health Holdings, LLC)(11) 399 Boylston Street Boston, MA 02116		Senior Secured			May 2024			Interest rate PRIME + 6.45% or Floor rate of 9.70%, 3.85% Exit Fee		$	11,500				11,481				11,537
X4 Pharmaceuticals, Inc.(11)(13) 955 Massachusetts Ave Cambridge, MA 02139		Senior Secured			July 2024			Interest rate PRIME + 3.75% or Floor rate of 8.75%, 8.80% Exit Fee		$	32,500				33,870				34,177
Yumanity Therapeutics, Inc.(11) 790 Memorial Drive Suite 2C Cambridge, MA 02139		Senior Secured			January 2024			Interest rate PRIME + 4.00% or Floor rate of 8.75%, 5.92% Exit Fee		$	14,106				14,542				14,588
Subtotal: 1-5 Years Maturity															857,657				863,976
Subtotal: Drug Discovery & Development (70.00%)*															930,005				936,324
Healthcare Services, Other
1-5 Years Maturity
Carbon Health Technologies, Inc.(13)(17)(19) 55 Pacific Avenue, Suite 100 San Francisco, CA 94111		Senior Secured			March 2025			Interest rate PRIME + 5.60% or Floor rate of 8.85%, 3.95% Exit Fee		$	11,250				11,241				11,258
Equality Health, LLC (13)(14)(17) 521 S. 3rd St. Phoenix, AZ 85004		Senior Secured			February 2026			Interest rate PRIME + 6.25% or Floor rate of 9.50%, PIK Interest 1.55%		$	35,306				34,984				35,075
Subtotal: 1-5 Years Maturity															46,225				46,333
Subtotal: Healthcare Services, Other (3.46%)*															46,225				46,333
Information Services
Under 1 Year Maturity
Planet Labs, Inc. (11) 490 2nd Street San Francisco, CA 94107		Senior Secured			June 2022			Interest rate PRIME + 5.50% or Floor rate of 11.00%, 3.00% Exit Fee		$	25,000				25,317				25,317
Subtotal: Under 1 Year Maturity															25,317				25,317
1-5 Years Maturity
Yipit, LLC (17)(18) 22 West 19th Street New York, NY 10011		Senior Secured			September 2026			Interest rate 1-month LIBOR + 9.08% or Floor rate of 10.08%		$	45,900				44,984				44,984
Subtotal: 1-5 Years Maturity															44,984				44,984
Subtotal: Information Services (5.26%)*															70,301				70,301
Internet Consumer & Business Services
Under 1 Year Maturity
Nextroll, Inc. (13)(14)(19) 2300 Harrison Street San Francisco, CA 94110		Senior Secured			June 2022			Interest rate PRIME + 3.75% or Floor rate of 7.00%, PIK Interest 2.95%, 3.50% Exit Fee		$	21,395				21,950				21,950
Subtotal: Under 1 Year Maturity															21,950				21,950
1-5 Years Maturity
AppDirect, Inc. (11)(17) 650 California Street San Francisco, CA 92108		Senior Secured			August 2024			Interest rate PRIME + 5.90% or Floor rate of 9.15%, 7.95% Exit Fee		$	30,790				31,230				32,253
ePayPolicy Holdings, LLC (11)(17) 1120 S. Capital of Texas Hwy Austin, TX 78746		Senior Secured			December 2024			Interest rate 3-month LIBOR + 8.50% or Floor rate of 9.50%		$	8,169				7,999				8,129
EverFi, Inc.(13)(14)(16) 3299 K St NW Washington, D.C., DC 20007		Senior Secured			May 2022			Interest rate PRIME + 3.90% or Floor rate of 9.15%, PIK Interest 1.50%		$	85,564				85,210				85,210
Houzz, Inc. (9)(14) 540 Bryant Street Palo Alto, CA 94301		Convertible Debt			May 2028			PIK Interest 5.50%		$	20,390				20,390				20,390

 

20