Annual report pursuant to Section 13 and 15(d)

Schedule 12-14s - CONSOLIDATED SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES (Tables)

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Schedule 12-14s - CONSOLIDATED SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES (Tables)
 12 Months Ended
Dec. 31, 2023
Investments in and Advances to Affiliates [Abstract]  
Schedule of Investments in and Advances to Affiliates, Schedule of Investments
(in thousands)
Portfolio Company
Investment (1)
Amount of Interest and Fees Credited to Income (2)
Realized Gain (Loss) Fair Value as of December 31, 2022
Gross Additions (3)
Gross Reductions (4)
Net Change in Unrealized Appreciation/ (Depreciation) Fair Value as of December 31, 2023
Control Investments
Majority Owned Control Investments
Coronado Aesthetics, LLC (8)
Preferred Stock $ —  $ —  $ 313  $ —  —  $ (53) $ 260 
  Common Stock —  —  6  —  —  (4) 2 
Gibraltar Acquisition LLC (pka as Gibraltar Business Capital, LLC) (5)
Unsecured Debt 3,439  —  21,700  9,912  —  2,866  34,478 
  Member Units —  —  15,244  6,000  —  6,790  28,034 
Hercules Adviser LLC (6)
Unsecured Debt 608  —  12,000  —  —  —  12,000 
Member Units —  —  19,153  —  —  9,560  28,713 
Total Majority Owned Control Investments $ 4,047  $ —  $ 68,416  $ 15,912  $ —  $ 19,159  $ 103,487 
Other Control Investments
Tectura Corporation(7)
Senior Debt $ 690  $ —  $ 8,042  $ —  $ (13,263) $ 13,471  $ 8,250 
  Preferred Stock —  —  —  13,263  —  (10,000) 3,263 
  Common Stock —  —  —  —  —  4  4 
Total Other Control Investments   $ 690  $ —  $ 8,042  $ 13,263  $ (13,263) $ 3,475  $ 11,517 
Total Control Investments $ 4,737  $ —  $ 76,458  $ 29,175  $ (13,263) $ 22,634  $ 115,004 
(1)Stock and warrants are generally non-income producing and restricted.
(2)Represents the total amount of interest, fees, or dividends credited to income for the period an investment was an affiliate or control investment.
(3)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, paid-in-kind interest or dividends, the amortization of discounts and closing fees and the exchange of one or more existing securities for one or more new securities.
(4)Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include previously recognized depreciation on investments that become control or affiliate investments during the period.
(5)As of March 31, 2018, the Company's investment in Gibraltar Acquisition LLC (p.k.a. Gibraltar Business Capital, LLC) became classified as a control investment as a result of obtaining a controlling financial interest. Gibraltar Acquisition LLC is a wholly-owned subsidiary, which is the holding company for their wholly-owned affiliated portfolio companies, Gibraltar Business Capital, LLC and Gibraltar Equipment Finance, LLC. The subsidiary has no significant assets or liabilities, other than their equity and debt investments and equity interest in Gibraltar Business Capital, LLC and Gibraltar Equipment Finance, LLC, respectively.
(6)Hercules Adviser LLC is owned by Hercules Capital Management LLC and presented with Hercules Partner Holdings, LLC which are both wholly owned by the Company. Please refer to “Note 1 - Description of Business” for additional disclosure.
(7)As of March 31, 2017, the Company's investment in Tectura Corporation became classified as a control investment as of result of obtaining more than 50% representation on the portfolio company's board. In May 2018, the Company purchased common shares, thereby obtaining greater than 25% of voting securities of Tectura as of June 30, 2018.
(8)As of December 31, 2021, the Company's investment in Coronado Aesthetics, LLC became classified as a control investment as a result of obtaining more than 25% of the voting securities of the portfolio company.
CONSOLIDATED SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES
As of and for the year ended December 31, 2022
(in thousands)
Portfolio Company
Investment (1)
Amount of Interest and Fees Credited to Income (2)
Realized Gain (Loss) Fair Value as of December 31, 2021
Gross Additions (3)
Gross Reductions (4)
Net Change in Unrealized Appreciation/ (Depreciation) Fair Value as of December 31, 2022
Control Investments
Majority Owned Control Investments
Coronado Aesthetics, LLC (9)
Preferred Stock $ —  $ —  $ 500  $ —  —  $ (187) $ 313 
Common Stock —  —  65  —  —  (59) 6 
Gibraltar Business Capital, LLC (5)
Unsecured Debt 3,453  —  23,212  82  —  (1,594) 21,700 
Preferred Stock —  —  19,393  —  —  (5,256) 14,137 
Common Stock —  —  1,225  —  —  (118) 1,107 
Hercules Adviser LLC (6)
Unsecured Debt 546  —  8,850  3,150  —  —  12,000 
Member Units —  —  11,990  —  —  7,163  19,153 
Total Majority Owned Control Investments $ 3,999  $ —  $ 65,235  $ 3,232  $ —  $ (51) $ 68,416 
Other Control Investments
Tectura Corporation(7)
Senior Debt $ 690  $ —  $ 8,269  $ —  $ —  $ (227) $ 8,042 
Preferred Stock —  —  —  —  —  —  — 
Common Stock —  —  —  —  —  —  — 
Total Other Control Investments $ 690  $ —  $ 8,269  $ —  $ —  $ (227) $ 8,042 
Total Control Investments $ 4,689  $ —  $ 73,504  $ 3,232  $ —  $ (278) $ 76,458 
Affiliate Investments
Black Crow AI, Inc. (8)
Preferred Stock $ —  $ 3,772  $ 1,120  $ —  $ (1,000) $ (120) $ — 
Pineapple Energy LLC (8)
Senior Debt 1,204  (2,014) 7,747  —  (7,780) 33  — 
Common Stock —  —  591  —  (4,767) 4,176  — 
Total Affiliate Investments $ 1,204  $ 1,758  $ 9,458  $ —  $ (13,547) $ 4,089  $ — 
Total Control and Affiliate Investments $ 5,893  $ 1,758  $ 82,962  $ 3,232  $ (13,547) $ 3,811  $ 76,458 
(1)Stock and warrants are generally non-income producing and restricted.
(2)Represents the total amount of interest, fees, or dividends credited to income for the period an investment was an affiliate or control investment.
(3)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, paid-in-kind interest or dividends, the amortization of discounts and closing fees and the exchange of one or more existing securities for one or more new securities.
(4)Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include previously recognized depreciation on investments that become control or affiliate investments during the period.
(5)As of March 31, 2018, the Company's investment in Gibraltar Business Capital, LLC became classified as a control investment as a result of obtaining a controlling financial interest.
(6)Hercules Adviser LLC is a wholly owned subsidiary providing investment management and other services to the Adviser Funds and other External Parties.
(7)As of March 31, 2017, the Company's investment in Tectura Corporation became classified as a control investment as of result of obtaining more than 50% representation on the portfolio company's board. In May 2018, the Company purchased common shares, thereby obtaining greater than 25% of voting securities of Tectura as of June 30, 2018.
(8)As of September 30, 2022, Black Crow AI, Inc. and Pineapple Energy LLC were no longer affiliates as defined under the 1940 Act.
(9)As of December 31, 2021, the Company's investment in Coronado Aesthetics, LLC became classified as a control investment as a result of obtaining more than 25% of the voting securities of the portfolio company.
CONSOLIDATED SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES
As of and for the year ended December 31, 2023
(in thousands)
Portfolio Company Industry
Type of Investment (1)
Maturity Date Interest Rate and Floor Principal
or Shares		 Cost
Value (2)
Control Investments
Majority Owned Control Investments
Coronado Aesthetics, LLC Medical Devices & Equipment Preferred Series A Equity 5,000,000 $ 250  $ 260 
Medical Devices & Equipment Common Stock 180,000 —  2 
Total Coronado Aesthetics, LLC $ 250  $ 262 
Gibraltar Acquisition LLC (p.k.a. Gibraltar Business Capital, LLC)(3)
Diversified Financial Services Unsecured Debt September 2026
Interest rate FIXED 11.50%
 $ 25,000  24,663  24,663 
Diversified Financial Services Unsecured Debt September 2026
Interest rate FIXED 11.95%
 $ 10,000  9,815  9,815 
Diversified Financial Services Member Units 1 34,006  28,034 
Total Gibraltar Acquisition, LLC $ 68,484  $ 62,512 
Hercules Adviser LLC(4)
Diversified Financial Services Unsecured Debt June 2025
Interest rate FIXED 5.00%
 $ 12,000  12,000  12,000 
Diversified Financial Services Member Units 1 35  28,713 
Total Hercules Adviser LLC $ 12,035  $ 40,713 
Total Majority Owned Control Investments (5.74%)*
 $ 80,769  $ 103,487 
Other Control Investments
Tectura Corporation Consumer & Business Services Senior Secured Debt July 2024
Interest rate FIXED 8.25%
 $ 8,250  $ 8,250  $ 8,250 
Consumer & Business Services Common Stock 414,994,863  900  4 
Consumer & Business Services Preferred Series BB Equity 1,000,000  —  12 
Consumer & Business Services Preferred Series C Equity 3,235,298 13,263  3,251 
Total Tectura Corporation $ 22,413  $ 11,517 
Total Other Control Investments (0.64%)*
 $ 22,413  $ 11,517 
Total Control Investments (6.38%)*
 $ 103,182  $ 115,004 
*Value as a percent of net assets
(1)Stock and warrants are generally non-income producing and restricted.
(2)All of the Company’s control and affiliate investments are Level 3 investments valued using significant unobservable inputs.
(3)Gibraltar Acquisition LLC is a wholly-owned subsidiary, which is the holding company for their wholly-owned affiliated portfolio companies, Gibraltar Business Capital, LLC and Gibraltar Equipment Finance, LLC. The subsidiary has no significant assets or liabilities, other than their equity and debt investments and equity interest in Gibraltar Business Capital, LLC and Gibraltar Equipment Finance, LLC, respectively.
(4)Hercules Adviser LLC is owned by Hercules Capital Management LLC and presented with Hercules Partner Holdings, LLC which are both wholly owned by the Company. Please refer to “Note 1” for additional disclosure.
CONSOLIDATED SCHEDULE OF INVESTMENTS IN AND ADVANCES TO AFFILIATES
As of and for the year ended December 31, 2022
(in thousands)
Portfolio Company Industry
Type of Investment (1)
 Maturity Date Interest Rate and Floor
Principal or Shares
 Cost
Value (2)
Control Investments
Majority Owned Control Investments
Coronado Aesthetics, LLC Medical Devices & Equipment Preferred Series A Equity 5,000,000 $ 250  $ 313 
Medical Devices & Equipment Common Stock 180,000 —  6 
Total Coronado Aesthetics, LLC $ 250  $ 319 
Gibraltar Business Capital, LLC Diversified Financial Services Unsecured Debt September 2026
Interest rate FIXED 14.50%
 $ 15,000  14,715  12,802 
Diversified Financial Services Unsecured Debt September 2026
Interest rate FIXED 11.50%
 $ 10,000  9,852  8,898 
Diversified Financial Services Preferred Series A Equity 10,602,752 26,122  14,137 
Diversified Financial Services Common Stock 830,000 1,884  1,107 
Total Gibraltar Business Capital, LLC $ 52,573  $ 36,944 
Hercules Adviser LLC Diversified Financial Services Unsecured Debt June 2025
Interest rate FIXED 5.00%
 $ 12,000  12,000  12,000 
Diversified Financial Services Member Units 1 35  19,153 
Total Hercules Adviser LLC $ 12,035  $ 31,153 
Total Majority Owned Control Investments (4.88%)*
 $ 64,858  $ 68,416 
Other Control Investments
Tectura Corporation Consumer & Business Services Senior Secured Debt July 2024
PIK Interest 5.00%
 $ 10,680  $ 240  $ — 
Consumer & Business Services Senior Secured Debt July 2024
Interest rate FIXED 8.25%
 $ 8,250  8,250  8,042 
Consumer & Business Services Senior Secured Debt July 2024
PIK Interest 5.00%
 $ 13,023  13,023  — 
Consumer & Business Services Preferred Series BB Equity 1,000,000 —  — 
Consumer & Business Services Common Stock 414,994,863 900  — 
Total Tectura Corporation $ 22,413  $ 8,042 
Total Other Control Investments (0.58%)*
 $ 22,413  $ 8,042 
Total Control Investments (5.46%)*
 $ 87,271  $ 76,458 
*Value as a percent of net assets
(1)Stock and warrants are generally non-income producing and restricted.
(2)All of the Company’s control and affiliate investments are Level 3 investments valued using significant unobservable inputs.