Edgar Filing: HERCULES TECHNOLOGY GROWTH CAPITAL INC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For The Quarterly Period Ended March 31, 2015

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

Commission File Number: 814-00702

HERCULES TECHNOLOGY GROWTH

CAPITAL, INC.

(Exact Name of Registrant as Specified in its Charter)

Maryland		743113410
(State or Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)
400 Hamilton Ave., Suite 310 Palo Alto, California (Address of Principal Executive Offices)		94301 (Zip Code)
		94301 (Zip Code)

(650) 289-3060

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ¨ No ¨

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

Large accelerated filer	x	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	¨

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

On May 4, 2015, there were 72,584,695 shares outstanding of the Registrant’s common stock, $0.001 par value.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

FORM 10-Q TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		3
Item 1.	Consolidated Financial Statements	3
	Consolidated Statement of Assets and Liabilities as of March 31, 2015 (unaudited) and December 31, 2014	3
	Consolidated Statement of Operations for the three month periods ended March 31, 2015 and 2014 (unaudited)	5
	Consolidated Statement of Changes in Net Assets for the three month periods ended March 31, 2015 and 2014 (unaudited)	6
	Consolidated Statement of Cash Flows for the three month periods ended March 31, 2015 and 2014 (unaudited)	7
	Consolidated Schedule of Investments as of March 31, 2015 (unaudited)	8
	Consolidated Schedule of Investments as of December 31, 2014	22
	Notes to Consolidated Financial Statements (unaudited)	36
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	64
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	98
Item 4.	Controls and Procedures	99
PART II. OTHER INFORMATION		100
Item 1.	Legal Proceedings	100
	Item 1A. Risk Factors	100
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	101
Item 3.	Defaults Upon Senior Securities	101
Item 4.	Mine Safety Disclosures	101
Item 5.	Other Information	101
Item 6.	Exhibits	102
SIGNATURES		103

PART I: FINANCIAL INFORMATION

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

ITEM 1.

CONSOLIDATED FINANCIAL STATEMENTS

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES

(unaudited)

(dollars in thousands, except per share data)

	March 31, 2015			December 31, 2014
Assets
Investments:
Non-control/Non-affiliate investments (cost of $1,154,801 and $1,019,799, respectively)	$	1,150,639		$	1,012,738
Affiliate investments (cost of $16,007 and $15,538, respectively)		10,782			7,999
Total investments, at value (cost of $1,170,808 and $1,035,337, respectively)		1,161,421			1,020,737
Cash and cash equivalents		171,756			227,116
Restricted cash		21,949			12,660
Interest receivable		9,102			9,453
Other assets		22,860			29,257
Total assets	$	1,387,088		$	1,299,223

Liabilities
Accounts payable and accrued liabilities	$	9,320		$	14,101
Long-term Liabilities (Convertible Senior Notes)		17,375			17,345
2017 Asset-Backed Notes		4,203			16,049
2021 Asset-Backed Notes		129,300			129,300
2019 Notes		170,364			170,364
2024 Notes		103,000			103,000
Long-term SBA Debentures		190,200			190,200
Total liabilities	$	623,762		$	640,359

Net assets consist of:
Common stock, par value		73			65
Capital in excess of par value		760,034			657,233
Unrealized depreciation on investments		(11,462	)		(17,076	)
Accumulated realized gains on investments		17,391			14,079
Undistributed net investment income (Distributions in excess of net investment income)		(2,710	)		4,563
Total net assets	$	763,326		$	658,864
Total liabilities and net assets	$	1,387,088		$	1,299,223

Shares of common stock outstanding ($0.001 par value, 100,000,000 authorized)		72,891			64,715
Net asset value per share	$	10.47		$	10.18

See notes to consolidated financial statements.

The following table presents the assets and liabilities of our consolidated securitization trusts for the asset-backed notes (see Note 4), which are variable interest entities (“VIE”). The assets of our securitization VIEs can only be used to settle obligations of our consolidated securitization VIEs, these liabilities are only the obligations of our consolidated securitization VIEs, and the creditors (or beneficial interest holders) do not have recourse to our general credit. These assets and liabilities are included in the Consolidated Statement of Assets and Liabilities above.

(Dollars in thousands)	March 31, 2015		December 31, 2014
Assets
Restricted Cash	$	21,949	$	12,660
Total investments, at value (cost of $261,304 and $296,314, respectively)		262,394		291,464
Total assets	$	284,343	$	304,124

Liabilities
Asset-Backed Notes	$	133,503	$	145,349
Total liabilities	$	133,503	$	145,349

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

(in thousands, except per share data)

	For the Three Months Ended March 31,
	2015			2014
Investment income:
Interest income
Non-Control/Non-Affiliate investments	$	30,459		$	29,382
Affiliate investments		100			1,464
Total interest income		30,559			30,846
Fees
Non-Control/Non-Affiliate investments		1,934			4,913
Affiliate investments		1			11
Total fees		1,935			4,924
Total investment income		32,494			35,770
Operating expenses:
Interest		7,854			7,148
Loan fees		1,513			2,076
General and administrative		3,618			2,461
Employee Compensation:
Compensation and benefits		3,796			4,221
Stock-based compensation		2,719			1,560
Total employee compensation		6,515			5,781
Total operating expenses		19,500			17,466
Loss on debt extinguishment (Long-term Liabilities - Convertible Senior Notes)		(1	)		—
Net investment income		12,993			18,304
Net realized gain on investments
Non-Control/Non-Affiliate investments		3,312			4,872
Total net realized gain on investments		3,312			4,872
Net increase in unrealized appreciation (depreciation) on investments
Non-Control/Non-Affiliate investments		3,301			(1,038	)
Affiliate investments		2,313			47
Total net unrealized appreciation (depreciation) on investments		5,614			(991	)

Total net realized and unrealized gain (loss)		8,926			3,881
Net increase in net assets resulting from operations	$	21,919		$	22,185

Net investment income before investment gains and losses per common share:
Basic	$	0.20		$	0.30
Change in net assets per common share:
Basic	$	0.33		$	0.36
Diluted	$	0.33		$	0.35
Weighted average shares outstanding
Basic		63,783			60,870
Diluted		64,163			62,695
Dividends declared per common share:
Basic	$	0.31		$	0.31

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

(unaudited)

(dollars and shares in thousands)

																Undistributed
																net investment
																income/
										Unrealized			Accumulated			(Distributions			Provision for
							Capital in			Appreciation			Realized			in excess of			Income Taxes
	Common Stock						excess			(Depreciation)			Gains (Losses)			investment			on Investment			Net
	Shares				Par Value		of par value			on Investments			on Investments			income)			Gains			Assets
Balance at December 31, 2013		61,837		$		62	$	656,594		$	3,598		$	(15,240	)	$	5,335		$	(342	)	$	650,007
Net increase (decrease) in net assets resulting from operations		—				—		—			(991	)		4,872			18,304			—			22,185
Issuance of common stock due to stock option exercises		62				—		727			—			—			—			—			727
Retired shares from net issuance		(48	)			—		(748	)		—			—			—			—			(748	)
Retired shares for restricted stock vesting		(120	)			—		(1,724	)		—			—			—			—			(1,724	)
Issuance of common stock as stock dividend		29				—		440			—			—			—			—			440
Dividends distributed		—				—		—			—			—			(19,165	)		—			(19,165	)
Stock-based compensation		—				—		1,580			—			—			—			—			1,580
Balance at March 31, 2014		61,760		$		62	$	656,869		$	2,607		$	(10,368	)	$	4,474		$	(342	)	$	653,302

Balance at December 31, 2014		64,715		$		65	$	657,233		$	(17,076	)	$	14,079		$	4,905		$	(342	)	$	658,864
Net increase (decrease) in net assets resulting from operations		—				—		—			5,614			3,312			12,993			—			21,919
Public offering, net of offering expenses		7,591				8		100,084			—			—			—			—			100,092
Issuance of common stock due to stock option exercises		34				—		406			—			—			—			—			406
Retired shares from net issuance		(27	)			—		(401	)		—			—			—			—			(401	)
Issuance of common stock under restricted stock plan		580				—		—			—			—			—			—			—
Retired shares for restricted stock vesting		(42	)			—		(591	)		—			—			—			—			(591	)
Issuance of common stock as stock dividend		40				—		562			—			—			—			—			562
Dividends distributed		—				—		—			—			—			(20,266	)		—			(20,266	)
Stock-based compensation		—				—		2,741			—			—			—			—			2,741
Balance at March 31, 2015		72,891		$		73	$	760,034		$	(11,462	)	$	17,391		$	(2,368	)	$	(342	)	$	763,326

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

(dollars in thousands)


	For the Three Months Ended March 31,
Cash flows from operating activities:	2015			2014
Net increase in net assets resulting from operations	$	21,919		$	22,185
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchase of investments		(209,387	)		(113,887	)
Principal and fee payments received on investments		75,368			135,008
Proceeds from the sale of investments		7,001			7,598
Net unrealized depreciation (appreciation) on investments		(5,614	)		991
Net realized gain on investments		(3,312	)		(4,872	)
Accretion of paid-in-kind principal		(665	)		(659	)
Accretion of loan discounts		(1,356	)		(3,378	)
Accretion of loan discount on Convertible Senior Notes		62			271
Loss on debt extinguishment (Long-term Liabilities - Convertible Senior Notes)		1			—
Payment of loan discount on Convertible Senior Notes		(2	)		—
Accretion of loan exit fees		(2,767	)		(2,411	)
Change in deferred loan origination revenue		1,540			(457	)
Unearned fees related to unfunded commitments		527			(125	)
Amortization of debt fees and issuance costs		1,288			1,913
Depreciation		58			54
Stock-based compensation and amortization of restricted stock grants		2,741			1,579
Change in operating assets and liabilities:
Interest and fees receivable		351			786
Prepaid expenses and other assets		2,674			(3,401	)
Accounts payable		(504	)		(41	)
Accrued liabilities		(3,978	)		(5,307	)
Net cash provided by (used in) operating activities		(114,055	)		35,847

Cash flows from investing activities:
Purchases of capital equipment		(42	)		(4	)
Reduction of (investment in) restricted cash		(9,289	)		1,487
Net cash provided by (used in) investing activities		(9,331	)		1,483

Cash flows from financing activities:
Issuance of common stock, net		100,092			(135	)
Issuance (retirement) of employee shares		(586	)		(1,738	)
Dividends paid		(19,704	)		(18,725	)
Repayments of 2017 Asset-Backed Notes		(11,846	)		(25,775	)
Repayments of Long-Term SBA Debentures		—			(34,800	)
Cash Paid for redemption of Convertible Senior Notes		(30	)		—
Fees paid for credit facilities and debentures		100			13
Net cash provided by (used in) financing activities		68,026			(81,160	)
Net decrease in cash and cash equivalents		(55,360	)		(43,830	)
Cash and cash equivalents at beginning of period		227,116			268,368
Cash and cash equivalents at end of period	$	171,756		$	224,538

Supplemental non-cash investing and financing activities:
Dividends Reinvested	$	562		$	440
Paid-in-kind Principal	$	1,356		$	1,207

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Debt Investment
Communications & Networking
1-5 Years Maturity
OpenPeak, Inc.^(10)(12)	Communications & Networking	Senior Secured	April 2017	Interest rate PRIME + 8.75% or Floor rate of 12.00%	$	11,680	$	11,864	$	11,981
SkyCross, Inc.^(12)(13)	Communications & Networking	Senior Secured	January 2018	Interest rate PRIME + 9.70% or Floor rate of 12.95%	$	22,000		21,551		17,775
Subtotal: 1-5 Years Maturity								33,415		29,756
Subtotal: Communications & Networking (3.90%)*								33,415		29,756
Consumer & Business Products
1-5 Years Maturity
Antenna79 (p.k.a. Pong Research Corporation)^(11)(12)(13)	Consumer & Business Products	Senior Secured	December 2017	Interest rate PRIME + 6.75% or Floor rate of 10.00%, PIK Interest 2.50%	$	4,869		4,798		4,944
	Consumer & Business Products	Senior Secured	June 2016	Interest rate PRIME + 7.75% or Floor rate of 11.00%	$	183		183		182
Total Antenna79 (p.k.a. Pong Research Corporation)					$	5,052		4,981		5,126
Fluc, Inc.⁽⁸⁾	Consumer & Business Products	Convertible Senior Note	March 2017	Interest rate FIXED 4.00%	$	100		100		100
IronPlanet, Inc.⁽¹²⁾	Consumer & Business Products	Senior Secured	November 2017	Interest rate PRIME + 6.20% or Floor rate of 9.45%	$	37,500		36,911		36,911
The Neat Company^(11)(12)(13)	Consumer & Business Products	Senior Secured	September 2017	Interest rate PRIME + 7.75% or Floor rate of 11.00%, PIK Interest 1.00%	$	20,111		19,624		19,536
Subtotal: 1-5 Years Maturity								61,616		61,673
Subtotal: Consumer & Business Products (8.08%)*								61,616		61,673
Drug Delivery
1-5 Years Maturity
AcelRx Pharmaceuticals, Inc.^{(9)(10)(12)(13)}	Drug Delivery	Senior Secured	October 2017	Interest rate PRIME + 3.85% or Floor rate of 9.10%	$	25,000		25,020		25,261
Agile Therapeutics, Inc⁽¹²⁾	Drug Delivery	Senior Secured	December 2018	Interest rate PRIME + 5.75% or Floor rate of 9.00%	$	16,500		15,904		15,904
BIND Therapeutics, Inc.^(12)(13)	Drug Delivery	Senior Secured	July 2018	Interest rate PRIME + 5.10% or Floor rate of 8.35%	$	15,000		14,787		14,051
BioQuiddity Incorporated⁽¹²⁾	Drug Delivery	Senior Secured	May 2018	Interest rate PRIME + 8.00% or Floor rate of 11.25%	$	7,500		7,490		7,490
Celator Pharmaceuticals, Inc.^(10)(12)	Drug Delivery	Senior Secured	June 2018	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	15,000		14,846		14,886
Celsion Corporation^(10)(12)	Drug Delivery	Senior Secured	June 2017	Interest rate PRIME + 8.00% or Floor rate of 11.25%	$	9,122		9,071		9,243
Dance Biopharm, Inc.^(12)(13)	Drug Delivery	Senior Secured	November 2017	Interest rate PRIME + 7.40% or Floor rate of 10.65%	$	3,616		3,610		3,614
Edge Therapeutics, Inc.⁽¹²⁾	Drug Delivery	Senior Secured	March 2018	Interest rate PRIME + 5.95% or Floor rate of 10.45%	$	6,000		5,894		5,820
Egalet Corporation⁽¹²⁾	Drug Delivery	Senior Secured	July 2018	Interest rate PRIME + 6.15% or Floor rate of 9.40%	$	15,000		14,764		14,764
Neos Therapeutics, Inc.^(12)(13)	Drug Delivery	Senior Secured	October 2017	Interest rate PRIME + 7.25% or Floor rate of 10.50%	$	10,000		9,847		9,947
	Drug Delivery	Senior Secured	October 2017	Interest rate FIXED 9.00%	$	10,000		10,000		9,874
Total Neos Therapeutics, Inc.					$	20,000		19,847		19,821
Zosano Pharma, Inc.^(10)(12)	Drug Delivery	Senior Secured	June 2017	Interest rate PRIME + 6.80% or Floor rate of 12.05%	$	3,652		3,580		3,601
Subtotal: 1-5 Years Maturity								134,813		134,455
Subtotal: Drug Delivery (17.61%)*								134,813		134,455

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Drug Discovery & Development
Under 1 Year Maturity
Aveo Pharmaceuticals, Inc.^{(9)(10)(12)(13)}	Drug Discovery & Development	Senior Secured	December 2015	Interest rate PRIME + 7.15% or Floor rate of 11.90%	$	8,854	$	8,854	$	8,854
Concert Pharmaceuticals, Inc.⁽¹⁰⁾	Drug Discovery & Development	Senior Secured	October 2015	Interest rate PRIME + 3.25% or Floor rate of 8.50%	$	5,086		5,070		5,070
Insmed, Incorporated^(10)(12)	Drug Discovery & Development	Senior Secured	January 2016	Interest rate PRIME + 4.75% or Floor rate of 9.25%	$	25,000		24,958		24,958
Subtotal: Under 1 Year Maturity								38,882		38,882
1-5 Years Maturity
ADMA Biologics, Inc.^(10)(11)(12)	Drug Discovery & Development	Senior Secured	December 2017	Interest rate PRIME + 3.00% or Floor rate of 8.75%, PIK Interest 1.95%	$	15,225		15,011		15,236
Aveo Pharmaceuticals, Inc.^{(9)(10)(12)(13)}	Drug Discovery & Development	Senior Secured	January 2018	Interest rate PRIME + 6.65% or Floor rate of 11.90%	$	10,000		9,846		9,915
Celladon Corporation^(12)(13)	Drug Discovery & Development	Senior Secured	February 2018	Interest rate PRIME + 5.00% or Floor rate of 8.25%	$	10,000		10,106		10,101
Cempra, Inc.^(10)(12)	Drug Discovery & Development	Senior Secured	April 2018	Interest rate PRIME + 6.30% or Floor rate of 9.55%	$	18,000		18,035		18,215
Cerecor Inc.⁽¹²⁾	Drug Discovery & Development	Senior Secured	August 2017	Interest rate PRIME + 4.70% or Floor rate of 7.95%	$	7,500		7,411		7,387
Cerulean Pharma Inc.⁽¹²⁾	Drug Discovery & Development	Senior Secured	July 2018	Interest rate PRIME + 4.05% or Floor rate of 7.30%	$	15,000		14,718		14,718
Cleveland BioLabs, Inc.^(12)(13)	Drug Discovery & Development	Senior Secured	January 2017	Interest rate LIBOR + 6.20% or Floor rate of 10.45%	$	1,702		1,956		1,917
CTI BioPharma Corp. (p.k.a. Cell Therapeutics, Inc.)^(10)(12)	Drug Discovery & Development	Senior Secured	October 2016	Interest rate PRIME + 8.00% or Floor rate of 11.25%	$	8,117		8,638		8,618
	Drug Discovery & Development	Senior Secured	October 2016	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	4,030		4,110		4,093
	Drug Discovery & Development	Senior Secured	October 2016	Interest rate PRIME + 8.00% or Floor rate of 11.25%	$	4,030		4,110		4,093
Total CTI BioPharma Corp. (p.k.a. Cell Therapeutics, Inc.)					$	16,177		16,858		16,804
Dynavax Technologies^(9)(12)	Drug Discovery & Development	Senior Secured	July 2018	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	10,000		9,983		9,983
Epirus Biopharmaceuticals, Inc.⁽¹²⁾	Drug Discovery & Development	Senior Secured	April 2018	Interest rate PRIME + 4.70% or Floor rate of 7.95%	$	7,500		7,345		7,464
Genocea Biosciences, Inc.^(10)(12)	Drug Discovery & Development	Senior Secured	July 2018	Interest rate PRIME + 4.00% or Floor rate of 7.25%	$	12,000		11,881		11,881
Melinta Therapeutics⁽¹²⁾	Drug Discovery & Development	Senior Secured	June 2018	Interest rate PRIME + 5.00% or Floor rate of 8.25%	$	20,000		19,429		19,429
Neothetics, Inc. (p.k.a. Lithera, Inc)^(12)(13)	Drug Discovery & Development	Senior Secured	January 2018	Interest rate PRIME + 5.75% or Floor rate of 9.00%	$	10,000		9,806		9,829
Merrimack Pharmaceuticals, Inc.⁽¹²⁾	Drug Discovery & Development	Senior Secured	November 2018	Interest rate PRIME + 7.30% or Floor rate of 10.55%	$	40,000		40,515		40,515
Neuralstem, Inc.^(12)(13)	Drug Discovery & Development	Senior Secured	April 2017	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	9,489		9,389		9,389
uniQure B.V. ^{(4)(9)(10)(12)}	Drug Discovery & Development	Senior Secured	June 2018	Interest rate PRIME + 5.00% or Floor rate of 10.25%	$	20,000		19,878		20,240
XOMA Corporation^(9)(12)(13)	Drug Discovery & Development	Senior Secured	September 2018	Interest rate PRIME + 6.15% or Floor rate of 9.40%	$	20,000		19,536		19,536
Subtotal: 1-5 Years Maturity								241,703		242,559
Subtotal: Drug Discovery & Development (36.87%)*								280,585		281,441
Electronics & Computer Hardware
1-5 Years Maturity
Plures Technologies, Inc.^(7)(11)	Electronics & Computer Hardware	Senior Secured	October 2016	Interest rate LIBOR + 8.75% or Floor rate of 12.00%, PIK Interest 4.00%	$	267		180		—
Subtotal: 1-5 Years Maturity								180		—
Subtotal: Electronics & Computer Hardware (0.00%)*								180		—

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Energy Technology
Under 1 Year Maturity
Fluidic, Inc.^(10)(12)	Energy Technology	Senior Secured	March 2016	Interest rate PRIME + 8.00% or Floor rate of 11.25%	$	2,981	$	3,081	$	3,081
Stion Corporation^(5)(12)	Energy Technology	Senior Secured	March 2016	Interest rate PRIME + 8.75% or Floor rate of 12.00%	$	3,462		3,462		1,600
TAS Energy, Inc.^(10)(12)	Energy Technology	Senior Secured	December 2015	Interest rate PRIME + 7.75% or Floor rate of 11.00%	$	6,149		6,242		6,242
Subtotal: Under 1 Year Maturity								12,785		10,923
1-5 Years Maturity
Agrivida, Inc.^(12)(13)	Energy Technology	Senior Secured	December 2016	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	4,921		5,016		4,969
American Superconductor Corporation^(10)(12)	Energy Technology	Senior Secured	November 2016	Interest rate PRIME + 7.25% or Floor rate of 11.00%	$	6,667		6,964		6,843
	Energy Technology	Senior Secured	March 2017	Interest rate PRIME + 7.75% or Floor rate of 11.00%	$	1,500		1,460		1,446
Total American Superconductor Corporation					$	8,167		8,424		8,289
Amyris, Inc.^(9)(12)	Energy Technology	Senior Secured	February 2017	Interest rate PRIME + 6.25% or Floor rate of 9.50%	$	25,000		25,000		25,458
	Energy Technology	Senior Secured	February 2017	Interest rate PRIME + 5.25% or Floor rate of 8.50%	$	5,000		5,000		5,092
Total Amyris, Inc.					$	30,000		30,000		30,550
Modumetal, Inc.⁽¹²⁾	Energy Technology	Senior Secured	March 2017	Interest rate PRIME + 10.45% or Floor rate of 13.70%	$	2,708		2,760		2,744
Polyera Corporation^(12)(13)	Energy Technology	Senior Secured	June 2016	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	3,080		3,272		3,258
	Energy Technology	Senior Secured	April 2018	Interest rate PRIME + 6.70% or Floor rate of 9.95%	$	3,000		2,904		2,904
Total Polyera Corporation					$	6,080		6,176		6,162
Sungevity Development, LLC	Energy Technology	Senior Secured	October 2017	Interest rate PRIME + 3.70% or Floor rate 6.95%	$	25,000		23,963		23,963
	Energy Technology	Senior Secured	April 2016	Interest rate PRIME + 3.70% or Floor rate 6.95%	$	16,017		16,017		16,017
Total Sungevity Development, LLC					$	41,017		39,980		39,980
Subtotal: 1-5 Years Maturity								92,356		92,694
Subtotal: Energy Technology (13.57%)*								105,141		103,617
Healthcare Services, Other
1-5 Years Maturity
Chromadex Corporation^(12)(13)	Healthcare Services, Other	Senior Secured	April 2018	Interest rate PRIME + 6.10% or Floor rate of 9.35%	$	2,500		2,427		2,446
InstaMed Communications, LLC^(12)(13)	Healthcare Services, Other	Senior Secured	March 2018	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	5,000		5,061		5,011
Subtotal: 1-5 Years Maturity								7,488		7,457
Subtotal: Healthcare Services, Other (0.98%)*								7,488		7,457
Information Services
Under 1 Year Maturity
Eccentex Corporation^(10)(12)	Information Services	Senior Secured	May 2015	Interest rate PRIME + 7.00% or Floor rate of 10.25%	$	84		99		99
Subtotal: Under 1 Year Maturity								99		99
1-5 Years Maturity
INMOBI Inc.^{(4)(9)(11)(12)}	Information Services	Senior Secured	December 2016	Interest rate PRIME + 7.00% or Floor rate of 10.25%	$	14,612		14,612		14,612
	Information Services	Senior Secured	December 2017	Interest rate PRIME + 5.75% or Floor rate of 9.00%, PIK Interest 2.50%	$	15,107		15,003		15,003
Total INMOBI Inc.					$	29,719		29,615		29,615
InXpo, Inc.^(12)(13)	Information Services	Senior Secured	October 2016	Interest rate PRIME + 7.75% or Floor rate of 10.75%	$	1,800		1,828		1,819
Subtotal: 1-5 Years Maturity								31,443		31,434
Subtotal: Information Services (4.13%)*								31,542		31,533

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Internet Consumer & Business Services
Under 1 Year Maturity
Education Dynamics, LLC^(11)(13)	Internet Consumer & Business Services	Senior Secured	March 2016	Interest rate LIBOR + 12.50% or Floor rate of 12.50%, PIK Interest 1.50%	$	20,642	$	20,629	$	20,629
Gazelle, Inc.^(11)(13)	Internet Consumer & Business Services	Senior Secured	December 2015	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	407		407		407
NetPlenish^(7)(8)(13)	Internet Consumer & Business Services	Convertible Senior Note	April 2015	Interest rate FIXED 10.00%	$	65		65		—
	Internet Consumer & Business Services	Senior Secured	September 2015	Interest rate FIXED 10.00%	$	381		373		—
Total NetPlenish					$	446		438		—
Tectura Corporation^(7)(11)(14)	Internet Consumer & Business Services	Senior Secured	May 2014	Interest rate LIBOR + 10.00% or Floor rate of 13.00%	$	563		563		144
	Internet Consumer & Business Services	Senior Secured	May 2014	Interest rate LIBOR + 10.00% or Floor rate of 13.00%	$	5,000		5,000		1,276
	Internet Consumer & Business Services	Senior Secured	May 2014	Interest rate LIBOR + 10.00% or Floor rate of 13.00%	$	6,468		6,468		1,652
	Internet Consumer & Business Services	Senior Secured	May 2014	Interest rate LIBOR + 8.00% or Floor rate of 11.00%, PIK Interest 1.00%	$	9,070		9,070		2,317
Total Tectura Corporation					$	21,101		21,101		5,389
Subtotal: Under 1 Year Maturity								42,575		26,425
1-5 Years Maturity
Gazelle, Inc.^(11)(13)	Internet Consumer & Business Services	Senior Secured	July 2017	Interest rate PRIME + 7.00% or Floor rate of 10.25%, PIK Interest 2.50%	$	13,797		13,551		13,643
Just Fabulous, Inc.^(10)(12)	Internet Consumer & Business Services	Senior Secured	February 2017	Interest rate PRIME + 8.25% or Floor rate of 11.50%	$	15,000		14,638		14,938
Lightspeed POS, Inc. ^(4)(9)(10)	Internet Consumer & Business Services	Senior Secured	May 2018	Interest rate PRIME + 3.25% or Floor rate of 6.50%	$	2,000		1,987		2,000
Reply! Inc.^(7)(11)(12)	Internet Consumer & Business Services	Senior Secured	March 2019	Interest rate PRIME + 4.25% or Floor rate of 7.50%	$	6,321		5,952		3,212
	Internet Consumer & Business Services	Senior Secured	March 2019	PIK Interest 2.00%	$	6,321		6,321		3,411
Total Reply! Inc.					$	12,642		12,273		6,623
Tapjoy, Inc.⁽¹²⁾	Internet Consumer & Business Services	Senior Secured	July 2018	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	20,000		19,496		19,415
WaveMarket, Inc.⁽¹²⁾	Internet Consumer & Business Services	Senior Secured	March 2017	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	268		271		277
Subtotal: 1-5 Years Maturity								62,216		56,896
Subtotal: Internet Consumer & Business Services (10.92%)*								104,791		83,321
Media/Content/Info
Under 1 Year Maturity
Zoom Media Group, Inc.^(10)(11)	Media/Content/Info	Senior Secured	December 2015	Interest rate PRIME + 5.25% or Floor rate of 8.50%	$	5,060		5,060		5,060
	Media/Content/Info	Senior Secured	December 2015	Interest rate PRIME + 7.25% or Floor rate of 10.50%, PIK Interest 3.75%	$	2,024		1,998		1,998
Total Zoom Media Group, Inc.					$	7,084		7,058		7,058
Subtotal: Under 1 Year Maturity								7,058		7,058
1-5 Years Maturity
Rhapsody International, Inc.^(10)(11)(13)	Media/Content/Info	Senior Secured	April 2018	Interest rate PRIME + 5.25% or Floor rate of 9.00%, PIK interest of 1.50%	$	20,281		19,882		19,699
Subtotal: 1-5 Years Maturity								19,882		19,699
Subtotal: Media/Content/Info (3.51%)*								26,940		26,757

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Medical Devices & Equipment
Under 1 Year Maturity
Home Dialysis Plus, Inc.^(10)(12)	Medical Devices & Equipment	Senior Secured	September 2015	Interest rate FIXED 8.00%	$	500	$	500	$	500
Medrobotics Corporation^(12)(13)	Medical Devices & Equipment	Senior Secured	March 2016	Interest rate PRIME + 7.85% or Floor rate of 11.10%	$	2,175		2,287		2,287
Subtotal: Under 1 Year Maturity								2,787		2,787
1-5 Years Maturity
Amedica Corporation^(8)(12)(13)	Medical Devices & Equipment	Senior Secured	January 2018	Interest rate PRIME + 7.70% or Floor rate of 10.95%	$	20,000		19,912		20,153
Aspire Bariatrics, Inc.^(12)(13)	Medical Devices & Equipment	Senior Secured	April 2018	Interest rate PRIME + 6.00% or Floor rate of 9.25%	$	4,000		3,590		3,590
Avedro, Inc.^(12)(13)	Medical Devices & Equipment	Senior Secured	June 2018	Interest rate PRIME + 6.00% or Floor rate of 9.25%	$	12,500		12,096		11,998
Flowonix Medical Incorporated⁽¹²⁾	Medical Devices & Equipment	Senior Secured	May 2018	Interest rate PRIME + 5.25% or Floor rate of 10.00%	$	15,000		14,768		14,768
Gamma Medica, Inc.^(10)(12)	Medical Devices & Equipment	Senior Secured	January 2018	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	4,000		3,907		3,885
Home Dialysis Plus, Inc.^(10)(12)	Medical Devices & Equipment	Senior Secured	October 2017	Interest rate PRIME + 6.35% or Floor rate of 9.60%	$	15,000		14,829		14,693
InspireMD, Inc.^(4)(9)(12)	Medical Devices & Equipment	Senior Secured	February 2017	Interest rate PRIME + 7.25% or Floor rate of 10.50%	$	7,901		8,065		8,029
nContact Surgical, Inc^(12)(13)	Medical Devices & Equipment	Senior Secured	November 2018	Interest rate PRIME + 9.25% or Floor rate of 9.25%	$	10,000		9,783		9,783
Quanterix Corporation^(10)(12)	Medical Devices & Equipment	Senior Secured	February 2018	Interest rate PRIME + 2.75% or Floor rate of 8.00%	$	10,000		9,829		9,873
SonaCare Medical, LLC (p.k.a. US HIFU, LLC)^(10)(12)	Medical Devices & Equipment	Senior Secured	April 2016	Interest rate PRIME + 7.75% or Floor rate of 11.00%	$	875		1,231		1,171
SynergEyes, Inc.^(12)(13)	Medical Devices & Equipment	Senior Secured	January 2018	Interest rate PRIME + 7.75% or Floor rate of 11.00%	$	5,000		5,087		5,056
ViewRay, Inc.^(11)(13)	Medical Devices & Equipment	Senior Secured	June 2017	Interest rate PRIME + 7.00% or Floor rate of 10.25%, PIK Interest 1.50%	$	13,949		13,701		13,790
Subtotal: 1-5 Years Maturity								116,798		116,789
Subtotal: Medical Devices & Equipment (15.67%)*								119,585		119,576
Semiconductors
1-5 Years Maturity
Avnera Corporation^(10)(12)	Semiconductors	Senior Secured	April 2017	Interest rate PRIME + 5.75% or Floor rate of 9.00%	$	5,000		5,004		5,016
Subtotal: 1-5 Years Maturity								5,004		5,016
Subtotal: Semiconductors (0.66%)*								5,004		5,016

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Software
Under 1 Year Maturity
CareCloud Corporation^(12)(13)	Software	Senior Secured	July 2015	Interest rate PRIME + 1.40% or Floor rate of 4.65%	$	3,000	$	3,000	$	3,000
Clickfox, Inc.^(12)(13)	Software	Senior Secured	July 2015	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	2,000		2,000		2,000
	Software	Senior Secured	August 2015	Interest rate PRIME + 8.75% or Floor rate of 12.00%	$	3,000		2,991		2,991
Total Clickfox, Inc.					$	5,000		4,991		4,991
Mobile Posse, Inc^.(12)(13)	Software	Senior Secured	June 2015	Interest rate PRIME + 2.00% or Floor rate of 5.25%	$	1,000		1,000		1,000
Subtotal: Under 1 Year Maturity								8,991		8,991
1-5 Years Maturity
CareCloud Corporation^(12)(13)	Software	Senior Secured	December 2017	Interest rate PRIME + 3.25% or Floor rate of 6.50%	$	208		208		206
	Software	Senior Secured	July 2017	Interest rate PRIME + 5.50% or Floor rate of 8.75%	$	10,000		9,885		9,809
	Software	Senior Secured	January 2018	Interest rate PRIME + 1.70% or Floor rate of 4.95%	$	3,000		2,950		2,906
Total CareCloud Corporation					$	13,208		13,043		12,921
Clickfox, Inc.^(12)(13)	Software	Senior Secured	March 2018	Interest rate PRIME + 8.25% or Floor rate of 11.50%	$	6,000		5,889		5,680
Druva, Inc.⁽¹²⁾	Software	Senior Secured	March 2018	Interest rate PRIME + 4.60% or Floor rate of 7.85%	$	9,000		8,894		8,894
JumpStart Games, Inc. (p.k.a. Knowledge Adventure, Inc.) ^(11)(12)(13)	Software	Senior Secured	October 2016	Interest rate PRIME + 8.25% or Floor rate of 11.50%, PIK Interest 6.50%	$	1,356		1,353		1,394
	Software	Senior Secured	March 2018	Interest rate PRIME + 8.25% or Floor rate of 11.50%, PIK Interest 6.50%	$	11,255		11,330		11,555
Total JumpStart Games, Inc. (p.k.a. Knowledge Adventure, Inc.)					$	12,611		12,683		12,949
Message Systems, Inc.⁽¹³⁾	Software	Senior Secured	February 2017	Interest rate PRIME + 2.75% or Floor rate of 6.00%	$	1,118		1,118		1,118
	Software	Senior Secured	February 2019	Interest rate PRIME + 7.25% or Floor rate of 10.50%	$	17,500		16,996		16,996
Total Message Systems, Inc.					$	18,618		18,114		18,114
Mobile Posse, Inc.^(12)(13)	Software	Senior Secured	December 2016	Interest rate PRIME + 7.50% or Floor rate of 10.75%	$	2,615		2,632		2,658
Neos Geosolutions, Inc.^(12)(13)	Software	Senior Secured	May 2016	Interest rate PRIME + 5.75% or Floor rate of 10.50%	$	1,947		2,084		2,072
Poplicus, Inc.^(12)(13)	Software	Senior Secured	June 2017	Interest rate PRIME + 5.25% or Floor rate of 8.50%	$	1,500		1,514		1,502
Soasta, Inc.^(12)(13)	Software	Senior Secured	February 2018	Interest rate PRIME + 2.25% or Floor rate of 5.50%	$	3,500		3,372		3,311
	Software	Senior Secured	February 2018	Interest rate PRIME + 4.75% or Floor rate of 8.00%	$	15,000		14,446		14,446
Total Soasta, Inc.					$	18,500		17,818		17,757
Sonian, Inc.^(12)(13)	Software	Senior Secured	July 2017	Interest rate PRIME + 7.00% or Floor rate of 10.25%	$	5,029		5,006		5,000
StrongView Systems, Inc.^(11)(12)	Software	Senior Secured	December 2017	Interest rate PRIME + 6.00% or Floor rate of 9.25%, PIK Interest 3.00%	$	10,074		9,861		9,861
Touchcommerce, Inc.^(12)(13)	Software	Senior Secured	August 2016	Interest rate PRIME + 2.25% or Floor Rate of 6.50%	$	4,811		4,811		4,703
	Software	Senior Secured	February 2018	Interest rate PRIME + 6.00% or Floor Rate of 10.25%	$	7,000		6,723		6,793
Total Touchcommerce, Inc.					$	11,811		11,534		11,496
Subtotal: 1-5 Years Maturity								109,072		108,904
Subtotal: Software (15.44%)*								118,063		117,895

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Specialty Pharmaceuticals
Under 1 Year Maturity
Cranford Pharmaceuticals, LLC^{(10)(11)(12)(13)}	Specialty Pharmaceuticals	Senior Secured	August 2015	Interest rate LIBOR + 8.25% or Floor rate of 9.50%	$	2,000	$	2,000	$	2,000
Subtotal: Under 1 Year Maturity								2,000		2,000
1-5 Years Maturity
Alimera Sciences, Inc.⁽¹⁰⁾	Specialty Pharmaceuticals	Senior Secured	May 2018	Interest rate PRIME + 7.65% or Floor rate of 10.90%	$	35,000		34,225		33,856
Cranford Pharmaceuticals, LLC^{(10)(11)(12)(13)}	Specialty Pharmaceuticals	Senior Secured	February 2017	Interest rate LIBOR + 9.55% or Floor rate of 10.80%, PIK Interest 1.35%	$	14,101		14,125		14,206
Subtotal: 1-5 Years Maturity								48,350		48,062
Subtotal: Specialty Pharmaceuticals (6.56%)*								50,350		50,062
Surgical Devices
Under 1 Year Maturity
Transmedics, Inc.^(10)(12)	Surgical Devices	Senior Secured	November 2015	Interest rate FIXED 12.95%	$	5,519		5,473		5,473
Subtotal: Under 1 Year Maturity								5,473		5,473
Subtotal: Surgical Devices (0.72%)*								5,473		5,473
Total Debt Investments (138.61%)*								1,084,986		1,058,032

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Equity Investments
Biotechnology Tools
NuGEN Technologies, Inc. ⁽¹³⁾	Biotechnology Tools	Equity	Preferred Series C		189,394	$	500	$	535
Subtotal: Biotechnology Tools (0.07%)*							500		535
Communications & Networking
GlowPoint, Inc.⁽³⁾	Communications & Networking	Equity	Common Stock		114,192		102		104
Peerless Network, Inc.	Communications & Networking	Equity	Preferred Series A		1,000,000		1,000		6,247
Subtotal: Communications & Networking (0.83%)*							1,102		6,351
Consumer & Business Products
Market Force Information, Inc.	Consumer & Business Products	Equity	Preferred Series B-1		187,970		500		3
	Consumer & Business Products	Equity	Common Stock		480,261		—		237
Total Market Force Information, Inc.					668,231		500		240
Subtotal: Consumer & Business Products (0.03%)*							500		240
Diagnostic
Singulex, Inc.	Diagnostic	Equity	Common Stock		937,998		750		643
Subtotal: Diagnostic (0.08%)*							750		643
Drug Delivery
AcelRx Pharmaceuticals, Inc. ^(3)(9)(13)	Drug Delivery	Equity	Common Stock		54,240		108		209
Merrion Pharmaceuticals, Plc ^(3)(4)(9)	Drug Delivery	Equity	Common Stock		20,000		9		—
Neos Therapeutics, Inc.	Drug Delivery	Equity	Preferred Series C		300,000		1,500		1,856
Subtotal: Drug Delivery (0.27%)*							1,617		2,065
Drug Discovery & Development
Aveo Pharmaceuticals, Inc.^(3)(9)(13)	Drug Discovery & Development	Equity	Common Stock		167,864		842		243
Cerecor Inc.	Drug Discovery & Development	Equity	Preferred Series B		3,334,445		1,000		762
Cerulean Pharma Inc. ⁽³⁾	Drug Discovery & Development	Equity	Common Stock		135,501		1,000		1,222
Dicerna Pharmaceuticals, Inc.^{(3) (13)}	Drug Discovery & Development	Equity	Common Stock		142,858		1,000		3,433
Epirus Biopharmaceuticals, Inc. ⁽³⁾	Drug Discovery & Development	Equity	Common Stock		200,000		1,000		1,790
Genocea Biosciences, Inc. ⁽³⁾	Drug Discovery & Development	Equity	Common Stock		223,463		2,000		2,650
Inotek Pharmaceuticals Corporation ⁽³⁾	Drug Discovery & Development	Equity	Common Stock		3,778		1,500		20
Insmed, Incorporated ⁽³⁾	Drug Discovery & Development	Equity	Common Stock		70,771		1,000		1,322
Paratek Pharmaceutcals, Inc. (p.k.a. Transcept Pharmaceuticals, Inc.) ⁽³⁾	Drug Discovery & Development	Equity	Common Stock		31,580		1,744		977
Subtotal: Drug Discovery & Development (1.63%)*							11,086		12,419
Electronics & Computer Hardware
Identiv, Inc. ⁽³⁾	Electronics & Computer Hardware	Equity	Common Stock		6,700		34		57
Subtotal: Electronics & Computer Hardware (0.01%)*							34		57
Energy Technology
Glori Energy, Inc. ⁽³⁾	Energy Technology	Equity	Common Stock		18,208		165		39
SCIEnergy, Inc.	Energy Technology	Equity	Preferred Series 1		385,000		761		24
Subtotal: Energy Technology (0.01%)*							926		63
Information Services
Good Technology Corporation (p.k.a. Visto Corporation) ⁽¹³⁾	Information Services	Equity	Common Stock		500,000		603		646
Subtotal: Information Services (0.08%)*							603		646
Internet Consumer & Business Services
Blurb, Inc. ⁽¹³⁾	Internet Consumer & Business Services	Equity	Preferred Series B		220,653		175		279
Lightspeed POS, Inc.⁽⁴⁾⁽⁹⁾	Internet Consumer & Business Services	Equity	Preferred Series C		23,003		250		274
Oportun (p.k.a. Progress Financial)	Internet Consumer & Business Services	Equity	Preferred Series G		218,351		250		402
	Internet Consumer & Business Services	Equity	Preferred Series H		87,802		250		252
Total Oportun (p.k.a. Progress Financial)					306,153		500		654
Philotic, Inc.	Internet Consumer & Business Services	Equity	Common Stock		9,023		93		—
RazorGator Interactive Group, Inc.	Internet Consumer & Business Services	Equity	Preferred Series AA		34,783		15		30
Taptera, Inc.	Internet Consumer & Business Services	Equity	Preferred Series B		454,545		150		176
Subtotal: Internet Consumer & Business Services (0.19%)*							1,183		1,413

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Medical Devices & Equipment
Flowonix Medical Incorporated	Medical Devices & Equipment	Equity	Preferred Series E		221,893	$	1,500	$	1,794
Gelesis, Inc. ^(5)(13)	Medical Devices & Equipment	Equity	Preferred Series A-1		674,208		425		785
	Medical Devices & Equipment	Equity	Preferred Series A-2		675,676		500		737
	Medical Devices & Equipment	Equity	Common Stock		698,862		—		714
Total Gelesis, Inc.					2,048,746		925		2,236
Medrobotics Corporation ⁽¹³⁾	Medical Devices & Equipment	Equity	Preferred Series E		136,798		250		162
	Medical Devices & Equipment	Equity	Preferred Series F		73,971		155		173
Total Medrobotics Corporation					210,769		405		335
Novasys Medical, Inc.	Medical Devices & Equipment	Equity	Preferred Series D-1		4,118,444		1,000		—
Optiscan Biomedical, Corp.^(5)(13)	Medical Devices & Equipment	Equity	Preferred Series B		6,185,567		3,000		539
	Medical Devices & Equipment	Equity	Preferred Series C		1,927,309		655		162
	Medical Devices & Equipment	Equity	Preferred Series D		55,103,923		5,257		5,789
Total Optiscan Biomedical, Corp.					63,216,799		8,912		6,490
Oraya Therapeutics, Inc.	Medical Devices & Equipment	Equity	Preferred Series 1		1,086,969		500		429
Subtotal: Medical Devices & Equipment (1.48%)*							13,242		11,284
Software
Atrenta, Inc.	Software	Equity	Preferred Series C		1,196,845		986		2,045
Atrenta, Inc.	Software	Equity	Preferred Series D		635,513		508		1,231
Total Atrenta, Inc.					1,832,358		1,494		3,276
Box, Inc. ^{(3) (13)}	Software	Equity	Common Stock		1,464,747		5,818		28,930
CapLinked, Inc.	Software	Equity	Preferred Series A-3		53,614		51		81
ForeScout Technologies, Inc.	Software	Equity	Preferred Series D		319,099		398		564
	Software	Equity	Preferred Series E		80,587		131		146
Total ForeScout Technologies, Inc.					399,686		529		710
HighRoads, Inc.	Software	Equity	Preferred Series B		190,170		307		343
WildTangent, Inc. ⁽¹³⁾	Software	Equity	Preferred Series 3		100,000		402		237
Subtotal: Software (4.40%)*							8,601		33,577
Specialty Pharmaceuticals
QuatRx Pharmaceuticals Company	Specialty Pharmaceuticals	Equity	Preferred Series E		241,829		750		—
	Specialty Pharmaceuticals	Equity	Preferred Series E-1		26,955		—		—
	Specialty Pharmaceuticals	Equity	Preferred Series G		4,667,636		—		—
Total QuatRx Pharmaceuticals Company					4,936,420		750		—
Subtotal: Specialty Pharmaceuticals (0.00%)*							750		—
Surgical Devices
Gynesonics, Inc. ⁽¹³⁾	Surgical Devices	Equity	Preferred Series B		219,298		250		104
	Surgical Devices	Equity	Preferred Series C		656,538		282		199
	Surgical Devices	Equity	Preferred Series D		1,991,157		712		1,090
Total Gynesonics, Inc.					2,866,993		1,244		1,393
Transmedics, Inc.	Surgical Devices	Equity	Preferred Series B		88,961		1,100		402
	Surgical Devices	Equity	Preferred Series C		119,999		300		234
	Surgical Devices	Equity	Preferred Series D		260,000		650		1,129
Total Transmedics, Inc.					468,960		2,050		1,765
Subtotal: Surgical Devices (0.41%)*							3,294		3,158
Total: Equity Investments (9.49%)*							44,188		72,451

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Warrant Investments
Biotechnology Tools
Labcyte, Inc. ⁽¹³⁾	Biotechnology Tools	Warrant	Preferred Series C		1,127,624	$	323	$	425
Subtotal: Biotechnology Tools (0.06%)*							323		425
Communications & Networking
Intelepeer, Inc. ⁽¹³⁾	Communications & Networking	Warrant	Preferred Series C		117,958		102		—
OpenPeak, Inc.	Communications & Networking	Warrant	Common Stock		108,982		149		—
PeerApp, Inc.	Communications & Networking	Warrant	Preferred Series B		298,779		61		68
Peerless Network, Inc.	Communications & Networking	Warrant	Preferred Series A		135,000		95		717
Ping Identity Corporation	Communications & Networking	Warrant	Preferred Series B		1,136,277		52		212
SkyCross, Inc. ⁽¹³⁾	Communications & Networking	Warrant	Preferred Series F		9,762,777		394		—
Spring Mobile Solutions, Inc.	Communications & Networking	Warrant	Preferred Series D		2,834,375		418		258
Subtotal: Communications & Networking (0.16%)*							1,271		1,255
Consumer & Business Products
Antenna79 (p.k.a. Pong Research Corporation) ⁽¹³⁾	Consumer & Business Products	Warrant	Preferred Series A		1,662,441		228		36
Intelligent Beauty, Inc. ⁽¹³⁾	Consumer & Business Products	Warrant	Preferred Series B		190,234		230		284
IronPlanet, Inc.	Consumer & Business Products	Warrant	Preferred Series D		1,155,821		1,076		1,140
Market Force Information, Inc.	Consumer & Business Products	Warrant	Preferred Series A-1		150,212		24		8
The Neat Company ⁽¹³⁾	Consumer & Business Products	Warrant	Preferred Series C-1		540,540		366		356
Subtotal: Consumer & Business Products (0.24%)*							1,924		1,824
Diagnostic
Navidea Biopharmaceuticals, Inc. (p.k.a. Neoprobe)) ^(3)(13)	Diagnostic	Warrant	Common Stock		333,333		244		28
Subtotal: Diagnostic (0.00%)*							244		28
Drug Delivery
AcelRx Pharmaceuticals, Inc. ^(3)(9)(13)	Drug Delivery	Warrant	Common Stock		176,730		786		209
Agile Therapeutics, Inc ⁽³⁾	Drug Delivery	Warrant	Common Stock		180,274		730		686
Alexza Pharmaceuticals, Inc. ⁽³⁾	Drug Delivery	Warrant	Common Stock		37,639		645		—
BIND Therapeutics, Inc. ^(3)(13)	Drug Delivery	Warrant	Common Stock		152,586		488		71
BioQuiddity Incorporated	Drug Delivery	Warrant	Common Stock		459,183		1		1
Celator Pharmaceuticals, Inc. ⁽³⁾	Drug Delivery	Warrant	Common Stock		210,675		138		135
Celsion Corporation ⁽³⁾	Drug Delivery	Warrant	Common Stock		194,986		428		133
Dance Biopharm, Inc. ⁽¹³⁾	Drug Delivery	Warrant	Preferred Series A		97,701		74		149
Edge Therapeutics, Inc.	Drug Delivery	Warrant	Preferred Series C-1		107,526		390		258
Egalet Corporation ⁽³⁾	Drug Delivery	Warrant	Common Stock		113,421		130		735
Kaleo, Inc. (p.k.a. Intelliject, Inc.)	Drug Delivery	Warrant	Preferred Series B		82,500		594		1,316
Neos Therapeutics, Inc. ⁽¹³⁾	Drug Delivery	Warrant	Preferred Series C		170,000		285		325
Revance Therapeutics, Inc. ⁽³⁾	Drug Delivery	Warrant	Common Stock		53,511		557		88
Zosano Pharma, Inc. ⁽³⁾	Drug Delivery	Warrant	Common Stock		31,674		164		99
Subtotal: Drug Delivery (0.55%)*							5,410		4,205

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Drug Discovery & Development
ADMA Biologics, Inc. ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		89,750	$	295	$	278
Anthera Pharmaceuticals, Inc.^(3)(13)	Drug Discovery & Development	Warrant	Common Stock		40,178		984		—
Aveo Pharmaceuticals, Inc. ^(3)(9)(13)	Drug Discovery & Development	Warrant	Common Stock		608,696		194		462
Cerecor Inc.	Drug Discovery & Development	Warrant	Preferred Series B		625,208		70		30
Cerulean Pharma Inc. ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		137,521		357		569
Chroma Therapeutics, Ltd. ⁽⁴⁾⁽⁹⁾	Drug Discovery & Development	Warrant	Preferred Series D		325,261		490		—
Cleveland BioLabs, Inc. ^(3)(13)	Drug Discovery & Development	Warrant	Common Stock		7,813		105		3
Concert Pharmaceuticals, Inc. ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		70,796		367		198
Coronado Biosciences, Inc. ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		73,009		142		85
Dicerna Pharmaceuticals, Inc. ^(3)(13)	Drug Discovery & Development	Warrant	Common Stock		200		28		—
Epirus Biopharmaceuticals, Inc. ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		64,194		276		353
Genocea Biosciences, Inc. ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		73,725		266		389
Horizon Pharma, Inc. ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		3,735		52		27
Melinta Therapeutics	Drug Discovery & Development	Warrant	Preferred Series 3		1,151,936		603		548
Nanotherapeutics, Inc. ⁽¹³⁾	Drug Discovery & Development	Warrant	Common Stock		171,389		838		1,488
Neothetics, Inc. (p.k.a. Lithera, Inc) ^(3)(13)	Drug Discovery & Development	Warrant	Common Stock		46,838		266		133
Neuralstem, Inc. ^(3)(13)	Drug Discovery & Development	Warrant	Common Stock		75,187		77		44
Paratek Pharmaceutcals, Inc. (p.k.a. Transcept Pharmaceuticals, Inc.) ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		5,121		87		5
uniQure B.V. ^(3)(4)(9)	Drug Discovery & Development	Warrant	Common Stock		37,174		218		389
XOMA Corporation ^{(3 )(9)(13)}	Drug Discovery & Development	Warrant	Common Stock		181,268		279		272
Subtotal: Drug Discovery & Development (0.69%)*							5,994		5,273
Electronics & Computer Hardware
Clustrix, Inc.	Electronics & Computer Hardware	Warrant	Common Stock		50,000		12		9
Subtotal: Electronics & Computer Hardware (0.00%)*							12		9
Energy Technology
Agrivida, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series D		471,327		120		203
Alphabet Energy, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series A		86,329		81		181
American Superconductor Corporation ⁽³⁾	Energy Technology	Warrant	Common Stock		58,823		39		69
Brightsource Energy, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series 1		175,000		780		185
Calera, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series C		44,529		513		—
EcoMotors, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series B		437,500		308		314
Fluidic, Inc.	Energy Technology	Warrant	Preferred Series D		61,804		102		44
Fulcrum Bioenergy, Inc.	Energy Technology	Warrant	Preferred Series C-1		280,897		274		186
GreatPoint Energy, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series D-1		393,212		548		—
Polyera Corporation ⁽¹³⁾	Energy Technology	Warrant	Preferred Series C		311,609		337		534
SCIEnergy, Inc.	Energy Technology	Warrant	Common Stock		530,811		181		—
	Energy Technology	Warrant	Preferred Series 1		145,811		50		—
Total SCIEnergy, Inc.					676,622		231		—
Scifiniti (p.k.a. Integrated Photovoltaics, Inc.) ⁽¹³⁾	Energy Technology	Warrant	Preferred Series A-1		390,000		82		70
Solexel, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series C		1,171,625		1,162		673
Stion Corporation ⁽⁵⁾	Energy Technology	Warrant	Preferred Series Seed		2,154		1,378		—
Sungevity Development, LLC	Energy Technology	Warrant	Preferred Series C		32,472,222		903		903
TAS Energy, Inc.	Energy Technology	Warrant	Preferred Series AA		428,571		299		—
TPI Composites, Inc.	Energy Technology	Warrant	Preferred Series B		160		273		201
Trilliant, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series A		320,000		162		40
Subtotal: Energy Technology (0.47%)*							7,592		3,603
Healthcare Services, Other
Chromadex Corporation ^(3)(13)	Healthcare Services, Other	Warrant	Common Stock		419,020		156		200
Subtotal: Healthcare Services, Other (0.03%)*							156		200

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Information Services
Cha Cha Search, Inc. ⁽¹³⁾	Information Services	Warrant	Preferred Series G		48,232	$	58	$	4
INMOBI Inc. ⁽⁴⁾⁽⁹⁾	Information Services	Warrant	Common Stock		46,874		82		30
InXpo, Inc. ⁽¹³⁾	Information Services	Warrant	Preferred Series C		648,400		98		14
	Information Services	Warrant	Preferred Series C-1		740,832		59		17
Total InXpo, Inc.					1,389,232		157		31
RichRelevance, Inc. ⁽¹³⁾	Information Services	Warrant	Preferred Series E		112,612		98		—
Subtotal: Information Services (0.01%)*							395		65
Internet Consumer & Business Services
Blurb, Inc. ⁽¹³⁾	Internet Consumer & Business Services	Warrant	Preferred Series B		218,684		299		77
	Internet Consumer & Business Services	Warrant	Preferred Series C		234,280		636		183
Total Blurb, Inc.					452,964		935		260
CashStar, Inc. ⁽¹³⁾	Internet Consumer & Business Services	Warrant	Preferred Series C-2		727,272		130		108
Gazelle, Inc.⁽¹³⁾	Internet Consumer & Business Services	Warrant	Preferred Series A-1		991,288		158		85
Just Fabulous, Inc.	Internet Consumer & Business Services	Warrant	Preferred Series B		206,184		1,101		1,600
Lightspeed POS, Inc. ⁽⁴⁾⁽⁹⁾	Internet Consumer & Business Services	Warrant	Preferred Series C		24,561		20		68
Oportun (p.k.a. Progress Financial)	Internet Consumer & Business Services	Warrant	Preferred Series G		174,562		78		155
Prism Education Group, Inc. ⁽¹³⁾	Internet Consumer & Business Services	Warrant	Preferred Series B		200,000		43		—
Reply! Inc.	Internet Consumer & Business Services	Warrant	Preferred Series B		137,225		320		—
ShareThis, Inc. ⁽¹³⁾	Internet Consumer & Business Services	Warrant	Preferred Series C		493,502		547		262
Tapjoy, Inc.	Internet Consumer & Business Services	Warrant	Preferred Series D		748,670		316		102
Tectura Corporation	Internet Consumer & Business Services	Warrant	Preferred Series B-1		253,378		51		—
Subtotal: Internet Consumer & Business Services (0.35%)*							3,699		2,640
Media/Content/Info
Rhapsody International, Inc. ⁽¹³⁾	Media/Content/Info	Warrant	Common Stock		715,755		384		393
Zoom Media Group, Inc.	Media/Content/Info	Warrant	Preferred Series A		1,204		348		262
Subtotal: Media/Content/Info (0.09%)*							732		655
Medical Devices & Equipment
Amedica Corporation ^{(3) (13)}	Medical Devices & Equipment	Warrant	Common Stock		516,129		459		—
Avedro, Inc.⁽¹³⁾	Medical Devices & Equipment	Warrant	Preferred Series D		1,308,451		401		592
Aspire Bariatrics, Inc. ⁽¹³⁾	Medical Devices & Equipment	Warrant	Preferred Series D		335,000		419		426
Flowonix Medical Incorporated	Medical Devices & Equipment	Warrant	Preferred Series E		110,947		203		428
Gamma Medica, Inc.	Medical Devices & Equipment	Warrant	Preferred Series A		357,500		170		183
Gelesis, Inc.^(5)(13)	Medical Devices & Equipment	Warrant	Preferred Series A-1		263,688		78		178
Home Dialysis Plus, Inc.	Medical Devices & Equipment	Warrant	Preferred Series A		500,000		402		585
InspireMD, Inc.^(3)(4)(9)	Medical Devices & Equipment	Warrant	Common Stock		168,351		242		4
Medrobotics Corporation ⁽¹³⁾	Medical Devices & Equipment	Warrant	Preferred Series E		455,539		370		213
MELA Sciences, Inc.⁽³⁾	Medical Devices & Equipment	Warrant	Common Stock		69,320		402		14
nContact Surgical, Inc ⁽¹³⁾	Medical Devices & Equipment	Warrant	Preferred Series D-1		201,439		266		620
NetBio, Inc.	Medical Devices & Equipment	Warrant	Common Stock		2,568		408		56
NinePoint Medical, Inc.⁽¹³⁾	Medical Devices & Equipment	Warrant	Preferred Series A-1		587,840		170		262
Novasys Medical, Inc.	Medical Devices & Equipment	Warrant	Common Stock		109,449		2		—
	Medical Devices & Equipment	Warrant	Preferred Series D		526,840		125		—
	Medical Devices & Equipment	Warrant	Preferred Series D-1		53,607		6		—
Total Novasys Medical, Inc.					689,896		133		—
Optiscan Biomedical, Corp. ^(5)(13)	Medical Devices & Equipment	Warrant	Preferred Series D		10,535,275		1,252		278
Oraya Therapeutics, Inc.	Medical Devices & Equipment	Warrant	Common Stock		954		66		—
	Medical Devices & Equipment	Warrant	Preferred Series 1		1,632,084		676		132
Total Oraya Therapeutics, Inc.					1,633,038		742		132
Quanterix Corporation	Medical Devices & Equipment	Warrant	Preferred Series C		115,618		156		138
SonaCare Medical, LLC (p.k.a. US HIFU, LLC)	Medical Devices & Equipment	Warrant	Preferred Series A		6,464		188		—
ViewRay, Inc. ⁽¹³⁾	Medical Devices & Equipment	Warrant	Preferred Series C		43,103		333		316
Subtotal: Medical Devices & Equipment (0.58%)*							6,794		4,425

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Semiconductors
Achronix Semiconductor Corporation	Semiconductors	Warrant	Preferred Series C		360,000	$	160	$	23
Aquantia Corp.	Semiconductors	Warrant	Preferred Series G		196,831		4		3
Avnera Corporation	Semiconductors	Warrant	Preferred Series E		102,958		14		34
Subtotal: Semiconductors (0.01%)*							178		60
Software
Atrenta, Inc.	Software	Warrant	Preferred Series D		392,670		120		432
Braxton Technologies, LLC	Software	Warrant	Preferred Series A		168,750		188		—
CareCloud Corporation ⁽¹³⁾	Software	Warrant	Preferred Series B		413,433		258		452
Clickfox, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series B		1,038,563		330		990
	Software	Warrant	Preferred Series C		592,019		730		676
	Software	Warrant	Preferred Series C-A		46,109		13		44
Total Clickfox, Inc.					1,676,691		1,073		1,710
Daegis Inc. (p.k.a. Unify Corporation) ^{(3) (13)}	Software	Warrant	Common Stock		718,860		1,434		3
Hillcrest Laboratories, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series E		1,865,650		55		123
JumpStart Games, Inc. (p.k.a. Knowledge Holdings, Inc.) ⁽¹³⁾	Software	Warrant	Preferred Series E		614,333		16		8
Message Systems, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series B		408,011		334		330
Mobile Posse, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series C		396,430		130		58
Neos Geosolutions, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series 3		221,150		22		—
NewVoiceMedia Limited ⁽⁴⁾⁽⁹⁾	Software	Warrant	Preferred Series E		225,586		33		71
Poplicus Incorporated ⁽¹³⁾	Software	Warrant	Preferred Series B-1		2,595,230		—		87
Soasta, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series E		410,800		691		717
Sonian, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series C		185,949		106		65
StrongView Systems, Inc.	Software	Warrant	Preferred Series C		551,470		168		227
SugarSync, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series CC		332,726		78		102
	Software	Warrant	Preferred Series DD		107,526		34		34
Total SugarSync, Inc.					440,252		112		136
Touchcommerce, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series E		1,885,930		361		282
White Sky, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series B-2		124,295		54		6
Subtotal: Software (0.62%)*							5,155		4,707
Specialty Pharmaceuticals
Alimera Sciences, Inc. ⁽³⁾	Specialty Pharmaceuticals	Warrant	Common Stock		285,016		729		521
QuatRx Pharmaceuticals Company	Specialty Pharmaceuticals	Warrant	Preferred Series E		155,324		307		—
Subtotal: Specialty Pharmaceuticals (0.17%)*							1,036		521

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(unaudited)

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Surgical Devices
Gynesonics, Inc. ⁽¹³⁾	Surgical Devices	Warrant	Preferred Series C		180,480	$	75	$	50
	Surgical Devices	Warrant	Preferred Series D		1,575,965		320		585
Total Gynesonics, Inc.					1,756,445		395		635
Transmedics, Inc.	Surgical Devices	Warrant	Preferred Series B		40,436		224		4
	Surgical Devices	Warrant	Preferred Series D		175,000		100		404
Total Transmedics, Inc.					215,436		324		408
Subtotal: Surgical Devices (0.14%)*							719		1,043
Total Warrant Investments (4.05%)*							41,634		30,938
Total Investments (152.15%)*						$	1,170,808	$	1,161,421

*	Value as a percent of net assets

(1)	Preferred and common stock, warrants, and equity interests are generally non-income producing.

(2)	Gross unrealized appreciation, gross unrealized depreciation, and net depreciation for federal income tax purposes totaled $50.4 million, $60.9 million and $10.5 million respectively. The tax cost of investments is $1.2 billion.

(3)

Except for warrants in 33 publicly traded companies and common stock in 14 publicly traded companies, all investments are restricted at March 31, 2015 and were valued at fair value as determined in good faith by the Audit Committee of the Board of Directors. No unrestricted securities of the same issuer are outstanding. The Company uses the Standard Industrial Code for classifying the industry grouping of its portfolio companies.

(4)	Non-U.S. company or the company’s principal place of business is outside the United States.

(5)	Affiliate investment that is defined under the Investment Company Act of 1940 as companies in which HTGC owns at least 5% but not more than 25% of the voting securities of the company.

(6)	Control investment that is defined under the Investment Company Act of 1940 as companies in which HTGC owns at least 25% of the voting securities of the company or has greater than 50% representation on its board. There were no control investments at March 31, 2015.

(7)	Debt is on non-accrual status at March 31, 2015, and is therefore considered non-income producing.

(8)	Denotes that all or a portion of the debt investment is convertible senior debt.

(9)	Indicates assets that the Company deems not “qualifying assets” under section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets.

(10)	Denotes that all or a portion of the debt investment secures the notes offered in the Debt Securitizations (as defined in Note 4).

(11)	Denotes that all or a portion of the debt investment principal includes accumulated PIK, or payment-in-kind, interest and is net of repayments.

(12)	Denotes that all or a portion of the debt investment includes an exit fee receivable.

(13)	Denotes that all or a portion of the investment in this portfolio company is held by HT II or HT III, the Company’s wholly-owned SBIC subsidiaries.

(14)

The stated ‘Maturity Date’ for the Tectura assets reflects the last extension of the forbearance period on these loans. The borrower loans remain outstanding and management is continuing to work with the borrower to satisfy the obligations. The Company’s investment team and Investment Committee continue to closely monitor developments at the borrower company.

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Debt Investments
Biotechnology Tools
1-5 Years Maturity
Labcyte, Inc. ^(10)(12)(13)	Biotechnology Tools	Senior Secured	June 2016	Interest rate PRIME + 6.70% or Floor rate of 9.95%	$	2,695	$	2,869	$	2,869
Subtotal: 1-5 Years Maturity								2,869		2,869
Subtotal: Biotechnology Tools (0.44%)*								2,869		2,869
Communications & Networking
1-5 Years Maturity
OpenPeak, Inc. ^(10)(12)	Communications & Networking	Senior Secured	April 2017	Interest rate PRIME + 8.75% or Floor rate of 12.00%	$	12,889		13,193		13,193
SkyCross, Inc. ^(12)(13)	Communications & Networking	Senior Secured	January 2018	Interest rate PRIME + 9.70% or Floor rate of 12.95%	$	22,000		21,580		20,149
Spring Mobile Solutions, Inc. ^(10)(12)	Communications & Networking	Senior Secured	November 2016	Interest rate PRIME + 8.00% or Floor rate of 11.25%	$	18,840		18,928		19,116
Subtotal: 1-5 Years Maturity								53,701		52,458
Subtotal: Communications & Networking (7.96%)*								53,701		52,458
Consumer & Business Products
1-5 Years Maturity
Antenna79 (p.k.a. Pong Research Corporation) ^(12)(13)	Consumer & Business Products	Senior Secured	December 2017	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	5,000		4,912		4,884
	Consumer & Business Products	Senior Secured	June 2016	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	216		89		89
Total Antenna79 (p.k.a. Pong Research Corporation)					$	5,216		5,001		4,973
Fluc, Inc. ⁽⁸⁾	Consumer & Business Products	Convertible Senior Note	March 2017	Interest rate FIXED 4.00%	$	100		100		100
IronPlanet, Inc. ⁽¹²⁾	Consumer & Business Products	Senior Secured	November 2017	Interest rate PRIME + 6.20% or Floor rate of 9.45%	$	37,500		36,345		36,345
The Neat Company ^(11)(12)(13)	Consumer & Business Products	Senior Secured	September 2017	Interest rate PRIME + 7.75% or Floor rate of 11.00%, PIK Interest 1.00%	$	20,061		19,422		19,422
Subtotal: 1-5 Years Maturity								60,868		60,840
Subtotal: Consumer & Business Products (9.23%)*								60,868		60,840

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Drug Delivery
Under 1 Year Maturity
Revance Therapeutics, Inc. ^(10)(12)	Drug Delivery	Senior Secured	March 2015	Interest rate PRIME + 6.60% or Floor rate of 9.85%	$	2,098	$	2,458	$	2,458
	Drug Delivery	Senior Secured	March 2015	Interest rate PRIME + 6.60% or Floor rate of 9.85%	$	210		246		246
Total Revance Therapeutics, Inc.					$	2,308		2,704		2,704
Subtotal: Under 1 Year Maturity								2,704		2,704
1-5 Years Maturity
AcelRx Pharmaceuticals, Inc.^{(9)(10)(12)(13)}	Drug Delivery	Senior Secured	October 2017	Interest rate PRIME + 3.85% or Floor rate of 9.10%	$	25,000		24,831		24,969
BIND Therapeutics, Inc.^(12)(13)	Drug Delivery	Senior Secured	September 2016	Interest rate PRIME + 7.00% or Floor rate of 10.25%	$	3,274		3,343		3,228
BioQuiddity Incorporated ⁽¹²⁾	Drug Delivery	Senior Secured	May 2018	Interest rate PRIME + 8.00% or Floor rate of 11.25%	$	7,500		7,439		7,439
Celator Pharmaceuticals, Inc. ^(10)(12)	Drug Delivery	Senior Secured	June 2018	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	10,000		9,927		9,899
Celsion Corporation ^(10)(12)	Drug Delivery	Senior Secured	June 2017	Interest rate PRIME + 8.00% or Floor rate of 11.25%	$	10,000		9,858		10,027
Dance Biopharm, Inc. ^(12)(13)	Drug Delivery	Senior Secured	November 2017	Interest rate PRIME + 7.40% or Floor rate of 10.65%	$	3,905		3,871		3,864
Edge Therapeutics, Inc. ⁽¹²⁾	Drug Delivery	Senior Secured	March 2018	Interest rate PRIME + 5.95% or Floor rate of 10.45%	$	3,000		2,847		2,847
Neos Therapeutics, Inc. ^(12)(13)	Drug Delivery	Senior Secured	October 2017	Interest rate PRIME + 7.25% or Floor rate of 10.50%	$	5,000		4,916		4,916
	Drug Delivery	Senior Secured	October 2017	Interest rate FIXED 9.00%	$	10,000		10,010		10,063
Total Neos Therapeutics, Inc.					$	15,000		14,926		14,979
Zosano Pharma, Inc. ^(10)(12)	Drug Delivery	Senior Secured	June 2017	Interest rate PRIME + 6.80% or Floor rate of 12.05%	$	4,000		3,894		3,881
Subtotal: 1-5 Years Maturity								80,936		81,133
Subtotal: Drug Delivery (12.72%)*								83,640		83,837

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Drug Discovery & Development
Under 1 Year Maturity
Aveo Pharmaceuticals, Inc. ^{(9)(10)(12)(13)}	Drug Discovery & Development	Senior Secured	December 2015	Interest rate PRIME + 7.15% or Floor rate of 11.90%	$	11,611	$	11,611	$	11,611
Concert Pharmaceuticals, Inc. ⁽¹⁰⁾	Drug Discovery & Development	Senior Secured	October 2015	Interest rate PRIME + 3.25% or Floor rate of 8.50%	$	7,175		7,142		7,142
Subtotal: Under 1 Year Maturity								18,753		18,753
1-5 Years Maturity
ADMA Biologics, Inc. ^(10)(11)(12)	Drug Discovery & Development	Senior Secured	December 2017	Interest rate PRIME + 5.5% or Floor rate of 8.75%, PIK Interest 1.95%	$	5,000		4,879		4,933
	Drug Discovery & Development	Senior Secured	December 2017	Interest rate PRIME + 3.00% or Floor rate of 8.75%, PIK Interest 1.95%	$	10,153		10,032		10,144
Total ADMA Biologics, Inc.					$	15,153		14,911		15,077
Aveo Pharmaceuticals, Inc. ^{(9)(10)(12)(13)}	Drug Discovery & Development	Senior Secured	January 2018	Interest rate PRIME + 6.65% or Floor rate of 11.90%	$	10,000		9,766		9,766
Celladon Corporation ^(12)(13)	Drug Discovery & Development	Senior Secured	February 2018	Interest rate PRIME + 5.00% or Floor rate of 8.25%	$	10,000		10,022		10,022
Cempra, Inc. ^(10)(12)	Drug Discovery & Development	Senior Secured	April 2018	Interest rate PRIME + 6.30% or Floor rate of 9.55%	$	18,000		18,020		18,560
Cerecor Inc. ⁽¹²⁾	Drug Discovery & Development	Senior Secured	August 2017	Interest rate PRIME + 6.30% or Floor rate of 9.55%	$	7,500		7,374		7,374
Cleveland BioLabs, Inc. ^(12)(13)	Drug Discovery & Development	Senior Secured	January 2017	Interest rate PRIME + 6.10% or Floor rate of 9.35%	$	1,883		1,883		1,920
CTI BioPharma Corp. (pka Cell Therapeutics, Inc.) ^(10)(12)	Drug Discovery & Development	Senior Secured	October 2016	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	4,584		4,584		4,712
	Drug Discovery & Development	Senior Secured	October 2016	Interest rate PRIME + 9.00% or Floor rate of 12.25%	$	13,890		13,890		14,279
Total CTI BioPharma Corp. (pka Cell Therapeutics, Inc.)					$	18,474		18,474		18,991
Dynavax Technologies ^(9)(12)	Drug Discovery & Development	Senior Secured	July 2018	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	10,000		9,897		9,897
Epirus Biopharmaceuticals, Inc. ⁽¹²⁾	Drug Discovery & Development	Senior Secured	April 2018	Interest rate PRIME + 4.70% or Floor rate of 7.95%	$	7,500		7,308		7,308
Genocea Biosciences, Inc. ⁽¹²⁾	Drug Discovery & Development	Senior Secured	July 2018	Interest rate PRIME + 2.25% or Floor rate of 7.25%	$	12,000		11,814		11,814
Insmed, Incorporated ^(10)(12)	Drug Discovery & Development	Senior Secured	January 2018	Interest rate PRIME + 4.75% or Floor rate of 9.25%	$	25,000		24,854		24,854
Melinta Therapeutics ⁽¹²⁾	Drug Discovery & Development	Senior Secured	June 2018	Interest rate PRIME + 5.00% or Floor rate of 8.25%	$	20,000		19,272		19,272
Merrimack Pharmaceuticals, Inc. ⁽¹²⁾	Drug Discovery & Development	Senior Secured	November 2016	Interest rate PRIME + 5.30% or Floor rate of 10.55%	$	40,000		40,578		40,677
Neothetics, Inc. (pka Lithera, Inc) ^(12)(13)	Drug Discovery & Development	Senior Secured	January 2018	Interest rate PRIME + 5.75% or Floor rate of 9.00%	$	10,000		9,751		9,697
Neuralstem, Inc. ^(12)(13)	Drug Discovery & Development	Senior Secured	April 2017	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	9,489		9,333		9,333
uniQure B.V. ^{(4)(9)(10)(12)}	Drug Discovery & Development	Senior Secured	June 2018	Interest rate PRIME + 5.00% or Floor rate of 10.25%	$	15,000		14,890		14,798
	Drug Discovery & Development	Senior Secured	June 2018	Interest rate PRIME + 5.25% or Floor rate of 10.25%	$	5,000		4,962		4,931
Total Uniqure B.V.					$	20,000		19,852		19,729
Subtotal: 1-5 Years Maturity								233,109		234,291
Subtotal: Drug Discovery & Development (38.41%)*								251,862		253,044

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Electronics & Computer Hardware
1-5 Years Maturity
Plures Technologies, Inc. ^(7)(11)	Electronics & Computer Hardware	Senior Secured	October 2016	Interest rate LIBOR + 8.75% or Floor rate of 12.00%, PIK Interest 4.00%	$	267	$	180	$	—
Subtotal: 1-5 Years Maturity								180		—
Subtotal: Electronics & Computer Hardware (0.00%)*								180		—
Energy Technology
Under 1 Year Maturity
Glori Energy, Inc. ^(10)(12)	Energy Technology	Senior Secured	June 2015	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	1,778		2,042		2,042
Scifiniti (pka Integrated Photovoltaics, Inc.) ⁽¹³⁾	Energy Technology	Senior Secured	February 2015	Interest rate PRIME + 7.38% or Floor rate of 10.63%	$	227		227		227
Stion Corporation ^(5)(12)	Energy Technology	Senior Secured	February 2015	Interest rate PRIME + 8.75% or Floor rate of 12.00%	$	2,954		2,993		1,600
TAS Energy, Inc. ^(10)(12)	Energy Technology	Senior Secured	December 2015	Interest rate PRIME + 7.75% or Floor rate of 11.00%	$	6,901		7,091		7,091
Subtotal: Under 1 Year Maturity								12,353		10,960
1-5 Years Maturity
Agrivida, Inc. ^(12)(13)	Energy Technology	Senior Secured	December 2016	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	4,921		5,013		4,923
American Superconductor Corporation ^(10)(12)	Energy Technology	Senior Secured	March 2017	Interest rate PRIME + 7.75% or Floor rate of 11.00%	$	1,500		1,446		1,446
	Energy Technology	Senior Secured	November 2016	Interest rate PRIME + 7.25% or Floor rate of 11.00%	$	7,667		7,847		7,847
Total American Superconductor Corporation					$	9,167		9,293		9,293
Amyris, Inc. ^(9)(12)	Energy Technology	Senior Secured	February 2017	Interest rate PRIME + 6.25% or Floor rate of 9.50%	$	25,000		25,000		25,170
	Energy Technology	Senior Secured	February 2017	Interest rate PRIME + 5.25% or Floor rate of 8.50%	$	5,000		5,000		5,034
Total Amyris, Inc.					$	30,000		30,000		30,204
Fluidic, Inc. ^(10)(12)	Energy Technology	Senior Secured	March 2016	Interest rate PRIME + 8.00% or Floor rate of 11.25%	$	3,674		3,747		3,721
Modumetal, Inc. ⁽¹²⁾	Energy Technology	Senior Secured	March 2017	Interest rate PRIME + 8.70% or Floor rate of 11.95%	$	3,000		2,991		2,991
Polyera Corporation ^(12)(13)	Energy Technology	Senior Secured	June 2016	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	3,654		3,818		3,810
Subtotal: 1-5 Years Maturity								54,862		54,942
Subtotal: Energy Technology (10.00%)*								67,215		65,902
Healthcare Services, Other
1-5 Years Maturity
Chromadex Corporation ^(12)(13)	Healthcare Services, Other	Senior Secured	April 2018	Interest rate PRIME + 4.70% or Floor rate of 7.95%	$	2,500		2,407		2,407
InstaMed Communications, LLC ⁽¹³⁾	Healthcare Services, Other	Senior Secured	March 2018	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	5,000		5,041		5,041
MDEverywhere, Inc. ^(10)(12)	Healthcare Services, Other	Senior Secured	January 2018	Interest rate LIBOR + 9.50% or Floor rate of 10.75%	$	3,000		2,962		2,962
Subtotal: 1-5 Years Maturity								10,410		10,410
Subtotal: Healthcare Services, Other (1.58%)*								10,410		10,410

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Information Services
Under 1 Year Maturity
Eccentex Corporation ^(10)(12)	Information Services	Senior Secured	May 2015	Interest rate PRIME + 7.00% or Floor rate of 10.25%	$	204	$	218	$	184
Subtotal: Under 1 Year Maturity								218		184
1-5 Years Maturity
INMOBI Inc. ^{(4)(9)(11)(12)}	Information Services	Senior Secured	December 2016	Interest rate PRIME + 7.00% or Floor rate of 10.25%	$	9,612		9,283		9,283
	Information Services	Senior Secured	December 2017	Interest rate PRIME + 5.75% or Floor rate of 9.00%, PIK Interest 2.50%	$	15,013		14,820		14,820
Total INMOBI Inc.					$	24,625		24,103		24,103
InXpo, Inc. ^(12)(13)	Information Services	Senior Secured	July 2016	Interest rate PRIME + 7.75% or Floor rate of 10.75%	$	2,057		2,073		1,976
Subtotal: 1-5 Years Maturity								26,176		26,079
Subtotal: Information Services (3.99%)*								26,394		26,263
Internet Consumer & Business Services
Under 1 Year Maturity
Gazelle, Inc. ^(11)(13)	Internet Consumer & Business Services	Senior Secured	December 2015	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	1,231		1,231		1,231
NetPlenish ^(7)(8)(13)	Internet Consumer & Business Services	Convertible Senior Note	April 2015	Interest rate FIXED 10.00%	$	89		89		—
	Internet Consumer & Business Services	Senior Secured	September 2015	Interest rate FIXED 10.00%	$	381		373		—
Total NetPlenish					$	470		462		—
Reply! Inc. ^(10)(11)(12)	Internet Consumer & Business Services	Senior Secured	September 2015	Interest rate PRIME + 6.88% or Floor rate of 10.13%, PIK Interest 2.00%	$	7,615		7,757		4,322
	Internet Consumer & Business Services	Senior Secured	September 2015	Interest rate PRIME + 7.25% or Floor rate of 11.00%, PIK Interest 2.00%	$	1,680		1,749		955
Total Reply! Inc.					$	9,295		9,506		5,277
Tectura Corporation ^(7)(11)(15)	Internet Consumer & Business Services	Senior Secured	May 2014	Interest rate LIBOR + 10.00% or Floor rate of 13.00%	$	563		563		121
	Internet Consumer & Business Services	Senior Secured	May 2014	Interest rate LIBOR + 8.00% or Floor rate of 11.00%, PIK Interest 1.00%	$	9,070		9,070		1,511
	Internet Consumer & Business Services	Senior Secured	May 2014	Interest rate LIBOR + 10.00% or Floor rate of 13.00%	$	5,000		5,000		1,074
	Internet Consumer & Business Services	Senior Secured	May 2014	Interest rate LIBOR + 10.00% or Floor rate of 13.00%	$	6,468		6,468		1,390
Total Tectura Corporation					$	21,101		21,101		4,096
Subtotal: Under 1 Year Maturity								32,300		10,604
1-5 Years Maturity
Education Dynamics, LLC ^(11)(13)	Internet Consumer & Business Services	Senior Secured	March 2016	Interest rate LIBOR + 12.5% or Floor rate of 12.50%, PIK Interest 1.50%	$	20,563		20,546		20,559
Gazelle, Inc. ^(11)(13)	Internet Consumer & Business Services	Senior Secured	July 2017	Interest rate PRIME + 7.00% or Floor rate of 10.25%, PIK Interest 2.50%	$	13,712		13,498		13,498
Just Fabulous, Inc. ^(10)(12)	Internet Consumer & Business Services	Senior Secured	February 2017	Interest rate PRIME + 8.25% or Floor rate of 11.50%	$	15,000		14,468		14,768
Lightspeed POS, Inc. ^(4)(9)(10)	Internet Consumer & Business Services	Senior Secured	May 2018	Interest rate PRIME + 3.25% or Floor rate of 6.50%	$	2,000		1,985		1,994
Reply! Inc. ^(10)(11)(12)	Internet Consumer & Business Services	Senior Secured	February 2016	Interest rate PRIME + 7.25% or Floor rate of 10.50%, PIK Interest 2.00%	$	2,721		2,658		1,548
Tapjoy, Inc. ⁽¹²⁾	Internet Consumer & Business Services	Senior Secured	July 2018	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	3,000		2,921		2,921
WaveMarket, Inc. ⁽¹²⁾	Internet Consumer & Business Services	Senior Secured	March 2017	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	300		303		303
Subtotal: 1-5 Years Maturity								56,379		55,591
Subtotal: Internet Consumer & Business Services (10.05%)*								88,679		66,195

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Media/Content/Info
Under 1 Year Maturity
Zoom Media Group, Inc. ^(10)(11)	Media/Content/Info	Senior Secured	December 2015	Interest rate PRIME + 7.25% or Floor rate of 10.50%, PIK Interest 3.75%	$	2,510	$	2,466	$	2,466
	Media/Content/Info	Senior Secured	December 2015	Interest rate PRIME + 5.25% or Floor rate of 8.50%	$	5,060		5,002		5,002
Total Zoom Media Group, Inc.					$	7,570		7,468		7,468
Subtotal: Under 1 Year Maturity								7,468		7,468
1-5 Years Maturity
Rhapsody International, Inc. ^(10)(11)(13)	Media/Content/Info	Senior Secured	April 2018	Interest rate PRIME + 5.25% or Floor rate of 9.00%, PIK interest of 1.50%	$	20,206		19,750		19,579
Subtotal: 1-5 Years Maturity								19,750		19,579
Subtotal: Media/Content/Info (4.11%)*								27,218		27,047
Medical Devices & Equipment
Under 1 Year Maturity
Baxano Surgical, Inc. ^(7)(12)	Medical Devices & Equipment	Senior Secured	February 2015	Interest rate FIXED 12.50%	$	100		86		80
Home Dialysis Plus, Inc. ^(10)(12)	Medical Devices & Equipment	Senior Secured	September 2015	Interest rate FIXED 8.00%	$	500		500		500
Oraya Therapeutics, Inc. ^(10)(11)(12)	Medical Devices & Equipment	Senior Secured	September 2015	Interest rate PRIME + 5.50% or Floor rate of 10.25%, PIK Interest 1.00%	$	6,174		6,146		6,146
Subtotal: Under 1 Year Maturity								6,732		6,726
1-5 Years Maturity
Amedica Corporation ^(8)(12)(13)	Medical Devices & Equipment	Senior Secured	January 2018	Interest rate PRIME + 7.70% or Floor rate of 10.95%	$	20,000		19,704		19,902
Avedro, Inc. ^(12)(13)	Medical Devices & Equipment	Senior Secured	December 2017	Interest rate PRIME + 8.25% or Floor rate of 11.50%	$	7,500		7,247		7,247
Baxano Surgical, Inc. ^(7)(12)	Medical Devices & Equipment	Senior Secured	March 2017	Interest rate PRIME + 7.75% or Floor rate of 12.50%	$	7,113		7,040		6,405
Flowonix Medical Incorporated ⁽¹²⁾	Medical Devices & Equipment	Senior Secured	May 2018	Interest rate PRIME + 5.25% or Floor rate of 10.00%	$	15,000		14,675		14,675
Gamma Medica, Inc. ⁽¹²⁾	Medical Devices & Equipment	Senior Secured	January 2018	Interest rate PRIME + 6.50% or Floor rate of 9.75%	$	4,000		3,874		3,874
Home Dialysis Plus, Inc. ^(10)(12)	Medical Devices & Equipment	Senior Secured	October 2017	Interest rate PRIME + 6.35% or Floor rate of 9.60%	$	15,000		14,780		14,780
InspireMD, Inc. ^{(4)(9)(10)(12)}	Medical Devices & Equipment	Senior Secured	February 2017	Interest rate PRIME +7.25% or Floor rate of 10.50%	$	8,818		8,897		6,486
Medrobotics Corporation ^(12)(13)	Medical Devices & Equipment	Senior Secured	March 2016	Interest rate PRIME + 7.85% or Floor rate of 11.10%	$	2,680		2,765		2,755
nContact Surgical, Inc ⁽¹²⁾	Medical Devices & Equipment	Senior Secured	November 2018	Interest rate PRIME + 9.25% or Floor rate of 9.25%	$	10,000		9,735		9,735
NetBio, Inc. ⁽¹⁰⁾	Medical Devices & Equipment	Senior Secured	August 2017	Interest rate PRIME + 5.00% or Floor rate of 11.00%	$	4,870		4,669		4,718
NinePoint Medical, Inc. ^(12)(13)	Medical Devices & Equipment	Senior Secured	January 2016	Interest rate PRIME + 5.85% or Floor rate of 9.10%	$	3,241		3,357		3,342
Quanterix Corporation ^(10)(12)	Medical Devices & Equipment	Senior Secured	November 2017	Interest rate PRIME + 2.75% or Floor rate of 8.00%	$	5,000		4,930		4,911
SonaCare Medical, LLC (pka US HIFU, LLC) ^(10)(12)	Medical Devices & Equipment	Senior Secured	April 2016	Interest rate PRIME + 7.75% or Floor rate of 11.00%	$	875		1,200		1,209
SynergEyes, Inc. ^(12)(13)	Medical Devices & Equipment	Senior Secured	January 2018	Interest rate PRIME + 7.75% or Floor rate of 11.00%	$	5,000		5,034		4,983
ViewRay, Inc. ^(11)(13)	Medical Devices & Equipment	Senior Secured	June 2017	Interest rate PRIME + 7.00% or Floor rate of 10.25%, PIK Interest 1.50%	$	15,220		14,920		14,973
Subtotal: 1-5 Years Maturity								122,827		119,995
Subtotal: Medical Devices & Equipment (19.23%)*								129,559		126,721

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Semiconductors
Under 1 Year Maturity
Achronix Semiconductor Corporation	Semiconductors	Senior Secured	January 2015	Interest rate PRIME + 10.60% or Floor rate of 13.85%	$	95	$	95	$	95
Subtotal: Under 1 Year Maturity								95		95
1-5 Years Maturity
Avnera Corporation ^(10)(12)	Semiconductors	Senior Secured	April 2017	Interest rate PRIME + 5.75% or Floor rate of 9.00%	$	5,000		4,983		4,990
Subtotal: 1-5 Years Maturity								4,983		4,990
Subtotal: Semiconductors (0.77%)*								5,078		5,085
Software
Under 1 Year Maturity
CareCloud Corporation ^(12)(13)	Software	Senior Secured	July 2015	Interest rate PRIME + 1.40% or Floor rate of 4.65%	$	3,000		2,968		2,968
Clickfox, Inc. ^(12)(13)	Software	Senior Secured	July 2015	Interest rate PRIME + 6.75% or Floor rate of 10.00%	$	2,000		2,000		2,000
Mobile Posse, Inc. ^(12)(13)	Software	Senior Secured	June 2015	Interest rate PRIME + 2.00% or Floor rate of 5.25%	$	1,000		993		988
Touchcommerce, Inc. ^(12)(13)	Software	Senior Secured	January 2015	Interest rate PRIME + 2.25% or Floor rate of 6.50%	$	3,811		3,811		3,805
Subtotal: Under 1 Year Maturity								9,772		9,761
1-5 Years Maturity
CareCloud Corporation ^(12)(13)	Software	Senior Secured	December 2017	Interest rate PRIME + 3.25% or Floor rate of 6.50%	$	208		204		201
	Software	Senior Secured	July 2017	Interest rate PRIME + 5.50% or Floor rate of 8.75%	$	10,000		9,839		9,740
	Software	Senior Secured	January 2018	Interest rate PRIME + 1.70% or Floor rate of 4.95%	$	3,000		2,929		2,884
Total CareCloud Corporation					$	13,208		12,972		12,825
Clickfox, Inc. ^(12)(13)	Software	Senior Secured	December 2017	Interest rate PRIME + 8.25% or Floor rate of 11.50%	$	6,000		6,010		5,948
JumpStart Games, Inc. (p.k.a Knowledge Adventure, Inc.) ^(12)(13)	Software	Senior Secured	March 2018	Interest rate PRIME + 8.25% or Floor rate of 11.50%	$	11,750		11,771		11,709
	Software	Senior Secured	October 2016	Interest rate PRIME + 8.25% or Floor rate of 11.50%	$	1,356		1,332		1,332
Total JumpStart Games, Inc. (p.k.a Knowledge Adventure, Inc.)					$	13,106		13,103		13,041
Mobile Posse, Inc. ^(12)(13)	Software	Senior Secured	December 2016	Interest rate PRIME + 7.50% or Floor rate of 10.75%	$	2,950		2,943		2,972
Neos Geosolutions, Inc. ^(12)(13)	Software	Senior Secured	May 2016	Interest rate PRIME + 5.75% or Floor rate of 10.50%	$	2,332		2,454		2,444
Poplicus, Inc. ^(12)(13)	Software	Senior Secured	June 2017	Interest rate PRIME + 5.25% or Floor rate of 8.50%	$	1,500		1,504		1,487
Soasta, Inc. ^(12)(13)	Software	Senior Secured	February 2018	Interest rate PRIME + 4.75% or Floor rate of 8.00%	$	15,000		14,367		14,367
	Software	Senior Secured	February 2018	Interest rate PRIME + 2.25% or Floor rate of 5.50%	$	3,500		3,353		3,353
Total Soasta, Inc.					$	18,500		17,720		17,720
Sonian, Inc. ^(12)(13)	Software	Senior Secured	July 2017	Interest rate PRIME + 7.00% or Floor rate of 10.25%	$	5,500		5,450		5,436
StrongView Systems, Inc. ⁽¹²⁾	Software	Senior Secured	December 2017	Interest rate PRIME + 6.00% or Floor rate of 9.25%, PIK Interest 3.00%	$	10,000		9,779		9,779
Touchcommerce, Inc. ^(12)(13)	Software	Senior Secured	June 2017	Interest rate PRIME + 6.00% or Floor rate of 10.25%	$	5,000		4,903		4,953
Subtotal: 1-5 Years Maturity								76,838		76,605
Subtotal: Software (13.11%)*								86,610		86,366

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Maturity Date	Interest Rate and Floor	Principal Amount		Cost⁽²⁾		Value⁽³⁾
Specialty Pharmaceuticals
Under 1 Year Maturity
Cranford Pharmaceuticals, LLC ^(11)(12)(13)	Specialty Pharmaceuticals	Senior Secured	August 2015	Interest rate LIBOR + 8.25% or Floor rate of 9.50%	$	2,000	$	1,977	$	1,986
Subtotal: Under 1 Year Maturity								1,977		1,986
1-5 Years Maturity
Alimera Sciences, Inc. ⁽¹⁰⁾	Specialty Pharmaceuticals	Senior Secured	May 2018	Interest rate PRIME + 7.65% or Floor rate of 10.90%	$	35,000		34,138		33,429
Cranford Pharmaceuticals, LLC ^(11)(12)(13)	Specialty Pharmaceuticals	Senior Secured	February 2017	Interest rate LIBOR + 9.55% or Floor rate of 10.80%, PIK Interest 1.35%	$	15,644		15,595		15,465
Subtotal: 1-5 Years Maturity								49,733		48,894
Subtotal: Specialty Pharmaceuticals (7.72%)*								51,710		50,880
Surgical Devices
Under 1 Year Maturity
Transmedics, Inc. ^(10)(12)	Surgical Devices	Senior Secured	November 2015	Interest rate FIXED 12.95%	$	6,061		5,989		5,989
Subtotal: Under 1 Year Maturity								5,989		5,989
Subtotal: Surgical Devices (0.91%)*								5,989		5,989
Total Debt Investments (140.23%)*								951,982		923,906

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Equity Investments
Biotechnology Tools
NuGEN Technologies, Inc. ⁽¹³⁾	Biotechnology Tools	Equity	Preferred Series C		189,394	$	500	$	498
Subtotal: Biotechnology Tools (0.08%)*							500		498
Communications & Networking
GlowPoint, Inc. ⁽³⁾	Communications & Networking	Equity	Common Stock		114,192		102		126
Peerless Network, Inc.	Communications & Networking	Equity	Preferred Series A		1,000,000		1,000		7,229
Subtotal: Communications & Networking (1.12%)*							1,102		7,355
Consumer & Business Products
Market Force Information, Inc.	Consumer & Business Products	Equity	Preferred Series B		187,970		500		317
Subtotal: Consumer & Business Products (0.05%)*							500		317
Diagnostic
Singulex, Inc.	Diagnostic	Equity	Common Stock		937,998		750		750
Subtotal: Diagnostic (0.11%)*							750		750
Drug Delivery
AcelRx Pharmaceuticals, Inc. ^(3)(9)(13)	Drug Delivery	Equity	Common Stock		54,240		109		365
Merrion Pharmaceuticals, Plc^(3)(4)(9)	Drug Delivery	Equity	Common Stock		20,000		9		—
Neos Therapeutics, Inc. ⁽¹³⁾	Drug Delivery	Equity	Preferred Series C		300,000		1,500		1,635
Subtotal: Drug Delivery (0.30%)*							1,618		2,000
Drug Discovery & Development
Aveo Pharmaceuticals, Inc.^(3)(9)(13)	Drug Discovery & Development	Equity	Common Stock		167,864		842		141
Celladon Corporation^(3)(13)	Drug Discovery & Development	Equity	Common Stock		105,263		1,000		2,056
Cempra, Inc.⁽³⁾	Drug Discovery & Development	Equity	Common Stock		97,931		458		2,303
Cerecor Inc.	Drug Discovery & Development	Equity	Preferred Series B		3,334,445		1,000		922
Dicerna Pharmaceuticals, Inc. ^(3)(13)	Drug Discovery & Development	Equity	Common Stock		142,858		1,000		2,353
Genocea Biosciences, Inc.⁽³⁾	Drug Discovery & Development	Equity	Common Stock		223,463		2,000		1,262
Inotek Pharmaceuticals Corporation⁽¹⁴⁾	Drug Discovery & Development	Equity	Common Stock		4,523		1,500		—
Insmed, Incorporated⁽³⁾	Drug Discovery & Development	Equity	Common Stock		70,771		1,000		845
Paratek Pharmaceuticals, Inc. (p.k.a Transcept Pharmaceuticals, Inc.) ⁽³⁾	Drug Discovery & Development	Equity	Common Stock		31,580		1,743		1,158
Subtotal: Drug Discovery & Development (1.68%)*							10,543		11,040
Electronics & Computer Hardware
Identiv, Inc.⁽³⁾	Electronics & Computer Hardware	Equity	Common Stock		49,097		247		682
Subtotal: Electronics & Computer Hardware (0.10%)*							247		682
Energy Technology
Glori Energy, Inc. ⁽³⁾	Energy Technology	Equity	Common Stock		18,208		165		76
SCIEnergy, Inc.	Energy Technology	Equity	Preferred Series 1		385,000		761		22
Subtotal: Energy Technology (0.01%)*							926		98
Information Services
Good Technology Corporation (pka Visto Corporation) ⁽¹³⁾	Information Services	Equity	Common Stock		500,000		603		605
Subtotal: Information Services (0.09%)*							603		605
Internet Consumer & Business Services
Blurb, Inc. ⁽¹³⁾	Internet Consumer & Business Services	Equity	Preferred Series B		220,653		175		265
Lightspeed POS, Inc.⁽⁴⁾⁽⁹⁾	Internet Consumer & Business Services	Equity	Preferred Series C		23,003		250		260
Philotic, Inc.	Internet Consumer & Business Services	Equity	Common Stock		9,023		93		—
Progress Financial	Internet Consumer & Business Services	Equity	Preferred Series G		218,351		250		233
Taptera, Inc.	Internet Consumer & Business Services	Equity	Preferred Series B		454,545		150		162
Subtotal: Internet Consumer & Business Services (0.14%)*							918		920

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Media/Content/Info
Everyday Health, Inc. (pka Waterfront Media, Inc.) ⁽³⁾	Media/Content/Info	Equity	Common Stock		97,060	$	1,000	$	1,432
Subtotal: Media/Content/Info (0.22%)*							1,000		1,432
Medical Devices & Equipment
Flowonix Medical Incorporated	Medical Devices & Equipment	Equity	Preferred Series E		221,893		1,500		1,614
Gelesis, Inc.^(5)(13)	Medical Devices & Equipment	Equity	LLC Interest		674,208		425		181
	Medical Devices & Equipment	Equity	LLC Interest		675,676		500		114
	Medical Devices & Equipment	Equity	LLC interests (Common)		674,208		—		31
Total Gelesis, Inc.					2,024,092		925		326
Medrobotics Corporation⁽¹³⁾	Medical Devices & Equipment	Equity	Preferred Series E		136,798		250		149
	Medical Devices & Equipment	Equity	Preferred Series F		73,971		155		167
Total Medrobotics Corporation					210,769		405		316
Novasys Medical, Inc.	Medical Devices & Equipment	Equity	Preferred Series D-1		4,118,444		1,000		—
Optiscan Biomedical, Corp. ^(5)(13)	Medical Devices & Equipment	Equity	Preferred Series B		6,185,567		3,000		455
	Medical Devices & Equipment	Equity	Preferred Series C		1,927,309		655		138
	Medical Devices & Equipment	Equity	Preferred Series D		55,103,923		5,257		5,260
Total Optiscan Biomedical, Corp					63,216,799		8,912		5,853
Oraya Therapeutics, Inc.	Medical Devices & Equipment	Equity	Preferred Series 1		1,086,969		500		—
Subtotal: Medical Devices & Equipment (1.23%)*							13,242		8,109
Software
Atrenta, Inc.	Software	Equity	Preferred Series C		1,196,845		986		1,745
	Software	Equity	Preferred Series D		635,513		508		1,109
Total Atrenta, Inc					1,832,358		1,494		2,854
Box, Inc. ^(13)(14)	Software	Equity	Preferred Series B		271,070		251		5,747
	Software	Equity	Preferred Series C		589,844		872		12,506
	Software	Equity	Preferred Series D		158,133		500		3,352
	Software	Equity	Preferred Series D-1		186,766		1,694		3,960
	Software	Equity	Preferred Series D-2		220,751		2,001		4,680
	Software	Equity	Preferred Series E		38,183		500		810
Total Box, Inc					1,464,747		5,818		31,055
CapLinked, Inc.	Software	Equity	Preferred Series A-3		53,614		51		79
ForeScout Technologies, Inc.	Software	Equity	Preferred Series D		319,099		398		519
HighRoads, Inc.	Software	Equity	Preferred Series B		190,170		307		228
WildTangent, Inc. ⁽¹³⁾	Software	Equity	Preferred Series 3		100,000		402		228
Subtotal: Software (5.31%)*							8,470		34,963
Specialty Pharmaceuticals
QuatRx Pharmaceuticals Company	Specialty Pharmaceuticals	Equity	Preferred Series E		241,829		750		—
	Specialty Pharmaceuticals	Equity	Preferred Series E-1		26,955		—		—
	Specialty Pharmaceuticals	Equity	Preferred Series G		4,667,636		—		—
Total QuatRx Pharmaceuticals Company					4,936,420		750		—
Subtotal: Specialty Pharmaceuticals (0.00%)*							750		—
Surgical Devices
Gynesonics, Inc. ⁽¹³⁾	Surgical Devices	Equity	Preferred Series B		219,298		250		101
	Surgical Devices	Equity	Preferred Series C		656,538		282		186
	Surgical Devices	Equity	Preferred Series D		1,991,157		712		1,073
Total Gynesonics, Inc.					2,866,993		1,244		1,360
Transmedics, Inc.	Surgical Devices	Equity	Preferred Series B		88,961		1,100		353
	Surgical Devices	Equity	Preferred Series C		119,999		300		180
	Surgical Devices	Equity	Preferred Series D		260,000		650		1,071
Total Transmedics, Inc.					468,960		2,050		1,604
Subtotal: Surgical Devices (0.45%)*							3,294		2,964
Total: Equity Investments (10.89%)*							44,463		71,733

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Warrant Investments
Biotechnology Tools
Labcyte, Inc.⁽¹³⁾	Biotechnology Tools	Warrant	Preferred Series C		1,127,624	$	323	$	354
Subtotal: Biotechnology Tools (0.05%)*							323		354
Communications & Networking
Intelepeer, Inc.⁽¹³⁾	Communications & Networking	Warrant	Preferred Series C		117,958		102		18
OpenPeak, Inc.	Communications & Networking	Warrant	Common Stock		108,982		149		104
PeerApp, Inc.	Communications & Networking	Warrant	Preferred Series B		298,779		61		45
Peerless Network, Inc.	Communications & Networking	Warrant	Preferred Series A		135,000		95		844
Ping Identity Corporation	Communications & Networking	Warrant	Preferred Series B		1,136,277		52		183
SkyCross, Inc. ⁽¹³⁾	Communications & Networking	Warrant	Preferred Series F		9,762,777		394		—
Spring Mobile Solutions, Inc.	Communications & Networking	Warrant	Preferred Series D		2,834,375		418		426
Subtotal: Communications & Networking (0.25%)*							1,271		1,620
Consumer & Business Products
Antenna79 (p.k.a. Pong Research Corporation) ⁽¹³⁾	Consumer & Business Products	Warrant	Preferred Series A		1,662,441		228		202
Intelligent Beauty, Inc. ⁽¹³⁾	Consumer & Business Products	Warrant	Preferred Series B		190,234		230		327
IronPlanet, Inc.	Consumer & Business Products	Warrant	Preferred Series D		1,155,821		1,077		1,067
Market Force Information, Inc.	Consumer & Business Products	Warrant	Preferred Series A		99,286		24		21
The Neat Company ⁽¹³⁾	Consumer & Business Products	Warrant	Preferred Series C-1		540,540		365		451
Subtotal: Consumer & Business Products (0.31%)*							1,924		2,068
Diagnostic
Navidea Biopharmaceuticals, Inc. (pka Neoprobe)^(3)(13)	Diagnostic	Warrant	Common Stock		333,333		244		75
Subtotal: Diagnostic (0.01%)*							244		75
Drug Delivery
AcelRx Pharmaceuticals, Inc. ^(3)(9)(13)	Drug Delivery	Warrant	Common Stock		176,730		786		420
Alexza Pharmaceuticals, Inc. ⁽³⁾	Drug Delivery	Warrant	Common Stock		37,639		645		—
BIND Therapeutics, Inc. ^(3)(13)	Drug Delivery	Warrant	Common Stock		71,359		367		6
BioQuiddity Incorporated	Drug Delivery	Warrant	Common Stock		459,183		1		1
Celator Pharmaceuticals, Inc.⁽³⁾	Drug Delivery	Warrant	Common Stock		158,006		107		67
Celsion Corporation ⁽³⁾	Drug Delivery	Warrant	Common Stock		194,986		428		248
Dance Biopharm, Inc.⁽¹³⁾	Drug Delivery	Warrant	Preferred Series A		97,701		74		109
Edge Therapeutics, Inc.	Drug Delivery	Warrant	Preferred Series C-1		107,526		390		217
Kaleo, Inc. (p.k.a. Intelliject, Inc.)	Drug Delivery	Warrant	Preferred Series B		82,500		594		1,108
Neos Therapeutics, Inc.⁽¹³⁾	Drug Delivery	Warrant	Preferred Series C		170,000		285		235
Revance Therapeutics, Inc. ⁽³⁾	Drug Delivery	Warrant	Common Stock		53,511		557		64
Zosano Pharma, Inc.⁽¹⁴⁾	Drug Delivery	Warrant	Common Stock		31,674		164		179
Subtotal: Drug Delivery (0.40%)*							4,398		2,654

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Drug Discovery & Development
ADMA Biologics, Inc.⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		89,750	$	295	$	366
Anthera Pharmaceuticals, Inc. ^(3)(13)	Drug Discovery & Development	Warrant	Common Stock		40,178		984		—
Aveo Pharmaceuticals, Inc.^(3)(9)(13)	Drug Discovery & Development	Warrant	Common Stock		608,696		194		107
Cerecor Inc.	Drug Discovery & Development	Warrant	Preferred Series B		625,208		70		47
Chroma Therapeutics, Ltd.⁽⁴⁾⁽⁹⁾	Drug Discovery & Development	Warrant	Preferred Series D		325,261		490		—
Cleveland BioLabs, Inc. ^(3)(13)	Drug Discovery & Development	Warrant	Common Stock		156,250		105		10
Concert Pharmaceuticals, Inc. ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		70,796		367		164
Coronado Biosciences, Inc.⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		73,009		142		43
Dicerna Pharmaceuticals, Inc. ^(3)(13)	Drug Discovery & Development	Warrant	Common Stock		200		28		—
Epirus Biopharmaceuticals, Inc. ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		64,194		276		207
Genocea Biosciences, Inc. ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		73,725		266		188
Horizon Pharma, Inc. ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		3,735		52		4
Melinta Therapeutics	Drug Discovery & Development	Warrant	Preferred Series 3		1,151,936		604		590
Nanotherapeutics, Inc. ⁽¹³⁾	Drug Discovery & Development	Warrant	Common Stock		171,389		838		1,421
Neothetics, Inc. (pka Lithera, Inc) ^(3)(13)	Drug Discovery & Development	Warrant	Common Stock		46,838		266		122
Neuralstem, Inc. ^(3)(13)	Drug Discovery & Development	Warrant	Common Stock		75,187		77		71
Paratek Pharmaceutcals, Inc. (p.k.a Transcept Pharmaceuticals, Inc) ⁽³⁾	Drug Discovery & Development	Warrant	Common Stock		5,121		87		10
uniQure B.V. ^(3)(4)(9)	Drug Discovery & Development	Warrant	Common Stock		37,174		218		184
Subtotal: Drug Discovery & Development (0.54%)*							5,359		3,534
Electronics & Computer Hardware
Clustrix, Inc.	Electronics & Computer Hardware	Warrant	Common Stock		50,000		12		10
Subtotal: Electronics & Computer Hardware (0.00%)*							12		10
Energy Technology
Agrivida, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series D		471,327		120		186
Alphabet Energy, Inc.⁽¹³⁾	Energy Technology	Warrant	Preferred Series A		86,329		81		135
American Superconductor Corporation⁽³⁾	Energy Technology	Warrant	Common Stock		588,235		39		40
Brightsource Energy, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series 1		174,999		780		213
Calera, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series C		44,529		513		—
EcoMotors, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series B		437,500		308		256
Fluidic, Inc.	Energy Technology	Warrant	Preferred Series C		59,665		102		60
Fulcrum Bioenergy, Inc.	Energy Technology	Warrant	Preferred Series C-1		280,897		275		135
GreatPoint Energy, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series D-1		393,212		548		—
Polyera Corporation ⁽¹³⁾	Energy Technology	Warrant	Preferred Series C		161,575		69		228
SCIEnergy, Inc.	Energy Technology	Warrant	Common Stock		530,811		181		—
	Energy Technology	Warrant	Preferred Series 1		145,811		50		—
Total SCIEnergy, Inc.					676,622		231		—
Scifiniti (pka Integrated Photovoltaics, Inc.)⁽¹³⁾	Energy Technology	Warrant	Preferred Series A-1		390,000		82		65
Solexel, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series C		1,171,625		1,162		666
Stion Corporation ⁽⁵⁾	Energy Technology	Warrant	Preferred Series Seed		2154		1,378		—
TAS Energy, Inc.	Energy Technology	Warrant	Preferred Series F		428,571		299		157
TPI Composites, Inc.	Energy Technology	Warrant	Preferred Series B		160		273		107
Trilliant, Inc. ⁽¹³⁾	Energy Technology	Warrant	Preferred Series A		320,000		161		32
Subtotal: Energy Technology (0.35%)*							6,421		2,280
Healthcare Services, Other
Chromadex Corporation ^(3)(13)	Healthcare Services, Other	Warrant	Common Stock		419,020		156		106
MDEverywhere, Inc.	Healthcare Services, Other	Warrant	Common Stock		129		94		11
Subtotal: Healthcare Services, Other (0.02%)*							250		117
Information Services
Cha Cha Search, Inc. ⁽¹³⁾	Information Services	Warrant	Preferred Series G		48,232		58		20
INMOBI Inc. ⁽⁴⁾⁽⁹⁾	Information Services	Warrant	Common Stock		42,187		74		72
InXpo, Inc. ⁽¹³⁾	Information Services	Warrant	Preferred Series C		648,400		98		26
	Information Services	Warrant	Preferred Series C-1		740,832		58		30
Total InXpo, Inc.					1,389,232		156		56
RichRelevance, Inc. ⁽¹³⁾	Information Services	Warrant	Preferred Series E		112,612		98		—
Subtotal: Information Services (0.02%)*							386		148

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Internet Consumer & Business Services
Blurb, Inc. ⁽¹³⁾	Internet Consumer & Business Services	Warrant	Preferred Series B		218,684	$	299	$	79
	Internet Consumer & Business Services	Warrant	Preferred Series C		234,280		636		173
Total Blurb, Inc.					452,964		935		252
CashStar, Inc. ⁽¹³⁾	Internet Consumer & Business Services	Warrant	Preferred Series C-2		727,272		130		83
Gazelle, Inc. ⁽¹³⁾	Internet Consumer & Business Services	Warrant	Preferred Series A-1		991,288		158		185
Just Fabulous, Inc.	Internet Consumer & Business Services	Warrant	Preferred Series B		206,184		1,101		1,490
Lightspeed POS, Inc. ⁽⁴⁾⁽⁹⁾	Internet Consumer & Business Services	Warrant	Preferred Series C		24,561		20		60
Prism Education Group, Inc. ⁽¹³⁾	Internet Consumer & Business Services	Warrant	Preferred Series B		200,000		43		—
Progress Financial	Internet Consumer & Business Services	Warrant	Preferred Series G		174,562		78		63
Reply! Inc.	Internet Consumer & Business Services	Warrant	Preferred Series B		137,225		320		—
ShareThis, Inc. ⁽¹³⁾	Internet Consumer & Business Services	Warrant	Preferred Series C		493,502		547		282
Tapjoy, Inc.	Internet Consumer & Business Services	Warrant	Preferred Series D		430,485		263		125
Tectura Corporation	Internet Consumer & Business Services	Warrant	Preferred Series B-1		253,378		51
Subtotal: Internet Consumer & Business Services (0.39%)*							3,646		2,540
Media/Content/Info
Mode Media Corporation ⁽¹³⁾	Media/Content/Info	Warrant	Preferred Series D		407,457		482		—
Rhapsody International, Inc. ⁽¹³⁾	Media/Content/Info	Warrant	Common Stock		715,755		385		358
Zoom Media Group, Inc.	Media/Content/Info	Warrant	Preferred Series A		1,204		348		382
Subtotal: Media/Content/Info (0.11%)*							1,215		740
Medical Devices & Equipment
Amedica Corporation^(3)(13)	Medical Devices & Equipment	Warrant	Common Stock		516,129		459		—
Avedro, Inc. ⁽¹³⁾	Medical Devices & Equipment	Warrant	Preferred Series D		1,308,451		401		553
Baxano Surgical, Inc. ⁽³⁾	Medical Devices & Equipment	Warrant	Common Stock		882,353		439		—
Flowonix Medical Incorporated	Medical Devices & Equipment	Warrant	Preferred Series E		66,568		203		228
Gamma Medica, Inc.	Medical Devices & Equipment	Warrant	Preferred Series A		357,500		170		196
Gelesis, Inc. ^(5)(13)	Medical Devices & Equipment	Warrant	LLC Interest		263,688		78		1
Home Dialysis Plus, Inc.	Medical Devices & Equipment	Warrant	Preferred Series A		500,000		402		587
InspireMD, Inc.^(3)(4)(9)	Medical Devices & Equipment	Warrant	Common Stock		168,351		242		12
Medrobotics Corporation ⁽¹³⁾	Medical Devices & Equipment	Warrant	Preferred Series E		455,539		370		182
MELA Sciences, Inc. ⁽³⁾	Medical Devices & Equipment	Warrant	Common Stock		69,320		401		1
nContact Surgical, Inc	Medical Devices & Equipment	Warrant	Preferred Series D-1		201,439		266		450
NetBio, Inc.	Medical Devices & Equipment	Warrant	Common Stock		2,568		408		60
NinePoint Medical, Inc. ⁽¹³⁾	Medical Devices & Equipment	Warrant	Preferred Series A-1		587,840		170		204
Novasys Medical, Inc.	Medical Devices & Equipment	Warrant	Common Stock		109,449		2		—
	Medical Devices & Equipment	Warrant	Preferred Series D		526,840		125		—
	Medical Devices & Equipment	Warrant	Preferred Series D-1		53,607		6		—
Total Novasys Medical, Inc.					689,896		133		—
Optiscan Biomedical, Corp. ^(5)(13)	Medical Devices & Equipment	Warrant	Preferred Series D		10,535,275		1,252		219
Oraya Therapeutics, Inc.	Medical Devices & Equipment	Warrant	Common Stock		954		66		—
	Medical Devices & Equipment	Warrant	Preferred Series 1		1,632,084		676		—
Total Oraya Therapeutics, Inc.					1,633,038		742		—
Quanterix Corporation	Medical Devices & Equipment	Warrant	Preferred Series C		69,371		104		164
SonaCare Medical, LLC (pka US HIFU, LLC)	Medical Devices & Equipment	Warrant	Preferred Series A		6,464		188		—
ViewRay, Inc. ⁽¹³⁾	Medical Devices & Equipment	Warrant	Preferred Series C		312,500		333		359
Subtotal: Medical Devices & Equipment (0.49%)*							6,761		3,216
Semiconductors
Achronix Semiconductor Corporation	Semiconductors	Warrant	Preferred Series C		360,000		160		9
Avnera Corporation	Semiconductors	Warrant	Preferred Series E		102,958		14		32
Subtotal: Semiconductors (0.01%)*							174		41

See notes to consolidated financial statements.

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(dollars in thousands)

Portfolio Company	Sub-Industry	Type of Investment⁽¹⁾	Series	Shares		Cost⁽²⁾		Value⁽³⁾
Software
Atrenta, Inc.	Software	Warrant	Preferred Series D		392,670	$	120	$	359
Braxton Technologies, LLC	Software	Warrant	Preferred Series A		168,750		188		—
CareCloud Corporation ⁽¹³⁾	Software	Warrant	Preferred Series B		413,433		258		482
Clickfox, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series B		1,038,563		330		783
	Software	Warrant	Preferred Series C		592,019		730		555
	Software	Warrant	Preferred Series C-A		46,109		14		35
Total Clickfox, Inc.					1,676,691		1,074		1,373
Daegis Inc. (pka Unify Corporation) ^(3)(13)	Software	Warrant	Common Stock		718,860		1,434		5
ForeScout Technologies, Inc.	Software	Warrant	Preferred Series E		80,587		41		74
Hillcrest Laboratories, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series E		1,865,650		54		106
JumpStart Games, Inc. (p.k.a Knowledge Holdings, Inc.) ⁽¹³⁾	Software	Warrant	Preferred Series E		614,333		15		8
Mobile Posse, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series C		396,430		130		66
Neos Geosolutions, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series 3		221,150		22		—
NewVoiceMedia Limited⁽⁴⁾⁽⁹⁾	Software	Warrant	Preferred Series E		225,586		33		34
Soasta, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series E		410,800		691		1,014
Sonian, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series C		185,949		106		72
StrongView Systems, Inc.	Software	Warrant	Preferred Series C		551,470		169		218
SugarSync, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series CC		332,726		78		78
	Software	Warrant	Preferred Series DD		107,526		34		26
Total SugarSync, Inc.					440,252		112		104
Touchcommerce, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series E		992,595		252		164
White Sky, Inc. ⁽¹³⁾	Software	Warrant	Preferred Series B-2		124,295		54		4
Subtotal: Software (0.62%)*							4,753		4,083
Specialty Pharmaceuticals
Alimera Sciences, Inc. ⁽³⁾	Specialty Pharmaceuticals	Warrant	Common Stock		285,016		728		656
QuatRx Pharmaceuticals Company	Specialty Pharmaceuticals	Warrant	Preferred Series E		155,324		308		—
Subtotal: Specialty Pharmaceuticals (0.10%)*							1,036		656
Surgical Devices
Gynesonics, Inc. ⁽¹³⁾	Surgical Devices	Warrant	Preferred Series C		180,480		74		48
	Surgical Devices	Warrant	Preferred Series D		1,575,965		320		562
Total Gynesonics, Inc.					1,756,445		394		610
Transmedics, Inc.	Surgical Devices	Warrant	Preferred Series B		40,436		225		—
	Surgical Devices	Warrant	Preferred Series D		175,000		100		352
Total Transmedics, Inc.					215,436		325		352
Subtotal: Surgical Devices (0.15%)*							719		962
Total Warrant Investments (3.81%)*							38,892		25,098
Total Investments (154.92%)*						$	1,035,337	$	1,020,737

*	Value as a percent of net assets

(1)	Preferred and common stock, warrants, and equity interests are generally non-income producing.

(2)	Gross unrealized appreciation, gross unrealized depreciation, and net depreciation for federal income tax purposes totaled $46.1 million, $63.4 million and $17.3 million respectively. The tax cost of investments is $1.0 billion.

(3)

Except for warrants in twenty-nine publicly traded companies and common stock in thirteen publicly traded companies, all investments are restricted at December 31, 2014 and were valued at fair value as determined in good faith by the Audit Committee of the Board of Directors. No unrestricted securities of the same issuer are outstanding. The Company uses the Standard Industrial Code for classifying the industry grouping of its portfolio companies.

(4)	Non-U.S. company or the company’s principal place of business is outside the United States.

(5)	Affiliate investment that is defined under the Investment Company Act of 1940 as companies in which HTGC owns at least 5% but not more than 25% of the voting securities of the company.

(6)	Control investment that is defined under the Investment Company Act of 1940 as companies in which HTGC owns at least 25% of the voting securities of the company or has greater than 50% representation on its board. There were no control investments at December 31, 2014.

(7)	Debt is on non-accrual status at December 31, 2014, and is therefore considered non-income producing.

(8)	Denotes that all or a portion of the debt investment is convertible senior debt.

(9)	Indicates assets that the Company deems not “qualifying assets” under section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets.

(10)	Denotes that all or a portion of the debt investment secures the notes offered in the Debt Securitizations (as defined in Note 4).

(11)	Denotes that all or a portion of the debt investment principal includes accumulated PIK, or payment-in-kind, interest and is net of repayments.

(12)	Denotes that all or a portion of the debt investment includes an exit fee receivable.

(13)	Denotes that all or a portion of the investment in this portfolio company is held by HT II or HT III, the Company’s wholly-owned SBIC subsidiaries.

(14)	Subsequent to December 31, 2014, this company completed an initial public offering. Note that the December 31, 2014 fair value does not reflect any potential impact of the conversion of our preferred shares to common shares which may include reverse splits associated with the offering.

(15)

See notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Description of Business and Basis of Presentation

Hercules Technology Growth Capital, Inc. (the “Company”) is a specialty finance company focused on providing senior secured loans to venture capital-backed companies in technology-related industries, including technology, biotechnology, life science, and energy and renewables technology at all stages of development. The Company sources its investments through its principal office located in Palo Alto, CA, as well as through its additional offices in Boston, MA, New York, NY, McLean, VA and Radnor, PA. The Company was incorporated under the General Corporation Law of the State of Maryland in December 2003.

The Company is an internally managed, non-diversified closed-end investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). From incorporation through December 31, 2005, the Company was taxed as a corporation under Subchapter C of the Internal Revenue Code of 1986, (the “Code”). Effective January 1, 2006, the Company elected to be treated for tax purposes as a regulated investment company, or RIC, under the Code (see Note 5). As an investment company, the Company follows accounting and reporting guidance as set forth in Accounting Standards Codification (“ASC”) 946.

Hercules Technology II, L.P. (“HT II”), Hercules Technology III, L.P. (“HT III”), and Hercules Technology IV, L.P. (“HT IV”), are Delaware limited partnerships that were formed in January 2005, September 2009 and December 2010, respectively. HT II and HT III were licensed to operate as small business investment companies (“SBICs”) under the authority of the Small Business Administration (“SBA”) on September 27, 2006 and May 26, 2010, respectively. As SBICs, HT II and HT III are subject to a variety of regulations concerning, among other things, the size and nature of the companies in which they may invest and the structure of those investments. HT IV was formed in anticipation of receiving an additional SBIC license; however, the Company has not yet applied for such license, and HT IV currently has no material assets or liabilities. The Company also formed Hercules Technology SBIC Management, LLC, or (“HTM”), a limited liability company in November 2003. HTM is a wholly owned subsidiary of the Company and serves as the limited partner and general partner of HT II and HT III (see Note 4 to the Company’s consolidated financial statements).

HT II and HT III hold approximately $154.9 million and $319.2 million in assets, respectively, and they accounted for approximately 8.9% and 18.4% of the Company’s total assets, respectively, prior to consolidation at March 31, 2015.

The Company also established wholly owned subsidiaries, all of which are structured as Delaware corporations and limited liability companies, to hold portfolio companies organized as limited liability companies, or LLCs (or other forms of pass-through entities). By investing through these wholly owned subsidiaries, the Company is able to benefit from the tax treatment of these entities and create a tax structure that is more advantageous with respect to the Company’s RIC status.

The consolidated financial statements include the accounts of the Company, its subsidiaries and its consolidated securitization VIEs. All inter-company accounts and transactions have been eliminated in consolidation. In accordance with Article 6 of Regulation S-X under the Securities Act of 1933 and the Securities and Exchange Act of 1934, the Company does not consolidate portfolio company investments. The accompanying consolidated interim financial statements are presented in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information, and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X under the Securities Act of 1933 and the Securities Exchange Act of 1934. Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, all adjustments consisting solely of normal recurring accruals considered necessary for the fair statement of consolidated financial statements for the interim periods have been included. The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the year. Therefore, the interim unaudited consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes thereto for the period ended December 31, 2014. The year-end Consolidated Statement of Assets and Liabilities data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries and all VIEs of which the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation.

A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. The primary beneficiary of a VIE is the party with both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb the losses or the right to receive benefits that could potentially be significant to the VIE.

To assess whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers all the facts and circumstances including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes identifying the activities that most significantly impact the VIE’s economic performance and identifying which party, if any, has power over those activities. In general, the party that makes the most significant decisions affecting the VIE is determined to have the power to direct the activities of a VIE. To assess whether the Company has the obligation to absorb the losses or the right to receive benefits that could potentially be significant to the VIE, the Company considers all of its economic interests, including debt and equity interests, servicing rights and fee arrangements, and any other variable interests in the VIE. If the Company determines that it is the party with the power to make the most significant decisions affecting the VIE, and the Company has a potentially significant interest in the VIE, then it consolidates the VIE.

The Company performs ongoing reassessments, usually quarterly, of whether it is the primary beneficiary of a VIE. The reassessment process considers whether the Company has acquired or divested the power to direct the activities of the VIE through changes in governing documents or other circumstances. The Company also reconsiders whether entities previously determined not to be VIEs have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework.

As of the date of this report, the VIEs consolidated by the Company are its securitization VIEs formed in conjunction with the issuance of the Asset-Backed Notes (as defined herein) (See Note 4).

Reclassification

Certain balances from prior years have been reclassified in order to conform to the current year presentation.

Valuation of Investments

At March 31, 2015, 83.7% of the Company’s total assets represented investments in portfolio companies that are valued at fair value by the Board of Directors. Value, as defined in Section 2(a)(41) of the 1940 Act, is (i) the market price for those securities for which a market quotation is readily available and (ii) for all other securities and assets, fair value is as determined in good faith by the Board of Directors. The Company’s investments are carried at fair value in accordance with the 1940 Act and Accounting Standards Codification topic 820 Fair Value Measurements and Disclosures (“ASC 820”). The Company’s debt securities are primarily invested in venture capital-backed companies in technology-related industries, including technology, biotechnology, life science and energy and renewables technology at all stages of development. Given the nature of lending to these types of businesses, substantially all of the Company’s investments in these portfolio companies are considered Level 3 assets under ASC 820 because there is no known or accessible market or market indexes for these investment securities to be traded or exchanged. As such, the Company values substantially all of its investments at fair value as determined in good faith pursuant to a consistent valuation policy by the Company’s Board of Directors in accordance with the provisions of ASC 820 and the 1940 Act. Due to the inherent uncertainty in determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments determined in good faith by its Board of Directors may differ significantly from the value that would have been used had a readily available market existed for such investments, and the differences could be material.

The Company may from time to time engage an independent valuation firm to provide the Company with valuation assistance with respect to certain portfolio investments on a quarterly basis. The Company intends to continue to engage an independent valuation firm to provide management with assistance regarding the Company’s determination of the fair value of selected portfolio investments each quarter unless directed by the Board of Directors to cancel such valuation services. The scope of services rendered by an independent valuation firm is at the discretion of the Board of Directors. The Company’s Board of Directors is ultimately and solely responsible for determining the fair value of the Company’s investments in good faith.

With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, the Company’s Board of Directors has approved a multi-step valuation process each quarter, as described below:

(1) the Company’s quarterly valuation process begins with each portfolio company being initially valued by the investment professionals responsible for the portfolio investment;

(2) preliminary valuation conclusions are then documented and business based assumptions are discussed with the Company’s investment committee;

(3) the Audit Committee of the Board of Directors reviews the preliminary valuation of the investments in the portfolio as provided by the investment committee, which incorporates the results of the independent valuation firm as appropriate; and

(4) the Board of Directors, upon the recommendation of the Audit Committee, discusses valuations and determines the fair value of each investment in the Company’s portfolio in good faith based on the input of, where applicable, the respective independent valuation firm and the investment committee.

ASC 820 establishes a framework for measuring the fair value of assets and liabilities and outlines a fair value hierarchy which prioritizes the inputs used to measure fair value and the effect of fair value measures on earnings. ASC 820 also requires disclosure for fair value measurements based on the level within the hierarchy of the information used in the valuation. ASC 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company has categorized all investments recorded at fair value in accordance with ASC 820 based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets at the measurement date. The types of assets carried at Level 1 fair value generally are equities listed in active markets.

Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset in connection with market data at the measurement date and for the extent of the instrument’s anticipated life. Fair valued assets that are generally included in this category are warrants held in a public company.

Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset at the measurement date. It includes prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Generally, assets carried at fair value and included in this category are the debt investments and warrants and equities held in a private company.

In accordance with ASU 2011-04, the following tables provide quantitative information about the Company’s Level 3 fair value measurements of the Company’s investments as of March 31, 2015 (unaudited) and December 31, 2014. In addition to the techniques and inputs noted in the tables below, according to the Company’s valuation policy, the Company may also use other valuation techniques and methodologies when determining the Company’s fair value measurements. The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements.

Investment Type - Level Three Debt Investments	Fair Value at March 31, 2015 (in thousands)		Valuation Techniques/Methodologies	Unobservable Input^(a)	Range		Weighted Average ^(b)
Pharmaceuticals	$	113,110	Originated Within 6 Months	Origination Yield	10.34% - 15.43%			12.69%
		290,713	Market Comparable Companies	Hypothetical Market Yield	9.83% - 16.70%			12.76%
				Premium/(Discount)	(0.50%) - 1.00%
Technology		113,378	Originated Within 6 Months	Origination Yield	6.15% - 16.82%			14.38%
		168,727	Market Comparable Companies	Hypothetical Market Yield	6.77% - 18.01%			13.90%
				Premium/(Discount)	0.00% - 1.00%
		24,398	Liquidation^(c)	Probability weighting of alternative outcomes	10.00% - 100.00%
Medical Devices		28,140	Originated Within 6 Months	Origination Yield	12.14% - 21.03%			14.00%
		102,363	Market Comparable Companies	Hypothetical Market Yield	11.29% - 21.87%			14.34%
				Premium/(Discount)	0.00% - 0.50%
Energy Technology		42,884	Originated Within 6 Months	Origination Yield	7.16% - 15.05%			12.04%
		51,881	Market Comparable Companies	Hypothetical Market Yield	13.33% - 23.41%			15.93%
				Premium/(Discount)	0.00 - 1.50%
		1,600	Liquidation^(c)	Probability weighting of alternative outcomes		100.00%
Lower Middle Market		19,699	Market Comparable Companies	Hypothetical Market Yield		13.59%		13.59%
				Premium/(Discount)		1.00%
		5,390	Liquidation^(c)	Probability weighting of alternative outcomes	45.00% - 55.00%

			Debt Investments Where Fair Value Approximates Cost
		—	Imminent Payoffs^(d)
		95,749	Debt Investments Maturing in Less than One Year
	$	1,058,032	Total Level Three Debt Investments

(a)

The significant unobservable inputs used in the fair value measurement of the Company’s debt securities are hypothetical market yields and premiums/(discounts). The hypothetical market yield is defined as the exit price of an investment in a hypothetical market to hypothetical market participants where buyers and sellers are willing participants. The premiums (discounts) relate to company specific characteristics such as underlying investment performance, security liens, and other characteristics of the investment. Significant increases (decreases) in the inputs in isolation would result in a significantly lower (higher) fair value measurement, depending on the materiality of the investment. Debt investments in the industries noted in the Company’s Consolidated Schedule of Investments are included in the industries note above as follows:

·	Pharmaceuticals, above, is comprised of debt investments in the Specialty Pharmaceuticals, Drug Discovery and Development, Drug Delivery, Diagnostic and Biotechnology Tools industries in the Consolidated Schedule of Investments.

·	Technology, above, is comprised of debt investments in the Software, Semiconductors, Internet Consumer and Business Services, Consumer and Business Products, Information Services, and Communications and Networking industries in the Consolidated Schedule of Investments.

·	Medical Devices, above, is comprised of debt investments in the Surgical Devices, Medical Devices and Equipment and Biotechnology Tools industries in the Consolidated Schedule of Investments.

·	Energy Technology, above, aligns with the Energy Technology Industry in the Consolidated Schedule of Investments.

Lower Middle Market, above, is comprised of debt investments in the Communications and Networking, Electronics and Computer Hardware, Healthcare Services - Other, Information Services, Internet Consumer and Business Services, Media/Content/Info, and Specialty Pharmaceuticals industries in the Consolidated Schedule of Investments.

(b)	The weighted averages are calculated based on the fair market value of each investment.

(c)	The significant unobservable inputs used in the fair value measurement of impaired debt securities is the probability weighting of alternative outcomes.

(d)	Imminent payoffs represent debt investments that the Company expects to be fully repaid within the next three months, prior to their scheduled maturity date.

Investment Type - Level Three Debt Investments	Fair Value at December 31, 2014 (in thousands)		Valuation Techniques/Methodologies	Unobservable Input^(a)	Range		Weighted Average ^(b)
Pharmaceuticals	$	117,229	Originated Within 6 Months	Origination Yield	10.34% - 16.52%			11.76%
		237,595	Market Comparable Companies	Hypothetical Market Yield	9.75% - 17.73%			10.62%
				Premium/(Discount)	(0.50%) - 1.00%
Medical Devices		60,332	Originated Within 6 Months	Origination Yield	12.14% - 16.56%			13.69%
		60,658	Market Comparable Companies	Hypothetical Market Yield	11.64% - 22.22%			12.19%
				Premium/(Discount)	0.00% - 1.00%
		12,970	Liquidation^(c)	Probability weighting of alternative outcomes		50.00%
Technology		152,645	Originated Within 6 Months	Origination Yield	10.54% - 20.02%			14.08%
		80,835	Market Comparable Companies	Hypothetical Market Yield	6.95% - 15.50%			13.01%
				Premium/(Discount)	0.00% - 0.50%
		27,159	Liquidation^(c)	Probability weighting of alternative outcomes	10.00% - 90.00%
Energy Technology		4,437	Originated Within 6 Months	Origination Yield	13.85% - 21.57%			19.00%
		52,949	Market Comparable Companies	Hypothetical Market Yield	13.20% - 16.62%			15.41%
				Premium/(Discount)	0.00% - 1.50%
		1,600	Liquidation^(c)	Probability weighting of alternative outcomes		100.00%
Lower Middle Market		2,962	Originated Within 6 Months	Origination Yield		14.04%		14.04%
		59,254	Market Comparable Companies	Hypothetical Market Yield	11.91% - 15.33%			13.98%
				Premium/(Discount)	0.00% - 0.50%
		4,096	Liquidation^(c)	Probability weighting of alternative outcomes	45.00% - 55.00%

			Debt Investments Where Fair Value Approximates Cost
		9,318	Imminent Payoffs^(d)
		39,867	Debt Investments Maturing in Less than One Year
	$	923,906	Total Level Three Debt Investments

(a)

The significant unobservable inputs used in the fair value measurement of the Company’s securities are hypothetical market yields and premiums/(discounts). The hypothetical market yield is defined as the exit price of an investment in a hypothetical market to hypothetical market participants where buyers and sellers are willing participants. The premiums (discounts) relate to company specific characteristics such as underlying investment performance, security liens, and other characteristics of the investment. Significant increases (decreases) in the inputs in isolation would result in a significantly lower (higher) fair value measurement, depending on the materiality of the investment. Debt investments in the industries noted in the Company’s Consolidated Schedule of Investments are included in the industries note above as follows:

·	Pharmaceuticals, above, is comprised of debt investments in the Specialty Pharmaceuticals, Drug Discovery and Development, Drug Delivery, Diagnostic and Biotechnology Tools industries in the Consolidated Schedule of Investments.

·	Medical Devices, above, is comprised of debt investments in the Surgical Devices, Medical Devices and Equipment and Biotechnology Tools industries in the Consolidated Schedule of Investments.

·	Technology, above, is comprised of debt investments in the Software, Semiconductors, Internet Consumer and Business Services, Consumer and Business Products, Information Services, and Communications and Networking industries in the Consolidated Schedule of Investments.

·	Energy Technology, above, aligns with the Energy Technology Industry in the Consolidated Schedule of Investments.

(b)	The weighted averages are calculated based on the fair market value of each investment.

(c)	The significant unobservable inputs used in the fair value measurement of impaired debt securities is the probability weighting of alternative outcomes.

(d)	Imminent payoffs represent debt investments that the Company expects to be fully repaid within the next three months, prior to their scheduled maturity date.

Investment Type - Level Three Equity and Warrant Investments	Fair Value at March 31, 2015 (in thousands)		Valuation Techniques/ Methodologies	Unobservable Input ^(a)	Range	Weighted Average ^(e)
Equity Investments	$	12,500	Market Comparable Companies	EBITDA Multiple ^(b)	4.5x - 21.6x	8.8x
				Revenue Multiple ^(b)	0.8x - 3.8x	2.6x
				Discount for Lack of Marketability ^(c)	6.11% - 30.04%		15.93%
				Average Industry Volatility^(d)	32.52% - 94.47%		66.80%
				Risk-Free Interest Rate	0.17% - 0.85%		0.24%
				Estimated Time to Exit (in months)	8 - 35	11
		18,956	Market Adjusted OPM Backsolve	Average Industry Volatility ^(d)	29.95% - 87.97%		66.97%
				Risk-Free Interest Rate	0.23% - 1.32%		0.61%
				Estimated Time to Exit (in months)	11 - 41	20
Warrant Investments		10,760	Market Comparable Companies	EBITDA Multiple ^(b)	5.7x - 81.9x	20.6x
				Revenue Multiple ^(b)	0.3x - 14.2x	4.0x
				Discount for Lack of Marketability ^(c)	12.85% - 36.52%		22.77%
				Average Industry Volatility ^(d)	43.78% - 75.78%		57.20%
				Risk-Free Interest Rate	0.17% - 1.10%		0.49%
				Estimated Time to Exit (in months)	8 - 47		21
		13,975	Market Adjusted OPM Backsolve	Average Industry Volatility ^(d)	29.95% - 105.34%		68.29%
				Risk-Free Interest Rate	0.17% - 2.95%		0.78%
				Estimated Time to Exit (in months)	8 - 50		26
Total Level Three Warrant and Equity Investments	$	56,191

(a)

The significant unobservable inputs used in the fair value measurement of the Company’s warrant and equity-related securities are revenue and/or EBITDA multiples and discounts for lack of marketability. Additional inputs used in the Black Scholes Option Pricing Model (“OPM”) include industry volatility, risk free interest rate and estimated time to exit. Significant increases (decreases) in the inputs in isolation would result in a significantly higher (lower) fair value measurement, depending on the materiality of the investment. For some investments, additional consideration may be given to data from the last round of financing or merger/acquisition events near the measurement date.

(b)	Represents amounts used when the Company has determined that market participants would use such multiples when pricing the investments.

(c)	Represents amounts used when the Company has determined market participants would take into account these discounts when pricing the investments.

(d)	Represents the range of industry volatility used by market participants when pricing the investment.

(e)	Weighted averages are calculated based on the fair market value of each investment.

Investment Type - Level Three Equity and Warrant Investments	Fair Value at December 31, 2014 (in thousands)		Valuation Techniques/ Methodologies	Unobservable Input^(a)	Range	Weighted Average^(e)
Equity Investments	$	12,249	Market Comparable Companies	EBITDA Multiple ^(b)	5.2x - 23.4x	8.5x
				Revenue Multiple^(b)	0.9x - 3.6x	2.6x
				Discount for Lack of Marketability^(c)	5.67% - 35.45%		15.95%
				Average Industry Volatility ^(d)	48.10% - 95.18%		62.78%
				Risk-Free Interest Rate	0.22% - 0.83%		0.24%
				Estimated Time to Exit (in months)	10 - 28	11
		46,686	Market Adjusted OPM Backsolve	Average Industry Volatility ^(d)	38.95% - 84.30%		55.0%
				Risk-Free Interest Rate	0.10% - 1.32%		0.2%
				Estimated Time to Exit (in months)	6 - 43	10
Warrant Investments		9,725	Market Comparable Companies	EBITDA Multiple ^(b)	0.0x - 98.9x	16.6x
				Revenue Multiple^(b)	0.3x - 15.7x	4.3x
				Discount for Lack of Marketability^(c)	12.12% - 35.50%		22.1%
				Average Industry Volatility ^(d)	37.70% - 108.86%		67.2%
				Risk-Free Interest Rate	0.22% - 1.34%		0.8%
				Estimated Time to Exit (in months)	10 - 47	27
		12,198	Market Adjusted OPM Backsolve	Average Industry Volatility ^(d)	32.85% - 99.81%		67.6%
				Risk-Free Interest Rate	0.21% - 2.95%		0.9%
				Estimated Time to Exit (in months)	10 - 48	28
Total Level Three Warrant and Equity Investments	$	80,858

(a)

(b)	Represents amounts used when the Company has determined that market participants would use such multiples when pricing the investments.

(c)	Represents amounts used when the Company has determined market participants would take into account these discounts when pricing the investments.

(d)	Represents the range of industry volatility used by market participants when pricing the investment.

(e)	Weighted averages are calculated based on the fair market value of each investment.

Debt Investments

The Company follows the guidance set forth in ASC 820 which establishes a framework for measuring the fair value of assets and liabilities and outlines a fair value hierarchy which prioritizes the inputs used to measure fair value and the effect of fair value measures on earnings. The Company’s debt securities are primarily invested in venture capital-backed companies in technology-related industries, including technology, biotechnology, life science and energy and renewables technology. Given the nature of lending to these types of businesses, the Company’s investments in these portfolio companies are considered Level 3 assets under ASC 820 because there is no known or accessible market or market indexes for debt instruments for these investment securities to be traded or exchanged.

In making a good faith determination of the value of the Company’s investments, the Company generally starts with the cost basis of the investment, which includes the value attributed to the Original Issue Discount (“OID”), if any, and payment-in-kind (“PIK”) interest or other receivables which have been accrued to principal as earned. The Company then applies the valuation methods as set forth below.

The Company applies a procedure for debt investments that assumes the sale of each investment in a hypothetical market to a hypothetical market participant where buyers and sellers are willing participants. The hypothetical market does not include scenarios where the underlying security was simply repaid or extinguished, but includes an exit concept. The Company determines the yield at inception for each debt investment. The Company then uses senior secured, leveraged loan yields provided by third party providers to determine the change in market yields between inception of the debt security and the measurement date. Industry specific indices are used to benchmark/assess market based movements.

Under this process, the Company also evaluates the collateral for recoverability of the debt investment. The Company considers each portfolio company’s credit rating, security liens and other characteristics of the investment to adjust the baseline yield to derive a credit adjusted hypothetical yield for each investment as of the measurement date. The anticipated future cash flows from each investment are then discounted at the hypothetical yield to estimate each investment’s fair value as of the measurement date.

The Company’s process includes, among other things, the underlying investment performance, the current portfolio company’s financial condition and market changing events that impact valuation, estimated remaining life, current market yield and interest rate spreads of similar securities as of the measurement date. The Company values its syndicated loans using broker quotes and bond indices amongst other factors. If there is a significant deterioration of the credit quality of a debt investment, the Company may consider other factors to estimate fair value, including the proceeds that would be received in a liquidation analysis.

The Company records unrealized depreciation on investments when it believes that an investment has decreased in value, including where collection of a loan is doubtful or, if under the in-exchange premise, when the value of a debt security is less than amortized cost of the investment. Conversely, where appropriate, the Company records unrealized appreciation if it believes that the underlying portfolio company has appreciated in value and, therefore, that its investment has also appreciated in value or, if under the in-exchange premise, the value of a debt security is greater than amortized cost.

When originating a debt instrument, the Company generally receives warrants or other equity-related securities from the borrower. The Company determines the cost basis of the warrants or other equity-related securities received based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and warrants or other equity-related securities received. Any resulting discount on the debt investments from recordation of the warrant or other equity instruments is accreted into interest income over the life of the debt investment.

Equity-Related Securities and Warrants

Securities that are traded in the over-the-counter markets or on a stock exchange will be valued at the prevailing bid price at period end. The Company has a limited number of equity securities in public companies. In accordance with the 1940 Act, unrestricted publicly traded securities for which market quotations are readily available are valued at the closing market quote on the measurement date.

The Company estimates the fair value of warrants using a Black Scholes Option Pricing Model (“OPM”). At each reporting date, privately held warrant and equity-related securities are valued based on an analysis of various factors including, but not limited to, the portfolio company’s operating performance and financial condition and general market conditions, price to enterprise value or price to equity ratios, discounted cash flow, valuation comparisons to comparable public companies or other industry benchmarks. When an external event occurs, such as a purchase transaction, public offering, or subsequent equity sale, the pricing indicated by that external event is utilized to corroborate the Company’s valuation of the warrant and equity-related securities. The Company periodically

reviews the valuation of its portfolio companies that have not been involved in a qualifying external event to determine if the enterprise value of the portfolio company may have increased or decreased since the last valuation measurement date.

Investments measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations as of March 31, 2015 (unaudited) and as of December 31, 2014. The Company transfers investments in and out of Level 1, 2 and 3 securities as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period. During the three months ended March 31, 2015, there were no transfers between Levels 1 or 2.

(in thousands)	Balance March 31,		Quoted Prices In Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	2015		(Level 1)		(Level 2)		(Level 3)
Senior secured debt	$	1,058,032	$	—	$	—	$	1,058,032
Preferred stock	$	29,217		—		—		29,217
Common stock	$	43,234		40,995		—		2,239
Warrants	$	30,938		—		6,203		24,735
Total	$	1,161,421	$	40,995	$	6,203	$	1,114,223

(in thousands)	Balance December 31,		Quoted Prices In Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	2014		(Level 1)		(Level 2)		(Level 3)
Senior secured debt	$	923,906	$	—	$	—	$	923,906
Preferred stock	$	57,548		—		—		57,548
Common stock	$	14,185		12,798		—		1,387
Warrants	$	25,098		—		3,175		21,923
Total	$	1,020,737	$	12,798	$	3,175	$	1,004,764

The table below presents a reconciliation for all financial assets and liabilities measured at fair value on a recurring basis, excluding accrued interest components, using significant unobservable inputs (Level 3) for the three months ended March 31, 2015 (unaudited) and the year ended December 31, 2014.

(in thousands)	Balance, January 1, 2015		Net Realized (Losses) ⁽¹⁾			Net Change in Unrealized Appreciation (Depreciation) ⁽²⁾		Purchases ⁽⁵⁾		Sales		Repayments ⁽⁶⁾			Gross Transfers into Level 3 ⁽³⁾		Gross Transfers out of Level 3 ⁽³⁾			Balance, March 31, 2015
Senior Debt	$	923,906	$	—		$	1,123	$	207,819	$	—	$	(74,816	)	$	—	$	—		$	1,058,032
Preferred Stock		57,548		—			2,328		355		—		—			41		(31,055	)		29,217
Common Stock		1,387		—			852		—		—		—			—		—			2,239
Warrants		21,923		(576	)		1,456		2,152		—		—			—		(220	)		24,735
Total	$	1,004,764	$	(576	)	$	5,759	$	210,326	$	—	$	(74,816	)	$	41	$	(31,275	)	$	1,114,223

(in thousands)	Balance, January 1, 2014		Net Realized (Losses) ⁽¹⁾			Net Change in Unrealized Appreciation (Depreciation) ⁽²⁾			Purchases ⁽⁵⁾		Sales			Repayments ⁽⁶⁾			Gross Transfers into Level 3 ⁽⁴⁾		Gross Transfers out of Level 3 ⁽⁴⁾			Balance, December 31, 2014
Senior Debt	$	821,988	$	—		$	(14,182	)	$	615,596	$	—		$	(497,258	)	$	—	$	(2,238	)	$	923,906
Preferred Stock		35,554		(750	)		15,779			7,097		(503	)		—			2,007		(1,636	)		57,548
Common Stock		2,107		(130	)		601			—		(1,189	)		—			—		(2	)		1,387
Warrants		28,707		(48	)		(10,553	)		8,596		(2,503	)		—			—		(2,276	)		21,923
Total	$	888,356	$	(928	)	$	(8,355	)	$	631,289	$	(4,195	)	$	(497,258	)	$	2,007	$	(6,152	)	$	1,004,764

(1)	Includes net realized gains (losses) recorded as realized gains or losses in the accompanying Consolidated Statement of Operations.

(2)	Included in change in net unrealized appreciation (depreciation) in the accompanying Consolidated Statement of Operations.

(3)	Transfers in/out of Level 3 during the three months ended March 31, 2015 relate to the exercise of warrants in Forescout, Inc. to equity and the initial public offerings of Box, Inc. and Zosano Pharma, Inc.

(4)

Transfers in/out of Level 3 during the year ended December 31, 2014 relate to the conversion of Paratek Pharmaceuticals, Inc., SCI Energy, Inc., Oraya Therapeutics, Inc., and Neuralstem, Inc. debt to equity, the exercise of warrants in Box, Inc and WildTangent, Inc. to equity, the conversion of warrants in Glori Energy, Inc. to equity in the company’s reverse public merger, the public merger of Paratek Pharmaceuticals, Inc. with Transcept Pharmaceuticals, Inc. and the initial public offerings of Concert Pharmaceuticals, Inc., Dicerna Pharmaceuticals, Inc., Everyday Health, Inc., Neothetics, Inc., Revance Therapeutics, Inc., and UniQure BV.

(5)	Amounts listed above are inclusive of loan origination fees received at the inception of the loan which are deferred and amortized into fee income as well as the accretion of existing loan discounts and fees during the period.

(6)	Amounts listed above include the acceleration and payment of loan discounts and loan fees due to early payoffs or restructures.

For the three months ended March 31, 2015, approximately $2.3 million and $852,000 in net unrealized appreciation was recorded for preferred stock and common stock Level 3 investments, respectively, relating to assets still held at the reporting date. For the same period, approximately $704,000 and $924,000 in net unrealized appreciation was recorded for debt and warrant Level 3 investments, respectively, relating to assets still held at the reporting date.

For the year ended December 31, 2014, approximately $15.0 million and $555,000 in net unrealized appreciation was recorded for preferred stock and common stock Level 3 investments, respectively, relating to assets still held at the reporting date. For the same period, approximately $14.2 million and $2.8 million in net unrealized depreciation was recorded for debt and warrant Level 3 investments, respectively, relating to assets still held at the reporting date.

As required by the 1940 Act, the Company classifies its investments by level of control. “Control investments” are defined in the 1940 Act as investments in those companies that the Company is deemed to “control”. Generally, under the 1940 Act, the Company is deemed to “control” a company in which it has invested if it owns 25% or more of the voting securities of such company or has greater than 50% representation on its board. “Affiliate investments” are investments in those companies that are “affiliated companies” of the Company, as defined in the 1940 Act, which are not control investments. The Company is deemed to be an “affiliate” of a company in which it has invested if it owns 5% or more but less than 25% of the voting securities of such company. “Non-control/non-affiliate investments” are investments that are neither control investments nor affiliate investments.

The following table summarizes the Company’s realized and unrealized gain and loss and changes in our unrealized appreciation and depreciation on affiliate investments for the three months ended March 31, 2015 and 2014 (unaudited). The Company did not hold any Control investments at either March 31, 2015 or 2014.

(in thousands)				For the Three Months Ended March 31, 2015
Portfolio Company	Type	Fair Value at March 31, 2015		Investment Income		Unrealized (Depreciation)/ Appreciation			Reversal of Unrealized (Depreciation)/ Appreciation		Realized Gain/(Loss)
Gelesis, Inc.	Affiliate	$	2,414	$	—	$	2,087		$	—	$	—
Optiscan BioMedical, Corp.	Affiliate		6,768		—		695			—		—
Stion Corporation	Affiliate		1,600		101		(469	)		—		—
Total		$	10,782	$	101	$	2,313		$	—	$	—

(in thousands)				For the Three Months Ended March 31, 2014
Portfolio Company	Type	Fair Value at March 31, 2014		Investment Income		Unrealized (Depreciation)/ Appreciation			Reversal of Unrealized (Depreciation)/ Appreciation		Realized Gain/(Loss)
Gelesis, Inc.	Affiliate	$	497	$	—	$	24		$	—	$	—
Optiscan BioMedical, Corp.	Affiliate		5,032		—		247			—		—
Stion Corporation	Affiliate		5,664		1,475		(224	)		—		—
Total		$	11,193	$	1,475	$	47		$	—	$	—

A summary of the composition of the Company’s investment portfolio as of March 31, 2015 (unaudited) and December 31, 2014 at fair value is shown as follows:

	March 31, 2015					December 31, 2014
(in thousands)	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio
Senior secured debt with warrants	$	878,830		75.7	%	$	740,659		72.6	%
Senior secured debt		210,140		18.1	%		208,345		20.4	%
Preferred stock		29,217		2.5	%		57,548		5.6	%
Common stock		43,234		3.7	%		14,185		1.4	%
Total	$	1,161,421		100.0	%	$	1,020,737		100.0	%

The increase in common stock and the decrease in preferred stock is primarily due to the initial public offering of Box, Inc. on January 23, 2015 in which all of our preferred shares were converted to common stock in the public portfolio company. The shares held by the Company in Box, Inc. are subject to a customary IPO lockup period and the Company is restricted from selling these shares of common stock for approximately six months from the date of the initial public offering. The Company’s potential gain is subject to the price of the shares when the Company exits the investment.

A summary of the Company’s investment portfolio, at value, by geographic location as of March 31, 2015 (unaudited) and December 31, 2014 is shown as follows:

	March 31, 2015					December 31, 2014
(in thousands)	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio
United States	$	1,100,701		94.8	%	$	967,803		94.8	%
India		29,645		2.5	%		24,175		2.4	%
Netherlands		20,629		1.8	%		19,913		2.0	%
Israel		8,032		0.7	%		6,498		0.6	%
Canada		2,343		0.2	%		2,314		0.2	%
England		71		—			34		—
Total	$	1,161,421		100.0	%	$	1,020,737		100.0	%

The following table shows the fair value of the Company’s portfolio by industry sector at March 31, 2015 (unaudited) and December 31, 2014:

	March 31, 2015					December 31, 2014
(in thousands)	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio
Drug Discovery & Development	$	299,133		25.8	%	$	267,618		26.2	%
Software		156,179		13.4	%		125,412		12.3	%
Drug Delivery		140,725		12.1	%		88,491		8.7	%
Medical Devices & Equipment		135,285		11.6	%		138,046		13.5	%
Energy Technology		107,283		9.2	%		68,280		6.7	%
Internet Consumer & Business Services		87,374		7.5	%		69,655		6.8	%
Consumer & Business Products		63,737		5.5	%		63,225		6.2	%
Specialty Pharmaceuticals		50,583		4.4	%		51,536		5.0	%
Communications & Networking		37,362		3.2	%		61,433		6.0	%
Information Services		32,244		2.8	%		27,016		2.6	%
Media/Content/Info		27,412		2.4	%		29,219		2.9	%
Surgical Devices		9,674		0.8	%		9,915		1.0	%
Healthcare Services, Other		7,657		0.7	%		10,527		1.0	%
Semiconductors		5,076		0.4	%		5,126		0.5	%
Biotechnology Tools		960		0.1	%		3,721		0.4	%
Diagnostic		671		0.1	%		825		0.1	%
Electronics & Computer Hardware		66		0.0	%		692		0.1	%
Total	$	1,161,421		100.0	%	$	1,020,737		100.0	%

During the three months ended March 31, 2015, the Company funded and or restructured investments in debt securities totaling approximately $207.0 million. During the three months ended March 31, 2015, the Company funded equity investments totaling approximately $2.4 million.

During the three-months ended March 31, 2014, the Company funded investments in debt securities and equity investments totaling approximately $110.4 million and $1.5 million, respectively. The Company converted approximately $2.0 million of warrants to equity in three portfolio companies during the three-months ended March 31, 2014.

No single portfolio investment represents more than 10% of the fair value of the investments as of March 31, 2015 and December 31, 2014.

During the three months ended March 31, 2015, the Company recognized net realized gains of approximately $3.3 million. During the three months ended March 31, 2015, the Company recorded gross realized gains of approximately $4.3 million primarily from the sale of investments in four portfolio companies, including Cempra, Inc. ($2.0 million), Celladon Corporation ($1.4 million), Everyday Health, Inc. ($387,000) and Identiv, Inc. ($304,000). These gains were partially offset by gross realized losses of approximately $1.0 million from the liquidation of the Company’s investments in three portfolio companies.

During the three-month period ended March 31, 2014, the Company recognized gross realized gains of approximately $5.4 million primarily from the sale of investments in five portfolio companies, including CTI BioPharma Corp. ($1.3 million), Neuralstem, Inc. ($1.2 million), Portola Pharmaceuticals, Inc. ($700,000), AcelRx Pharmaceuticals, Inc. ($485,000) and Dicerna Pharmaceuticals, Inc. ($200,000). These gains were partially offset by gross realized losses of approximately $500,000 from the liquidation of the Company’s warrant and equity investments in five portfolio companies.

Loan origination and commitment fees received in full at the inception of a loan are deferred and amortized into fee income as an enhancement to the related loan’s yield over the contractual life of the loan. Loan exit fees to be paid at the termination of the loan are accreted into interest income over the contractual life of the loan. The Company had approximately $5.5 million and $4.5 million of unamortized fees at March 31, 2015 and December 31, 2014, respectively, and approximately $17.8 million and $19.3 million in exit fees receivable at March 31, 2015 and December 31, 2014, respectively.

The Company has debt investments in its portfolio that contain a PIK provision. The PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan and recorded as interest income. To maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders in the form of dividends even though the Company has not yet collected the cash. Amounts necessary to pay these dividends may come from available cash or the liquidation of certain investments. The Company recorded approximately $907,000 and $852,000 in PIK income during the three months ended March 31, 2015 and 2014, respectively.

In certain investment transactions, the Company may provide advisory services. For services that are separately identifiable and external evidence exists to substantiate fair value, income is recognized as earned, which is generally when the investment transaction closes. The Company had no income from advisory services in either the three months ended March 31, 2015 or 2014.

In the majority of cases, the Company collateralizes its investments by obtaining a first priority security interest in a portfolio company’s assets, which may include its intellectual property. In other cases, the Company may obtain a negative pledge covering a company’s intellectual property. At March 31, 2015, approximately 48.1% of the Company’s portfolio company debt investments were secured by a first priority security in all of the assets of the portfolio company, including their intellectual property, and 51.9% of the Company’s portfolio company debt investments were to portfolio companies that were prohibited from pledging or encumbering their intellectual property, or subject to a negative pledge. At March 31, 2015 the Company had no equipment only liens on any of our portfolio companies.

3. Fair Value of Financial Instruments

Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. The Company believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, accounts payable and accrued liabilities, approximate the fair values of such items due to the short maturity of such instruments. The Convertible Senior Notes, the April 2019 Notes, the September 2019 Notes (together with the April 2019 Notes, the “2019 Notes”), the 2024 Notes, the 2017 Asset-Backed Notes, the 2021 Asset- Backed Notes and the SBA debentures, as each term is defined herein, as sources of liquidity remain a strategic advantage due to their flexible structure, long-term duration, and low fixed interest rates. At March 31, 2015, the April 2019 Notes were trading on the New York Stock Exchange for 25.45 per dollar at par value, the September 2019 Notes were trading on the New York Stock Exchange for 25.51 per dollar at par value and the 2024 Notes were trading on the New York Stock Exchange for 25.15 per dollar at par value. Based on market quotations on or around March 31, 2015, the Convertible Senior Notes were trading for 1.2150 per dollar at par value, the 2017 Asset-Backed Notes were trading for 1.0000 per dollar at par value and the 2021 Asset-Backed Notes were trading for 0.9997 per dollar at par value. Calculated based on the net present value of payments over the term of the notes using estimated market rates for similar notes and remaining terms, the fair value of the SBA debentures would be approximately $196.7 million, compared to the carrying amount of $190.2 million as of March 31, 2015.

See the accompanying Consolidated Schedule of Investments for the fair value of the Company’s investments. The methodology for the determination of the fair value of the Company’s investments is discussed in Note 2.

The liabilities of the Company below are recorded at amortized cost and not at fair value on the Consolidated Statement of Assets and Liabilities. The following table provides additional information about the level in the fair value hierarchy of the Company’s liabilities at March 31, 2015 (unaudited) and December 31, 2014:

(in thousands)			Identical Assets		Observable Inputs		Unobservable Inputs
Description	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
Convertible Senior Notes	$	21,435	$	—	$	21,435	$	—
2017 Asset-Backed Notes		4,203		—		4,203		—
2021 Asset-Backed Notes		129,260		—		129,260		—
April 2019 Notes		86,011		—		86,011		—
September 2019 Notes		87,626		—		87,626		—
2024 Notes		103,618		—		103,618		—
SBA Debentures		196,681		—		—		196,681
Total	$	628,834	$	—	$	432,153	$	196,681

(in thousands)			Identical Assets		Observable Inputs		Unobservable Inputs
Description	December 31, 2014		(Level 1)		(Level 2)		(Level 3)
Convertible Senior Notes	$	22,799	$	—	$	22,799	$	—
2017 Asset-Backed Notes		22,068		—		—		22,068
2021 Asset-Backed Notes		129,300		—		129,300		—
April 2019 Notes		86,450		—		86,450		—
September 2019 Notes		88,073		—		88,073		—
2024 Notes		104,071		—		104,071		—
SBA Debentures		191,779		—		—		191,779
Total	$	644,540	$	—	$	430,693	$	213,847

The 2017 Asset-Backed Notes transferred from Level 3 to Level 2 as of March 31, 2015 due to the rapid amortization event triggered in February 2015, as the assets are now expected to be repaid at par within one year. See “Subsequent Events.”

4. Borrowings Long Term

Outstanding Borrowings

At March 31, 2015 (unaudited) and December 31, 2014, the Company had the following available borrowings and outstanding borrowings:

	March 31, 2015				December 31, 2014
(in thousands)	Total Available		Carrying Value ⁽¹⁾		Total Available		Carrying Value ⁽¹⁾
SBA Debentures ⁽²⁾	$	190,200	$	190,200	$	190,200	$	190,200
2019 Notes		170,364		170,364		170,364		170,364
2024 Notes		103,000		103,000		103,000		103,000
2017 Asset-Backed Notes		4,203		4,203		16,049		16,049
2021 Asset-Backed Notes		129,300		129,300		129,300		129,300
Convertible Senior Notes ⁽³⁾		17,642		17,375		17,674		17,345
Wells Facility⁽⁴⁾		75,000		—		75,000		—
Union Bank Facility⁽⁴⁾		75,000		—		75,000		—
Total	$	764,709	$	614,442	$	776,587	$	626,258

(1)	Except for the Convertible Senior Notes, all carrying values are the same as the principal amount outstanding.

(2)	At both March 31, 2015 and December 31, 2014, the total available borrowings under the SBA debentures were $190.2 million, of which $41.2 million was available in HT II and $149.0 million was available in HT III.

(3)

During the three months ended March 31, 2015, holders of approximately $32,000 of the Company’s Convertible Senior Notes have exercised their conversion rights. The balance at March 31, 2015 represents the remaining aggregate principal amount outstanding of the Convertible Senior Notes less the unaccreted discount initially recorded upon issuance of the Convertible Senior Notes. The total unaccreted discount for the Convertible Senior Notes was approximately $267,000 at March 31, 2015 and $329,000 at December 31, 2014.

(4)	Availability subject to the Company meeting the borrowing base requirements.

Long-Term SBA Debentures

On September 27, 2006, HT II received a license to operate as a SBIC under the SBIC program and is able to borrow funds from the SBA against eligible investments and regulatory capital. Under the Small Business Investment Company Act and current SBA policy applicable to SBICs, a SBIC can have outstanding at any time SBA guaranteed debentures up to twice the amount of its regulatory capital. With the Company’s net investment of $38.0 million in HT II as of March 31, 2015, HT II has the capacity to issue a total of $41.2 million of SBA guaranteed debentures, subject to SBA approval, of which $41.2 million was available at March 31, 2015. As of March 31, 2015, HT II has paid the SBA commitment fees and facility fees of approximately $1.5 million and $3.6 million, respectively. As of March 31, 2015 the Company held investments in HT II in 37 companies with a fair value of approximately $111.2 million, accounting for approximately 9.6% of the Company’s total portfolio at March 31, 2015.

On May 26, 2010, HT III received a license to operate as a SBIC under the SBIC program and is able to borrow funds from the SBA against eligible investments and additional contributions to regulatory capital. With the Company’s net investment of $74.5 million in HT III as of March 31, 2015, HT III has the capacity to issue a total of $149.0 million of SBA guaranteed debentures, of which $149.0 million was outstanding as of March 31, 2015. As of March 31, 2015, HT III has paid commitment fees and facility fees of approximately $1.5 million and $3.6 million, respectively. As of March 31, 2015, the Company held investments in HT III in 42 companies with a fair value of approximately $288.4 million, accounting for approximately 24.8% of the Company’s total portfolio at March 31, 2015.

SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under present SBA regulations, eligible small businesses include businesses that have a tangible net worth not exceeding $19.5 million and have average annual fully taxed net income not exceeding $6.5 million for the two most recent fiscal years. In addition, SBICs must devote 25.0% of its investment activity to “smaller” enterprises as defined by the SBA. A smaller enterprise is one that has a tangible net worth not exceeding $6.0 million and has average annual fully taxed net income not exceeding $2.0 million for the two most recent fiscal years. SBA regulations also provide alternative size standard criteria to determine eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and gross sales. According to SBA regulations, SBICs may make long-term loans to small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services. Through the Company’s wholly-owned subsidiaries HT II and HT III, the Company plans to provide long-term loans to qualifying small businesses, and in connection therewith, make equity investments.

HT II and HT III are periodically examined and audited by the SBA’s staff to determine their compliance with SBA regulations. If HT II or HT III fails to comply with applicable SBA regulations, the SBA could, depending on the severity of the violation, limit or prohibit HT II’s or HT III’s use of debentures, declare outstanding debentures immediately due and payable, and/or limit HT II or HT III from making new investments. In addition, HT II or HT III may also be limited in their ability to make distributions to the Company if they do not have sufficient capital in accordance with SBA regulations. Such actions by the SBA would, in turn, negatively affect the Company because HT II and HT III are the Company’s wholly owned subsidiaries. HT II and HT III were in compliance with the terms of the SBIC’s leverage as of March 31, 2015 as a result of having sufficient capital as defined under the SBA regulations.

The rates of borrowings under various draws from the SBA beginning in March 2009 are set semiannually in March and September and range from 2.25% to 4.62%. Interest payments on SBA debentures are payable semiannually. There are no principal payments required on these issues prior to maturity and no prepayment penalties. Debentures under the SBA generally mature ten years after being borrowed. Based on the initial draw down date of March 2009, the initial maturity of SBA debentures will occur in March 2019. In addition, the SBA charges a fee that is set annually, depending on the Federal fiscal year the leverage commitment was delegated by the SBA, regardless of the date that the leverage was drawn by the SBIC. The annual fees related to HT II debentures that pooled on September 22, 2010 were 0.406% and 0.285%, depending upon the year in which the underlying commitment was closed. The annual fees on other debentures have been set at 0.906%. The annual fees related to HT III debentures that pooled on March 27, 2013 were 0.804%. The annual fees on other debentures have been set at 0.515%. The rates of borrowings on the Company’s SBA debentures range from 3.05% to 5.53% when including these annual fees.

The average amount of debentures outstanding for the three months ended March 31, 2015 for HT II was approximately $41.2 million with an average interest rate of approximately 4.46%. The average amount of debentures outstanding for the three months ended March 31, 2015 for HT III was approximately $149.0 million with an average interest rate of approximately 3.38%.

As of March 31, 2015, the maximum statutory limit on the dollar amount of combined outstanding SBA guaranteed debentures is $225.0 million, subject to periodic adjustments by the SBA. In aggregate, at March 31, 2015, with the Company’s net investment of $112.5 million, HT II and HT III have the capacity to issue a total of $190.2 million of SBA-guaranteed debentures, subject to SBA approval. At March 31, 2015, the Company has issued $190.2 million in SBA-guaranteed debentures in the Company’s SBIC subsidiaries.

The Company reported the following SBA debentures outstanding as of March 31, 2015 (unaudited) and December 31, 2014:

(in thousands) Issuance/Pooling Date	Maturity Date	Interest Rate ⁽¹⁾		March 31, 2015		December 31, 2014
SBA Debentures:
March 25, 2009	March 1, 2019		5.53%	$	18,400	$	18,400
September 23, 2009	September 1, 2019		4.64%		3,400		3,400
September 22, 2010	September 1, 2020		3.62%		6,500		6,500
September 22, 2010	September 1, 2020		3.50%		22,900		22,900
March 29, 2011	March 1, 2021		4.37%		28,750		28,750
September 21, 2011	September 1, 2021		3.16%		25,000		25,000
March 21, 2012	March 1, 2022		3.28%		25,000		25,000
March 21, 2012	March 1, 2022		3.05%		11,250		11,250
September 19, 2012	September 1, 2022		3.05%		24,250		24,250
March 27, 2013	March 1, 2023		3.16%		24,750		24,750
Total SBA Debentures				$	190,200	$	190,200

(1)	Interest rate includes annual charge

2019 Notes

On March 6, 2012, the Company and U.S. Bank National Association (the “2019 Trustee”) entered into an indenture (the “Base Indenture”). On April 17, 2012, the Company and the 2019 Trustee entered into the First Supplemental Indenture to the Base Indenture (the “First Supplemental Indenture”), dated April 17, 2012, relating to the Company’s issuance, offer and sale of $43.0 million aggregate principal amount of 7.00% senior notes due 2019 (the “April 2019 Notes”). The sale of the April 2019 Notes generated net proceeds, before expenses, of approximately $41.7 million.

In July 2012, the Company reopened the Company’s April 2019 Notes and issued an additional $41.5 million in aggregate principal amount of April 2019 Notes, which included the exercise of an over-allotment option, bringing the total amount of the April 2019 Notes issued to approximately $84.5 million in aggregate principal amount.

On September 24, 2012, the Company and the 2019 Trustee, entered into the Second Supplemental Indenture to the Base Indenture (the “Second Supplemental Indenture”), dated as of September 24, 2012, relating to the Company’s issuance, offer and sale of $75.0 million aggregate principal amount of 7.00% senior notes due 2019 (the “September 2019 Notes” and, together with the April 2019 Notes, the “2019 Notes”). The sale of the September 2019 Notes generated net proceeds, before expenses, of approximately $72.75 million.

In October 2012, the underwriters exercised their over-allotment option for an additional $10.9 million of the September 2019 Notes, bringing the total amount of the September 2019 Notes issued to approximately $85.9 million in aggregate principal outstanding.

As of March 31, 2015 (unaudited) and December 31, 2014, the 2019 Notes payable is comprised of:

(in thousands)	March 31, 2015		December 31, 2014
April 2019 Notes	$	84,490	$	84,490
September 2019 Notes		85,874		85,874
Carrying Value of 2019 Notes	$	170,364	$	170,364

April 2019 Notes

The April 2019 Notes will mature on April 30, 2019 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or after April 30, 2015, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption. The April 2019 Notes bear interest at a rate of 7.00% per year payable quarterly on January 30, April 30, July 30 and October 30 of each year, commencing on July 30, 2012, and trade on the New York Stock Exchange under the trading symbol “HTGZ.”

The April 2019 Notes are the Company’s direct unsecured obligations and rank: (i) pari passu with the Company’s other outstanding and future senior unsecured indebtedness; (ii) senior to any of the Company’s future indebtedness that expressly provides it is subordinated to the April 2019 Notes; (iii) effectively subordinated to all the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grant security), to the extent of the value of the assets securing such indebtedness; (iv) structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries.

The Base Indenture, as supplemented by the First Supplemental Indenture, contains certain covenants including covenants requiring the Company’s compliance with (regardless of whether it is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act to comply with the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act and to provide financial information to the holders of the April 2019 Notes and the 2019 Trustee if the Company should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934. These covenants are subject to important limitations and exceptions that are described in the Base Indenture, as supplemented by the First Supplemental Indenture. The Base Indenture provides for customary events of default and further provides that the 2019 Trustee or the holders of 25% in aggregate principal amount of the outstanding April 2019 Notes in a series may declare such April 2019 Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period.

The April 2019 Notes were sold pursuant to an underwriting agreement dated April 11, 2012 among the Company and Stifel, Nicolaus & Company, Incorporated, as representative of the several underwriters named in the underwriting agreement.

September 2019 Notes

The September 2019 Notes will mature on September 30, 2019 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or after September 30, 2015, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption. The September 2019 Notes bear interest at a rate of 7.00% per year payable quarterly on March 30, June 30, September 30 and December 30 of each year, commencing on December 30, 2012, and trade on the New York Stock Exchange under the trading symbol “HTGY.”

The September 2019 Notes are the Company’s direct unsecured obligations and rank: (i) pari passu with the Company’s other outstanding and future senior unsecured indebtedness; (ii) senior to any of the Company’s future indebtedness that expressly provides it is subordinated to the September 2019 Notes; (iii) effectively subordinated to all the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to the extent of the value of the assets securing such indebtedness; (iv) structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries.

The Base Indenture, as supplemented by the Second Supplemental Indenture, contains certain covenants including covenants requiring the Company to comply with (regardless of whether it is subject to) the asset coverage requirements set forth in Section 18 (a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act to comply with the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act and to provide financial information to the holders of the September 2019 Notes and the 2019 Trustee if the Company should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934. These covenants are subject to important limitations and exceptions that are described in the Base Indenture, as supplemented by the Second Supplemental Indenture. The Base Indenture provides for customary events of default and further provides that the Trustee or the holders of 25% in aggregate principal amount of the outstanding September 2019 Notes in a series may declare such September 2019 Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period.

The September 2019 Notes were sold pursuant to an underwriting agreement dated September 19, 2012 among the Company and Stifel, Nicolaus & Company, Incorporated, as representative of the several underwriters named in the underwriting agreement.

For the three months ended March 31, 2015 and 2014 (unaudited), the components of interest expense and related fees and cash paid for interest expense for the April 2019 Notes and September 2019 Notes are as follows:

	Three Months Ended March 31,
(in thousands)	2015		2014
Stated interest expense	$	2,981	$	2,981
Amortization of debt issuance cost		240		240
Total interest expense and fees	$	3,221	$	3,221
Cash paid for interest expense and fees	$	2,981	$	2,981

As of March 31, 2015, the Company was in compliance with the terms of the Base Indenture, and respective supplemental indentures thereto, governing the April 2019 Notes and September 2019 Notes. See “Subsequent Events.”

2024 Notes

On July 14, 2014, the Company and U.S. Bank, N.A. (the “2024 Trustee”), entered into the Third Supplemental Indenture (the “Third Supplemental Indenture”) to the Base Indenture between the Company and the 2024 Trustee, dated July 14, 2014, relating to the Company’s issuance, offer and sale of $100.0 million aggregate principal amount of 2024 Notes. On August 6, 2014, the underwriters issued notification to exercise their over-allotment option for an additional $3.0 million in aggregate principal amount of the 2024 Notes. The sale of the 2024 Notes generated net proceeds of approximately $99.9 million.

The 2024 Notes will mature on July 30, 2024 and may be redeemed in whole or in part at the Company’s option at any time or from time to time on or after July 30, 2017, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption. The 2024 Notes bear interest at a rate of 6.25% per year payable quarterly on January 30, April 30, July 30 and October 30 of each year, commencing on July 30, 2014, and trade on the New York Stock Exchange under the trading symbol “HTGX.”

The 2024 Notes will be the Company’s direct unsecured obligations and will rank: (i) pari passu with the Company’s other outstanding and future senior unsecured indebtedness; (ii) senior to any of the Company’s future indebtedness that expressly provides it is subordinated to the 2024 Notes; (iii) effectively subordinated to all the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to the extent of the value of the assets securing such indebtedness; (iv) structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries.

The Base Indenture, as supplemented by the Third Supplemental Indenture, contains certain covenants including covenants requiring the Company to comply with (regardless of whether it is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act and to comply with the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act. These covenants are subject to important limitations and exceptions that are described in the Base Indenture, as supplemented by the Third Supplemental Indenture. The Base Indenture, as supplemented by the Third Supplemental Indenture, also contains certain reporting requirements, including a requirement that the Company provide financial information to the holders of the 2024 Notes and the 2024 Trustee if the Company should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934. The Base Indenture provides for customary events of default and further provides that the 2024 Trustee or the holders of 25% in aggregate principal amount of the outstanding 2024 Notes in a series may declare such 2024 Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period. As of March 31, 2015, the Company was in compliance with the terms of the Base Indenture as supplemented by the Third Supplemental Indenture.

At both March 31, 2015 and December 31, 2014, the 2024 Notes had an outstanding principal balance of $103.0 million.

For the three months ended March 31, 2015 and 2014, (unaudited), the components of interest expense and related fees and cash paid for interest expense for the 2024 Notes are as follows:

	Three Months Ended March 31,
(in thousands)	2015		2014
Stated interest expense	$	1,609	$	—
Amortization of debt issuance cost		83		—
Total interest expense and fees	$	1,692	$	—
Cash paid for interest expense and fees	$	1,609	$	—

2017 Asset-Backed Notes

On December 19, 2012, the Company completed a $230.7 million term debt securitization in connection with which an affiliate of the Company made an offer of $129.3 million in aggregate principal amount of fixed-rate asset-backed notes (the “2017 Asset-Backed Notes”), which 2017 Asset-Backed Notes were rated A2(sf) by Moody’s Investors Service, Inc. The 2017 Asset-Backed Notes were sold by Hercules Capital Funding Trust 2012-1 pursuant to a note purchase agreement, dated as of December 12, 2012, by and among the Company, Hercules Capital Funding 2012-1, LLC as trust depositor (the “2012 Trust Depositor”), Hercules Capital Funding Trust 2012-1 as issuer (the “2012 Securitization Issuer”), and Guggenheim Securities, LLC, as initial purchaser, and are backed by a pool of senior loans made to certain of the Company’s portfolio companies and secured by certain assets of those portfolio companies and are to be serviced by the Company. Interest on the 2017 Asset- Backed Notes will be paid, to the extent of funds available, at a fixed rate of 3.32% per annum. The 2017 Asset-Backed Notes have a stated maturity of December 16, 2017.

As part of this transaction, the Company entered into a sale and contribution agreement with the 2012 Trust Depositor under which the Company has agreed to sell or have contributed to the 2012 Trust Depositor certain senior loans made to certain of the Company’s portfolio companies (the “2012 Loans”). The Company has made customary representations, warranties and covenants in the sale and contribution agreement with respect to the 2012 Loans as of the date of their transfer to the 2012 Trust Depositor.

In connection with the sale of the 2017 Asset-Backed Notes, the Company has made customary representations, warranties and covenants in the note purchase agreement. The 2017 Asset-Backed Notes are secured obligations of the 2012 Securitization Issuer and are non-recourse to the Company. The 2012 Securitization Issuer also entered into an indenture governing the 2017Asset-Backed Notes, which includes customary representations, warranties and covenants. The 2017 Asset-Backed Notes were sold without being registered under the Securities Act (A) in the United States to “qualified institutional buyers” as defined in Rule 144A under the Securities Act and to institutional “accredited investors” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) who in each case, are “qualified purchasers” as defined in Sec. 2(A)(51) of the 1940 Act and pursuant to an exemption under the Securities Act and (B) to non-U.S. purchasers acquiring interest in the 2017 Asset-Backed Notes outside the United States in accordance with Regulation S of the Securities Act. The 2012 Securitization Issuer will not be registered under the 1940 Act in reliance on an exemption provided by Section 3(c) (7) thereof. In addition, the 2012 Trust Depositor entered into an amended and restated trust agreement in respect of the 2012 Securitization Issuer, which includes customary representations, warranties and covenants.

The 2012 Loans are serviced by the Company pursuant to a sale and servicing agreement, which contains customary representations, warranties and covenants. The Company performs certain servicing and administrative functions with respect to the 2012 Loans. The Company is entitled to receive a monthly fee from the 2012 Securitization Issuer for servicing the 2012 Loans. This servicing fee is equal to the product of one-twelfth (or in the case of the first payment date, a fraction equal to the number of days from and including December 5, 2012 through and including January 15, 2013 over 360) of 2.00% and the aggregate outstanding principal balance of the 2012 Loans plus the amount of collections on deposit in the 2012 Securitization Issuer’s collection account, as of the first day of the related collection period (the period from the 5th day of the immediately preceding calendar month through the 4th day of the calendar month in which a payment date occurs, and for the first payment date, the period from and including December 5, 2012, to the close of business on January 4, 2013).

The Company also serves as administrator to the 2012 Securitization Issuer under an administration agreement, which includes customary representations, warranties and covenants.

At March 31, 2015 and December 31, 2014, the 2017 Asset-Backed Notes had an outstanding principal balance of $4.2 million and $16.0 million, respectively. See “Subsequent Events.”

Under the terms of the 2017 Asset Backed Notes, the Company is required to maintain a reserve cash balance, funded through interest and principal collections from the underlying securitized debt portfolio, which may be used to pay monthly interest and principal payments on the 2017 Asset-Backed Notes. The Company has segregated these funds and classified them as restricted cash. There was approximately $2.7 million and $1.2 million of restricted cash as of March 31, 2015 and December 31, 2014, respectively, funded through interest collections.

2021 Asset-Backed Notes

On November 13, 2014, the Company completed a $237.4 million term debt securitization in connection with which an affiliate of the Company made an offer of $129.3 million in aggregate principal amount of fixed-rate asset-backed notes (the “2021 Asset-Backed Notes”), which 2021 Asset-Backed Notes were rated A(sf) by Kroll Bond Rating Agency, Inc. (“KBRA”). The 2021 Asset-Backed Notes were sold by Hercules Capital Funding Trust 2014-1 pursuant to a note purchase agreement, dated as of November 13, 2014, by and among the Company, Hercules Capital Funding 2014-1, LLC as trust depositor (the “2014 Trust Depositor”), Hercules Capital Funding Trust 2014-1 as issuer (the “2014 Securitization Issuer”), and Guggenheim Securities, LLC, as initial purchaser, and are backed by a pool of senior loans made to certain of the Company’s portfolio companies and secured by certain assets of those

portfolio companies and are to be serviced by the Company. The securitization has an 18-month reinvestment period during which time principal collections may be reinvested into additional eligible loans. Interest on the 2021 Asset-Backed Notes will be paid, to the extent of funds available, at a fixed rate of 3.524% per annum. The 2021 Asset-Backed Notes have a stated maturity of April 16, 2021.

As part of this transaction, the Company entered into a sale and contribution agreement with the 2014 Trust Depositor under which the Company has agreed to sell or have contributed to the 2014 Trust Depositor certain senior loans made to certain of the Company’s portfolio companies (the “2014 Loans”). The Company has made customary representations, warranties and covenants in the sale and contribution agreement with respect to the 2014 Loans as of the date of their transfer to the 2014 Trust Depositor.

In connection with the issuance and sale of the 2021 Asset-Backed Notes, the Company has made customary representations, warranties and covenants in the note purchase agreement. The 2021 Asset-Backed Notes are secured obligations of the 2014 Securitization Issuer and are non-recourse to the Company. The 2014 Securitization Issuer also entered into an indenture governing the 2021 Asset-Backed Notes, which includes customary representations, warranties and covenants. The 2021 Asset-Backed Notes were sold without being registered under the Securities Act (A) in the United States to “qualified institutional buyers” as defined in Rule 144A under the Securities Act and to institutional “accredited investors” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) who in each case, are “qualified purchasers” as defined in Sec. 2 (A)(51) of the 1940 Act and pursuant to an exemption under the Securities Act and (B) to non-U.S. purchasers acquiring interest in the 2021 Asset-Backed Notes outside the United States in accordance with Regulation S of the Securities Act. The 2014 Securitization Issuer will not be registered under the 1940 Act in reliance on an exemption provide by Section 3(c) (7) thereof and Rule 3A-7 thereunder. In addition, the 2014 Trust Depositor entered into an amended and restated trust agreement in respect of the 2014 Securitization Issuer, which includes customary representation, warranties and covenants.

The 2014 Loans are serviced by the Company pursuant to a sale and servicing agreement, which contains customary representations, warranties and covenants. The Company performs certain servicing and administrative functions with respect to the 2014 Loans. The Company is entitled to receive a monthly fee from the 2014 Securitization Issuer for servicing the 2014 Loans. This servicing fee is equal to the product of one-twelfth (or in the case of the first payment date, a fraction equal to the number of days from and including October 5, 2014 through and including December 5, 2014 over 360) of 2.00% and the aggregate outstanding principal balance of the 2014 Loans plus collections on deposit in the 2014 Securitization Issuer’s collections account, as of the first day of the related collection period (the period from the 5th day of the immediately preceding calendar month through the 4th day of the calendar month in which a payment date occurs, and for the first payment date, the period from and including October 5, 2014, to the close of business on December 5, 2014).

The Company also serves as administrator to the 2014 Securitization Issuer under an administration agreement, which includes customary representations, warranties and covenants.

At both March 31, 2015 and December 31, 2014, the 2021 Asset-Backed Notes had an outstanding principal balance of $129.3 million.

Under the terms of the 2021 Asset-Backed Notes, the Company is required to maintain a reserve cash balance, funded through interest and principal collections from the underlying securitized debt portfolio, which may be used to pay monthly interest and principal payments on the 2021 Asset-Backed Notes. The Company has segregated these funds and classified them as restricted cash. There was approximately $19.2 million and $11.5 million of restricted cash as of March 31, 2015 and December 31, 2014, respectively, funded through interest collections.

Convertible Senior Notes

In April 2011, the Company issued $75.0 million in aggregate principal amount of 6.00% convertible senior notes due 2016 (the “Convertible Senior Notes”). During the three months ended March 31, 2015, holders of approximately $32,000 of the Company’s Convertible Senior Notes have exercised their conversion rights. As of March 31, 2015, the carrying value of the Convertible Senior Notes, comprised of the aggregate principal amount outstanding less the unaccreted discount initially recorded upon issuance of the Convertible Senior Notes, is approximately $17.4 million.

The Convertible Senior Notes mature on April 15, 2016 (the “Maturity Date”), unless previously converted or repurchased in accordance with their terms. The Convertible Senior Notes bear interest at a rate of 6.00% per year payable semiannually in arrears on April 15 and October 15 of each year, commencing on October 15, 2011. The Convertible Senior Notes are the Company’s senior unsecured obligations and rank senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Senior Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such

indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.

Prior to the close of business on the business day immediately preceding October 15, 2015, holders may convert their Convertible Senior Notes only under certain circumstances set forth in the indenture. On or after October 15, 2015 until the close of business on the scheduled trading day immediately preceding the Maturity Date, holders may convert their Convertible Senior Notes at any time. Upon conversion, the Company will pay or deliver, as the case may be, at the Company’s election, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock. The conversion rate will initially be 84.0972 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $11.89 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, if certain corporate events occur prior to the Maturity Date, the conversion rate will be increased for converting holders. As of March 31, 2015, the conversion rate was 88.6189 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an adjusted conversion price of approximately $11.28 per share of common stock).

The Company may not redeem the Convertible Senior Notes prior to maturity. No sinking fund is provided for the Convertible Senior Notes. In addition, if certain corporate events occur, holders of the Convertible Senior Notes may require the Company to repurchase for cash all or part of their Convertible Senior Notes at a repurchase price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the required repurchase date.

The Convertible Senior Notes are accounted for in accordance with ASC 470-20 (previously FASB Staff Position No. APB 14- 1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”). In accounting for the Convertible Senior Notes, the Company estimated at the time of issuance that the values of the debt and the embedded conversion feature of the Convertible Senior Notes were approximately 92.8% and 7.2%, respectively. The original issue discount of 7.2% attributable to the conversion feature of the Convertible Senior Notes was recorded in “capital in excess of par value” in the Consolidated Statement of Assets and Liabilities. As a result, the Company recorded interest expense comprised of both stated interest expense as well as accretion of the original issue discount resulting in an estimated effective interest rate of approximately 8.1%.

Upon meeting the stock trading price conversion requirement as set forth in the Indenture, dated April 15, 2011, between the Company and U.S. Bank National Association, during the three months ended June 30, 2014, September 30, 2014 and December 31, 2014, the Convertible Senior Notes became convertible on July 1, 2014 and continued to be convertible during each of the three months ended September 30, 2014, December 31, 2014 and March 31, 2015, respectively. During this period and as of March 31, 2015, approximately $57.4 million of the Convertible Senior Notes had been converted and were settled with a combination of cash equal to the outstanding principal amount of the converted notes and approximately 1.5 million shares of the Company’s common stock, or $24.3 million. By not meeting the stock trading price conversion requirement during the three months ended March 31, 2015, the Convertible Senior Notes are currently not convertible for the three months ending June 30, 2015. See “Subsequent Events.”

The Company recorded a loss on extinguishment of debt for the proportionate amount of unamortized debt issuance costs and original issue discount on Notes converted during the period. The loss was partially offset by a gain in the amount of the difference between the outstanding principal balance of the converted notes and the fair value of the debt instrument. The net loss on extinguishment of debt the Company recorded for the three months ended March 31, 2015 and the year ended December 31, 2014 was approximately $1,000 and $1.6 million, respectively, and was classified as a component of net investment income in the Company’s Consolidated Statement of Operations.

As of March 31, 2015 (unaudited) and December 31, 2014, the components of the carrying value of the Convertible Senior Notes were as follows:

(in thousands)	March 31, 2015			December 31, 2014
Principal amount of debt	$	17,642		$	17,674
Original issue discount, net of accretion		(267	)		(329	)
Carrying value of Convertible Senior Notes	$	17,375		$	17,345

For the three months ended March 31, 2015 and 2014 (unaudited), the components of interest expense, fees and cash paid for interest expense for the Convertible Senior Notes were as follows:

	Three Months Ended March 31,
(in thousands)	2015		2014
Stated interest expense	$	215	$	1,125
Accretion of original issue discount		62		271
Amortization of debt issuance cost		33		144
Total interest expense	$	310	$	1,540
Cash paid for interest expense	$	—	$	—

The estimated effective interest rate of the debt component of the Convertible Senior Notes, equal to the stated interest of 6.0% plus the accretion of the original issue discount, was approximately 8.1% for the three months ended March 31, 2015 and 2014. Interest expense decreased by approximately $910,000 during the three months ended March 31, 2015 from the three months ended March 31, 2014, due to Convertible Senior Notes settled between periods. As of March 31, 2015, the Company is in compliance with the terms of the indentures governing the Convertible Senior Notes.

Wells Facility

In August 2008, the Company entered into a $50.0 million two-year revolving senior secured credit facility with Wells Fargo Capital Finance (the “Wells Facility”). On June 20, 2011, the Company renewed the Wells Facility, and the Wells Facility was further amended on August 1, 2012, December 17, 2012 and August 8, 2014. Under this senior secured facility, Wells Fargo Capital Finance has made commitments of $75.0 million. The facility contains an accordion feature, in which the Company can increase the credit line up to an aggregate of $300.0 million, funded by additional lenders and with the agreement of Wells Fargo Capital Finance and subject to other customary conditions. The Company expects to continue discussions with various other potential lenders to join the new facility; however, there can be no assurances that additional lenders will join the Wells Facility.

On August 1, 2012, the Company entered into an amendment to the Wells Facility that reduced the interest rate floor by 75 basis points to 4.25% and extended the maturity date by one year to August 2015. Additionally, the August 2012 amendment added an amortization period that commences on the day immediately following the end of the revolving credit availability period and ends one year thereafter on the maturity date. The August 2012 amendment also reduced the unused line fee, as further discussed below. On August 8, 2014, the Company entered into a further amendment to the Wells Facility to set the interest rate floor at 4.00% and to extend the revolving credit availability period to August 2017.

As amended, borrowings under the Wells Facility will generally bear interest at a rate per annum equal to LIBOR plus 3.50%, with a floor of 4.00% and an advance rate of 50% against eligible debt investments. The Wells Facility is secured by debt investments in the borrowing base. The Wells Facility requires payment of a non-use fee on a scale of 0.0% to 0.50% of the average monthly outstanding balance. The monthly payment of a non-use fee thereafter shall depend on the average balance that was outstanding on a scale between 0.0% and 0.50%. For the three months ended March 31, 2015 and 2014, this non-use fee was approximately $94,000 and $110,000, respectively. On June 20, 2011 the Company paid an additional $1.1 million in structuring fees in connection with the Wells Facility which are being amortized through the end of the term of the Wells Facility. In connection with the August 2014 amendments, the Company paid an additional $750,000 in structuring fees in connection with the Wells Facility which are being amortized through the end of the term of the Wells Facility.

The Wells Facility includes various financial and operating covenants applicable to the Company and the Company’s subsidiaries, in addition to those applicable to Hercules Funding II, LLC. As amended, these covenants require the Company to maintain certain financial ratios and a minimum tangible net worth in an amount, when added to outstanding subordinated indebtedness, that is in excess of $500.0 million plus 90% of the cumulative amount of equity raised after June 30, 2014. As of March 31, 2015, the minimum tangible net worth covenant has increased to $590.4 million as a result of the March 2015 follow-on public offering of 7.6 million shares of common stock for total net proceeds of approximately $100.1 million. The Wells Facility provides for customary events of default, including, but not limited to, payment defaults, breach of representations or covenants, including certain key man provisions and lien limitations, bankruptcy events and change of control. The Company was in compliance with all covenants at March 31, 2015.

At March 31, 2015 there were no borrowings outstanding on this facility. See “Subsequent Events.”

Union Bank Facility

The Company has a $75.0 million revolving senior secured credit facility (the “Union Bank Facility”) with MUFG Union Bank, N.A. (“MUFG Union Bank”). The Company originally entered into the Union Bank Facility on February 10, 2010 but, following several amendments, amended and restated the Union Bank Facility on August 14, 2014. The amendment and restatement extends the maturity date of the Union Bank Facility to August 1, 2017, increases the size of the Union Bank Facility to $75.0 million from $30.0 million, and adjusts the interest rate for LIBOR borrowings under the Union Bank Facility. LIBOR-based borrowings by the Company under the Union Bank Facility will bear interest at a rate per annum equal to LIBOR plus 2.25% with no floor, whereas previously the Company paid a per annum interest rate on such borrowings equal to LIBOR plus 2.50% with a floor of 4.00%. Other borrowings by the Company under the Union Bank Facility, which are based on a reference rate instead of LIBOR, will continue to bear interest at a rate per annum equal to the reference rate (which is the greater of the federal funds rate plus 1.00% and a periodically announced MUFG Union Bank index rate) plus the greater of (i) 4.00% minus the reference rate and (ii) 1.00%. The Company continues to have the option of determining which type of borrowing to request under the Union Bank Facility. Subject to certain conditions, the amendment also removes a previous ceiling on the amount of certain unsecured indebtedness that the Company may incur.

The Union Bank Facility contains an accordion feature, pursuant to which the Company may increase the size of the Union Bank Facility to an aggregate principal amount of $300.0 million by bringing in additional lenders, subject to the approval of MUFG Union Bank and other customary conditions. There can be no assurances that additional lenders will join the Union Bank Facility to increase available borrowings.

The Union Bank Facility requires the payment of a non-use fee of 0.50% annually. For the three months ended March 31, 2015 and 2014, this non-use fee was approximately $94,000 and $37,500, respectively. The amount that the Company may borrow under the Union Bank Facility is determined by applying an advance rate to eligible loans. The Union Bank Facility generally requires payment of monthly interest on loans based on a reference rate and at the end of a one, two, or three-month period, as applicable, for loans based on LIBOR. All outstanding principal is due upon maturity.

The Union Bank Facility is collateralized by debt investments in the Company’s portfolio companies, and includes an advance rate equal to 50.0% of eligible debt investments placed in the collateral pool.

The Company has various financial and operating covenants required by the Union Bank Facility. These covenants require, among other things, that the Company maintain certain financial ratios, including liquidity, asset coverage, and debt service coverage, and a minimum tangible net worth in an amount, when added to outstanding subordinated indebtedness, that is in excess of $550.0 million plus 90% of the amount of net cash proceeds received from the sale of common stock after June 30, 2014. As of March 31, 2015, the minimum tangible net worth covenant has increased to $640.1 million as a result of the March 2015 follow-on public offering of 7.6 million shares of common stock for total net proceeds of approximately $100.1 million. The Union Bank Facility provides for customary events of default, including, but not limited to, payment defaults, breach of representations or covenants, bankruptcy events and change of control. The Company was in compliance with all covenants at March 31, 2015.

At March 31, 2015 there were no borrowings outstanding on this facility.

Citibank Credit Facility

The Company, through Hercules Funding Trust I, an affiliated statutory trust, had a securitized credit facility (the “Citibank Credit Facility”) with Citigroup Global Markets Realty Corp. (“Citigroup”), which expired under normal terms. During the first quarter of 2009, the Company paid off all principal and interest owed under the Citibank Credit Facility. Citigroup has an equity participation right through a warrant participation agreement on the pool of debt investments and warrants collateralized under the Citibank Credit Facility. Pursuant to the warrant participation agreement, the Company granted to Citigroup a 10% participation in all warrants held as collateral. However, no additional warrants were included in collateral subsequent to the facility amendment on May 2, 2007. As a result, Citigroup is entitled to 10% of the realized gains on the warrants until the realized gains paid to Citigroup pursuant to the agreement equal $3,750,000 (the “Maximum Participation Limit”). The obligations under the warrant participation agreement continue even after the Citibank Credit Facility is terminated until the Maximum Participation Limit has been reached.

During the three months ended March 31, 2015, the Company recorded an increase in participation liability and a decrease in unrealized appreciation by a net amount of approximately $41,000 primarily due to appreciation of fair value on the pool of warrants collateralized under the warrant participation. The remaining value of their participation right on unrealized gains in the related equity investments is approximately $142,000 as of March 31, 2015 and is included in accrued liabilities. There can be no assurances that the unrealized appreciation of the warrants will not be higher or lower in future periods due to fluctuations in the value of the warrants, thereby increasing or reducing the effect on the cost of borrowing. Since inception of the agreement, the Company has paid Citigroup approximately $2.1 million under the warrant participation agreement thereby reducing realized gains by this amount. The Company will continue to pay Citigroup under the warrant participation agreement until the Maximum Participation Limit is reached or the warrants expire. Warrants subject to the Citigroup participation agreement are set to expire between February 2016 and January 2017.

5. Income taxes

The Company intends to continue to operate so as to qualify to be taxed as a RIC under Subchapter M of the Code and, as such, will not be subject to federal income tax on the portion of taxable income and gains distributed to stockholders.

To qualify as a RIC, the Company is required to meet certain income and asset diversification tests in addition to distributing at least 90% of its investment company taxable income, as defined by the Code. The amount to be paid out as a dividend is determined by the Board of Directors each quarter and is based upon the annual earnings estimated by the management of the Company. To the extent that the Company’s earnings fall below the amount of dividends declared, however, a portion of the total amount of the Company’s dividends for the fiscal year may be deemed a return of capital for tax purposes to the Company’s stockholders.

Taxable income includes the Company’s taxable interest, dividend and fee income, as well as taxable net capital gains. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as gains or losses are not included in taxable income until they are realized.

Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, which includes contractual payment-in-kind interest, and the amortization of discounts and fees. Cash collections of income resulting from contractual PIK interest arrangements or the amortization of discounts and fees generally occur upon the repayment of the loans or debt securities that include such items. Non-cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation and amortization expense.

During the three months ended March 31, 2015, the Company declared a distribution of $0.31 per share. The determination of the tax attributes of the Company’s distributions is made annually as of the end of the Company’s fiscal year based upon its taxable income for the full year and distributions paid for the full year. As a result, a determination made on a quarterly basis may not be representative of the actual tax attributes of the Company’s distributions for a full year. If the Company had determined the tax attributes of our distributions year-to-date as of March 31, 2015, approximately 100% would be from ordinary income and spillover earnings from 2014. However there can be no certainty to shareholders that this determination is representative of what the tax attributes of its 2015 distributions to shareholders will actually be.

As a RIC, the Company will be subject to a 4% nondeductible federal excise tax on certain undistributed income unless the Company distributes in a timely manner an amount at least equal to the sum of (1) 98% of its ordinary income for each calendar year, (2) 98.2% of its capital gain net income for the 1-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in the preceding year (the “Excise Tax Avoidance Requirements”). The Company will not be subject to excise taxes on amounts on which the Company is required to pay corporate income tax (such as retained net capital gains). Depending on the level of taxable income earned in a tax year, the Company may choose to carry over taxable income in excess of current year distributions from such taxable income into the next tax year and pay a 4% excise tax on such income, as required. The maximum amount of excess taxable income that may be carried over for distribution in the next year under the Code is the total amount of dividends paid in the following year, subject to certain declaration and payment guidelines. To the extent the Company chooses to carry over taxable income into the next tax year, dividends declared and paid by the Company in a year may differ from taxable income for that year as such dividends may include the distribution of current year taxable income, the distribution of prior year taxable income carried over into and distributed in the current year, or returns of capital.

Taxable income for the three-months ended March 31, 2015 was approximately $16.3 million or $0.26 per share. Taxable net realized loss for the same period were $2.6 million or approximately $0.04 per share. Taxable income for the three-months ended March 31, 2014 was approximately $12.3 million or $0.20 per share. Taxable net realized gains for the same period were $3.5 million or approximately $0.06 per share.

The Company intends to distribute approximately $16.7 million of spillover from long term earnings from the year ended December 31, 2014 to the Company’s shareholders in 2015.

6. Shareholders’ Equity

On August 16, 2013, the Company entered into an “At-The-Market” (“ATM”) equity distribution agreement with JMP Securities LLC (“JMP”). The equity distribution agreement provides that the Company may offer and sell up to 8.0 million shares of its common stock from time to time through JMP, as its sales agent. Sales of the Company’s common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at the market,” as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE or similar securities exchange or sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices.

During the year ended December 31, 2014, the Company sold 650,000 shares of common stock for total accumulated net proceeds of approximately $9.5 million, all of which is accretive to net asset value. The Company generally uses net proceeds from these offerings to make investments, to repurchase or pay down liabilities and for general corporate purposes. As of March 31, 2015, approximately 7.35 million shares remain available for issuance and sale under the equity distribution agreement.

On February 24, 2015, the Company’s Board of Directors authorized a stock repurchase plan permitting the Company to repurchase up to $50.0 million of its common stock. The Company may repurchase shares of its common stock in the open market, including block purchases, at prices that may be above or below the net asset value as reported in the most recently published financial statements. During the three month period ended March 31, 2015, the Company did not repurchase any common stock.

The Company anticipates that the manner, timing, and amount of any share purchases will be determined by management based upon the evaluation of market conditions, stock price, and additional factors in accordance with regulatory requirements. Pursuant to the 1940 Act, the Company is required to notify shareholders when such a program is initiated or implemented. The repurchase program does not require the Company to acquire any specific number of shares and may be extended, modified, or discontinued at any time.

On March 27, 2015, the Company raised approximately $100.1 million, after deducting offering expenses, in a public offering of 7,590,000 shares of its common stock.

The Company has issued stock options for common stock subject to future issuance, of which 585,729 and 695,672 were outstanding at March 31, 2015 and December 31, 2014, respectively.

7. Equity Incentive Plan

The Company and its stockholders have authorized and adopted the 2004 Equity Incentive Plan (the “2004 Plan”) for purposes of attracting and retaining the services of its executive officers and key employees. Under the 2004 Plan, the Company is authorized to issue 7.0 million shares of common stock. On June 1, 2011, stockholders approved an amended and restated plan and provided an increase of 1.0 million shares, authorizing the Company to issue 8.0 million shares of common stock under the 2004 Plan.

The Company and its stockholders have authorized and adopted the 2006 Non-Employee Director Plan (the “2006 Plan” and, together with the 2004 Plan, the “Plans”) for purposes of attracting and retaining the services of its Board of Directors. Under the 2006 Plan, the Company is authorized to issue 1.0 million shares of common stock. The Company filed an exemptive relief request with the Securities and Exchange Commission (“SEC”) to allow options to be issued under the 2006 Plan which was approved on October 10, 2007.

On June 21, 2007, the stockholders approved amendments to the 2004 Plan and the 2006 Plan allowing for the grant of restricted stock. The amended Plans limit the combined maximum amount of restricted stock that may be issued under both Plans to 10% of the outstanding shares of the Company’s stock on the effective date of the Plans plus 10% of the number of shares of stock issued or delivered by the Company during the terms of the Plans. The amendments further specify that no one person shall be granted awards of restricted stock relating to more than 25% of the shares available for issuance under the 2004 Plan. Further, the amount of voting securities that would result from the exercise of all of the Company’s outstanding warrants, options and rights, together with any restricted stock issued pursuant to the Plans, at the time of issuance shall not exceed 25% of its outstanding voting securities, except that if the amount of voting securities that would result from such exercise of all of the Company’s outstanding warrants, options and rights issued to the Company’s directors, officers and employees, together with any restricted stock issued pursuant to the Plans, would exceed 15% of the Company’s outstanding voting securities, then the total amount of voting securities that would result from the exercise of all outstanding warrants, options and rights, together with any restricted stock issued pursuant to the Plans, at the time of issuance shall not exceed 20% of our outstanding voting securities.

The following table summarizes the common stock options activities for the three months ended March 31, 2015 and 2014 (unaudited):

	Three Months Ended March 31,
	2015					2014
	Common Stock Options			Weighted Average Exercise Price		Common Stock Options			Weighted Average Exercise Price
Outstanding at December 31,		695,672		$	14.58		833,923		$	12.53
Granted		68,500		$	14.10		—		$	—
Exercised		(34,664	)	$	10.69		(61,755	)	$	11.77
Forfeited		(141,280	)	$	14.71		(1,751	)	$	11.39
Expired		(2,499	)	$	11.01		—		$	—
Outstanding at March 31,		585,729		$	14.74		770,417		$	12.59
Shares Expected to Vest at March 31,		438,472		$	14.74		518,046		$	12.59

The following table summarizes common stock options outstanding and exercisable at March 31, 2015 (unaudited):

(Dollars in thousands, except exercise price)	Options outstanding								Options exercisable
Range of exercise prices	Number of shares		Weighted average remaining contractual life		Aggregate intrinsic value		Weighted average exercise price		Number of shares		Weighted average remaining contractual life		Aggregate intrinsic value		Weighted average exercise price
$9.25 - $14.02		133,645		5.60	$	165,079	$	12.49		47,361		4.11	$	113,493	$	11.11
$14.60 - $16.34		452,084		6.27		—	$	15.40		99,896		5.52		—	$	15.14
$9.25 - $16.34		585,729		6.12	$	165,079	$	14.74		147,257		5.07	$	113,493	$	13.85

Options generally vest 33% one year after the date of grant and ratably over the succeeding 24 months.

All options may be exercised for a period ending seven years after the date of grant. At March 31, 2015, options for 147,257 shares were exercisable at a weighted average exercise price of approximately $13.85 per share with a weighted average remaining contractual term of 5.07 years.

The Company determined that the fair value of options granted under the 2006 and 2004 Plans during the three months ended March 31, 2015 was approximately $27,000. No options were granted during the three months ended March 31, 2014. During the three months ended March 31, 2015 and 2014, approximately $67,000 and $140,000 of share-based cost due to stock option grants was expensed, respectively. As of March 31, 2015, there was approximately $436,000 of total unrecognized compensation costs related to stock options. These costs are expected to be recognized over a weighted average remaining vesting period of 1.74 years.

The fair value of options granted is based upon a Black Scholes option pricing model using the assumptions in the following table for the three months ended March 31, 2015:

	Three Months Ended March 31,
	2015
Expected Volatility		18.94%
Expected Dividends		10%
Expected term (in years)		4.5
Risk-free rate	1.08% - 1.57%

During the three months ended March 31, 2015 the Company granted 579,833 shares of restricted stock pursuant to the Plans. During the three months ended March 31, 2014 the Company did not grant any restricted stock pursuant to the Plans. The Company determined that the fair value of restricted stock granted under the 2006 and 2004 Plans during the three months ended March 31, 2015 was approximately $8.1 million. During the three months ended March 31, 2015 and 2014, the Company expensed approximately $2.7 million and $1.4 million of compensation expense related to restricted stock, respectively. As of March 31, 2015, there was approximately $17.9 million of total unrecognized compensation costs related to restricted stock. These costs are expected to be recognized over a weighted average remaining vesting period of 2.00 years.

The following table summarizes the activities for the Company’s unvested restricted stock for the three months ended March 31, 2015 and 2014 (unaudited):

	Three Months Ended March 31,
	2015					2014
	Restricted Stock Units			Weighted Average Exercise Price		Restricted Stock Units			Weighted Average Exercise Price
Unvested at December 31,		1,302,780		$	13.23		1,035,897		$	11.94
Granted		579,833		$	14.02		—		$	—
Vested		(102,042	)	$	12.01		(284,490	)	$	12.21
Forfeited		(1,438	)	$	12.88		—		$	—
Unvested at March 31,		1,779,133		$	13.56		751,407		$	11.84

The SEC, through an exemptive order granted on June 22, 2010, approved amendments to the Plans which allow participants to elect to have the Company withhold shares of the Company’s common stock to pay for the exercise price and applicable taxes with respect to an option exercise (“net issuance exercise”). The exemptive order also permits the holders of restricted stock to elect to have the Company withhold shares of Hercules stock to pay the applicable taxes due on restricted stock at the time of vesting. Each individual can make a cash payment at the time of option exercise or to pay taxes on restricted stock.

8. Earnings Per Share

Shares used in the computation of the Company’s basic and diluted earnings per share are as follows (unaudited):

	Three Months Ended March 31,
(in thousands, except per share data)	2015			2014
Numerator
Net increase in net assets resulting from operations	$	21,919		$	22,185
Less: Dividends declared-common and restricted shares		(20,266	)		(19,165	)
Undistributed earnings		1,653			3,020
Undistributed earnings-common shares		1,653			3,020
Add: Dividend declared-common shares		19,712			18,928
Numerator for basic and diluted change in net assets per common share		21,365			21,948

Denominator
Basic weighted average common shares outstanding		63,783			60,870
Common shares issuable		380			1,825
Weighted average common shares outstanding assuming dilution		64,163			62,695

Change in net assets per common share
Basic	$	0.33		$	0.36
Diluted	$	0.33		$	0.35

In the table above, unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents are treated as participating securities for calculating earnings per share.

For the purpose of calculating diluted earnings per share for three months ended March 31, 2015 and 2014, the dilutive effect of the Convertible Senior Notes under the treasury stock method is included in this calculation because the Company’s share price was greater than the conversion price in effect ($11.28 as of March 31, 2015 and $11.56 as of March 31, 2014) for the Convertible Senior Notes for such periods.

The calculation of change in net assets resulting from operations per common share—assuming dilution, excludes all anti-dilutive shares. For the three months ended March 31, 2015 and 2014, the number of anti-dilutive shares, as calculated based on the weighted average closing price of the Company’s common stock for the periods, was approximately 652,102 and 797,489 shares, respectively.

At March 31, 2015, the Company was authorized to issue 100,000,000 shares of common stock with a par value of $0.001. Each share of common stock entitles the holder to one vote.

9. Financial Highlights

Following is a schedule of financial highlights for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
	2015			2014
Per share data⁽¹⁾:
Net asset value at beginning of period	$	10.18		$	10.51
Net investment income		0.20			0.30
Net realized gain on investments		0.05			0.08
Net unrealized appreciation (depreciation) on investments		0.09			(0.02	)
Total from investment operations		0.34			0.36
Net increase (decrease) in net assets from capital share transactions		0.23			(0.01	)
Distributions of net investment income		(0.32	)		(0.31	)
Stock-based compensation expense included in investment income⁽²⁾		0.04			0.03
Net asset value at end of period	$	10.47		$	10.58

Ratios and supplemental data:
Per share market value at end of period	$	13.48		$	14.07
Total return⁽³⁾		-7.35	%		-12.42	%
Shares outstanding at end of period		72,891			61,760
Weighted average number of common shares outstanding		63,783			60,870
Net assets at end of period	$	763,326		$	653,302
Ratio of operating expense to average net assets⁽⁴⁾⁽⁵⁾		11.73	%		10.74	%
Ratio of net investment income before investment gains and losses to average net assets⁽⁴⁾		7.82	%		11.26	%
Average debt outstanding	$	624,132		$	536,110
Weighted average debt per common share	$	9.79		$	8.81

(1)	All per share activity is calculated based on the weighted average shares outstanding for the relevant period.

(2)	Stock option expense is a non-cash expense that has no effect on net asset value. Pursuant to ASC 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 three months ended March 31, 2015 and 2014 equals the change in the ending market value over the beginning of the period price per share plus dividends paid per share during the period, divided by the beginning price assuming the dividend is reinvested on the date of the distribution. As such, the total return is not annualized.

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

(5)

Operating expense as used in the ratio of operating expense to average net assets does not include loss on debt extinguishment (long-term liabilities - convertible senior notes). If loss on debt extinguishment (long-term liabilities - convertible senior notes) were included in total expense, the ratio for the three months ended March 31, 2015 would be 11.73% There was no loss on debt extinguishment (long-term liabilities - convertible senior notes) in the three months ended March 31, 2014 so the ratio for that period would not change.

10. Commitments and Contingencies

The Company’s commitments and contingencies consist primarily of unused commitments to extend credit in the form of loans to the Company’s portfolio companies. The balance of unfunded contractual commitments to extend credit at March 31, 2015 totaled approximately $377.6 million. Approximately $243.5 million of these unfunded contractual commitments as of March 31, 2015 are dependent upon the portfolio company reaching certain milestones before the debt commitment becomes available. Since a portion of these commitments may expire without being drawn, unfunded contractual commitments do not necessarily represent future cash requirements. In addition, the Company had approximately $141.0 million of non-binding term sheets outstanding at March 31, 2015. Non-binding outstanding term sheets are subject to completion of the Company’s due diligence and final investment committee approval process, as well as the negotiation of definitive documentation with the prospective portfolio companies. These non-binding term sheets generally convert to contractual commitments in approximately 90 days from signing. Not all non-binding term sheets are expected to close and do not necessarily represent the Company’s future cash requirements.

Certain premises are leased under agreements which expire at various dates through March 2020. Total rent expense amounted to approximately $408,000 and $388,000 during the three months ended March 31, 2015 and 2014, respectively. Future commitments under the credit facility and operating leases were as follows at March 31, 2015:

	Payments due by period (in thousands)
Contractual Obligations⁽¹⁾⁽²⁾	Total		Less than 1 year		1 - 3 years		3 - 5 years		After 5 years
Borrowings ^{(3) (4)}	$	614,442	$	4,240	$	17,338	$	321,464	$	271,400
Operating Lease Obligations ⁽⁵⁾		5,867		1,539		3,071		1,257		—
Total	$	620,309	$	5,779	$	20,409	$	322,721	$	271,400

(1)	Excludes commitments to extend credit to our portfolio companies.

(2)	The Company also has a warrant participation agreement with Citigroup. See Note 4 to the Company’s consolidated financial statements.

(3)

Includes $190.2 million in borrowings under the SBA debentures, $170.4 million of the 2019 Notes, $103.0 million of the 2024 Notes, $4.2 million in aggregate principal amount of the 2017 Asset-Backed Notes, $129.3 million in aggregate principal amount of the 2021 Asset-Backed Notes and $17.4 million of the Convertible Senior Notes.

(4)

Except for the Convertible Senior Notes, all carrying values are the same as the principal amount outstanding. The aggregate principal amount outstanding of the Convertible Senior Notes is $17.6 million less the unaccreted discount initially recorded upon issuance of the Convertible Senior Notes. The total unaccreted discount for the Convertible Senior Notes was $267,000 at March 31, 2015.

(5)	Long-term facility leases.

The Company may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to seek to impose liability on the Company in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, the Company does not expect any current matters will materially affect the Company’s financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on the Company’s financial condition or results of operations in any future reporting period.

11. Recent Accounting Pronouncements

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810) – Amendments to the Consolidation Analysis”. The new guidance applies to entities in all industries and provides a new scope exception to registered money market funds and similar unregistered money market funds. It makes targeted amendments to the current consolidation guidance and ends the deferral granted to investment companies from applying the VIE guidance. The Company is currently assessing the additional disclosure requirements. ASU 2015-02 is effective for public business entities for annual reporting periods beginning after December 15, 2016.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. The Company is currently assessing the additional disclosure requirements. ASU 2015-03 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015.

12. Subsequent Events

Dividend Declaration

On May 4, 2015 the Board of Directors declared a cash dividend of $0.31 per share to be paid on May 25, 2015 to shareholders of record as of May 18, 2015. This dividend represents the Company’s thirty-ninth consecutive dividend declaration since the Company’s initial public offering, bringing the total cumulative dividend declared to date to $10.61 per share.

2017 Asset-Backed Notes Repayment

In February 2015, changes in the payment schedule of obligors in the 2017 Asset-Backed Notes collateral pool triggered a rapid amortization event in accordance with the sale and servicing agreement for the 2017 Asset-Backed Notes. Due to this Event, the 2017 Asset-Backed Notes were fully repaid as of April 16, 2015.

April 2019 Notes – Redemption

In April 2015, the company redeemed $20.0 million of the $84.5 million in issued and outstanding aggregate principal amount of April 2019 Notes, as previously approved by the Board of Directors. The Company currently intends to make additional redemptions on the April 2019 Notes throughout the 2015 calendar year, depending on our anticipated cash needs. The Company will provide notice for and complete all redemptions in compliance with the terms of the Base Indenture, as supplemented by the First Supplemental Indenture.

Convertible Senior Notes

The Convertible Senior Notes are convertible into shares of the Company’s common stock beginning October 15, 2015, or, under certain circumstances, earlier. Upon conversion of the Convertible Senior Notes, the Company has the choice to pay or deliver, as the case may be, at the Company’s election, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock. The current conversion price of the Convertible Senior Notes is approximately $11.28 per share of common stock, in each case subject to adjustment in certain circumstances. By not meeting the stock trading price conversion requirement during the three months ended March 31, 2015, the Convertible Senior Notes are currently not convertible for the three months ending June 30, 2015.

At March 31, 2015 approximately $38,000 of the Convertible Senior Notes were converting pursuant to the conversion procedures as set forth in the Indenture, and were settled in April 2015 with a combination of cash equal to the outstanding principal amount of the converted notes and approximately 614 shares of the Company’s common stock. No additional notes are converting as of May 4, 2015 and no further settlements will be made prior to July 1, 2015.

Amendment to Wells Facility

In May 2015, the Company entered into a further amendment to the Wells Facility to remove the interest rate floor and to reduce the LIBOR rate margin by 25 basis points to 3.25%.

Amendment to Charter

Effective as of April 6, 2015, the Company amended its charter to increase the number of shares of common stock it is authorized to issue from 100,000,000 to 200,000,000. The Company effected the increase in authorized shares by filing Articles of Amendment with the State Department of Assessments and Taxation of Maryland.

Portfolio Company Developments

As of May 4, 2015, the Company held warrants or equity positions in five companies that have filed registration statements on Form S-1 with the SEC in contemplation of potential initial public offerings, including Gelesis, Inc., Good Technology, Inc. and three companies which filed confidentially under the JOBS Act. There can be no assurance that these companies will complete their initial public offerings in a timely matter or at all. In April 2015, the Company’s portfolio company ViewRay, Inc. formally withdrew its Form S-1 with the SEC, which had been on file as of March 31, 2015.

ITEM 2.

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

Forward-Looking Statements

The matters discussed in this report, as well as in future oral and written statements by management of Hercules Technology Growth 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 report should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking statements contained in this report include statements as to:

·	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 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 dividend 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 losses.

The following discussion should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this report. In addition to historical information, the following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under Item 1A—“Risk Factors” of Part II of this quarterly report on Form 10-Q, Item 1A—“Risk Factors” of our annual report on Form 10-K filed with the SEC on March 2, 2015 and under “Forward-Looking Statements” of this Item 2.

Overview

We are a specialty finance company focused on providing senior secured loans to venture capital-backed companies in technology-related industries, including technology, biotechnology, life science, and energy and renewables technology at all stages of development. We source our investments through our principal office located in Palo Alto, CA, as well as through our additional offices in Boston, MA, New York, NY, McLean, VA and Radnor, PA.

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. Our strategy is to evaluate and invest in a broad range of

technology-related industries including technology, biotechnology, life science, and energy and renewables technology and to offer a full suite of growth capital products. We invest primarily in structured debt with warrants and, to a lesser extent, in senior debt and equity investments. We invest primarily in private companies but also have investments in public companies.

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 rights to purchase common or preferred stock. Our structured debt with warrants investments typically are secured by some or all of the assets of the portfolio company.

Our investment objective is to maximize our portfolio total return by generating current income from our debt investments and capital appreciation from our equity-related investments. Our primary business objectives are to increase our net income, net operating income and net asset value by investing in structured debt with warrants and equity of venture capital-backed companies in technology-related industries with attractive current yields and the potential for equity appreciation and realized gains. Our equity ownership in our portfolio companies may exceed 25% of the voting securities of such companies, which represents a controlling interest under the 1940 Act. In some cases, we receive the right to make additional equity investments in our portfolio companies in connection with future equity financing rounds. Capital that we provide directly to venture capital-backed companies in technology-related industries is generally used for growth and general working capital purposes as well as in select cases for acquisitions or recapitalizations.

We also make investments in qualifying small businesses through our two wholly-owned SBICs. Our SBIC subsidiaries, HT II and HT III, hold approximately $154.9 million and $319.2 million in assets, respectively, and accounted for approximately 8.9% and 18.4% of our total assets, respectively, prior to consolidation at March 31, 2015. As of March 31, 2015, the maximum statutory limit on the dollar amount of combined outstanding SBA guaranteed debentures is $225.0 million, subject to periodic adjustments by the SBA. In aggregate, at March 31, 2015, with our net investment of $112.5 million, HT II and HT III have the capacity to issue a total of $190.2 million of SBA-guaranteed debentures, subject to SBA approval. At March 31, 2015, we have issued $190.2 million in SBA-guaranteed debentures in our SBIC subsidiaries.

We have qualified as and have elected to be treated for tax purposes as a RIC under the Code. Pursuant to this election, we generally will not have to pay corporate-level taxes on any income that we distribute to our stockholders. However, our qualification and election to be treated as a RIC requires that we comply with provisions contained in the Code. For example, as a RIC we must receive 90% or more of our income from qualified earnings, typically referred to as “good income,” as well as satisfy asset diversification and income distribution requirements.

We are an internally managed, non-diversified, closed-end investment company that has elected to be regulated as a business development company under the 1940 Act. As a business development company, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” which includes securities of private U.S. companies, cash, cash equivalents and high-quality debt investments that mature in one year or less.

Our portfolio is comprised of, and we anticipate that our portfolio will continue to be comprised of, investments primarily in technology related companies at various stages of their development. Consistent with requirements under the 1940 Act, we invest primarily in United-States based companies and to a lesser extent in foreign companies.

We regularly engage in discussions with third parties with respect to various potential transactions. We may acquire an investment or a portfolio of investments or an entire company or sell a portion of our portfolio on an opportunistic basis. We, our subsidiaries or our affiliates may also agree to manage certain other funds that invest in debt, equity or provide other financing or services to companies in a variety of industries for which we may earn management or other fees for our services. We may also invest in the equity of these funds, along with other third parties, from which we would seek to earn a return and/or future incentive allocations. Some of these transactions could be material to our business. Consummation of any such transaction will be subject to completion of due diligence, finalization of key business and financial terms (including price) and negotiation of final definitive documentation as well as a number of other factors and conditions including, without limitation, the approval of our board of directors and required regulatory or third party consents and, in certain cases, the approval of our stockholders. Accordingly, there can be no assurance that any such transaction would be consummated. Any of these transactions or funds may require significant management resources either during the transaction phase or on an ongoing basis depending on the terms of the transaction.

Portfolio and Investment Activity

The total fair value of our investment portfolio was $1.2 billion at March 31, 2015, as compared to $1.0 billion at December 31, 2014.

The fair value of our debt investment portfolio at March 31, 2015 was approximately $1.1 billion, compared to a fair value of approximately $923.9 million at December 31, 2014. The fair value of the equity portfolio at March 31, 2015 was approximately $72.5 million, compared to a fair value of approximately $71.7 million at December 31, 2014. The fair value of the warrant portfolio at March 31, 2015 was approximately $30.9 million, compared to a fair value of approximately $25.1 million at December 31, 2014.

Portfolio Activity

Our investments in portfolio companies take a variety of forms, including unfunded contractual commitments and funded investments. From time to time, unfunded contractual commitments depend upon a portfolio company reaching certain milestones before the debt commitment is available to the portfolio company, which is expected to affect our funding levels. These commitments will be subject to the same underwriting and ongoing portfolio maintenance as the on-balance sheet financial instruments that we hold. Debt commitments generally fund over the two succeeding quarters from close. Not all debt commitments represent our future cash requirements. Similarly, unfunded contractual commitments may expire without being drawn and do not represent our future cash requirements. We intend to have our unfunded commitments covered by either liquid assets or borrowings to the extent required by the 1940 Act.

Prior to entering into a contractual commitment, we generally issue a non-binding term sheet to a prospective portfolio company. Non-binding term sheets are subject to completion of our due diligence and final investment committee approval process, as well as the negotiation of definitive documentation with the prospective portfolio companies. These non-binding term sheets generally convert to contractual commitments in approximately 90 days from signing. Not all non-binding term sheets are expected to close and do not necessarily represent future cash requirements.

Our portfolio activity for the three months ended March 31, 2015 (unaudited) and the year ended December 31, 2014 was comprised of the following:

(in millions)	March 31, 2015		December 31, 2014
Debt Commitments ⁽¹⁾
New portfolio company	$	201.5	$	776.9
Existing portfolio company		68.1		118.0
Total	$	269.6	$	894.9
Funded and Restructured Debt Investments
New portfolio company	$	139.1	$	434.0
Existing portfolio company		67.9		177.0
Total	$	207.0	$	611.0
Funded Equity Investments
New portfolio company	$	1.4	$	7.2
Existing portfolio company		1.0		3.1
Total	$	2.4	$	10.3
Unfunded Contractual Commitments ⁽²⁾
Total	$	377.6	$	339.0
Non-Binding Term Sheets
New portfolio company	$	136.0	$	104.0
Existing portfolio company		5.0		4.2
Total	$	141.0	$	108.2

(1)	Includes restructured loans and renewals in addition to new commitments.

(2)

The amount for March 31, 2015 includes unfunded contractual commitments in 41 new and existing portfolio companies. Approximately $243.5 million of these unfunded contractual commitments as of March 31, 2015 are dependent upon the portfolio company reaching certain milestones before the debt commitment becomes available.

We receive payments in our debt investment portfolio based on scheduled amortization of the outstanding balances. In addition, we receive principal repayments for some of our loans prior to their scheduled maturity date. The frequency or volume of these early principal repayments may fluctuate significantly from period to period. During the three months ended March 31, 2015, we received approximately $74.0 million in aggregate principal repayments. Of the approximately $74.0 million of aggregate principal repayments, approximately $27.5 million were scheduled principal payments, and approximately $46.5 million were early principal repayments

related to 11 portfolio companies. Of the approximately $46.5 million early principal repayments, approximately $2.9 million was an early repayment due to a M&A transaction related to one portfolio company. Although we have experienced significant principal repayments during the previous year, we believe that future early repayments will not be significant based on our current portfolio; however, the yield on our loan portfolio may be lower.

Total portfolio investment activity (inclusive of unearned income) for the three months ended March 31, 2015 (unaudited) and for the year ended December 31, 2014 was as follows:

(in millions)	March 31, 2015			December 31, 2014
Beginning portfolio	$	1,020.7		$	910.3
New fundings and restructures		209.4			621.3
Warrants not related to current period fundings		0.5			0.8
Principal payments received on investments		(27.5	)		(135.8	)
Early payoffs		(46.5	)		(358.3	)
Accretion of loan discounts and paid-in-kind principal		7.0			24.5
Net acceleration of loan discounts and loan fees due to early payoff or restructure		(0.8	)		(3.3	)
New loan fees		(2.9	)		(9.2	)
Warrants converted to equity		—			2.0
Sale of investments		(2.7	)		(9.1	)
Loss on investments due to write offs		(1.0	)		(3.9	)
Net change in unrealized appreciation (depreciation)		5.2			(18.6	)
Ending portfolio	$	1,161.4		$	1,020.7

The following table shows the fair value of our portfolio of investments by asset class as of March 31, 2015 (unaudited) and December 31, 2014.

	March 31, 2015					December 31, 2014
(in thousands)	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio
Senior secured debt with warrants	$	878,830		75.7	%	$	740,659		72.6	%
Senior secured debt		210,140		18.1	%		208,345		20.4	%
Preferred stock		29,217		2.5	%		57,548		5.6	%
Common stock		43,234		3.7	%		14,185		1.4	%
Total	$	1,161,421		100.0	%	$	1,020,737		100.0	%

The increase in common stock and the decrease in preferred stock is primarily due to the initial public offering of Box, Inc. on January 23, 2015 in which all of our preferred shares were converted to common stock in the public portfolio company. The shares held by us in Box, Inc. are subject to a customary IPO lockup period and we are restricted from selling our shares of common stock for approximately six months from the date of the initial public offering. Our potential gain is subject to the price of the shares when we exit the investment.

A summary of our investment portfolio at value by geographic location is as follows:

	March 31, 2015					December 31, 2014
(in thousands)	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio
United States	$	1,100,701		94.8	%	$	967,803		94.8	%
India		29,645		2.5	%		24,175		2.4	%
Netherlands		20,629		1.8	%		19,913		2.0	%
Israel		8,032		0.7	%		6,498		0.6	%
Canada		2,343		0.2	%		2,314		0.2	%
England		71		—			34		—
Total	$	1,161,421		100.0	%	$	1,020,737		100.0	%

As of March 31, 2015, the Company held warrants or equity positions in six companies that have filed registration statements on Form S-1 with the SEC in contemplation of potential initial public offerings, including Good Technology, Inc., ViewRay, Inc. and four companies which filed confidentially under the JOBS Act. There can be no assurance that these companies will complete their initial public offerings in a timely manner or at all.

Changes in Portfolio

We generate revenue in the form of interest income, primarily from our investments in debt securities, and commitment and facility fees. Fees generated in connection with our debt investments are recognized over the life of the loan or, in some cases, recognized as earned. In addition, we generate revenue in the form of capital gains, if any, on warrants or other equity-related securities that we acquire from our portfolio companies. Our investments generally range from $1.0 million to $40.0 million. As of March 31, 2015, our debt investments have a term of between two and seven years and typically bear interest at a rate ranging from the prevailing U.S. prime rate, or Prime, or the London Interbank Offered Rate, or LIBOR, to approximately 14%. In addition to the cash yields received on our debt investments, in some instances, our debt investments may also include any of the following: end-of- term payments, exit fees, balloon payment fees, commitment fees, success fees, payment-in-kind (“PIK”) provisions or prepayment fees which may be required to be included in income prior to receipt.

Loan origination and commitment fees received in full at the inception of a loan are deferred and amortized into fee income as an enhancement to the related loan’s yield over the contractual life of the loan. We recognize nonrecurring fees amortized over the remaining term of the loan commencing in the quarter relating to specific loan modifications. Loan exit fees to be paid at the termination of the loan are accreted into interest income over the contractual life of the loan. We had approximately $5.5 million and $4.5 million of unamortized fees at March 31, 2015 and December 31, 2014, respectively, and approximately $17.8 million and $19.3 million in exit fees receivable at March 31, 2015 and December 31, 2014, respectively.

We have debt investments in our portfolio that contain a PIK provision. The PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan and recorded as interest income. To maintain our status as a RIC, this non-cash source of income must be paid out to stockholders in the form of dividends even though we have not yet collected the cash. Amounts necessary to pay these dividends may come from available cash or the liquidation of certain investments. We recorded approximately $907,000 and $852,000 in PIK income during the three months ended March 31, 2015 and 2014, respectively.

In the majority of cases, we collateralize our investments by obtaining a first priority security interest in a portfolio company’s assets, which may include its intellectual property. In other cases, we obtain a negative pledge covering a company’s intellectual property. At March 31, 2015, approximately 48.1% of our portfolio company debt investments were secured by a first priority security in all of the assets of the portfolio company, including their intellectual property, and 51.9% of our portfolio company debt investments were to portfolio companies that were prohibited from pledging or encumbering their intellectual property, or subject to a negative pledge. At March 31, 2015 we had no equipment only liens on any of our portfolio companies.

Interest on debt securities is generally payable monthly, with amortization of principal typically occurring over the term of the investment. In addition, certain of our loans may include an interest-only period ranging from three to eighteen months or longer. In limited instances in which we choose to defer amortization of the loan for a period of time from the date of the initial investment, the principal amount of the debt securities and any accrued but unpaid interest become due at the maturity date.

The core yield on our debt investments, which excludes any benefits from the accretion of fees and income related to early loan repayments attributed to the acceleration of unamortized fees and income as well as prepayment of fees, was 12.8% and 14.0%, during the three months ended March 31, 2015 and 2014, respectively. The effective yield on our debt investments, which includes the effects of fee and income accelerations attributed to early payoffs, restructuring, loan modifications and other one-time event fees, was 12.9% and 17.9% for the three months ended March 31, 2015 and 2014, respectively. This decrease in effective yield between periods is primarily due to decreased one-time fee accelerations and payoffs during the three months ended March 31, 2015 as compared to the three months ended March 31, 2014. The effective yield is derived by dividing total investment income by the weighted average earning investment portfolio assets outstanding during the quarter, excluding non-interest earning assets such as warrants and equity investments.

Portfolio Composition

Our portfolio companies are primarily privately held companies and public companies which are active in the drug discovery and development, software, drug delivery, medical device and equipment, energy technology, internet consumer and business services, consumer and business products, specialty pharmaceuticals, communications and networking, information services, media/content/info, surgical devices, healthcare services, semiconductors, biotechnology tools, diagnostic and electronics and computer hardware industry sectors. These sectors are characterized by high margins, high growth rates, consolidation and product and market extension opportunities. Value for companies in these sectors is often vested in intangible assets and intellectual property.

As of March 31, 2015, approximately 62.9% of the fair value of our portfolio was composed of investments in four industries: 25.8% was composed of investments in the drug discovery and development industry, 13.4% was composed of investments in the software industry, 12.1% was composed of investments in the drug delivery industry and 11.6% was composed of investments in the medical devices and equipment industry.

The following table shows the fair value of our portfolio by industry sector at March 31, 2015 (unaudited) and December 31, 2014:

	March 31, 2015					December 31, 2014
(in thousands)	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio
Drug Discovery & Development	$	299,133		25.8	%	$	267,618		26.2	%
Software		156,179		13.4	%		125,412		12.3	%
Drug Delivery		140,725		12.1	%		88,491		8.7	%
Medical Devices & Equipment		135,285		11.6	%		138,046		13.5	%
Energy Technology		107,283		9.2	%		68,280		6.7	%
Internet Consumer & Business Services		87,374		7.5	%		69,655		6.8	%
Consumer & Business Products		63,737		5.5	%		63,225		6.2	%
Specialty Pharmaceuticals		50,583		4.4	%		51,536		5.0	%
Communications & Networking		37,362		3.2	%		61,433		6.0	%
Information Services		32,244		2.8	%		27,016		2.6	%
Media/Content/Info		27,412		2.4	%		29,219		2.9	%
Surgical Devices		9,674		0.8	%		9,915		1.0	%
Healthcare Services, Other		7,657		0.7	%		10,527		1.0	%
Semiconductors		5,076		0.4	%		5,126		0.5	%
Biotechnology Tools		960		0.1	%		3,721		0.4	%
Diagnostic		671		0.1	%		825		0.1	%
Electronics & Computer Hardware		66		0.0	%		692		0.1	%
Total	$	1,161,421		100.0	%	$	1,020,737		100.0	%

Industry and sector concentrations vary as new loans are recorded and loans pay off. Loan revenue, consisting of interest, fees, and recognition of gains on equity and equity-related interests, can fluctuate materially when a loan is paid off or a related warrant or equity interest is sold. Revenue recognition in any given year can be highly concentrated among several portfolio companies.

For the three months ended March 31, 2015 and the year ended December 31, 2014, our ten largest portfolio companies represented approximately 27.3% and 28.6% of the total fair value of our investments in portfolio companies, respectively. At March 31, 2015, we had two investments that represent 5% or more of our net assets and at December 31, 2014, we had three investments that represented 5% or more of our net assets. At March 31, 2015, we had three equity investments representing approximately 57.5% of the total fair value of our equity investments, and each represented 5% or more of the total fair value of our equity investments. At December 31, 2014, we had three equity investments which represented approximately 61.5% of the total fair value of our equity investments, and each represented 5% or more of the total fair value of our equity investments.

As of March 31, 2015, 100.0% of our debt investments were in a senior secured first lien position, and approximately 97.3% of the debt investment portfolio was priced at floating interest rates or floating interest rates with a Prime or LIBOR-based interest rate floor. As a result, we believe we are well positioned to benefit should market interest rates rise in the near future.

Our investments in senior secured debt with warrants have equity enhancement features, typically in the form of warrants or other equity-related securities designed to provide us with an opportunity for capital appreciation. Our warrant coverage generally ranges from 3% to 20% of the principal amount invested in a portfolio company, with a strike price generally equal to the most recent equity financing round. As of March 31, 2015, we held warrants in 129 portfolio companies, with a fair value of approximately $30.9 million. The fair value of our warrant portfolio increased by approximately $5.8 million, as compared to a fair value of $25.1 million at December 31, 2014 primarily related to the addition of warrants in nine new and eight existing portfolio companies during the period.

Our existing warrant holdings would require us to invest approximately $94.4 million to exercise such warrants as of March 31, 2015. Warrants may appreciate or depreciate in value depending largely upon the underlying portfolio company’s performance and overall market conditions. Of the warrants which we have monetized since inception, we have realized warrant gain multiples in the range of approximately 1.02x to 14.93x based on the historical rate of return on our investments. However, our warrants may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our warrant portfolio.

As required by the 1940 Act, we classify our investments by level of control. “Control investments” are defined in the 1940 Act as investments in those companies that we are deemed to “control”, which, in general, includes a company in which we own 25% or more of the voting securities of such company or have greater than 50% representation on its board. “Affiliate investments” are investments in those companies that are “affiliated companies” of ours, as defined in the 1940 Act, which are not control investments. We are deemed to be an “affiliate” of a company in which we have invested if we own 5% or more, but less than 25%, of the voting securities of such company. “Non-control/non-affiliate investments” are investments that are neither control investments nor affiliate investments.

The following table summarizes our realized and unrealized gain and loss and changes in our unrealized appreciation and depreciation on affiliate investments for the three months ended March 31, 2015 and 2014 (unaudited). We did not hold any Control investments at either March 31, 2015 or 2014.

(in thousands)				For the Three Months Ended March 31, 2015
Portfolio Company	Type	Fair Value at March 31, 2015		Investment Income		Unrealized (Depreciation)/ Appreciation			Reversal of Unrealized (Depreciation)/ Appreciation		Realized Gain/(Loss)
Gelesis, Inc.	Affiliate	$	2,414	$	—	$	2,087		$	—	$	—
Optiscan BioMedical, Corp.	Affiliate		6,768		—		695			—		—
Stion Corporation	Affiliate		1,600		101		(469	)		—		—
Total		$	10,782	$	101	$	2,313		$	—	$	—

(in thousands)				For the Three Months Ended March 31, 2014
Portfolio Company	Type	Fair Value at March 31, 2014		Investment Income		Unrealized (Depreciation)/ Appreciation			Reversal of Unrealized (Depreciation)/ Appreciation		Realized Gain/(Loss)
Gelesis, Inc.	Affiliate	$	497	$	—	$	24		$	—	$	—
Optiscan BioMedical, Corp.	Affiliate		5,032		—		247			—		—
Stion Corporation	Affiliate		5,664		1,475		(224	)		—		—
Total		$	11,193	$	1,475	$	47		$	—	$	—

Portfolio Grading

We use an investment grading system, which grades each debt investment on a scale of 1 to 5 to characterize and monitor our expected level of risk on the debt investments in our portfolio with 1 being the highest quality. The following table shows the distribution of our outstanding debt investments on the 1 to 5 investment grading scale at fair value as of March 31, 2015 (unaudited) and December 31, 2014, respectively:

(in thousands)	March 31, 2015						December 31, 2014
Investment Grading	Number of Companies	Debt Investments at Fair Value		Percentage of Total Portfolio			Number of Companies	Debt Investments at Fair Value		Percentage of Total Portfolio
1	16	$	188,399		17.8	%	19	$	195,819		21.2	%
2	45		590,876		55.9	%	45		479,037		51.8	%
3	14		174,911		16.5	%	16		183,522		19.9	%
4	11		90,233		8.5	%	6		39,852		4.3	%
5	5		13,613		1.3	%	8		25,676		2.8	%
		$	1,058,032		100.0	%		$	923,906		100.0	%

As of March 31, 2015, our debt investments had a weighted average investment grading of 2.26, as compared to 2.24 at December 31, 2014. Our policy is to lower the grading on our portfolio companies as they approach the point in time when they will require additional equity capital. Additionally, we may downgrade our portfolio companies if they are not meeting our financing criteria or are underperforming relative to their respective business plans. Various companies in our portfolio will require additional funding in the near term or have not met their business plans and therefore have been downgraded until their funding is complete or their operations improve.

The 97% increase in percentage of total portfolio rated 4 at March 31, 2015 from December 31, 2014 is due to the downgrade of four portfolio companies from a 3 to a 4 during the three months ended March 31, 2015. The increase in weighted average investment grading at March 31, 2015 is partially offset by the 53% decrease in percentage of total portfolio rated 5 at March 31, 2015 from December 31, 2014 due to the upgrade of three portfolio companies from a 5 during the three months ended March 31, 2015.

At March 31, 2015, we had four debt investments on non-accrual with a cumulative cost and fair value of approximately $34.0 million and $12.0 million, respectively. At December 31, 2014 we had four debt investments on non-accrual with a cumulative cost and fair value of approximately $28.9 million and $10.6 million, respectively.

Results of Operations

Comparison of the three month periods ended March 31, 2015 and 2014

Investment Income

Total investment income for the three months ended March 31, 2015 was approximately $32.5 million as compared to approximately $35.8 million for the three months ended March 31, 2014.

Interest income for the three months ended March 31, 2015 totaled approximately $30.6 million as compared to approximately $30.8 million for the three months ended March 31, 2014. Income from commitment, facility and loan related fees for the three months ended March 31, 2015 totaled approximately $1.9 million as compared to approximately $4.9 million for the three months ended March 31, 2014. The decrease in both interest income and income from commitment, facility and loan related fees for the three months ended March 31, 2015 as compared to the three months ended March 31, 2014 is primarily attributable to interest and fees that were accelerated related to early pay-offs and restructurings during the three months ended March 31, 2014 that did not occur during the three months ended March 31, 2015.

The following table shows the PIK-related activity for the three months ended March 31, 2015 and 2014, at cost (unaudited):

	Three Months Ended March 31,
(in thousands)	2015			2014
Beginning PIK loan balance	$	6,250		$	5,603
PIK interest capitalized during the period		907			852
Payments received from PIK loans		(1,356	)		(1,207	)
Ending PIK loan balance	$	5,801		$	5,248

The increase in payments received from PIK loans and PIK interest capitalized during the three months ended March 31, 2015 as compared to the three months ended March 31, 2014 is due to the relative principal balances outstanding on PIK loans and timing of payment and funding activities between the comparable periods.

In certain investment transactions, we may earn income from advisory services; however, we had no income from advisory services in either the three months ended March 31, 2015 or 2014.

Operating Expenses

Our operating expenses are comprised of interest and fees on our borrowings, general and administrative expenses and employee compensation and benefits. Our operating expenses totaled approximately $19.5 million and $17.5 million during the three months ended March 31, 2015 and 2014, respectively.

Interest and Fees on our Borrowings

Interest and fees on our borrowings totaled approximately $9.4 million and $9.2 million for the three months ended March 31, 2015 and 2014, respectively. The increase in the three month period ended March 31, 2015 was primarily attributable to the higher weighted average balances outstanding on our 2019 Notes and Asset Backed Notes, partially offset by a reduction in outstanding Convertible Senior Notes.

We had a weighted average cost of debt, comprised of interest and fees and loss on debt extinguishment (long-term liabilities – convertible senior notes), of approximately 6.1% and 6.9% for the three months ended March 31, 2015 and 2014, respectively. The decrease between comparative periods was primarily driven by the issuance or substitution of lower cost debt positions between periods.

General and Administrative Expenses

General and administrative expenses include legal fees, consulting fees, accounting fees, printer fees, insurance premiums, rent, expenses associated with the workout of underperforming investments and various other expenses. Our general and administrative expenses increased to $3.6 million from $2.5 million for the three months ended March 31, 2015 and 2014, respectively. The increase is primarily due to recruiting costs associated with strategic board recruitment and operational hiring objectives as well as an increase in corporate legal expenses and outside consulting services.

Employee Compensation

Employee compensation and benefits totaled approximately $3.8 million for the three months ended March 31, 2015 as compared to approximately $4.2 million for the three months ended March 31, 2014. The decrease between these periods was primarily due to changes in variable compensation expense.

Stock-based compensation totaled approximately $2.7 million for the three months ended March 31, 2015 as compared to approximately $1.6 million for the three months ended March 31, 2014. The increase was primarily attributable to additional stock based compensation awards granted in March of 2015 and April of 2014.

Loss on Extinguishment of Convertible Senior Notes

Upon meeting the stock trading price conversion requirement during the three months ended June 30, 2014, September 30, 2014 and December 31, 2014, the Convertible Senior Notes became convertible on July 1, 2014 and continued to be convertible during each of the three months ended September 30, 2014, December 31, 2014 and March 31, 2015, respectively. During this period and as of March 31, 2015, holders of approximately $57.4 million of our Convertible Senior Notes have exercised their conversion rights and these Convertible Senior Notes were settled with a combination of cash equal to the outstanding principal amount of the converted notes and approximately 1.5 million shares of the Company’s common stock, or $24.3 million. See “Subsequent Events.”

We recorded a loss on extinguishment of debt for the proportionate amount of unamortized debt issuance costs and original issue discount on Notes converted during the period. The loss was partially offset by a gain in the amount of the difference between the outstanding principal balance of the converted notes and the fair value of the debt instrument. The net loss on extinguishment of debt we recorded for the three months ended March 31, 2015 was approximately $1,000 and was classified as a component of net investment income in our Consolidated Statement of Operations.

Net Investment Realized Gains and Losses and Net Unrealized Appreciation and Depreciation

Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the cost basis of an investment without regard to unrealized appreciation or depreciation previously recognized, and includes investments written off during the period, net of recoveries. Net change in unrealized appreciation or depreciation primarily reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

A summary of realized gains and losses for the three months ended March 31, 2015 and 2014 is as follows:

	Three Months Ended March 31,
(in thousands)	2015			2014
Realized gains	$	4,330		$	5,382
Realized losses		(1,018	)		(510	)
Net realized gains	$	3,312		$	4,872

During the three months ended March 31, 2015 and 2014, we recognized net realized gains of approximately $3.3 million and $4.9 million, respectively.

During the three months ended March 31, 2015, we recorded gross realized gains of approximately $4.3 million primarily from the sale of investments in four portfolio companies, including Cempra, Inc. ($2.0 million), Celladon Corporation ($1.4 million), Everyday Health, Inc. ($387,000) and Identiv, Inc. ($304,000). These gains were partially offset by gross realized losses of approximately $1.0 million from the liquidation of our warrant and equity investments in three portfolio companies.

During the three-month period ended March 31, 2014, we recognized gross realized gains of approximately $5.4 million primarily from the sale of investments in five portfolio companies, including CTI BioPharma Corp. ($1.3 million), Neuralstem, Inc. ($1.2 million), Portola Pharmaceuticals, Inc. ($700,000), AcelRx Pharmaceuticals, Inc. ($485,000) and Dicerna Pharmaceuticals, Inc. ($200,000). These gains were partially offset by gross realized losses of approximately $500,000 from the liquidation of our warrant and equity investments in five portfolio companies.

The net unrealized appreciation and depreciation of our investments is based on the fair value of each investment determined in good faith by our Board of Directors. The following table summarizes the change in net unrealized appreciation/depreciation of investments for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
(in thousands)	2015			2014
Gross unrealized appreciation on portfolio investments	$	21,155		$	25,249
Gross unrealized depreciation on portfolio investments		(13,239	)		(25,296	)
Reversal of prior period net unrealized appreciation upon a realization event		(3,708	)		(1,656	)
Reversal of prior period net unrealized depreciation upon a realization event		1,005			739
Net unrealized appreciation (depreciation) on taxes payable		442			(72	)
Citigroup warrant participation		(41	)		45
Net unrealized appreciation (depreciation) on portfolio investments	$	5,614		$	(991	)

During the three months ended March 31, 2015, we recorded approximately $5.6 million of net unrealized appreciation, of which $5.2 million is net unrealized appreciation from our debt, equity and warrant investments. Approximately $704,000 million is attributed to net unrealized appreciation on our debt investments which primarily related to the reversal of $2.4 million unrealized depreciation for prior period collateral based impairments on two portfolio companies offset by $1.8 million unrealized depreciation for collateral based impairments on six portfolio companies. Approximately $1.0 million is attributed to net unrealized appreciation on our equity investments which primarily related to approximately $3.0 million unrealized appreciation on three private portfolio companies and $1.5 million unrealized appreciation on our public equity portfolio related to portfolio company performance offset by the reversal of $3.7 million of prior period net unrealized appreciation upon being realized as a gain for our sale of shares of Cempra, Inc. Celladon Corporation, Everyday Health, and Identiv, Inc. as discussed above. Finally, approximately $3.1 million is attributed to net unrealized appreciation on our warrant investments which primarily related to $1.2 million of unrealized appreciation on our public portfolio company investments and the reversal of $1.0 million of unrealized depreciation upon being realized as a loss due to the liquidation of our warrant investments in three portfolio companies.

Net unrealized appreciation increased by approximately $442,000 as a result of decreased estimated taxes payable for the three months ended March 31, 2015.

During the three months ended March 31, 2015, net unrealized appreciation was offset by approximately $41,000 of net appreciation of fair value on the pool of warrants collateralized under the warrant participation.

During the three-months ended March 31, 2014, we recorded approximately $1.0 million of net unrealized depreciation from our debt, equity and warrant investments. Approximately $12.0 million is attributed to net unrealized appreciation on equity. This unrealized appreciation was offset by approximately $10.3 million attributed to net unrealized depreciation on our warrant investments, including approximately $1.5 million of net unrealized depreciation due to the reversal of prior period net unrealized appreciation upon being realized as a gain. Additionally, this unrealized appreciation was offset by approximately $2.7 million of net unrealized depreciation on our debt investments, which primarily related to $7.2 million of unrealized depreciation for collateral based impairments and the reversal of approximately $300,000 of prior period net unrealized appreciation upon being realized as a loss due to the write-off or early payoff of debt investments.

Net unrealized appreciation decreased by approximately $72,000 as a result of estimated taxes payable for the three-months ended March 31, 2014.

During the three-months ended March 31, 2014, net unrealized appreciation increased by approximately $45,000 as a result of net depreciation of fair value on the pool of warrants collateralized under the warrant participation agreement.

The following table summarizes the change in net unrealized appreciation/(depreciation) in the investment portfolio by category, excluding net unrealized appreciation (depreciation) on taxes payable and Citigroup warrant participation, for the three months ended March 31, 2015 and 2014 (unaudited).

	Three Months Ended March 31, 2015
(in millions)	Debt			Equity			Warrants			Total
Collateral Based Impairments	$	(1.8	)	$	—		$	—		$	(1.8	)
Reversals of Prior Period Collateral based impairments		2.4			—			0.2			2.6
Reversals due to Debt Payoffs & Warrant/Equity sales		0.4			(3.7	)		1.0			(2.3	)
Fair Value Market/Yield Adjustments*
Level 1 & 2 Assets		—			1.5			1.2			2.7
Level 3 Assets		0.1			3.2			0.7			4.0
Total Fair Value Market/Yield Adjustments		0.1			4.7			1.9			6.7
Total Unrealized Appreciation/(Depreciation)	$	1.1		$	1.0		$	3.1		$	5.2

	Three Months Ended March 31, 2014
(in millions)	Debt			Equity			Warrants			Total
Collateral Based Impairments	$	(7.2	)	$	—		$	(0.2	)	$	(7.4	)
Reversals due to Debt Payoffs & Warrant/Equity sales		(0.3	)		0.2			(9.6	)		(9.7	)
Fair Value Market/Yield Adjustments*
Level 1 & 2 Assets		—			3.5			0.1			3.6
Level 3 Assets		4.8			8.3			(0.6	)		12.5
Total Fair Value Market/Yield Adjustments		4.8			11.8			(0.5	)		16.1
Total Unrealized Appreciation/(Depreciation)	$	(2.7	)	$	12.0		$	(10.3	)	$	(1.0	)

Level 1 assets are generally equities listed in active markets and level 2 assets are generally warrants held in a public company. Observable market prices are typically the primary input in valuing level 1 and 2 assets. Level 3 asset valuations require inputs that are both significant and unobservable. Generally, level 3 assets are debt investments and warrants and equities held in a private company. See Note 2 to the financial statements discussing ASC 820.

Income and Excise Taxes

We account for income taxes in accordance with the provisions of ASC 740, Income Taxes, which requires that deferred income taxes be determined based upon the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of the enacted tax law. Valuation allowances are used to reduce deferred tax assets to the amount likely to be realized. We intend to distribute approximately $16.7 million of spillover from long term earnings from the year ended December 31, 2014 to our shareholders in 2015.

Net Increase in Net Assets Resulting from Operations and Earnings Per Share

For the three months ended March 31, 2015 and 2014, the net increase in net assets resulting from operations totaled approximately $21.9 million and approximately $22.2 million, respectively. These changes are made up of the items previously described.

The basic and fully diluted net change in net assets per common share were $0.33 and $0.33, respectively, for the three months ended March 31, 2015, whereas the basic and fully diluted net change in net assets per common share for the three months ended March 31, 2014 was $0.36 and $0.35, respectively.

For the purpose of calculating diluted earnings per share for three months ended March 31, 2015 and 2014, the dilutive effect of the Convertible Senior Notes under the treasury stock method is included in this calculation as our share price was greater than the conversion price in effect ($11.28 as of March 31, 2015 and $11.56 as of March 31, 2014) for the Convertible Senior Notes for such periods.

Financial Condition, Liquidity, and Capital Resources

Our liquidity and capital resources are derived from our Wells Facility, Union Bank Facility (together the “Credit Facilities”), SBA debentures, Convertible Senior Notes, 2019 Notes, 2024 Notes, 2017 Asset-Backed Notes, 2021 Asset-Backed Notes (as each is defined herein) and cash flows from operations, including investment sales and repayments, and income earned. Our primary use of funds from operations includes investments in portfolio companies and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, our borrowings and the proceeds from the turnover of our portfolio and from public and private offerings of securities to finance our investment objectives. We may raise additional equity or debt capital through both registered offerings off a shelf registration, “At-The-Market”, or ATM, and private offerings of securities, by securitizing a portion of our investments or borrowing, including from the SBA through our SBIC subsidiaries.

On August 16, 2013, we entered into an ATM equity distribution agreement with JMP Securities LLC, or JMP. The equity distribution agreement provides that we may offer and sell up to 8.0 million shares of our common stock from time to time through JMP, as our sales agent. Sales of our common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at the market,” as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made directly on the NYSE or similar securities exchange or sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices.

During the year ended December 31, 2014, we sold 650,000 shares of common stock for total accumulated net proceeds of approximately $9.5 million, all of which is accretive to net asset value. We generally use the net proceeds from these offerings to make investments, to repurchase or pay down liabilities and for general corporate purposes. As of March 31, 2015, approximately 7.35 million shares remained available for issuance and sale under the equity distribution agreement.

As of March 31, 2015, approximately $57.4 million of our Convertible Senior Notes had been converted and were settled with a combination of cash equal to the outstanding principal amount of the converted notes and approximately 1.5 million shares of our common stock, or $24.3 million. By not meeting the stock trading price conversion requirement during the three months ended March 31, 2015, the Convertible Senior Notes will not be convertible during the three-month period ending June 30, 2015. See “Subsequent Events”.

At March 31, 2015, we had $17.6 million of Convertible Senior Notes, $170.4 million of 2019 Notes, $103.0 million of 2024 Notes, $4.2 million of 2017 Asset-Backed Notes, $129.3 million of 2021 Asset-Backed Notes and $190.2 million of SBA debentures payable. We had no borrowings outstanding under either the Wells Facility or the Union Bank Facility. See “-Subsequent Events.”

At March 31, 2015, we had $321.8 million in available liquidity, including $171.8 million in cash and cash equivalents. We had available borrowing capacity of approximately $75.0 million under the Wells Facility and $75.0 million under the Union Bank Facility, subject to existing terms and advance rates and regulatory and covenant requirements. We primarily invest cash on hand in interest bearing deposit accounts.

At March 31, 2015, we had $112.5 million of cash in restricted accounts related to our SBIC that we may use to fund new investments in the SBIC. With our net investments of $38.0 million and $74.5 million in HT II and HT III, respectively, we have the combined capacity to issue a total of $190.2 million of SBA guaranteed debentures, subject to SBA approval. At March 31, 2015, we have issued $190.2 million in SBA guaranteed debentures in our SBIC subsidiaries.

At March 31, 2015, we had approximately $21.9 million of restricted cash, which consists of collections of interest and principal payments on assets that are securitized. In accordance with the terms of the related securitized 2017 Asset-Backed Notes and 2021 Asset-Backed Notes, based on current characteristics of the securitized debt investment portfolios, the restricted funds may be used to pay monthly interest and principal on the securitized debt and are not distributed to us or available for our general operations. During

the three months ended March 31, 2015, we principally funded our operations from (i) cash receipts from interest, dividend and fee income from our investment portfolio and (ii) cash proceeds from the realization of portfolio investments through the repayments of debt investments and the sale of debt and equity investments.

During the three months ended March 31, 2015, our operating activities used $114.1 million of cash and cash equivalents, compared to $35.8 million provided during the three months ended March 31, 2014. This $149.9 million decrease in cash provided by operating activities resulted primarily from the increase in investment purchases of approximately $95.5 million and the decrease of proceeds received from investment payoffs of approximately $59.6 million.

During the three months ended March 31, 2015, our investing activities used $9.3 million of cash, compared to approximately $1.5 million provided during the three months ended March 31, 2014. This $10.8 million decrease in cash provided by investing activities was primarily due to an increase of approximately $9.3 million in cash, classified as restricted cash, on assets that are securitized.

During the three months ended March 31, 2015, our financing activities provided $68.0 million of cash, compared to $81.2 million used during the three months ended March 31, 2014. This $149.2 million increase in cash provided by financing activities was primarily due to proceeds from issuance of common stock of $101.4 million as a result of a public offering of 7,590,000 shares on March 27, 2015 and decreases in repayments of 2017 Asset-Backed Notes and SBA debentures of $13.9 million and $34.8 million, respectively.

As of March 31, 2015, net assets totaled $763.3 million, with a net asset value per share of $10.47. We intend to generate additional cash primarily from cash flows from operations, including income earned from investments in our portfolio companies. Our primary use of funds will be investments in portfolio companies and cash distributions to holders of our common stock.

As required by the 1940 Act, our asset coverage must be at least 200% after each issuance of senior securities. As of March 31, 2015 our asset coverage ratio under our regulatory requirements as a business development company was 279.7% excluding our SBA debentures as a result of our exemptive order from the SEC which allows us to exclude all SBA leverage from our asset coverage ratio. As a result of the SEC exemptive order, our ratio of total assets on a consolidated basis to outstanding indebtedness may be less than 200%, which while providing increased investment flexibility, also may increase our exposure to risks associated with leverage. Total leverage when including our SBA debentures was 224.1% at March 31, 2015.

Outstanding Borrowings

At March 31, 2015 (unaudited) and December 31, 2014, we had the following available borrowings and outstanding amounts:

	March 31, 2015				December 31, 2014
(in thousands)	Total Available		Carrying Value ⁽¹⁾		Total Available		Carrying Value ⁽¹⁾
SBA Debentures ⁽²⁾	$	190,200	$	190,200	$	190,200	$	190,200
2019 Notes		170,364		170,364		170,364		170,364
2024 Notes		103,000		103,000		103,000		103,000
2017 Asset-Backed Notes		4,203		4,203		16,049		16,049
2021 Asset-Backed Notes		129,300		129,300		129,300		129,300
Convertible Senior Notes ⁽³⁾		17,642		17,375		17,674		17,345
Wells Facility⁽⁴⁾		75,000		—		75,000		—
Union Bank Facility⁽⁴⁾		75,000		—		75,000		—
Total	$	764,709	$	614,442	$	776,587	$	626,258

(1)	Except for the Convertible Senior Notes, all carrying values are the same as the principal amount outstanding.

(2)	At both March 31, 2015 and December 31, 2014, the total available borrowings under the SBA debentures were $190.2 million, of which $41.2 million was available in HT II and $149.0 million was available in HT III.

(3)

During the three months ended March 31, 2015, holders of approximately $32,000 of our Convertible Senior Notes have exercised their conversion rights. The balance at March 31, 2015 represents the remaining aggregate principal amount outstanding of the Convertible Senior Notes less the unaccreted discount initially recorded upon issuance of the Convertible Senior Notes. The total unaccreted discount for the Convertible Senior Notes was approximately $267,000 at March 31, 2015 and $329,000 at December 31, 2014.

(4)	Availability subject to us meeting the borrowing base requirements.

Our net asset value may decline as a result of economic conditions in the United States. Our continued compliance with the covenants under our Credit Facilities, Convertible Senior Notes, 2019 Notes, 2024 Notes, 2017 Asset-Backed Notes, 2021 Asset-Backed Notes and SBA debentures depend on many factors, some of which are beyond our control. Material net asset devaluation could have a material adverse effect on our operations and could require us to reduce our borrowings in order to comply with certain covenants, including the ratio of total assets to total indebtedness. We believe that our current cash and cash equivalents, cash

generated from operations, and funds available from our Credit Facilities will be sufficient to meet our working capital and capital expenditure commitments for at least the next 12 months.

Debt financing costs are fees and other direct incremental costs we incur in obtaining debt financing and are recognized as prepaid expenses and amortized into the Consolidated Statement of Operations as loan fees over the term of the related debt instrument. Prepaid financing costs, net of accumulated amortization, as of March 31, 2015 (unaudited) and December 31, 2014 were as follows:

(in thousands)	March 31, 2015		December 31, 2014
SBA Debentures	$	3,872	$	4,038
2019 Notes		4,112		4,352
2024 Notes		3,121		3,205
2017 Asset-Backed Notes		63		506
2021 Asset-Backed Notes		2,985		3,207
Convertible Senior Notes		143		175
Wells Facility		708		794
Union Bank Facility		141		156
Total	$	15,145	$	16,433

Commitments

In the normal course of business, we are party to financial instruments with off-balance sheet risk. These consist primarily of unfunded contractual commitments to extend credit, in the form of loans, to our portfolio companies. Unfunded contractual commitments to provide funds to portfolio companies are not reflected on our balance sheet. Our unfunded contractual commitments may be significant from time to time. As of March 31, 2015, we had unfunded contractual commitments of approximately $377.6 million. Approximately $243.5 million of these unfunded contractual commitments are dependent upon the portfolio company reaching certain milestones before the contractual commitment becomes available. These commitments will be subject to the same underwriting and ongoing portfolio maintenance as are the on-balance sheet financial instruments that we hold. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent our future cash requirements. We intend to use cash flow from normal and early principal repayments, and proceeds from borrowings and notes to fund these commitments. We intend to have our unfunded commitments covered by either liquid assets or borrowings to the extent required by the 1940 Act.

In addition, we had approximately $141.0 million of non-binding term sheets outstanding to five new and existing companies, which generally convert to contractual commitments within approximately 90 days of signing. Non-binding outstanding term sheets are subject to completion of our due diligence and final investment committee approval process, as well as the negotiation of definitive documentation with the prospective portfolio companies. Not all non-binding term sheets are expected to close and do not necessarily represent future cash requirements.

Contractual Obligations

The following table shows our contractual obligations as of March 31, 2015 (unaudited):

	Payments due by period (in thousands)
Contractual Obligations⁽¹⁾⁽²⁾	Total		Less than 1 year		1 - 3 years		3 - 5 years		After 5 years
Borrowings ^{(3) (4)}	$	614,442	$	4,240	$	17,338	$	321,464	$	271,400
Operating Lease Obligations ⁽⁵⁾		5,867		1,539		3,071		1,257		—
Total	$	620,309	$	5,779	$	20,409	$	322,721	$	271,400

(1)	Excludes commitments to extend credit to our portfolio companies.

(2)	We also have a warrant participation agreement with Citigroup. See Note 4 to our consolidated financial statements.

(3)

(4)

(5)	Long-term facility leases.

We and our executives and directors are covered by Directors and Officers Insurance, with the directors and officers being indemnified by us to the maximum extent permitted by Maryland law subject to the restrictions in the 1940 Act.

Borrowings

Long-term SBA Debentures

On September 27, 2006, HT II received a license to operate as a SBIC under the SBIC program and is able to borrow funds from the SBA against eligible investments and regulatory capital. Under the Small Business Investment Company Act and current SBA policy applicable to SBICs, a SBIC can have outstanding at any time SBA guaranteed debentures up to twice the amount of its regulatory capital. With our net investment of $38.0 million in HT II as of March 31, 2015, HT II has the capacity to issue a total of $41.2 million of SBA guaranteed debentures, subject to SBA approval, of which $41.2 million was available at March 31, 2015. As of March 31, 2015, HT II has paid the SBA commitment fees and facility fees of approximately $1.5 million and $3.6 million, respectively. As of March 31, 2015 we held investments in HT II in 37 companies with a fair value of approximately $111.2 million, accounting for approximately 9.6% of our total portfolio at March 31, 2015.

On May 26, 2010, HT III received a license to operate as a SBIC under the SBIC program and is able to borrow funds from the SBA against eligible investments and additional contributions to regulatory capital. With our net investment of $74.5 million in HT III as of March 31, 2015, HT III has the capacity to issue a total of $149.0 million of SBA guaranteed debentures, of which $149.0 million was outstanding as of March 31, 2015. As of March 31, 2015, HT III has paid commitment fees and facility fees of approximately $1.5 million and $3.6 million, respectively. As of March 31, 2015, we held investments in HT III in 42 companies with a fair value of approximately $288.4 million accounting for approximately 24.8% of our total portfolio at March 31, 2015.

SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under present SBA regulations, eligible small businesses include businesses that have a tangible net worth not exceeding $19.5 million and have average annual fully taxed net income not exceeding $6.5 million for the two most recent fiscal years. In addition, SBICs must devote 25.0% of its investment activity to “smaller” enterprises as defined by the SBA. A smaller enterprise is one that has a tangible net worth not exceeding $6.0 million and has average annual fully taxed net income not exceeding $2.0 million for the two most recent fiscal years. SBA regulations also provide alternative size standard criteria to determine eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and gross sales. According to SBA regulations, SBICs may make long-term loans to small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services. Through its wholly-owned subsidiaries HT II and HT III, we plan to provide long-term loans to qualifying small businesses, and in connection therewith, make equity investments.

HT II and HT III are periodically examined and audited by the SBA’s staff to determine their compliance with SBA regulations. If HT II or HT III fails to comply with applicable SBA regulations, the SBA could, depending on the severity of the violation, limit or prohibit HT II’s or HT III’s use of debentures, declare outstanding debentures immediately due and payable, and/or limit HT II or HT III from making new investments. In addition, HT II or HT III may also be limited in their ability to make distributions to us if they do not have sufficient capital in accordance with SBA regulations. Such actions by the SBA would, in turn, negatively affect us because HT II and HT III are our wholly owned subsidiaries. HT II and HT III were in compliance with the terms of the SBIC’s leverage as of March 31, 2015 as a result of having sufficient capital as defined under the SBA regulations.

The rates of borrowings under various draws from the SBA beginning in March 2009 are set semiannually in March and September and range from 2.25% to 4.62%. Interest payments on SBA debentures are payable semiannually. There are no principal payments required on these issues prior to maturity and no prepayment penalties. Debentures under the SBA generally mature ten years after being borrowed. Based on the initial draw down date of March 2009, the initial maturity of SBA debentures will occur in March 2019. In addition, the SBA charges a fee that is set annually, depending on the Federal fiscal year the leverage commitment was delegated by the SBA, regardless of the date that the leverage was drawn by the SBIC. The annual fees related to HT II debentures that pooled on September 22, 2010 were 0.406% and 0.285%, depending upon the year in which the underlying commitment was closed. The annual fees on other debentures have been set at 0.906%. The annual fees related to HT III debentures that pooled on March 27, 2013 were 0.804%. The annual fees on other debentures have been set at 0.515%. The rates of borrowings on our SBA debentures range from 3.05% to 5.53% when including these annual fees.

As of March 31, 2015, the maximum statutory limit on the dollar amount of combined outstanding SBA guaranteed debentures is $225.0 million, subject to periodic adjustments by the SBA. In aggregate, at March 31, 2015, with our net investment of $112.5 million, HT II and HT III have the capacity to issue a total of $190.2 million of SBA-guaranteed debentures, subject to SBA approval. At March 31, 2015, we have issued $190.2 million in SBA-guaranteed debentures in our SBIC subsidiaries.

We reported the following SBA debentures outstanding as of March 31, 2015 (unaudited) and December 31, 2014:

(in thousands) Issuance/Pooling Date	Maturity Date	Interest Rate ⁽¹⁾		March 31, 2015		December 31, 2014
SBA Debentures:
March 25, 2009	March 1, 2019		5.53%	$	18,400	$	18,400
September 23, 2009	September 1, 2019		4.64%		3,400		3,400
September 22, 2010	September 1, 2020		3.62%		6,500		6,500
September 22, 2010	September 1, 2020		3.50%		22,900		22,900
March 29, 2011	March 1, 2021		4.37%		28,750		28,750
September 21, 2011	September 1, 2021		3.16%		25,000		25,000
March 21, 2012	March 1, 2022		3.28%		25,000		25,000
March 21, 2012	March 1, 2022		3.05%		11,250		11,250
September 19, 2012	September 1, 2022		3.05%		24,250		24,250
March 27, 2013	March 1, 2023		3.16%		24,750		24,750
Total SBA Debentures				$	190,200	$	190,200

(1)	Interest rate includes annual charge

2019 Notes

On March 6, 2012, we and U.S. Bank National Association (the “2019 Trustee”) entered into an indenture (the “Base Indenture”). On April 17, 2012, we and the 2019 Trustee entered into the First Supplemental Indenture to the Base Indenture (the “First Supplemental Indenture”), dated April 17, 2012, relating to our issuance, offer and sale of $43.0 million aggregate principal amount of 7.00% senior notes due 2019 (the “April 2019 Notes”). The sale of the April 2019 Notes generated net proceeds, before expenses, of approximately $41.7 million.

In July 2012, we reopened our April 2019 Notes and issued an additional $41.5 million in aggregate principal amount of April 2019 Notes, which included the exercise of an over-allotment option, bringing the total amount of the April 2019 Notes issued to approximately $84.5 million in aggregate principal amount.

On September 24, 2012, we and the 2019 Trustee, entered into the Second Supplemental Indenture to the Base Indenture (the “Second Supplemental Indenture”), dated as of September 24, 2012, relating to our issuance, offer and sale of $75.0 million aggregate principal amount of 7.00% senior notes due 2019 (the “September 2019 Notes” and, together with the April 2019 Notes, the “2019 Notes”). The sale of the September 2019 Notes generated net proceeds, before expenses, of approximately $72.75 million.

As of March 31, 2015 (unaudited) and December 31, 2014, the 2019 Notes payable is comprised of:

(in thousands)	March 31, 2015		December 31, 2014
April 2019 Notes	$	84,490	$	84,490
September 2019 Notes		85,874		85,874
Carrying Value of 2019 Notes	$	170,364	$	170,364

April 2019 Notes

The April 2019 Notes will mature on April 30, 2019 and may be redeemed in whole or in part at our option at any time or from time to time on or after April 30, 2015, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption. The April 2019 Notes bear interest at a rate of 7.00% per year payable quarterly on January 30, April 30, July 30 and October 30 of each year, commencing on July 30, 2012, and trade on the New York Stock Exchange under the trading symbol “HTGZ.”

The April 2019 Notes are our direct unsecured obligations and rank: (i) pari passu with our other outstanding and future senior unsecured indebtedness; (ii) senior to any of our future indebtedness that expressly provides it is subordinated to the April 2019 Notes; (iii) effectively subordinated to all our existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grant security), to the extent of the value of the assets securing such indebtedness; (iv) structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries.

The Base Indenture, as supplemented by the First Supplemental Indenture, contains certain covenants including covenants requiring our compliance with (regardless of whether it is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act to comply with the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act and to provide financial information to the holders of the April 2019 Notes and the 2019Trustee if we should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934. These covenants are subject to important limitations and exceptions that are described in the Base Indenture, as supplemented by the First Supplemental Indenture. The Base Indenture provides for customary events of default and further provides that the 2019 Trustee or the holders of 25% in aggregate principal amount of the outstanding April 2019 Notes in a series may declare such April 2019 Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period.

The April 2019 Notes were sold pursuant to an underwriting agreement dated April 11, 2012 among us and Stifel, Nicolaus & Company, Incorporated, as representative of the several underwriters named in the underwriting agreement.

September 2019 Notes

The September 2019 Notes will mature on September 30, 2019 and may be redeemed in whole or in part at our option at any time or from time to time on or after September 30, 2015, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption. The September 2019 Notes bear interest at a rate of 7.00% per year payable quarterly on March 30, June 30, September 30 and December 30 of each year, commencing on December 30, 2012, and trade on the New York Stock Exchange under the trading symbol “HTGY.”

The September 2019 Notes are our direct unsecured obligations and rank: (i) pari passu with our other outstanding and future senior unsecured indebtedness; (ii) senior to any of our future indebtedness that expressly provides it is subordinated to the September 2019 Notes; (iii) effectively subordinated to all our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness; (iv) structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries.

The Base Indenture, as supplemented by the Second Supplemental Indenture, contains certain covenants including covenants requiring us to comply with (regardless of whether it is subject to) the asset coverage requirements set forth in Section 18 (a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act to comply with the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act and to provide financial information to the holders of the September 2019 Notes and the 2019 Trustee if we should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934. These covenants are subject to important limitations and exceptions that are described in the Base Indenture, as supplemented by the Second Supplemental Indenture. The Base Indenture provides for customary events of default and further provides that the 2019 Trustee or the holders of 25% in aggregate principal amount of the outstanding September 2019 Notes in a series may declare such September 2019 Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period.

The September 2019 Notes were sold pursuant to an underwriting agreement dated September 19, 2012 among us and Stifel, Nicolaus & Company, Incorporated, as representative of the several underwriters named in the underwriting agreement.

	Three Months Ended March 31,
(in thousands)	2015		2014
Stated interest expense	$	2,981	$	2,981
Amortization of debt issuance cost		240		240
Total interest expense and fees	$	3,221	$	3,221
Cash paid for interest expense and fees	$	2,981	$	2,981

As of March 31, 2015, we are in compliance with the terms of the Base Indenture, and respective supplemental indentures thereto, governing the April 2019 Notes and September 2019 Notes. See Note 4 to our consolidated financial statements for more detail on the 2019 Notes. Also, see “Subsequent Events.”

2024 Notes

On July 14, 2014, we and U.S. Bank, N.A. (the “2024 Trustee”), entered into the Third Supplemental Indenture (the “Third Supplemental Indenture”) to the Base Indenture between us and the 2024 Trustee, dated July 14, 2014, relating to our issuance, offer and sale of $100.0 million aggregate principal amount of 2024 Notes. On August 6, 2014, the underwriters issued notification to exercise their over-allotment option for an additional $3.0 million in aggregate principal amount of the 2024 Notes. The sale of the 2024 Notes generated net proceeds of approximately $99.9 million.

The 2024 Notes will mature on July 30, 2024 and may be redeemed in whole or in part at our option at any time or from time to time on or after July 30, 2017, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption. The 2024 Notes bear interest at a rate of 6.25% per year payable quarterly on January 30, April 30, July 30 and October 30 of each year, commencing on July 30, 2014, and trade on the New York Stock Exchange under the trading symbol “HTGX.”

The 2024 Notes will be our direct unsecured obligations and will rank: (i) pari passu with our other outstanding and future senior unsecured indebtedness; (ii) senior to any of our future indebtedness that expressly provides it is subordinated to the 2024 Notes; (iii) effectively subordinated to all of our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness; (iv) structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries.

The Base Indenture, as supplemented by the Third Supplemental Indenture, contains certain covenants including covenants requiring us to comply with (regardless of whether it is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act and to comply with the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act. These covenants are subject to important limitations and exceptions that are described in the Base Indenture, as supplemented by the Third Supplemental Indenture. The Base Indenture, as supplemented by the Third Supplemental Indenture, also contains certain reporting requirements, including a requirement that we provide financial information to the holders of the 2024 Notes and the 2024 Trustee if we should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934. The Base Indenture provides for customary events of default and further provides that the 2024 Trustee or the holders of 25% in aggregate principal amount of the outstanding 2024 Notes in a series may declare such 2024 Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period. As of March 31, 2015, we were in compliance with the terms of the Base Indenture, as supplemented by the Third Supplemental Indenture.

At both March 31, 2015 and December 31, 2014, the 2024 Notes had an outstanding principal balance of $103.0 million.

For the three months ended March 31, 2015 and 2014 (unaudited), the components of interest expense and related fees and cash paid for interest expense for the 2024 Notes are as follows:

	Three Months Ended March 31,
(in thousands)	2015		2014
Stated interest expense	$	1,609	$	—
Amortization of debt issuance cost		83		—
Total interest expense and fees	$	1,692	$	—
Cash paid for interest expense and fees	$	1,609	$	—

2017 Asset-Backed Notes

On December 19, 2012, we completed a $230.7 million term debt securitization in connection with which an affiliate of ours made an offer of $129.3 million in aggregate principal amount of fixed-rate asset-backed notes (the “2017 Asset-Backed Notes”), which 2017 Asset-Backed Notes were rated A2(sf) by Moody’s Investors Service, Inc. The 2017 Asset-Backed Notes were sold by Hercules Capital Funding Trust 2012-1 pursuant to a note purchase agreement, dated as of December 12, 2012, by and among us, Hercules Capital Funding 2012-1, LLC as trust depositor (the “2012 Trust Depositor”), Hercules Capital Funding Trust 2012-1 as issuer (the “2012 Securitization Issuer”), and Guggenheim Securities, LLC, as initial purchaser, and are backed by a pool of senior loans made to certain of our portfolio companies and secured by certain assets of those portfolio companies and are to be serviced by

us. Interest on the 2017 Asset- Backed Notes will be paid, to the extent of funds available, at a fixed rate of 3.32% per annum. The 2017 Asset-Backed Notes have a stated maturity of December 16, 2017.

As part of this transaction, we entered into a sale and contribution agreement with the 2012 Trust Depositor under which we have agreed to sell or have contributed to the 2012 Trust Depositor certain senior loans made to certain of our portfolio companies (the “2012 Loans”). We have made customary representations, warranties and covenants in the sale and contribution agreement with respect to the 2012 Loans as of the date of their transfer to the 2012 Trust Depositor.

In connection with the sale of the 2017 Asset-Backed Notes, we have made customary representations, warranties and covenants in the note purchase agreement. The 2017 Asset-Backed Notes are secured obligations of the 2012 Securitization Issuer and are non-recourse to us. The 2012 Securitization Issuer also entered into an indenture governing the 2017Asset-Backed Notes, which includes customary representations, warranties and covenants. The 2017 Asset-Backed Notes were sold without being registered under the Securities Act (A) in the United States to “qualified institutional buyers” as defined in Rule 144A under the Securities Act and to institutional “accredited investors” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) who in each case, are “qualified purchasers” as defined in Sec. 2(A)(51) of the 1940 Act and pursuant to an exemption under the Securities Act and (B) to non-U.S. purchasers acquiring interest in the 2017 Asset-Backed Notes outside the United States in accordance with Regulation S of the Securities Act. The 2012 Securitization Issuer will not be registered under the 1940 Act in reliance on an exemption provided by Section 3(c) (7) thereof. In addition, the 2012 Trust Depositor entered into an amended and restated trust agreement in respect of the 2012 Securitization Issuer, which includes customary representations, warranties and covenants.

The 2012 Loans are serviced by us pursuant to a sale and servicing agreement, which contains customary representations, warranties and covenants. We perform certain servicing and administrative functions with respect to the 2012 Loans. We are entitled to receive a monthly fee from the 2012 Securitization Issuer for servicing the 2012 Loans. This servicing fee is equal to the product of one-twelfth (or in the case of the first payment date, a fraction equal to the number of days from and including December 5, 2012 through and including January 15, 2013 over 360) of 2.00% and the aggregate outstanding principal balance of the 2012 Loans plus the amount of collections on deposit in the 2012 Securitization Issuer’s collection account, as of the first day of the related collection period (the period from the 5th day of the immediately preceding calendar month through the 4th day of the calendar month in which a payment date occurs, and for the first payment date, the period from and including December 5, 2012, to the close of business on January 4, 2013).

We also serve as administrator to the 2012 Securitization Issuer under an administration agreement, which includes customary representations, warranties and covenants.

At March 31, 2015 and December 31, 2014, the 2017 Asset-Backed Notes had an outstanding principal balance of $4.2 million and $16.0 million, respectively. See “Subsequent Events.”

Under the terms of the 2017 Asset Backed Notes, we are required to maintain a reserve cash balance, funded through interest and principal collections from the underlying securitized debt portfolio, which may be used to pay monthly interest and principal payments on the 2017 Asset-Backed Notes. We have segregated these funds and classified them as restricted cash. There was approximately $2.7 million and $1.2 million of restricted cash as of March 31, 2015 and December 31, 2014, respectively, funded through interest collections.

2021 Asset-Backed Notes

On November 13, 2014, we completed a $237.4 million term debt securitization in connection with which an affiliate of ours made an offer of $129.3 million in aggregate principal amount of fixed-rate asset-backed notes (the “2021 Asset-Backed Notes”), which 2021 Asset-Backed Notes were rated A(sf) by Kroll Bond Rating Agency, Inc. (“KBRA”). The 2021 Asset-Backed Notes were sold by Hercules Capital Funding Trust 2014-1 pursuant to a note purchase agreement, dated as of November 13, 2014, by and among us, Hercules Capital Funding 2014-1, LLC as trust depositor (the “2014 Trust Depositor”), Hercules Capital Funding Trust 2014-1 as issuer (the “2014 Securitization Issuer”), and Guggenheim Securities, LLC, as initial purchaser, and are backed by a pool of senior loans made to certain of our portfolio companies and secured by certain assets of those portfolio companies and are to be serviced by us. The securitization has an 18-month reinvestment period during which time principal collections may be reinvested into additional eligible loans. Interest on the 2021 Asset-Backed Notes will be paid, to the extent of funds available, at a fixed rate of 3.524% per annum. The 2021 Asset-Backed Notes have a stated maturity of April 16, 2021.

As part of this transaction, we entered into a sale and contribution agreement with the 2014 Trust Depositor under which we have agreed to sell or have contributed to the 2014 Trust Depositor certain senior loans made to certain of our portfolio companies (the “2014 Loans”). We have made customary representations, warranties and covenants in the sale and contribution agreement with respect to the 2014 Loans as of the date of their transfer to the 2014 Trust Depositor.

In connection with the issuance and sale of the 2021 Asset-Backed Notes, we have made customary representations, warranties and covenants in the note purchase agreement. The 2021 Asset-Backed Notes are secured obligations of the 2014 Securitization Issuer and are non-recourse to us. The 2014 Securitization Issuer also entered into an indenture governing the 2021 Asset-Backed Notes, which includes customary representations, warranties and covenants. The 2021 Asset-Backed Notes were sold without being registered under the Securities Act (A) in the United States to “qualified institutional buyers” as defined in Rule 144A under the Securities Act and to institutional “accredited investors” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) who in each case, are “qualified purchasers” as defined in Sec. 2 (A)(51) of the 1940 Act and pursuant to an exemption under the Securities Act and (B) to non-U.S. purchasers acquiring interest in the 2021 Asset-Backed Notes outside the United States in accordance with Regulation S of the Securities Act. The 2014 Securitization Issuer will not be registered under the 1940 Act in reliance on an exemption provide by Section 3(c) (7) thereof and Rule 3A-7 thereunder. In addition, the 2014 Trust Depositor entered into an amended and restated trust agreement in respect of the 2014 Securitization Issuer, which includes customary representation, warranties and covenants.

The 2014 Loans are serviced by us pursuant to a sale and servicing agreement, which contains customary representations, warranties and covenants. We perform certain servicing and administrative functions with respect to the 2014 Loans. We are entitled to receive a monthly fee from the 2014 Securitization Issuer for servicing the 2014 Loans. This servicing fee is equal to the product of one-twelfth (or in the case of the first payment date, a fraction equal to the number of days from and including October 5, 2014 through and including December 5, 2014 over 360) of 2.00% and the aggregate outstanding principal balance of the 2014 Loans plus collections on deposit in the 2014 Securitization Issuer’s collections account, as of the first day of the related collection period (the period from the 5th day of the immediately preceding calendar month through the 4th day of the calendar month in which a payment date occurs, and for the first payment date, the period from and including October 5, 2014, to the close of business on December 5, 2014).

We also serve as administrator to the 2014 Securitization Issuer under an administration agreement, which includes customary representations, warranties and covenants.

At both March 31, 2015 and December 31, 2014, the 2021 Asset-Backed Notes had an outstanding principal balance of $129.3 million.

Under the terms of the 2021 Asset-Backed Notes, we are required to maintain a reserve cash balance, funded through interest and principal collections from the underlying securitized debt portfolio, which may be used to pay monthly interest and principal payments on the 2021 Asset-Backed Notes. We have segregated these funds and classified them as restricted cash. There was approximately $19.2 million and $11.5 million of restricted cash as of March 31, 2015 and December 31, 2014, respectively, funded through interest collections.

Convertible Senior Notes

In April 2011, we issued $75.0 million in aggregate principal amount of 6.00% convertible senior notes (the “Convertible Senior Notes”) due 2016. During the three months ended March 31, 2015, holders of approximately $32,000 of our Convertible Senior Notes have exercised their conversion rights. As of March 31, 2015, the carrying value of the Convertible Senior Notes, comprised of the aggregate principal amount outstanding less the unaccreted discount initially recorded upon issuance of the Convertible Senior Notes, is approximately $17.4 million

The Convertible Senior Notes mature on April 15, 2016 (the “Maturity Date”), unless previously converted or repurchased in accordance with their terms. The Convertible Senior Notes bear interest at a rate of 6.00% per year payable semiannually in arrears on April 15 and October 15 of each year, commencing on October 15, 2011. The Convertible Senior Notes are our senior unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Senior Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.

Prior to the close of business on the business day immediately preceding October 15, 2015, holders may convert their Convertible Senior Notes only under certain circumstances set forth in the indenture. On or after October 15, 2015 until the close of business on the scheduled trading day immediately preceding the Maturity Date, holders may convert their Convertible Senior Notes at any time. Upon conversion, we will pay or deliver, as the case may be, at our election, cash, shares of our common stock or a combination of cash and shares of our common stock. The conversion rate will initially be 84.0972 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $11.89 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, if certain corporate events occur prior to the Maturity Date, the conversion rate will be increased for converting

holders. As of March 31, 2015, the conversion rate was 88.6189 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an adjusted conversion price of approximately $11.28 per share of common stock).

We may not redeem the Convertible Senior Notes prior to maturity. No sinking fund is provided for the Convertible Senior Notes. In addition, if certain corporate events occur, holders of the Convertible Senior Notes may require us to repurchase for cash all or part of their Convertible Senior Notes at a repurchase price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the required repurchase date.

The Convertible Senior Notes are accounted for in accordance with ASC 470-20 (previously FASB Staff Position No. APB 14- 1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”). In accounting for the Convertible Senior Notes, we estimated at the time of issuance that the values of the debt and the embedded conversion feature of the Convertible Senior Notes were approximately 92.8% and 7.2%, respectively. The original issue discount of 7.2% attributable to the conversion feature of the Convertible Senior Notes was recorded in “capital in excess of par value” in the Consolidated Statement of Assets and Liabilities. As a result, we record interest expense comprised of both stated interest expense as well as accretion of the original issue discount resulting in an estimated effective interest rate of approximately 8.1%.

Upon meeting the stock trading price conversion requirement during the three months ended June 30, 2014, September 30, 2014 and December 31, 2014, the Convertible Senior Notes became convertible on July 1, 2014 and continued to be convertible during each of the three months ended September 30, 2014, December 31, 2014 and March 31, 2015, respectively. During this period and as of March 31, 2015, approximately $57.4 million of the Convertible Senior Notes had been converted and were settled with a combination of cash equal to the outstanding principal amount of the converted notes and approximately 1.5 million shares of our common stock, or $24.3 million. By not meeting the stock trading price conversion requirement during the three months ended March 31, 2015, the Convertible Senior Notes are currently not convertible for the three months ending June 30, 2015. See “Subsequent Events.”

We recorded a loss on extinguishment of debt for the proportionate amount of unamortized debt issuance costs and original issue discount on Notes converted during the period. The loss was partially offset by a gain in the amount of the difference between the outstanding principal balance of the converted notes and the fair value of the debt instrument. The net loss on extinguishment of debt we recorded for the three months ended March 31, 2015 and the year ended December 31, 2014 was approximately $1,000 and $1.6 million, and was classified as a component of net investment income in our Consolidated Statement of Operations.

As of March 31, 2015 (unaudited) and December 31, 2014, the components of the carrying value of the Convertible Senior Notes were as follows:

(in thousands)	March 31, 2015			December 31, 2014
Principal amount of debt	$	17,642		$	17,674
Original issue discount, net of accretion		(267	)		(329	)
Carrying value of Convertible Senior Notes	$	17,375		$	17,345

For the three months ended March 31, 2015 and 2014 (unaudited), the components of interest expense, fees and cash paid for interest expense for the Convertible Senior Notes were as follows:

	Three Months Ended March 31,
(in thousands)	2015		2014
Stated interest expense	$	215	$	1,125
Accretion of original issue discount		62		271
Amortization of debt issuance cost		33		144
Total interest expense	$	310	$	1,540
Cash paid for interest expense	$	—	$	—

The estimated effective interest rate of the debt component of the Convertible Senior Notes, equal to the stated interest of 6.0% plus the accretion of the original issue discount, was approximately 8.1% for the three months ended March 31, 2015 and 2014. Interest expense decreased by approximately $910,000 during the three months ended March 31, 2015 from the three months ended March 31, 2014, due to Convertible Senior Notes settled between periods. As of March 31, 2015, we were in compliance with the terms of the indentures governing the Convertible Senior Notes.

Wells Facility

In August 2008, we entered into a $50.0 million two-year revolving senior secured credit facility with Wells Fargo Capital Finance (the “Wells Facility”). On June 20, 2011, we renewed the Wells Facility, and the Wells Facility was further amended on August 1, 2012, December 17, 2012 and August 8, 2014. Under this senior secured facility, Wells Fargo Capital Finance has made commitments of $75.0 million. The facility contains an accordion feature, in which we can increase the credit line up to an aggregate of $300.0 million, funded by additional lenders and with the agreement of Wells Fargo Capital Finance and subject to other customary conditions. We expect to continue discussions with various other potential lenders to join the new facility; however, there can be no assurances that additional lenders will join the Wells Facility.

On August 1, 2012, we entered into an amendment to the Wells Facility that reduced the interest rate floor by 75 basis points to 4.25% and extended the maturity date by one year to August 2015. Additionally, the August 2012 amendment added an amortization period that commences on the day immediately following the end of the revolving credit availability period and ends one year thereafter on the maturity date. The August 2012 amendment also reduced the unused line fee, as further discussed below. On August 8, 2014, we entered into a further amendment to the Wells Facility to set the interest rate floor at 4.00% and to extend the revolving credit availability period to August 2017.

As amended, borrowings under the Wells Facility will generally bear interest at a rate per annum equal to LIBOR plus 3.50%, with a floor of 4.00% and an advance rate of 50% against eligible debt investments. The Wells Facility is secured by debt investments in the borrowing base. The Wells Facility requires payment of a non-use fee on a scale of 0.0% to 0.50% of the average monthly outstanding balance. The monthly payment of a non-use fee thereafter shall depend on the average balance that was outstanding on a scale between 0.0% and 0.50%. For the three months ended March 31, 2015 and 2014, this non-use fee was approximately $94,000 and $101,000, respectively. On June 20, 2011 we paid an additional $1.1 million in structuring fees in connection with the Wells Facility which are being amortized through the end of the term of the Wells Facility. In connection with the August 2014 amendments, we paid an additional $750,000 in structuring fees in connection with the Wells Facility which are being amortized through the end of the term of the Wells Facility.

The Wells Facility includes various financial and operating covenants applicable to us and our subsidiaries, in addition to those applicable to Hercules Funding II, LLC. As amended, these covenants require us to maintain certain financial ratios and a minimum tangible net worth in an amount, when added to outstanding subordinated indebtedness, that is in excess of $500.0 million plus 90% of the cumulative amount of equity raised after June 30, 2014. As of March 31, 2015, the minimum tangible net worth covenant has increased to $590.4 million as a result of the March 2015 follow-on public offering of 7.6 million shares of common stock for total net proceeds of approximately $100.1 million. The Wells Facility provides for customary events of default, including, but not limited to, payment defaults, breach of representations or covenants, including certain key man provisions and lien limitations, bankruptcy events and change of control. We were in compliance with all covenants at March 31, 2015.

At March 31, 2015 there were no borrowings outstanding on this facility. See Note 4 to our consolidated financial statements for more detail on the Wells Facility. Also, see “Subsequent Events.”

Union Bank Facility

We have a $75.0 million revolving senior secured credit facility (the “Union Bank Facility”) with MUFG Union Bank, N.A. (“MUFG Union Bank”). We originally entered into the Union Bank Facility on February 10, 2010 but, following several amendments, amended and restated the Union Bank Facility on August 14, 2014. The amendment and restatement extends the maturity date of the Union Bank Facility to August 1, 2017, increases the size of the Union Bank Facility to $75.0 million from $30.0 million, and adjusts the interest rate for LIBOR borrowings under the Union Bank Facility. LIBOR-based borrowings by us under the Union Bank Facility will bear interest at a rate per annum equal to LIBOR plus 2.25% with no floor, whereas previously we paid a per annum interest rate on such borrowings equal to LIBOR plus 2.50% with a floor of 4.00%. Other borrowings by us under the Union Bank Facility, which are based on a reference rate instead of LIBOR, will continue to bear interest at a rate per annum equal to the reference rate (which is the greater of the federal funds rate plus 1.00% and a periodically announced MUFG Union Bank index rate) plus the greater of (i) 4.00% minus the reference rate and (ii) 1.00%. We continue to have the option of determining which type of borrowing to request under the Union Bank Facility. Subject to certain conditions, the amendment also removes a previous ceiling on the amount of certain unsecured indebtedness that we may incur.

The Union Bank Facility contains an accordion feature, pursuant to which we may increase the size of the Union Bank Facility to an aggregate principal amount of $300.0 million by bringing in additional lenders, subject to the approval of MUFG Union Bank and other customary conditions. There can be no assurances that additional lenders will join the Union Bank Facility to increase available borrowings.

The Union Bank Facility requires the payment of a non-use fee of 0.50% annually. For the three months ended March 31, 2015 and 2014, this non-use fee was approximately $94,000 and $37,500, respectively. The amount that we may borrow under the Union Bank Facility is determined by applying an advance rate to eligible loans. The Union Bank Facility generally requires payment of monthly interest on loans based on a reference rate and at the end of a one, two, or three-month period, as applicable, for loans based on LIBOR. All outstanding principal is due upon maturity.

The Union Bank Facility is collateralized by debt investments in our portfolio companies, and includes an advance rate equal to 50.0% of eligible debt investments placed in the collateral pool.

We have various financial and operating covenants required by the Union Bank Facility. These covenants require, among other things, that we maintain certain financial ratios, including liquidity, asset coverage, and debt service coverage, and a minimum tangible net worth in an amount, when added to outstanding subordinated indebtedness, that is in excess of $550.0 million plus 90% of the amount of net cash proceeds received from the sale of common stock after June 30, 2014. As of March 31, 2015, the minimum tangible net worth covenant has increased to $640.1 million as a result of the March 2015 follow-on public offering of 7.6 million shares of common stock for total net proceeds of approximately $100.1 million. The Union Bank Facility provides for customary events of default, including, but not limited to, payment defaults, breach of representations or covenants, bankruptcy events and change of control. We were in compliance with all covenants at March 31, 2015.

At March 31, 2015 there were no borrowings outstanding on this facility. See Note 4 to our consolidated financial statements for more detail on the Union Bank Facility.

Citibank Credit Facility

We, through Hercules Funding Trust I, an affiliated statutory trust, had a securitized credit facility (the “Citibank Credit Facility”) with Citigroup Global Markets Realty Corp. (“Citigroup”), which expired under normal terms. During the first quarter of 2009, we paid off all principal and interest owed under the Citibank Credit Facility. Citigroup has an equity participation right through a warrant participation agreement on the pool of debt investments and warrants collateralized under the Citibank Credit Facility. Pursuant to the warrant participation agreement, we granted to Citigroup a 10% participation in all warrants held as collateral. However, no additional warrants were included in collateral subsequent to the facility amendment on May 2, 2007. As a result, Citigroup is entitled to 10% of the realized gains on the warrants until the realized gains paid to Citigroup pursuant to the agreement equal $3,750,000 (the “Maximum Participation Limit”). The obligations under the warrant participation agreement continue even after the Citibank Credit Facility is terminated until the Maximum Participation Limit has been reached.

During the three months ended March 31, 2015, we recorded an increase in participation liability and a decrease in unrealized appreciation by a net amount of approximately $41,000 primarily due to appreciation of fair value on the pool of warrants collateralized under the warrant participation. The remaining value of their participation right on unrealized gains in the related equity investments was approximately $142,000 as of March 31, 2015 and is included in accrued liabilities. There can be no assurances that the unrealized appreciation of the warrants will not be higher or lower in future periods due to fluctuations in the value of the warrants, thereby increasing or reducing the effect on the cost of borrowing. Since inception of the agreement, we have paid Citigroup approximately $2.1 million under the warrant participation agreement thereby reducing our realized gains by this amount. We will continue to pay Citigroup under the warrant participation agreement until the Maximum Participation Limit is reached or the warrants expire. Warrants subject to the Citigroup participation agreement are set to expire between February 2016 and January 2017.

Dividends

The following table summarizes our dividends declared and paid, to be paid, or reinvested on all shares, including restricted stock, to date:

Date Declared	Record Date	Payment Date	Amount Per Share
October 27, 2005	November 1, 2005	November 17, 2005	$	0.03
December 9, 2005	January 6, 2006	January 27, 2006		0.30
April 3, 2006	April 10, 2006	May 5, 2006		0.30
July 19, 2006	July 31, 2006	August 28, 2006		0.30
October 16, 2006	November 6, 2006	December 1, 2006		0.30
February 7, 2007	February 19, 2007	March 19, 2007		0.30
May 3, 2007	May 16, 2007	June 18, 2007		0.30
August 2, 2007	August 16, 2007	September 17, 2007		0.30
November 1, 2007	November 16, 2007	December 17, 2007		0.30
February 7, 2008	February 15, 2008	March 17, 2008		0.30
May 8, 2008	May 16, 2008	June 16, 2008		0.34
August 7, 2008	August 15, 2008	September 19, 2008		0.34
November 6, 2008	November 14, 2008	December 15, 2008		0.34
February 12, 2009	February 23, 2009	March 30, 2009		0.32	*
May 7, 2009	May 15, 2009	June 15, 2009		0.30
August 6, 2009	August 14, 2009	September 14, 2009		0.30
October 15, 2009	October 20, 2009	November 23, 2009		0.30
December 16, 2009	December 24, 2009	December 30, 2009		0.04
February 11, 2010	February 19, 2010	March 19, 2010		0.20
May 3, 2010	May 12, 2010	June 18, 2010		0.20
August 2, 2010	August 12, 2010	September 17,2010		0.20
November 4, 2010	November 10, 2010	December 17, 2010		0.20
March 1, 2011	March 10, 2011	March 24, 2011		0.22
May 5, 2011	May 11, 2011	June 23, 2011		0.22
August 4, 2011	August 15, 2011	September 15, 2011		0.22
November 3, 2011	November 14, 2011	November 29, 2011		0.22
February 27, 2012	March 12, 2012	March 15, 2012		0.23
April 30, 2012	May 18, 2012	May 25, 2012		0.24
July 30, 2012	August 17, 2012	August 24, 2012		0.24
October 26, 2012	November 14, 2012	November 21, 2012		0.24
February 26, 2013	March 11, 2013	March 19, 2013		0.25
April 29, 2013	May 14, 2013	May 21, 2013		0.27
July 29, 2013	August 13, 2013	August 20, 2013		0.28
November 4, 2013	November 18, 2013	November 25, 2013		0.31
February 24, 2014	March 10, 2014	March 17, 2014		0.31
April 28, 2014	May 12, 2014	May 19, 2014		0.31
July 28, 2014	August 18, 2014	August 25, 2014		0.31
October 29, 2014	November 17, 2014	November 24, 2014		0.31
February 24, 2015	March 12, 2015	March 19, 2015		0.31
May 4, 2015	May 18, 2015	May 25, 2015		0.31
			$	10.61

*	Dividend paid in cash and stock.

On May 4, 2015 the Board of Directors declared a cash dividend of $0.31 per share to be paid on May 25, 2015 to shareholders of record as of May 18, 2015. This dividend represents our thirty-ninth consecutive dividend declaration since our initial public offering, bringing the total cumulative dividend declared to date $10.61 per share.

Our Board of Directors maintains a variable dividend policy with the objective of distributing four quarterly distributions in an amount that approximates 90 - 100% of our taxable quarterly income or potential annual income for a particular year. In addition, at the end of the year, our Board of Directors may choose to pay an additional special dividend, or fifth dividend, so that we may

distribute approximately all of our annual taxable income in the year it was earned, or may elect to maintain the option to spill over our excess taxable income into the coming year for future dividend payments.

Distributions in excess of our current and accumulated earnings and profits would generally be treated first as a return of capital to the extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain. The determination of the tax attributes of our distributions is made annually as of the end of our fiscal year based upon our taxable income for the full year and distributions paid for the full year. Of the dividends declared during the years ended December 31, 2014 and 2013, 100% were distributions of ordinary income. There can be no certainty to stockholders that this determination is representative of what the tax attributes of our 2015 distributions to stockholders will actually be.

Each year a statement on Form 1099-DIV identifying the source of the distribution (i.e., paid from ordinary income, paid from net capital gains on the sale of securities, and/or a return of paid-in-capital surplus which is a nontaxable distribution) is mailed to our stockholders. To the extent our taxable earnings fall below the total amount of our distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to our stockholders.

We operate to qualify to be taxed as a RIC under the Code. Generally, a RIC is entitled to deduct dividends it pays to its shareholders from its income to determine “taxable income.” Taxable income includes our taxable interest, dividend and fee income, as well as taxable net capital gains. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as gains or losses are not included in taxable income until they are realized. In addition, gains realized for financial reporting purposes may differ from gains included in taxable income as a result of our election to recognize gains using installment sale treatment, which generally results in the deferment of gains for tax purposes until notes or other amounts, including amounts held in escrow, received as consideration from the sale of investments are collected in cash. Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, which includes contractual payment-in-kind interest, and the amortization of discounts and fees. Cash collections of income resulting from contractual PIK interest arrangements or the amortization of discounts and fees generally occur upon the repayment of the loans or debt securities that include such items. Non- cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation and amortization expense.

As a RIC, we will be subject to a 4% nondeductible federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the 1-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in the preceding year (the “Excise Tax Avoidance Requirements”). We will not be subject to excise taxes on amounts on which we are required to pay corporate income tax (such as retained net capital gains). Depending on the level of taxable income earned in a tax year, we may choose to carry over taxable income in excess of current year distributions from such taxable income into the next tax year and pay a 4% excise tax on such income, as required. The maximum amount of excess taxable income that may be carried over for distribution in the next year under the Code is the total amount of dividends paid in the following year, subject to certain declaration and payment guidelines. To the extent we choose to carry over taxable income into the next tax year, dividends declared and paid by us in a year may differ from taxable income for that year as such dividends may include the distribution of current year taxable income, the distribution of prior year taxable income carried over into and distributed in the current year, or returns of capital.

We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings. Our ability to make distributions will be limited by the asset coverage requirements under the 1940 Act.

We intend to distribute approximately $16.7 million of spillover from long term earnings from the year ended December 31, 2014 to our shareholders in 2015.

We maintain an “opt-out” dividend reinvestment plan for our common stockholders. As a result, if we declare a dividend, cash dividends will be automatically reinvested in additional shares of our common stock unless the stockholder specifically “opts out” of the dividend reinvestment plan and chooses to receive cash dividends.

Critical Accounting Policies

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the period reported. On an ongoing basis, our management evaluates its estimates and assumptions, which are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates. Changes in our estimates and assumptions could materially impact our results of operations and financial condition.

Reclassification

Certain balances from prior years have been reclassified in order to conform to the current year presentation.

Valuation of Portfolio Investments

The most significant estimate inherent in the preparation of our consolidated financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded.

At March 31, 2015, approximately 83.7% of our total assets represented investments in portfolio companies that are valued at fair value by the Board of Directors. Value, as defined in Section 2(a)(41) of the 1940 Act, is (i) the market price for those securities for which a market quotation is readily available and (ii) for all other securities and assets, fair value is as determined in good faith by the Board of Directors. Our investments are carried at fair value in accordance with the 1940 Act and Accounting Standards Codification topic 820 Fair Value Measurements and Disclosures (“ASC 820”). Our debt securities are primarily invested in venture capital-backed companies in technology-related industries, including technology, biotechnology, life science and energy and renewables technology at all stages of development. Given the nature of lending to these types of businesses, our investments in these portfolio companies are generally considered Level 3 assets under ASC 820 because there is no known or accessible market or market indexes for these investment securities to be traded or exchanged. As such, we value substantially all of our investments at fair value as determined in good faith pursuant to a consistent valuation policy by our Board of Directors in accordance with the provisions of ASC 820 and the 1940 Act. Due to the inherent uncertainty in determining the fair value of investments that do not have a readily available market value, the fair value of our investments determined in good faith by our Board of Directors may differ significantly from the value that would have been used had a readily available market existed for such investments, and the differences could be material.

We may from time to time engage an independent valuation firm to provide us with valuation assistance with respect to certain of our portfolio investments on a quarterly basis. We intend to continue to engage an independent valuation firm to provide us with assistance regarding our determination of the fair value of selected portfolio investments each quarter unless directed by the Board of Directors to cancel such valuation services. The scope of the services rendered by an independent valuation firm is at the discretion of the Board of Directors. Our Board of Directors is ultimately and solely responsible for determining the fair value of our investments in good faith.

With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, our Board of Directors has approved a multi-step valuation process each quarter, as described below:

(1) our quarterly valuation process begins with each portfolio company being initially valued by the investment professionals responsible for the portfolio investment;

(2) preliminary valuation conclusions are then documented and business based assumptions are discussed with our investment committee;

(3) the Audit Committee of the Board of Directors reviews the preliminary valuation of the investments in the portfolio company as provided by the investment committee, which incorporates the results of the independent valuation firm as appropriate; and

(4) the Board of Directors, upon the recommendation of the Audit Committee, discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of, where applicable, the respective independent valuation firm and the investment committee.

We have categorized all investments recorded at fair value in accordance with ASC 820 based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

In accordance with ASU 2011-04, the following table provides quantitative information about our Level 3 fair value measurements of our investments as of March 31, 2015. In addition to the techniques and inputs noted in the table below, according to our valuation policy, we may also use other valuation techniques and methodologies when determining our fair value measurements. The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements.

Investment Type - Level Three Debt Investments	Fair Value at March 31, 2015 (in thousands)		Valuation Techniques/Methodologies	Unobservable Input^(a)	Range		Weighted Average ^(b)
Pharmaceuticals	$	113,110	Originated Within 6 Months	Origination Yield	10.34% - 15.43%			12.69%
		290,713	Market Comparable Companies	Hypothetical Market Yield	9.83% - 16.70%			12.76%
				Premium/(Discount)	(0.50%) - 1.00%
Technology		113,378	Originated Within 6 Months	Origination Yield	6.15% - 16.82%			14.38%
		168,727	Market Comparable Companies	Hypothetical Market Yield	6.77% - 18.01%			13.90%
				Premium/(Discount)	0.00% - 1.00%
		24,398	Liquidation^(c)	Probability weighting of alternative outcomes	10.00% - 100.00%
Medical Devices		28,140	Originated Within 6 Months	Origination Yield	12.14% - 21.03%			14.00%
		102,363	Market Comparable Companies	Hypothetical Market Yield	11.29% - 21.87%			14.34%
				Premium/(Discount)	0.00% - 0.50%
Energy Technology		42,884	Originated Within 6 Months	Origination Yield	7.16% - 15.05%			12.04%
		51,881	Market Comparable Companies	Hypothetical Market Yield	13.33% - 23.41%			15.93%
				Premium/(Discount)	0.00 - 1.50%
		1,600	Liquidation^(c)	Probability weighting of alternative outcomes		100.00%
Lower Middle Market		19,699	Market Comparable Companies	Hypothetical Market Yield		13.59%		13.59%
				Premium/(Discount)		1.00%
		5,390	Liquidation^(c)	Probability weighting of alternative outcomes	45.00% - 55.00%

			Debt Investments Where Fair Value Approximates Cost
		—	Imminent Payoffs^(d)
		95,749	Debt Investments Maturing in Less than One Year
	$	1,058,032	Total Level Three Debt Investments

(a)

·	Pharmaceuticals, above, is comprised of debt investments in the Specialty Pharmaceuticals, Drug Discovery and Development, Drug Delivery, Diagnostic and Biotechnology Tools industries in the Consolidated Schedule of Investments.

·	Technology, above, is comprised of debt investments in the Software, Semiconductors, Internet Consumer and Business Services, Consumer and Business Products, Information Services, and Communications and Networking industries in the Consolidated Schedule of Investments.

·	Medical Devices, above, is comprised of debt investments in the Surgical Devices, Medical Devices and Equipment and Biotechnology Tools industries in the Consolidated Schedule of Investments.

·	Energy Technology, above, aligns with the Energy Technology Industry in the Consolidated Schedule of Investments.

(b)	The weighted averages are calculated based on the fair market value of each investment.

(c)	The significant unobservable input s used in the fair value measurement of impaired debt securities is the probability weighting of alternative outcomes.

(d)	Imminent payoffs represent debt investments that we expect to be fully repaid within the next three months, prior to their scheduled maturity date.

Investment Type - Level Three Debt Investments	Fair Value at December 31, 2014 (in thousands)		Valuation Techniques/Methodologies	Unobservable Input^(a)	Range		Weighted Average ^(b)
Pharmaceuticals	$	117,229	Originated Within 6 Months	Origination Yield	10.34% - 16.52%			11.76%
		237,595	Market Comparable Companies	Hypothetical Market Yield	9.75% - 17.73%			10.62%
				Premium/(Discount)	(0.50%) - 1.00%
Medical Devices		60,332	Originated Within 6 Months	Origination Yield	12.14% - 16.56%			13.69%
		60,658	Market Comparable Companies	Hypothetical Market Yield	11.64% - 22.22%			12.19%
				Premium/(Discount)	0.00% - 1.00%
		12,970	Liquidation^(c)	Probability weighting of alternative outcomes		50.00%
Technology		152,645	Originated Within 6 Months	Origination Yield	10.54% - 20.02%			14.08%
		80,835	Market Comparable Companies	Hypothetical Market Yield	6.95% - 15.50%			13.01%
				Premium/(Discount)	0.00% - 0.50%
		27,159	Liquidation^(c)	Probability weighting of alternative outcomes	10.00% - 90.00%
Energy Technology		4,437	Originated Within 6 Months	Origination Yield	13.85% - 21.57%			19.00%
		52,949	Market Comparable Companies	Hypothetical Market Yield	13.20% - 16.62%			15.41%
				Premium/(Discount)	0.00% - 1.50%
		1,600	Liquidation^(c)	Probability weighting of alternative outcomes		100.00%
Lower Middle Market		2,962	Originated Within 6 Months	Origination Yield		14.04%		14.04%
		59,254	Market Comparable Companies	Hypothetical Market Yield	11.91% - 15.33%			13.98%
				Premium/(Discount)	0.00% - 0.50%
		4,096	Liquidation^(c)	Probability weighting of alternative outcomes	45.00% - 55.00%

			Debt Investments Where Fair Value Approximates Cost
		9,318	Imminent Payoffs^(d)
		39,867	Debt Investments Maturing in Less than One Year
	$	923,906	Total Level Three Debt Investments

(a)

·	Pharmaceuticals, above, is comprised of debt investments in the Specialty Pharmaceuticals, Drug Discovery and Development, Drug Delivery, Diagnostic and Biotechnology Tools industries in the Consolidated Schedule of Investments.

·	Medical Devices, above, is comprised of debt investments in the Surgical Devices, Medical Devices and Equipment and Biotechnology Tools industries in the Consolidated Schedule of Investments.

·	Technology, above, is comprised of debt investments in the Software, Semiconductors, Internet Consumer and Business Services, Consumer and Business Products, Information Services, and Communications and Networking industries in the Consolidated Schedule of Investments.

·	Energy Technology, above, aligns with the Energy Technology Industry in the Consolidated Schedule of Investments.

(b)	The weighted averages are calculated based on the fair market value of each investment.

(c)	The significant unobservable input s used in the fair value measurement of impaired debt securities is the probability weighting of alternative outcomes.

(d)	Imminent payoffs represent debt investments that we expect to be fully repaid within the next three months, prior to their scheduled maturity date.

Investment Type - Level Three Equity and Warrant Investments	Fair Value at March 31, 2015 (in thousands)		Valuation Techniques/ Methodologies	Unobservable Input ^(a)	Range	Weighted Average ^(e)
Equity Investments	$	12,500	Market Comparable Companies	EBITDA Multiple ^(b)	4.5x - 21.6x	8.8x
				Revenue Multiple ^(b)	0.8x - 3.8x	2.6x
				Discount for Lack of Marketability ^(c)	6.11% - 30.04%		15.93%
				Average Industry Volatility^(d)	32.52% - 94.47%		66.80%
				Risk-Free Interest Rate	0.17% - 0.85%		0.24%
				Estimated Time to Exit (in months)	8 - 35	11
		18,956	Market Adjusted OPM Backsolve	Average Industry Volatility ^(d)	29.95% - 87.97%		66.97%
				Risk-Free Interest Rate	0.23% - 1.32%		0.61%
				Estimated Time to Exit (in months)	11 - 41	20
Warrant Investments		10,760	Market Comparable Companies	EBITDA Multiple ^(b)	5.7x - 81.9x	20.6x
				Revenue Multiple ^(b)	0.3x - 14.2x	4.0x
				Discount for Lack of Marketability ^(c)	12.85% - 36.52%		22.77%
				Average Industry Volatility ^(d)	43.78% - 75.78%		57.20%
				Risk-Free Interest Rate	0.17% - 1.10%		0.49%
				Estimated Time to Exit (in months)	8 - 47		21
		13,975	Market Adjusted OPM Backsolve	Average Industry Volatility ^(d)	29.95% - 105.34%		68.29%
				Risk-Free Interest Rate	0.17% - 2.95%		0.78%
				Estimated Time to Exit (in months)	8 - 50		26
Total Level Three Warrant and Equity Investments	$	56,191

(a)

The significant unobservable inputs used in the fair value measurement of the Company’s warrant and equity-related securities are revenue and/or EBITDA multiples and discounts for lack of marketability. Additional inputs used in the Black Scholes Option Pricing Model ("OPM”) include industry volatility, risk free interest rate and estimated time to exit. Significant increases (decreases) in the inputs in isolation would result in a significantly higher (lower) fair value measurement, depending on the materiality of the investment. For some investments, additional consideration may be given to data from the last round of financing or merger/acquisition events near the measurement date.

(b)	Represents amounts used when the Company has determined that market participants would use such multiples when pricing the investments.

(c)	Represents amounts used when the Company has determined market participants would take into account these discounts when pricing the investments.

(d)	Represents the range of industry volatility used by market participants when pricing the investment.

(e)	Weighted averages are calculated based on the fair market value of each investment.

Investment Type - Level Three Equity and Warrant Investments	Fair Value at December 31, 2014 (in thousands)		Valuation Techniques/ Methodologies	Unobservable Input^(a)	Range	Weighted Average^(e)
Equity Investments	$	12,249	Market Comparable Companies	EBITDA Multiple ^(b)	5.2x - 23.4x	8.5x
				Revenue Multiple^(b)	0.9x - 3.6x	2.6x
				Discount for Lack of Marketability^(c)	5.67% - 35.45%		15.95%
				Average Industry Volatility ^(d)	48.10% - 95.18%		62.78%
				Risk-Free Interest Rate	0.22% - 0.83%		0.24%
				Estimated Time to Exit (in months)	10 - 28	11
		46,686	Market Adjusted OPM Backsolve	Average Industry Volatility ^(d)	38.95% - 84.30%		55.0%
				Risk-Free Interest Rate	0.10% - 1.32%		0.2%
				Estimated Time to Exit (in months)	6 - 43	10
Warrant Investments		9,725	Market Comparable Companies	EBITDA Multiple ^(b)	0.0x - 98.9x	16.6x
				Revenue Multiple^(b)	0.3x - 15.7x	4.3x
				Discount for Lack of Marketability^(c)	12.12% - 35.50%		22.1%
				Average Industry Volatility ^(d)	37.70% - 108.86%		67.2%
				Risk-Free Interest Rate	0.22% - 1.34%		0.8%
				Estimated Time to Exit (in months)	10 - 47	27
		12,198	Market Adjusted OPM Backsolve	Average Industry Volatility ^(d)	32.85% - 99.81%		67.6%
				Risk-Free Interest Rate	0.21% - 2.95%		0.9%
				Estimated Time to Exit (in months)	10 - 48	28
Total Level Three Warrant and Equity Investments	$	80,858

(a)

The significant unobservable inputs used in the fair value measurement of the Company’s warrant and equity-related securities are revenue and/or EBITDA multiples and discounts for lack of marketability. Additional inputs used in the Black Scholes Option Pricing Model ("OPM”) include industry volatility, risk free interest rate and estimated time to exit. Significant increases (decreases) in the inputs in isolation would result in a significantly higher (lower) fair value measurement, depending on the materiality of the investment. For some investments, additional consideration may be given to data from the last round of financing or merger/acquisition events near the measurement date.

(b)	Represents amounts used when the Company has determined that market participants would use such multiples when pricing the investments.

(c)	Represents amounts used when the Company has determined market participants would take into account these discounts when pricing the investments.

(d)	Represents the range of industry volatility used by market participants when pricing the investment.

(e)	Weighted averages are calculated based on the fair market value of each investment.

Debt Investments

We follow the guidance set forth in ASC 820 which establishes a framework for measuring the fair value of assets and liabilities and outlines a fair value hierarchy which prioritizes the inputs used to measure fair value and the effect of fair value measures on earnings. Our debt securities are primarily invested in venture capital-backed companies in technology-related markets, including technology, biotechnology, life science and energy and renewables technology industries at all stages of development. Given the nature of lending to these types of businesses, our investments in these portfolio companies are considered Level 3 assets under ASC 820 because there is no known or accessible market or market indexes for debt instruments for these investment securities to be traded or exchanged.

In making a good faith determination of the value of our investments, we generally start with the cost basis of the investment, which includes the value attributed to the Original Issue Discount (“OID”), if any, and PIK interest or other receivables which have been accrued to principal as earned. We then apply the valuation methods as set forth below.

We apply a procedure for debt investments that assumes the sale of each investment in a hypothetical market to a hypothetical market participant where buyers and sellers are willing participants. The hypothetical market does not include scenarios where the underlying security was simply repaid or extinguished, but includes an exit concept. We determine the yield at inception for each debt investment. We then use senior secured, leveraged loan yields provided by third party providers to determine the change in market yields between inception of the debt security and the measurement date. Industry specific indices are used to benchmark/assess market based movements.

Under this process, we also evaluate the collateral for recoverability of the debt investments. We consider each portfolio company’s credit rating, security liens and other characteristics of the investment to adjust the baseline yield to derive a credit adjusted hypothetical yield for each investment as of the measurement date. The anticipated future cash flows from each investment are then discounted at the hypothetical yield to estimate each investment’s fair value as of the measurement date.

Our process includes, among other things, the underlying investment performance, the current portfolio company’s financial condition and market changing events that impact valuation, estimated remaining life, current market yields and interest rate spreads of similar securities as of the measurement date. We value our syndicated debt investments using broker quotes and bond indices amongst other factors. If there is a significant deterioration of the credit quality of a debt investment, we may consider other factors than those a hypothetical market participant would use to estimate fair value, including the proceeds that would be received in a liquidation analysis.

We record unrealized depreciation on investments when we believe that an investment has decreased in value, including where collection of a debt investment is doubtful or, if under the in-exchange premise, when the value of a debt security is less than the amortized cost of the investment. Conversely, where appropriate, we record unrealized appreciation if we believe that the underlying portfolio company has appreciated in value and, therefore, that our investment has also appreciated in value or, if under the in-exchange premise, the value of a debt security is greater than amortized cost.

When originating a debt instrument, we generally receive warrants or other equity-related securities from the borrower. We determine the cost basis of the warrants or other equity-related securities received based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and warrants or other equity-related securities received. Any resulting discount on the debt investment from recordation of the warrant or other equity instruments is accreted into interest income over the life of the loan.

Equity-Related Securities and Warrants

Securities that are traded in the over-the-counter markets or on a stock exchange will be valued at the prevailing bid price at period end. We have a limited number of equity securities in public companies. In accordance with the 1940 Act, unrestricted publicly traded securities for which market quotations are readily available are valued at the closing market quote on the measurement date.

We estimate the fair value of warrants using a Black Scholes Option Pricing Model (“OPM”). At each reporting date, privately held warrant and equity related securities are valued based on an analysis of various factors including, but not limited to, the portfolio company’s operating performance and financial condition and general market conditions, price to enterprise value or price to equity ratios, discounted cash flow, valuation comparisons to comparable public companies or other industry benchmarks. When an external event occurs, such as a purchase transaction, public offering, or subsequent equity sale, the pricing indicated by that external event is utilized to corroborate our valuation of the warrant and equity related securities. We periodically review the valuation of our portfolio companies that have not been involved in a qualifying external event to determine if the enterprise value of the portfolio company may have increased or decreased since the last valuation measurement date.

Income Recognition

We record interest income on the accrual basis and we recognize it as earned in accordance with the contractual terms of the loan agreement to the extent that such amounts are expected to be collected. OID initially represents the value of detachable equity warrants obtained in conjunction with the acquisition of debt securities and is accreted into interest income over the term of the loan as a yield enhancement. When a loan becomes 90 days or more past due, or if management otherwise does not expect the portfolio company to be able to service its debt and other obligations, we will generally place the loan on non-accrual status and cease recognizing interest income on that loan until all principal has been paid. Any uncollected interest related to prior periods is reversed from income in the period that collection of the interest receivable is determined to be doubtful. However, we may make exceptions to this policy if the investment has sufficient collateral value and is in the process of collection. At March 31, 2015, we had four debt investments on non-accrual with a cumulative cost and approximate fair value of $34.0 million and $12.0 million, respectively, compared to four debt investments on non-accrual at December 31, 2014 a cumulative cost and approximate fair market value of $28.9 million and $10.6 million, respectively.

Paid-In-Kind and End of Term Income

Contractual PIK interest, which represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. We will generally cease accruing PIK interest if there is insufficient value to support the accrual or we do not expect the portfolio company to be able to pay all principal and interest due. In addition, we may also be entitled to an end-of-term payment that we amortize into income over the life of the loan. To maintain our status as a RIC, PIK and end-of-term income must be paid out to stockholders in the form of dividends even though we have not yet collected the cash. Amounts necessary to pay these dividends may come from available cash or the liquidation of certain investments. We recorded approximately $907,000 and $852,000 in PIK income during the three months ended March 31, 2015 and 2014, respectively.

Fee Income

Fee income, generally collected in advance, includes loan commitment and facility fees for due diligence and structuring, as well as fees for transaction services and management services rendered by us to portfolio companies and other third parties. Loan and commitment fees are amortized into income over the contractual life of the loan. Management fees are generally recognized as income when the services are rendered. Loan origination fees are capitalized and then amortized into interest income using the effective interest rate method. In certain loan arrangements, warrants or other equity interests are received from the borrower as additional origination fees.

We recognize nonrecurring fees amortized over the remaining term of the loan commencing in the quarter relating to specific loan modifications. Certain fees may still be recognized as one-time fees, including prepayment penalties, fees related to select covenant default waiver fees and acceleration of previously deferred loan fees and OID related to early loan pay-off or material modification of the specific debt outstanding.

Equity Offering Expenses

Our offering costs are charged against the proceeds from equity offerings when received.

Debt Issuance Costs

Debt issuance costs are fees and other direct incremental costs incurred by us in obtaining debt financing. Debt issuance costs are recognized as prepaid expenses and amortized over the life of the related debt instrument using the straight line method, which closely approximates the effective yield method.

Stock-Based Compensation

We have issued and may, from time to time, issue additional stock options and restricted stock to employees under our 2004 Equity Incentive Plan and Board members under our 2006 Equity Incentive Plan. We follow ASC 718, formally known as FAS 123R “Share-Based Payments” to account for stock options granted. Under ASC 718, compensation expense associated with stock-based compensation is measured at the grant date based on the fair value of the award and is recognized over the vesting period. Determining the appropriate fair value model and calculating the fair value of stock-based awards at the grant date requires judgment, including estimating stock price volatility, forfeiture rate and expected option life.

Income Taxes

Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, which includes contractual PIK interest arrangements, and the amortization of discounts and fees. Cash collections of income resulting from contractual PIK interest arrangements or the amortization of discounts and fees generally occur upon the repayment of the loans or debt securities that include such items. Non-cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation and amortization expense.

As a RIC, we will be subject to a 4% nondeductible federal excise tax on certain undistributed income unless the we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the 1-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in the preceding year (the “Excise Tax Avoidance Requirements”). We will not be subject to excise taxes on amounts on which we are required to pay corporate income tax (such as retained net capital gains).

Depending on the level of taxable income earned in a tax year, we may choose to carry over taxable income in excess of current year distributions from such taxable income into the next tax year and pay a 4% excise tax on such income, as required. The maximum amount of excess taxable income that may be carried over for distribution in the next year under the Code is the total amount of dividends paid in the following year, subject to certain declaration and payment guidelines. To the extent we choose to carry over taxable income into the next tax year, dividends declared and paid by us in a year may differ from taxable income for that year as such dividends may include the distribution of current year taxable income, the distribution of prior year taxable income carried over into and distributed in the current year, or returns of capital.

We intend to distribute approximately $16.7 million of spillover from long term earnings from the year ended December 31, 2014 to our shareholders in 2015.

Because federal income tax regulations differ from accounting principles generally accepted in the United States, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statement to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

Recent Accounting Pronouncements

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810) – Amendments to the Consolidation Analysis”. The new guidance applies to entities in all industries and provides a new scope exception to registered money market funds and similar unregistered money market funds. It makes targeted amendments to the current consolidation guidance and ends the deferral granted to investment companies from applying the VIE guidance. We are currently assessing the additional disclosure requirements. ASU 2015-02 is effective for public business entities for annual reporting periods beginning after December 15, 2016.

Subsequent Events

Dividend Declaration

2017 Asset-Backed Notes Repayment

April 2019 Notes – Redemption

In April 2015 we redeemed $20.0 million of the $84.5 million in issued and outstanding aggregate principal amount of April 2019 Notes, as previously approved by the Board of Directors. We currently intend to make additional redemptions on the April 2019 Notes throughout the 2015 calendar year, depending on our anticipated cash needs. We will provide notice for and complete all redemptions in compliance with the terms of the Base Indenture, as supplemented by the First Supplemental Indenture.

Convertible Senior Notes

The Convertible Senior Notes are convertible into shares of our common stock beginning October 15, 2015, or, under certain circumstances, earlier. Upon conversion of the Convertible Senior Notes, we have the choice to pay or deliver, as the case may be, at our election, cash, shares of our common stock or a combination of cash and shares of our common stock. The current conversion price of the Convertible Senior Notes is approximately $11.28 per share of common stock, in each case subject to adjustment in certain circumstances. By not meeting the stock trading price conversion requirement during the three months ended March 31, 2015, the Convertible Senior Notes are currently not convertible for the three months ending June 30, 2015.

At March 31, 2015 approximately $38,000 of the Convertible Senior Notes were converting pursuant to the conversion procedures as set forth in the Indenture, and were settled in April 2015 with a combination of cash equal to the outstanding principal amount of the converted notes and approximately 614 shares of our common stock. No additional notes are converting as of May 4, 2015 and no further settlements will be made prior to July 1, 2015.

Amendment to Wells Facility

In May 2015, we entered into a further amendment to the Wells Facility to remove the interest rate floor and to reduce the LIBOR rate margin by 25 basis points to 3.25%.

Amendment to Charter

Effective as of April 6, 2015, we amended our charter to increase the number of shares of common stock we are authorized to issue from 100,000,000 to 200,000,000. We effected the increase in authorized shares by filing Articles of Amendment with the State Department of Assessments and Taxation of Maryland.

Amendment to 2004 Equity Incentive Plan

At our 2015 Annual Meeting of stockholders, our stockholders will vote on whether to approve an amendment to the 2004 Equity Incentive Plan to increase the number of shares of common stock authorized for issuance thereunder by 4.0 million shares.

Closed and Pending Commitments

As of May 4, 2015, Hercules has:

a.	Closed debt and equity commitments of approximately $31.4 million to new and existing portfolio companies.

b.	Pending commitments (signed non-binding term sheets) of approximately $162.4 million. The table below summarizes our year-to-date closed and pending commitments as follows:

Closed Commitments and Pending Commitments (in millions)
January 1 - March 31, 2015 Closed Commitments	$	271.9
Q2-15 Closed Commitments (as of May 4, 2015)	$	31.4
Total Year-to-date 2015 Closed Commitments ^(a)	$	303.3
Pending Commitments (as of May 4, 2015)^(b)	$	162.4
Year to date 2015 Closed and Pending Commitments	$	465.7

Notes:

a.	Closed Commitments may include renewals of existing credit facilities. Not all Closed Commitments result in future cash requirements. Commitments generally fund over the two succeeding quarters from close.

b.	Not all pending commitments (signed non-binding term sheets) are expected to close and do not necessarily represent any future cash requirements.

Portfolio Company Developments

As of May 4, 2015, we held warrants or equity positions in five companies that have filed registration statements on Form S-1 with the SEC in contemplation of potential initial public offerings, including Gelesis, Inc., Good Technology, Inc. and three companies which filed confidentially under the JOBS Act. There can be no assurance that these companies will complete their initial public offerings in a timely manner or at all. In April 2015, our portfolio company ViewRay, Inc. formally withdrew its Form S-1 with the SEC, which had been on file as of March 31, 2015.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, including changes in interest rates. Interest rate risk is defined as the sensitivity of our current and future earnings to interest rate volatility, variability of spread relationships, the difference in re-pricing intervals between our assets and liabilities and the effect that interest rates may have on our cash flows. Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments, cash and cash equivalents and idle funds investments. Our investment income will be affected by changes in various interest rates, including LIBOR and Prime rates, to the extent our debt investments include variable interest rates. As of March 31, 2015, approximately 97.3% of the loans in our portfolio had variable rates based on floating Prime or LIBOR rates with a floor. Changes in interest rates can also affect, among other things, our ability to acquire and originate loans and securities and the value of our investment portfolio.

Based on our Consolidated Statement of Assets and Liabilities as of March 31, 2015, the following table shows the approximate annualized increase (decrease) in components of net assets resulting from operations of hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings.

(in thousands)	Interest		Interest		Net
Basis Point Increase⁽¹⁾	Income		Expense		Income
100	$	7,471	$	—	$	7,471
200	$	13,525	$	—	$	13,525
300	$	25,333	$	—	$	25,333
400	$	35,155	$	—	$	35,155
500	$	44,143	$	—	$	44,143

(1)	A decline in interest rates would not have a material impact on our Consolidated Financial Statements.

We do not currently engage in any hedging activities. However, we may, in the future, hedge against interest rate fluctuations by using standard hedging instruments such as futures, options, and forward contracts. While hedging activities may insulate us against changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to our borrowed funds and higher interest rates with respect to our portfolio of investments. During the three months ended March 31, 2015 we did not engage in interest rate hedging activities.

Although we believe that the foregoing analysis is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in the credit market, credit quality, size and composition of the assets in our portfolio. It does not adjust for other business developments, including borrowings under our Credit Facilities, SBA debentures, Convertible Senior Notes, 2019 Notes, 2024 Notes, 2017 Asset-Backed Notes and 2021 Asset-Backed Notes that could affect the net increase in net assets resulting from operations, or net income. It also does not assume any repayments from borrowers. Accordingly, no assurances can be given that actual results would not differ materially from the statement above.

Because we currently borrow, and plan to borrow in the future, money to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest the funds borrowed. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In periods of rising interest rates, our cost of funds would increase, which could reduce our net investment income if there is not a corresponding increase in interest income generated by variable rate assets in our investment portfolio.

For additional information regarding the interest rate associated with each of our Credit Facilities, SBA debentures, Convertible Senior Notes, 2019 Notes, 2024 Notes, 2017 Asset-Backed Notes and 2021 Asset-Backed Notes, please refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition, Liquidity and Capital Resources - Outstanding Borrowings” in this quarterly report on Form 10-Q.

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our chief executive and chief financial officers, under the supervision and with the participation of our management, conducted an evaluation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. As of the end of the period covered by this quarterly report on Form 10-Q, our chief executive and chief financial officers have concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our chief executive and chief financial officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financing reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended, that occurred during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

We may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.

ITEM 1A.

RISK FACTORS

In addition to the risks discussed below, important risk factors that could cause results or events to differ from current expectations are described in Part I, Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission on March 2, 2015.

Our financial results could be negatively affected if a significant portfolio investment fails to perform as expected.

Our total investment in companies may be significant individually or in the aggregate. As a result, if a significant investment in one or more companies fails to perform as expected, our financial results could be more negatively affected and the magnitude of the loss could be more significant than if we had made smaller investments in more companies. The following table shows the fair value of the totals of investments held in portfolio companies at March 31, 2015 that represent greater than 5% of our net assets:

	March 31, 2015
(in thousands)	Fair Value		Percentage of Net Assets
Sungevity Development, LLC.	$	40,883		5.4	%
Merrimack Pharmaceuticals, Inc.	$	40,515		5.3	%

Sungevity Development, LLC. is a global residential solar energy provider focused on making it easy and affordable for homeowners to benefit from solar power.

Merrimack Pharmaceuticals, Inc. is a biopharmaceutical company discovering, developing and preparing to commercialize innovative medicines paired with companion diagnostics for the treatment of serious diseases, with an initial focus on cancer.

Our financial results could be materially adversely affected if these portfolio companies or any of our other significant portfolio companies encounter financial difficulty and fail to repay their obligations or to perform as expected.

100

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three month period ended March 31, 2015, we issued approximately 40,084 shares of common stock to shareholders in connection with the dividend reinvestment plan. These issuances were not subject to the registration requirements of the Securities Act of 1933, as amended. The aggregate value of the shares of our common stock issued under our dividend reinvestment plan was approximately $562,000.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4.

MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5.

OTHER INFORMATION

On May 6, 2015, Hercules Technology Growth Capital, Inc. (the “Company”), through a special purpose wholly-owned subsidiary of the Company, Hercules Funding II LLC, amended its credit facility with Wells Fargo Capital Finance, LLC (“WFCF”) under which WFCF has committed $75.0 million in initial credit capacity. The facility contains an accordion feature, in which the Company can increase the credit line up to an aggregate of $300.0 million. The amendment reduces the interest rate per annum on LIBOR rate borrowings from LIBOR plus 3.50 % to LIBOR plus 3.25% and eliminates the interest rate floors on borrowings. The amendment is effective as of May 6, 2015.

Under the credit facility, as amended, LIBOR rate borrowings will bear interest at a rate per annum equal to LIBOR plus 3.25%, with no interest rate floor. The advance rate for eligible debt investments under the credit facility is 50%. The credit facility requires payment of a monthly non-use fee of the average monthly outstanding balance to a scale of 0.0% to 0.50% of the average monthly outstanding balance. The monthly payment of a non-use fee thereafter shall depend on the average balance that was outstanding on a scale between 0.0% and 0.50%. The credit facility generally requires payment of interest on a monthly basis. All outstanding principal is due upon maturity.

The credit facility also contains an accordion feature which allows the Company to increase the credit line up to an aggregate amount of $300.0 million funded by additional lenders who may join the facility and with the agreement of WFCF and subject to other customary conditions. There can be no assurances that additional lenders will join the new credit facility.

The credit facility provides for customary events of default, including, but not limited to, payment defaults, breach of representations or covenants, including certain key-man provisions and lien limitations, bankruptcy events and change of control. The credit facility also includes various financial and operating covenants applicable to the Company and its subsidiaries. The covenants require, among other things, that the Company maintain certain financial ratios and a minimum tangible net worth in an amount, when added to outstanding subordinated indebtedness that is in excess of $500.0 million plus 90% of the cumulative amount of equity raised after June 30, 2014.

The foregoing description of the credit facility does not purport to be complete and is qualified in its entirety by reference to the full text of the loan and security agreement, as amended, attached hereto as Exhibit 10.1.

101

ITEM 6.

EXHIBITS

Exhibit
Number

Description

10.1

Seventh Amendment to Loan and Security Agreement by and among Hercules Funding II, LLC and Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), dated as of May 6, 2015.*

31.1

Chief Executive Officer Certification Pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2

Chief Financial Officer Certification Pursuant to Exchange Act Rule 13a-14 (a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1

Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2

Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

*	Filed herewith.

102

SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		HERCULES TECHNOLOGY GROWTH CAPITAL, INC. (Registrant)

Dated: May 7, 2015		/S/ MANUEL A. HENRIQUEZ
		Manuel A. Henriquez
		Chairman, President, and Chief Executive Officer

Dated: May 7, 2015		/S/ JESSICA BARON
		Jessica Baron
		Vice President of Finance and Chief Financial Officer

103

EXHIBIT INDEX

Exhibit

Number

Description

10.1

Seventh Amendment to Loan and Security Agreement by and among Hercules Funding II, LLC and Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), dated as of May 6, 2015.*

31.1

Chief Executive Officer Certification Pursuant to Exchange Act Rule 13a-14 (a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2

Chief Financial Officer Certification Pursuant to Exchange Act Rule 13a-14 (a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1

Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2

Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

*	Filed herewith.

104