Hercules Capital, Inc. (NYSE:HTGC) Q3 2021 Earnings Conference Call October 28, 2021 5:00 PM ET Company Participants Michael Hara - Managing Director, IR Scott Bluestein - CEO and CIO Seth Meyer - CFO Conference Call Participants Crispin Love - Piper Sandler Kevin Fultz - JMP Securities Christopher Nolan - Ladenburg Thalmann Sarkis Sherbetchyan - B. Riley Securities Ryan Lynch - KBW Finian O'Shea - Wells Fargo Securities Operator Ladies and gentlemen, thank you for standing by, and welcome to the Hercules C ...

PART I. FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Hercules Capital, Inc. as of September 30, 2021, and for the three and nine-month periods then ended [Consolidated Statements of Assets and Liabilities](index=4&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) As of September 30, 2021, total assets increased to **$2.79 billion** from **$2.62 billion** at year-end 2020, driven by a rise in the fair value of investments Consolidated Balance Sheet Highlights (in thousands, except per share data) | Metric | September 30, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Total Investments, at fair value | $2,511,854 | $2,354,078 | | Total Assets | $2,791,208 | $2,623,997 | | Total Liabilities | $1,453,676 | $1,332,293 | | Total Net Assets | $1,337,532 | $1,291,704 | | Net Asset Value per share | $11.54 | $11.26 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For the nine months ended September 30, 2021, total investment income was **$208.5 million**, with a net increase in net assets from operations of **$170.4 million** Key Operating Results (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Total Investment Income | $208,511 | $211,926 | | Total Net Operating Expenses | $98,898 | $96,948 | | Net Investment Income | $109,613 | $114,978 | | Net Realized/Unrealized Gain (Loss) | $60,830 | $(38,889) | | Net Increase in Net Assets from Operations | $170,443 | $76,089 | | Basic EPS (from operations) | $1.47 | $0.68 | [Consolidated Statements of Changes in Net Assets](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) For the nine months ended September 30, 2021, net assets increased from **$1.29 billion** to **$1.34 billion**, primarily driven by a **$170.4 million** net increase from operations Reconciliation of Net Assets (in thousands) - Nine Months Ended Sep 30, 2021 | Description | Amount | | :--- | :--- | | Balance as of December 31, 2020 | $1,291,704 | | Net increase in net assets from operations | $170,443 | | Distributions | $(133,143) | | Stock-based compensation & other | $7,785 | | Other stock activities (net) | $(9,257) | | **Balance as of September 30, 2021** | **$1,337,532** | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2021, net cash provided by operating activities was **$28.7 million**, leading to an overall increase in cash, cash equivalents, and restricted cash of **$11.7 million** Summary of Cash Flows (in thousands) - Nine Months Ended Sep 30 | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $28,681 | $(24,015) | | Net Cash from Investing Activities | $(12) | $(115) | | Net Cash from Financing Activities | $(16,931) | $(42,805) | | **Net Increase (Decrease) in Cash** | **$11,738** | **$(66,935)** | [Consolidated Schedule of Investments](index=12&type=section&id=Consolidated%20Schedule%20of%20Investments) The schedule details the company's investment portfolio, totaling **$2.51 billion** at fair value as of September 30, 2021, predominantly composed of debt investments Investment Portfolio Summary as of September 30, 2021 (in thousands) | Investment Type | Cost | Fair Value | | :--- | :--- | :--- | | Debt Investments | $2,262,660 | $2,263,542 | | Equity Investments | $135,593 | $204,411 | | Warrant Investments | $25,913 | $42,859 | | Investment Funds & Vehicles | $1,223 | $1,042 | | **Total Investments** | **$2,425,389** | **$2,511,854** | [Notes to Consolidated Financial Statements](index=51&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the accounting policies and methodologies used in preparing the financial statements, covering business description, significant accounting policies, and breakdowns of investments and debt [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=65&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance and condition, highlighting portfolio activity, operational results, liquidity, and capital resources [Overview](index=66&type=section&id=Overview) Hercules Capital is an internally managed Business Development Company (BDC) specializing in senior secured loans to venture capital-backed companies in technology, life sciences, and renewable technology sectors - The company's primary business is providing structured debt with warrants to high-growth, venture capital-backed companies[318](index=318&type=chunk)[319](index=319&type=chunk) - Hercules operates as a BDC under the 1940 Act and has elected to be taxed as a RIC, which generally eliminates corporate-level taxes on distributed income[325](index=325&type=chunk)[326](index=326&type=chunk) - In May 2020, the company formed a wholly-owned subsidiary, Hercules Adviser LLC, to provide investment advisory services to third-party funds[327](index=327&type=chunk) [Portfolio and Investment Activity](index=67&type=section&id=Portfolio%20and%20Investment%20Activity) The total fair value of the investment portfolio grew to **$2.5 billion** as of September 30, 2021, with **$1.47 billion** in net new debt commitments originated Portfolio Activity for the Nine Months Ended September 30 (in millions) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Debt Commitments | $1,469.2 | $1,035.3 | | Net Debt Fundings | $907.0 | $629.4 | | Unfunded Contractual Commitments | $309.9 | $242.5 | Debt Investment Portfolio Grading (at Fair Value) | Investment Grading | Sep 30, 2021 (% of Portfolio) | Dec 31, 2020 (% of Portfolio) | | :--- | :--- | :--- | | 1 (Highest Quality) | 30.6% | 19.6% | | 2 | 48.8% | 49.1% | | 3 | 20.2% | 29.7% | | 4 | 0.4% | 1.2% | | 5 (Lowest Quality) | 0.0% | 0.4% | - Non-accrual investments decreased to **1.0%** of the total portfolio at amortized cost as of September 30, 2021, down from **1.3%** at December 31, 2020[360](index=360&type=chunk) [Results of Operations](index=72&type=section&id=Results%20of%20Operations) For the nine months ended September 30, 2021, total investment income was **$208.5 million**, with a significant positive swing in net realized and unrealized gains driving a substantial increase in net assets from operations to **$170.4 million** Comparison of Operating Results (in thousands) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Total Investment Income | $208,511 | $211,926 | | Total Net Operating Expenses | $98,898 | $96,948 | | Net Investment Income | $109,613 | $114,978 | | Net Realized/Unrealized Gain (Loss) | $60,830 | $(38,889) | | **Net Increase in Net Assets** | **$170,443** | **$76,089** | [Financial Condition, Liquidity, and Capital Resources](index=77&type=section&id=Financial%20Condition%2C%20Liquidity%2C%20and%20Capital%20Resources) As of September 30, 2021, Hercules had **$818.4 million** in available liquidity and an asset coverage ratio of **198.3%**, well above the regulatory requirement - The company had **$818.4 million** in available liquidity as of September 30, 2021, consisting of **$235.9 million** in cash and **$582.5 million** in available credit[413](index=413&type=chunk) - The asset coverage ratio was **198.3%** (excluding SBA debentures), exceeding the **150%** regulatory minimum[414](index=414&type=chunk) - In October 2021, the company used proceeds from the September 2026 Notes offering to fully redeem its outstanding 2027 and 2028 Asset-Backed Notes totaling **$289.2 million**[310](index=310&type=chunk)[417](index=417&type=chunk)[419](index=419&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=83&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with **95.9%** of its debt investments being floating rate, positioning it to potentially benefit from rising interest rates Interest Rate Sensitivity Analysis (Annualized) | Basis Point Change | Net Income Impact (in thousands) | EPS Impact | | :--- | :--- | :--- | | +200 | $32,646 | $0.28 | | +100 | $15,619 | $0.14 | | +50 | $7,784 | $0.07 | | -25 | $(27) | $(0.00) | - As of September 30, 2021, approximately **95.9%** of the company's loan portfolio had variable rates, while its SBA Debentures and various notes are fixed-rate, creating a liability-sensitive balance sheet that could benefit from rising interest rates[451](index=451&type=chunk) [Item 4. Controls and Procedures](index=84&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[456](index=456&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[457](index=457&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=85&type=section&id=Item%201.%20Legal%20Proceedings) The company states that it may be involved in litigation in the normal course of business but does not expect any current matters to materially affect its financial condition or results of operations - The company is not currently involved in any legal proceedings that are expected to have a material impact on its financial condition[460](index=460&type=chunk) [Item 1A. Risk Factors](index=85&type=section&id=Item%201A.%20Risk%20Factors) This section highlights the concentration risk within the investment portfolio, where seven portfolio companies each represented over **5%** of the company's net assets as of September 30, 2021 Portfolio Companies Representing >5% of Net Assets (as of Sep 30, 2021) | Portfolio Company | Fair Value (in thousands) | Percentage of Net Assets | | :--- | :--- | :--- | | BridgeBio Pharma LLC | $115,523 | 8.6% | | Zepz (p.k.a. Worldremit Group Limited) | $103,068 | 7.7% | | Corium, Inc. | $90,618 | 6.8% | | Rocket Lab Global Services, LLC | $87,722 | 6.6% | | Phathom Pharmaceuticals, Inc. | $85,827 | 6.4% | | EverFi, Inc. | $85,210 | 6.4% | | uniQure B.V. | $72,593 | 5.4% | [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=86&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the nine months ended September 30, 2021, the company issued **189,356** shares of common stock through its dividend reinvestment plan (DRIP) for approximately **$3.1 million** - Under its dividend reinvestment plan, the company issued **189,356** shares of common stock for an aggregate value of approximately **$3.1 million** during the first nine months of 2021[464](index=464&type=chunk)

July 29, 2021 SECOND QUARTER 2021 INVESTOR PRESENTATION Financing the Growth of Tomorrow's Companies TodayTM IMPORTANT NOTICE: FORWARD LOOKING STATEMENTS This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the "safe harbor" provisions ...

Financial Data and Key Metrics Changes - In Q2 2021, Hercules Capital generated total investment income of $69.6 million and net investment income of $37 million, or $0.32 per share, reflecting an increase from the previous quarter due to higher fee income [17][31] - The net asset value (NAV) per share increased by over 3% to $11.71, the highest since Q3 2008, driven by strong portfolio performance and equity capital markets [22][36] - The company reported net realized losses of $14.3 million, primarily due to the write-off of a legacy equity investment, but recorded gross realized gains of $47.9 million from equity and warrant sales [21][90] Business Line Data and Key Metrics Changes - Hercules originated over $440 million in gross new debt and equity commitments in Q2, with total fundings exceeding $278 million, establishing a record for the first half of the year with over $970 million in commitments [10][12] - The investment team maintained strong performance across technology and life sciences sectors, with a balanced approach providing a competitive advantage [11] Market Data and Key Metrics Changes - The venture capital ecosystem showed exceptional strength, with $74.1 billion raised and over $150 billion invested in the US during the first half of 2021, compared to $81 billion and $164.3 billion for all of 2020 [24] - The company noted an abundance of liquidity in the market, which has created challenges in prudent new business origination [11][110] Company Strategy and Development Direction - Hercules Capital emphasized a disciplined approach to underwriting, aiming to maintain a strong balance sheet and operational flexibility while navigating market challenges [9][12] - The company plans to continue investing in its team and infrastructure to position itself for long-term success, with a focus on optimizing its balance sheet and reducing overall cost of debt capital [23][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the portfolio and the overall market, expecting elevated prepayment activity in Q3 between $200 million and $250 million [15][101] - The company anticipates a record year for new debt and equity commitments in 2021, supported by a robust pipeline exceeding $1 billion [13][44] Other Important Information - Hercules declared its 10th consecutive quarterly cash distribution of $0.32 per share, along with a supplemental distribution of $0.07 per share, marking a 22% increase in distributions year-to-date compared to the previous year [25] - The company reported a weighted average internal credit rating of 1.93, the strongest in its history, indicating improved credit quality in its debt investment portfolio [18][19] Q&A Session Summary Question: Plans for the record spillover of $160 million - Management highlighted the flexibility provided by the spillover for future investments and distribution policy evaluations [47][49] Question: Factors driving elevated prepayments in Q3 - Management noted the strong performance and capitalization of portfolio companies, with several pending IPOs and M&A events expected to contribute to prepayments [51][55] Question: Satisfaction with the private credit fund - Management expressed satisfaction with the private credit fund's performance, noting it has allowed for larger transactions and increased opportunities [58][59] Question: Funding mix and balance sheet optimization - Management indicated a balanced funding mix between technology and life sciences, with ongoing efforts to optimize the balance sheet [71][70] Question: Impact of abundant capital on origination - Management acknowledged the challenges posed by abundant capital but emphasized their commitment to disciplined underwriting practices [110][113]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Hercules Capital, Inc. as of June 30, 2021, including balance sheets, statements of operations, changes in net assets, cash flows, and detailed investment schedules, along with explanatory notes [Consolidated Statements of Assets and Liabilities](index=3&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) As of June 30, 2021, total assets were $2.58 billion, total liabilities decreased to $1.22 billion, and total net assets increased to $1.36 billion, raising the net asset value per share to $11.71 Consolidated Balance Sheet Summary (in thousands) | Metric | June 30, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Total Investments, at fair value** | $2,521,090 | $2,354,078 | | Cash and cash equivalents | $18,447 | $198,282 | | **Total Assets** | **$2,578,572** | **$2,623,997** | | Total Debt (net) | $1,177,515 | $1,286,638 | | **Total Liabilities** | **$1,222,214** | **$1,332,293** | | **Total Net Assets** | **$1,356,358** | **$1,291,704** | | **Net Asset Value per share** | **$11.71** | **$11.26** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2021, total investment income was $69.6 million, with net investment income at $37.0 million, and a net increase in net assets from operations of $82.7 million, significantly higher than the prior year due to increased unrealized appreciation Q2 2021 vs Q2 2020 Performance (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | | :--- | :--- | :--- | | Total Investment Income | $69,559 | $67,968 | | Total Net Operating Expenses | $32,595 | $32,284 | | **Net Investment Income** | **$36,964** | **$35,684** | | Total net realized/unrealized gain | $45,767 | $26,081 | | **Net Increase in Net Assets** | **$82,731** | **$61,765** | | **Basic EPS (from operations)** | **$0.71** | **$0.55** | | Diluted EPS (from operations) | $0.65 | $0.55 | Six Months 2021 vs 2020 Performance (in thousands, except per share data) | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Total Investment Income | $138,318 | $141,587 | | Total Net Operating Expenses | $66,794 | $65,323 | | **Net Investment Income** | **$71,524** | **$76,264** | | Total net realized/unrealized gain (loss) | $75,370 | $(43,222) | | **Net Increase in Net Assets** | **$146,894** | **$33,042** | | **Basic EPS (from operations)** | **$1.27** | **$0.29** | | Diluted EPS (from operations) | $1.21 | $0.29 | [Consolidated Statements of Changes in Net Assets](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) For the six months ended June 30, 2021, net assets increased from $1.29 billion to $1.36 billion, primarily driven by a $146.9 million net increase from operations, partially offset by $88.0 million in distributions Reconciliation of Net Assets (Six Months Ended June 30, 2021, in thousands) | Description | Amount | | :--- | :--- | | **Balance as of December 31, 2020** | **$1,291,704** | | Net increase from operations | $146,894 | | Issuance of common stock (net) | $2,648 | | Distributions | $(87,953) | | Stock-based compensation | $5,163 | | **Balance as of June 30, 2021** | **$1,356,358** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash used in operating activities was $12.2 million, and net cash used in financing activities was $201.2 million, resulting in a total net decrease in cash of $213.4 million Summary of Cash Flows (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(12,185) | $(12,768) | | Net Cash Used in Investing Activities | $(12) | $(67) | | Net Cash Used in Financing Activities | $(201,212) | $(32,678) | | **Net Decrease in Cash** | **$(213,409)** | **$(45,513)** | | Cash at Beginning of Period | $237,622 | $114,996 | | **Cash at End of Period** | **$24,213** | **$69,483** | [Consolidated Schedule of Investments](index=11&type=section&id=Consolidated%20Schedule%20of%20Investments) As of June 30, 2021, the total investment portfolio had a fair value of $2.52 billion, primarily concentrated in senior secured debt (88.0%) and key industry sectors like Drug Discovery & Development, Software, and Internet Consumer & Business Services Portfolio Composition by Asset Class (June 30, 2021) | Asset Class | Fair Value (in thousands) | Percentage of Total Portfolio | | :--- | :--- | :--- | | Senior Secured Debt | $2,217,055 | 88.0% | | Unsecured Debt | $26,321 | 1.0% | | Preferred Stock | $57,966 | 2.3% | | Common Stock | $171,934 | 6.8% | | Warrants | $46,715 | 1.9% | | Investment Funds & Vehicles | $1,099 | 0.0% | | **Total** | **$2,521,090** | **100.0%** | Portfolio Composition by Industry Sector (June 30, 2021) | Industry Sector | Fair Value (in thousands) | Percentage of Total Portfolio | | :--- | :--- | :--- | | Drug Discovery & Development | $789,877 | 31.3% | | Software | $675,565 | 26.8% | | Internet Consumer & Business Services | $630,540 | 25.0% | | All Other Industries | $425,108 | 16.9% | | **Total** | **$2,521,090** | **100.0%** | [Notes to Consolidated Financial Statements](index=50&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on the company's business as a BDC and RIC, significant accounting policies including Level 3 fair value measurements, income recognition, debt facilities, equity plans, commitments, and related party transactions - Hercules Capital is an internally managed Business Development Company (BDC) and has elected to be treated as a Regulated Investment Company (RIC) for tax purposes, focusing on senior secured loans to venture capital-backed companies[104](index=104&type=chunk)[105](index=105&type=chunk) - As of June 30, 2021, approximately **97.8%** of the Company's total assets were investments whose fair value is determined in good faith by the Board of Directors, classified as Level 3 assets due to the lack of a readily available market[125](index=125&type=chunk) - In March 2021, the company's Adviser Subsidiary entered into an investment management agreement with a private External Fund, with shared services expenses allocated to this subsidiary totaling **$2.1 million** for the first six months of 2021[294](index=294&type=chunk) - On July 1, 2021, subsequent to the reporting period, the company fully redeemed the **$75.0 million** aggregate principal of its 5.25% April 2025 Notes[298](index=298&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=64&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance as a specialty finance company, highlighting portfolio growth to $2.5 billion, trends in investment income and expenses, the impact of unrealized appreciation, and its strong liquidity position of $610.0 million as of June 30, 2021 - The company's investment objective is to maximize portfolio total return through current income from debt investments and capital appreciation from warrant and equity investments in technology, life sciences, and sustainable technology sectors[309](index=309&type=chunk) Portfolio Activity (Six Months Ended June 30, in millions) | Activity (in millions) | 2021 | 2020 | | :--- | :--- | :--- | | Net Debt Commitments | $853.6 | $522.0 | | Net Debt Fundings | $539.8 | $364.9 | | Funded Equity Investments | $14.2 | $1.0 | | Unfunded Contractual Commitments | $327.3 | $165.1 | Debt Investment Portfolio Yields | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Weighted average core yield | 11.5% | 11.6% | | Weighted average effective yield | 12.7% | 12.9% | - As of June 30, 2021, the company had **$610.0 million** in available liquidity, including **$18.4 million** in cash and significant available capacity under its credit facilities and SBA license[394](index=394&type=chunk) - The company's asset coverage ratio was **219.3%** (excluding SBA debentures), well above the 150% regulatory minimum, providing investment flexibility[395](index=395&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=82&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate volatility, with 96.8% of debt investments having variable rates, positioning it to benefit from potential rate increases, as a hypothetical 100 basis point increase would raise net income by an estimated $13.8 million annually - As of June 30, 2021, approximately **96.8%** of the company's loan portfolio had variable interest rates, making its income sensitive to changes in Prime and LIBOR rates[431](index=431&type=chunk) Annualized Impact of Hypothetical Interest Rate Changes (in thousands) | Basis Point Change | Net Income Impact | EPS Impact | | :--- | :--- | :--- | | +100 | $13,834 | $0.12 | | +50 | $6,879 | $0.06 | | -25 | $4 | $0.00 | [Item 4. Controls and Procedures](index=83&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[436](index=436&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[437](index=437&type=chunk) [PART II. OTHER INFORMATION](index=84&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=84&type=section&id=Item%201.%20Legal%20Proceedings) The company does not expect any current legal matters to have a material adverse effect on its financial condition or results of operations - The company does not expect any current legal proceedings to materially affect its financial condition or results of operations[440](index=440&type=chunk) [Item 1A. Risk Factors](index=84&type=section&id=Item%201A.%20Risk%20Factors) This section highlights the risk of portfolio concentration, where the failure of a single significant investment could negatively affect financial results, with six portfolio companies each representing over 5% of net assets as of June 30, 2021 Portfolio Companies Representing >5% of Net Assets (June 30, 2021) | Portfolio Company | Fair Value (in thousands) | Percentage of Net Assets | | :--- | :--- | :--- | | BridgeBio Pharma LLC | $118,393 | 8.7% | | Worldremit Group Limited | $95,142 | 7.0% | | Rocket Lab Global Services, LLC | $87,182 | 6.4% | | EverFi, Inc. | $84,561 | 6.2% | | Houzz, Inc. | $75,542 | 5.6% | | uniQure B.V. | $71,840 | 5.3% | [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=85&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the six months ended June 30, 2021, the company issued 133,943 shares of common stock through its dividend reinvestment plan, valued at approximately $2.1 million, which were not registered under the Securities Act - For the six months ended June 30, 2021, **133,943** shares of common stock were issued under the dividend reinvestment plan, with an aggregate value of approximately **$2.1 million**[445](index=445&type=chunk) [Item 3. Defaults Upon Senior Securities](index=85&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable, as there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported for the period[446](index=446&type=chunk) [Item 4. Mine Safety Disclosures](index=85&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine safety disclosures are not applicable to the company[446](index=446&type=chunk) [Item 5. Other Information](index=85&type=section&id=Item%205.%20Other%20Information) This item is not applicable as there was no other information to report - No other information was reported for the period[446](index=446&type=chunk) [Item 6. Exhibits](index=86&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the Chief Executive Officer and Chief Financial Officer as required by the Sarbanes-Oxley Act of 2002 - The report includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[449](index=449&type=chunk)

April 29, 2021 FIRST QUARTER 2021 INVESTOR PRESENTATION Financing the Growth of Tomorrow's Companies TodayTM IMPORTANT NOTICE: FORWARD LOOKING STATEMENTS This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the "safe harbor" provisions ...

Hercules Capital, Inc. (NYSE:HTGC) Q1 2021 Earnings Conference Call April 29, 2021 5:00 PM ET Company Participants Michael Hara - MD of IR Scott Bluestein - CEO Seth Meyer - CFO Conference Call Participants Finian O'Shea - Wells Fargo Securities Crispin Love - Piper Sandler Devin Ryan - JMP Securities Ryan Lynch - KBW Sarkis Sherbetchyan - B. Riley Securities Casey Alexander - Compass Point Christopher Nolan - Ladenburg Thalmann John Hecht - Jefferies Operator Ladies and gentlemen, thank you for stand ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 814-00702 HERCULES CAPITAL, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ (Exact Nam ...

Financial Performance Highlights - Net Investment Income (NII) reached $42.2 million, a 5.1% year-over-year increase[8] - Total Investment Income amounted to $75.3 million, reflecting a 6.7% year-over-year growth[8] - The company reported a Net Interest Margin (NIM) of 10.3%[8] - The Return on Average Equity (ROAE) was 13.8%[8] - The Return on Average Assets (ROAA) was 6.6%[8] Portfolio and Investment Activity - Total Debt Investments at cost stood at $2.10 billion[8] - Total Investments at cost reached $2.32 billion[8] - The effective yield on the portfolio was 13.3%[8] - Since inception, the company has made $11.1 billion in total debt commitments[8] Capitalization and Liquidity - Available liquidity was $673.3 million[8] - The price-to-NAV ratio was 1.39x as of February 19, 2021[8]

Hercules Capital, Inc. (NYSE:HTGC) Q4 2020 Earnings Conference Call February 23, 2021 5:00 PM ET Company Participants Michael Hara - IR and Corporate Communications Scott Bluestein - CEO and Chief Investment Officer Seth Meyer - CFO Conference Call Participants Crispin Love - Piper Sandler Devin Ryan - JMP Securities Christopher Nolan - Ladenburg Thalmann Finian O'Shea - Wells Fargo Securities Ryan Lynch - KBW John Hecht - Jefferies Sarkis Sherbetchyan - B Riley Securities Casey Alexander - Compass Point Op ...