Good day, ladies and gentlemen and welcome to the Hercules Technology Growth Capital’s Q2 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded. I would like to introduce your host for today’s conference, Mr. Colin Hoover, Investor Relations of Hercules Technology. Mr. Hoover, you may begin your conference.

Thank you, operator and good afternoon everyone. On the call today are Manuel Henriquez, Hercules’ Co-founder, Chairman and CEO; and Jessica Baron, Chief Financial Officer. Hercules’ second quarter 2012 financial results were released just after the market closed today. They can be accessed from the company’s website at www.htgc.com. We’ve arranged for a replay of the call at Hercules’ webpage or by using the telephone number and pass code provided in today’s earnings release. I’d also like to call your attention to the Safe Harbor disclosure in our earnings release regarding forward-looking information. Actual financial results filed with the Securities and Exchange Commission may differ from those contained herein due to timing delays between the date of this release and the confirmation and final audit results. In addition, the statements contained in this release that are not purely historical are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements including, without limitation, the risks, and uncertainties, including the uncertainties surrounding the current market turbulence, and other factors we identify from time-to-time in our filings with the Securities and Exchange Commission. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can provide to be inaccurate. and as a result, the forward-looking statements based on those assumptions also can be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained in this release are made as of the date hereof, and Hercules assumes no obligation to update the forward-looking statements or subsequent events. To obtain copies of our latest SEC filings, please visit sec.gov or visit the website www.htgc.com. I’d now like to turn the call over to Manuel Henriquez, Hercules’ Co-founder, Chairman and CEO. Manuel?

Well, thank you Colin, and good afternoon and thank you everyone for joining us today. We have much to share with our investors this quarter, an another outstanding quarter and strong growth and performance by our team. I’d briefly give you some of the agenda, I plan on speaking briefly on our operating performance and results for Q2. I will share with you my observations and discussion points on the current environment and go to venture capital marketplace, and in pending legislation in Congress, as well as our view and perspective of what will come in the second half of 2012. And then lastly, turn the call over to Jessica Baron, our CFO. Now, turning my attention to the second quarter results, I am pleased to announce the progress and continued building of our portfolio and continued asset growth in our portfolio and earnings growth in our portfolio. We delivered a record high total quarterly investment income of $23.9 million, representing approximately 15% increase year-over-year. We also achieved an 80% increase year-over-year in growth of NII income at $12.3 million or $0.25 of share. DNOI not to be left behind also showed impressive growth at 19.5% year-over-year growth to $13.5 million or $0.28 of share in DNOI. All of this translates to strong coverage of earnings growth and more importantly strong coverage of dividend coverage of our earnings with our performance. Also showing strong growth in a portfolio was our asset growth in a portfolio. We grew the asset in our portfolio by 52% to approximately $723 million of investment assets at the end of the quarter, again representing a 52% increase year-over-year on the performance of the portfolio itself. Consistent with the first quarter of this year, we continued or controlled slow and steady growth approach to building assets.…

Thank you, Manuel, and thank you everyone for listening today. I’ll briefly go over our results for the quarter. We filed our 10-Q as well as our earnings press release after the market close today and here is a recap. We delivered $23.9 million in total investment income or revenues, a quarterly record, and an increase of 14.9% when compared to the second quarter of 2011. This year-over-year growth was driven by higher average outstanding balances of yielding assets during the quarter and accelerated fees related to almost $50 million of early payoffs during the quarter. The fair value of our yielding debt investment portfolio at quarter end was $647.1 million, an increase as Manuel mentioned of 57% from the same period a year ago. The effective yields on our debt investments during the second quarter was up to 15.2% from 14.6% in the first quarter of 2012. Excluding the income acceleration impact primarily past the one-time event, the effective yields for the quarter was 13.3%, down approximately 40 basis points sequentially and 70 basis points year-to-date. I’d like to reiterate that we expected to see the 100 basis point decline in our debt portfolios effective yield during 2012. Excluding early payoffs, the normal run rate on our portfolio historically has been between 12.5% to 15.5%. I’d also like to note that our peak income has historically has been the case is immaterial to our financial statements. Once again take which is non-cash revenue, which must be paid out to our shareholders in the form of dividend continues to represent a small component or less than 1.1% of our total investment income for the second quarter. Our cost of debt increased to $5.2 million in Q2 of 2012 compared to $3.8 million in the second quarter of 2011. The increase…

(Operator Instructions) our first question comes from Jasper Burch from Macquarie. Your line is open. Jasper Burch – Macquarie Research: Hi, good afternoon, everyone. We said down last month and chatted, we talked about, how you would kept first baby bond issuance, you still had large, when you get the small because you really want to sort of match your liabilities with upcoming fundings that you expected in the upcoming investment opportunities. I was just wondering, I mean coming out with the second baby bond issuance, and potential further issuance, I mean does that point to sort of a more bullish outlook on portfolio growth? And so that where are you expecting for portfolio growth in the last portion of the year?

So it showing us to learn my voice outlook for the portfolio? This is why we took advantage of the window that existed to be able to a secondary bond offering or top off of the existing bond and really enhance, and strengthen our balance sheet to take advantage of that growing market opportunity. Further evidence of that is our current active hiring. We’re in the market right now looking to hire three to five, it just on the investment professionals in both our technology and life sciences grew, and I historically have held back from doing that until I believe that we are facing the right environment. So you will see us start looking to deploy more capital probably sometime in the fourth quarter last year election, because the election outlook will have an impact and how we’re making investment activity as I described in previous calls as well as in propaganda democrat, they will change the landscape of investment activities. But you are absolutely correct. The signaling of my bullishness and outlook is in fact with the increase of baby bond offering that we expect to deploy in a quarter or two. However, because of the timing issues, we took those [candidates] money, when you actually needed. So in this case we’re probably end of having the $0.02 to $0.03 in earnings as we convert that new liquidity in divested assets, which we have in the past and we'll do it again this quarter. Jasper Burch – Macquarie Research: Okay, thanks for that color. And then, in terms of the depreciation on the portfolio, there was about $12 million that was driven by market yield adjustments. And then also I think in the opening remarks you mentioned that you expect the yield to actually climb a little bit in the fourth quarter. I was just wondering if you could give us a little bit more color, on what sort of the new investment yields that you're seeing are, and where those are relative to what's already on the portfolio.

So you got to look at, I somewhat ignore the depreciation and portfolio related to yield. I look at it more on a GAAP basis and you asked whether they are on boarding. And so what we saw occur in the second quarter was, we saw an uptick on the interest rate itself., so we saw that are the 20 basis point increase in the underlying interest rate, but we continue to see a little bit of compression going on with items related to OID facilities and other commitment fees that we have that accretive over the life alone, that’s you see most of the depression that came from. Jessi, you want to add to that?

I think it’s is a representation (inaudible). Jasper Burch – Macquarie Research: Okay, so you are seeing interest rates up and some of the fees down, so I guess I mean I guess, I just sort of assume that, if you saw the – like the comps go down the portfolio comps that mean yields on portfolio comps going up, that was what your portfolio down now it’s not the right way to look at it.

As I said in Q1, we’re reducing to give up on our collateral position, a senior secured position, we rather played off yield for that collateral position. So we are seeing a bit of compression attributed to fees. An OID accretion as we take, as we decide to take slight lower warrant coverages that we calculate OID that would have a – growing impact on the calculation of yield. I’d probably just compute the heck of it, I apologize. Jasper Burch – Macquarie Research: I’ll just revisit the chance get [now figured] out. And then in terms of the fee income, it rebounded a lot last couple of quarters, it taking sort of a dip play last year. Is that just due to, I mean the portfolio turn over and the portfolio or what’s the driver of that I mean sort of what is the level that we should look at going forward.

Yeah I mean, that’s correct. If you look at the difference between our effective yields with and without impact of early path of 15.2%versus 13.3% the average drivers. As we said almost $50 million of investment paid as office current quarter and depending upon, which assets that maybe you have win part of the acceleration of the unamortized fees. Jasper Burch – Macquarie Research: Okay, great. Thank you, that’s all very helpful, I’ll hop off.

Okay, thank you. Our next question comes from Aaron Deer with Sandler O'Neill. Your line is open. Aaron James Deer – Sandler O'Neill & Partners L.P.: Hi, good afternoon everyone.

Hi, Aaron. Aaron James Deer – Sandler O'Neill & Partners L.P.: I’m going to actually follow-up on Jeff’s question with respect to the yield adjustment. I just want to be clear, so the $8.3 million in the loan category that was entirely due to yield adjustments and there was no credit or other related impact there?

Right, I mean we really wanted to accurately to pick what happened this quarter with respect to our valuation adjustment. There was only one collateral based impairment in the portfolio, which referred $1,600. The rest of these adjustments are all supplying the current market fair value approach, which we have. There is actually some pretty good disclosures in our 10-Q about the process we apply here. But when we’re calling the field adjustments, it is what Manuel described where we are looking at rate today versus the historical rates embedded in our portfolio. And when you compare those on all-in basis, we see that the rates in most historical deals are little bit lower and when you do that comparison, you render this adjustment. Bear in mind of course that when these investments pass off and when as you’ve seen historically in our portfolio, our past are generally at par. Those unrealized depreciation adjustments that you see today will be reversed.

Yeah, I want to again add to this point. I think we’re one of only a few if not the only BDC that really decides to breakout yields and breakout the GAAP yield to the consistent yield. So, if I compare ourselves (inaudible) seize out that we had a 50.3% yield and we can just leave it at that. We don’t think it’s the right thing to do. We think the critical thing to do is to breakout and actually show that and this is our first attempt, and also on putting a new table in a release is help to drive, providing even more clarity on these discussions. So if we need to improve those tables further, we’re happy to do that as well. We’re just trying to create much more transparency for our shareholders as well and hope for the... Aaron James Deer – Sandler O'Neill & Partners L.P.: I appreciate the disclosure. I’m just trying to understand, if the average rates since decline then shouldn’t a value raise?

So, think of it this way Aaron, the average rate is represented of the entire portfolio, whether that be an investment made that’s still on go through 2009, one which was done at the end of Q2 of 2012. if you look a snapshot in time, we are seeing trends of improvements in current, today raise. But you sort of kept comparing the snapshot in time versus the history that’s embedded in our portfolio. So when you’re seeing a decline in all-in rates, you could perhaps look at that as being that the weighted-average based upon what come in the portfolio have slightly declined we’re talking about 40 basis points here whereas if you were to compare the deals, let’s renew let’s say the last quarter versus the deals that renew this quarter, you’re seeing an improvement in rate.

So, let me think you’re satisfied as well to help out. The loans that we’re talking about, our loans are at fiscal 2010 and 2011, when the markets are bit dislocated, we had a higher proportion of warrants attributed to those deals, because of that you have an increase in OID and to say those loans have a 14% mark-to-market yields at the time. Today, you’re looking at loans originating to 13% level, 13.3% level, which means you’ll about 100 basis points differential. And on a weighted basis that equates about a 40 basis point differential we do on the weighted basis of the portfolio. So, yes, you are correct, when you look at old legacy loans, there maybe at 40% level or so versus the new loans at 13%. When you apply mark-to-market, you’ll see a depreciation of those legacy loans to equalize what is seem to be the current market around 13%. Aaron James Deer – Sandler O'Neill & Partners L.P.: And then on the – just getting some additional color on the (inaudible), I think Jessica, you’ve mentioned what the scheduled payments were for the quarter, and then I’d say you had the $2 million pay down on the non-accrual Maxvision loan. Any other pay down that you’ve had quarter-to-date and expectations for the quarter overall?

This really in the quarter there hasn’t been any activity of note in that category.

As of today, we're not aware of any of our portfolio companies give us an indication that they plan on paying off early in Q3 thus far. Aaron James Deer – Sandler O'Neill & Partners L.P.: Okay, great. Thanks for taking my question.

Thank you. Our next question comes from Robert Bordett from Raymond James. Your line is now open. Robert Bordett – Raymond James: If I can go back to a question you’ve already covered, that the deployment expectations for the rest of the year, you talked about relative to the elections, et cetera there’s lot of uncertainty there, but if we look at the commitments you’ve had year-to-date 240, target now maybe 500 to 600. So you’re kind of half way there already, but it seems your expectations for Q3 this commitments versus funding. So your expectations for Q3 seem pretty moderate given the uncertainty in Q4 and how the elections going to turn out, which is everybody's guess at this point. How comfortable do you feel, because this sound like that the indications were pretty elevated deployment funding number in Q4 and how comfortable do you feel with that given the uncertainties there?

Well, it’s actually little more comforting than that. Let me kind of break it down for you. So we finished the first half of this year with about $214 million of commitments that we disclosed on this call. We also and further disclosed approximately $130 million of in-house signed term sheets already. So if you add this two together alone, you already have $370 million as of August 2. So I’m actually much better offered than I must have failed to clarify. So again, $240 million signed already and closed in the first half of this year, I have $130 million of signed term sheets in-house right now assuming all of that closes now put me at $370 million in August 2, turning my attention to remaining four months or so of the year. Historically, if you look at Hercules’ pattern, the fourth quarter can be anywhere due to $100 million to $240 million of commitments that are closed. And that’s the variability that can easily top over to $600 million to $700 million level, but it’s all going to be contingent upon factor leading into the fourth quarter, which I do not have good visibility on right now. Robert Bordett – Raymond James: Okay, got it. I think that makes sense. Looking at the you obviously (inaudible) in the context of the 20 to 30 expecting on cost basis, new assets in Q3, I mean I guess that’s the delta of some of the term sheets signed, you don’t expect in the satellite fund June in Q3?

Bingo, that’s exactly the case. Robert Bordett – Raymond James: Okay, got it, got it. Okay.

I think this from the pipeline point of view, I feel very, very good what we’re adding, how we are trending, it’s just like I said on the call, things are taking – well, things are taking longer to close that we’re also taking longer to close purposely, we do want to make sure these underlying companies are not – their trailing performance is not tapering off, as we lead into a new closing of an investment. Robert Bordett – Raymond James: Okay, got it. Second question, obviously the key thing you have gotten, I’d say you gotten rid of your non-accrual. I mean anything on the credit side any other portfolio companies that are raising concerns, is that could turn into non-accruals or do you feel very comfortable, obviously your overall average credit rating has remained very stable. But we can have a wide discussion within an average rate?

Well, I would say, what I’d say at all times to our investors, and the entire majority of our portfolio is contingent upon securing additional equity rounds on the venture capital community. At this point, as we say in every call, we disclosed the investor capital community performance and investments. At this juncture, I don’t anticipate any dramatic curtailment of equity dollars being invested by the venture industry per se, which means that my outlook or my confidence in our portfolio company is securing future rounds of equity remain stable. I'm not at this point turned to a negative outlook on having our portfolio come and secure additional rounds of financing. That said, as I said on previous calls, I will repeat on this call many of our life sciences companies are conditioned upon securing new rounds of financing, by specifically achieving and accomplishing FDA milestones on progressing from a Phase I clinical trial to Phase II clinical trial or a Phase III clinical trial. Some of those trials are completely, entirely out of the company's control because they have to do a science and their bodies ability to digest or symbolize these compounds and seek benefits out of them. But, my outlook on credit has not changed dramatically at all. Robert Bordett – Raymond James: I appreciate it. Thanks.

Thank you. Our next question comes from Vernon Plack from BB&T Capital. Your line is now open. Vernon Plack – BB&T Capital Markets: Yeah, thanks very much, couple of questions. Can you tell me the warrants, the game multiple on the warrant sales both Annie's and Bullhorn?

I believe that – why you forget the other one next. Next, I could tell you that one, because that one sits out. It was a 10.17 of multiple. And next, and I believe Annie’s was a 4.2 multiple on Annie’s that we’re going to confirm for you right now. Annie’s was a – sorry, 8.3 plus and we’re showing 8.3 on Annie’s. I am sorry, 8.3 on Annie’s and Bullhorn, don’t have that in front of me. I can get you that information, Bullhorn in front of me. Vernon Plack – BB&T Capital Markets: Okay, looking at the portfolio from a diversification standpoint, it seems like the one category that went down a lot and I haven’t look at it too closely, but looks like software went from actually went up from 6% of the 12%. Is that just the – it’s obviously the result of no minimum portfolio but can you help me understand that in terms of.

Yeah, as I said at the call, the software category within the venture industry space received a pretty strong venture capital investment activity. It received $1.6 billion venture capital activity of the total $2.4 billion of all information technology investing. As I said in the past we are under invested in the software and we're actively looking increase our exposure of software. You will see that number continue to increase in the coming quarters, as we also bring down, ever since slightly our Cleantech, and our Life Sciences exposure in balance with the software growth. Vernon Plack – BB&T Capital Markets: Okay, and…

And this is the part of the things that we do for risk litigation. We will dial in sectors and stages. Vernon Plack – BB&T Capital Markets: Right, just in terms of the – if you look at the impact that the early payoffs had on investment income and coming out with the number of around $3 million or $0.06 a share, is that the ballpark?

That’s good math. Vernon Plack – BB&T Capital Markets: So I got good enough.

That’s good math, yeah. Vernon Plack – BB&T Capital Markets: Okay. And if I look at that if you consider that norm occurring although you have a certain amount of that every quarter, and if I look at the return of SBA debt which could be $0.01, $0.105 if I look at the baby bond and a short-term impact of $0.02 to $0.03 I’m coming up with probably a net interest income number in the third quarter somewhere in the high-teens, does that seem reasonable, not to cheer on the business forecasting but it’s my logic thing.

We don’t give guidance that tightly anyways, but I think that you are logic. I would say that your logic of extrapolation is within reason, but the delta of that is – as you continue to deploy the assets and again we said we expect $20 million, $30 million up in the quarter albeit late in the quarter and that would dampen a little bit of that impact that you just referred to. Vernon Plack – BB&T Capital Markets: Sure, sure, okay. That's helpful. Thanks.

Thank you. Our next question comes from Douglas Harter with Credit Suisse. Your line is now open. Douglas Harter – Credit Suisse: I was hoping you could talk a little bit, obviously you’ve got the Wells facility which seems like a nice facility. Was there further availability to get structures like that? Do you have an appetite to do further facilities like that?

You know, Doug, I’m encouraged by the discourse that we had with Wells. I think that there is some evidence that banks are beginning to – but that’s consider relending again. Wells have been with us long time. So they understand our credit and our credit history. So they are quite comfortable with how we have performed, and what we’ve done. I can’t tell you with 100% certainly that others are there, where well did, but we are encouraged with some of the dialog going on that probably in the first part of 2013. We will look to add additional lenders to our syndicate. But as of today, I don’t know if anybody in horizon then if I tell you that, they’ll fall in place that quickly. Douglas Harter – Credit Suisse: Okay. And I guess, I think we’ve talked about this in the past, but the 12 month amortization, is that something that would give you greater comfort in using those credit facilities to a greater extent?

Absolutely, that is probably by far even more so they’re removing the floor, but less (inaudible) floor, I should say LIBOR floor is by far the more important issue, and the reason is this. As we proved in 2009, 2010 with our Deutsche Bank and Citibank line, the ability to have a tail, an amortization period is vital to be able to have the control, liquidation of the portfolio and that fine result having to inherently just did liquidate the portfolio and causing further impact. For those who may recall during that period of time, we saw dramatic earnings increase, as you were liquidating and paying back the Citibank and Deutsche Bank $130 million exposure we had, and having a tail allow us to do that control ability. Now to bringing all together, we are also experienced normal course of business between $18 and $20 of amortization on a quarterly basis. So having a one year tail and having a $75 million exposure more than adequately allow us to repay that loan under no amortization periods. Douglas Harter – Credit Suisse: Great, thanks. And then just wondering if you could just update us on your Facebook holdings, I’d say that you still under as of June 30 and obviously it’s been weak quarter today?

Well, you are certainly being polite on being weak. It’s been a pretty horrific performance. That said the fundamentals of why we made that investment and our belief in that company remains very strong, very solid. They have some challenges ahead of themselves on monetizing the mobile users. I will not shoot them in a context, I think they will figure it out and they will crack that nut. They have a challenge ahead of them. But just to remind everybody, our cost basis on those holdings are $31 and I believe $0.8 a share. So on a cost basis, we’re somewhere around $3.3 million down on that investment and I believe that they will crack that nut. This morning, I think the afternoon LinkedIn reported good earnings and they are in that similar – monetizing mobile users. So I’ll remain hopeful that Facebook will crack that nut. Douglas Harter – Credit Suisse: Great, thank you.

Thank you. Our next question comes from the line of Jason Arnold with RBC Capital Markets. Your line is now open. Jason Arnold – RBC Capital Markets: Hi. I’m just curious if you could give us an update on the competitive environment amongst lenders in your space right now?

Believe it or not, Jason nothing – there is no dramatic change whatsoever. We are not seeing any more increased competition than we saw Q1, and frankly, not much has changed. So we are not losing sleep on the competitive environment out there, it’s just been steady as it goes. Jason Arnold –RBC Capital Market: Okay, great. Thank you for the color.

Thank you. And our next question comes from John Hecht with Stephens. Your line is now open. John Hecht – Stephens, Inc.: Good afternoon, guys. Thanks for taking my questions. First of all, just to unclear the – after you resolved the non-accruals subsequent to the other quarter, do you guys have no non-accruals as a percent of fair value right now?

After the end of the quarter, that’s correct. John Hecht – Stephens, Inc.: Okay. And then just maybe this is what the favorable clarification, Manuel, what are you saying in the market that do you think you’re yields will raise an average, it’s sound like into the lateral part of the year, maybe end of the fourth quarter. Is that a function of maturing ARMs with your yields or is that a function of you’re seeing better pricing up there in your new bits, and so that you be might just see some up list in the overall portfolio and new loans going forward?

When you see the Q, you will figure this out quite rapidly. We have financial loans that are sub scanner deals that we have on our books. There are very good quality loans that we did, when we had in bundles of cash on our balance sheet, in order to help mitigate the negative spread, then maintaining cash at 10 basis points, I rather do a loan at 7% or 9% yields if you will. As we start utilizing the remaining cash, we have the liability to vacate those loans at a lower yield, and by the removal or payoff of those loans that is out to start giving raise to our overall portfolio yield. John Hecht – Stephens, Inc.: Okay, I gotcha. And then Jessica, it sounds like you have $50 million of SBA debt you can re-price over the next, I think is it September re-pricing? If the tenure stays around, what is today? Do you have a sense with the interest savings on an annual basis?

And for the SBA debentures, obviously we’ll be cutting the 300 basis points to 400 basis points loans have specific borrowing. But the impact on our total rate of average cost to that or maybe 0.5% once we complete the full cycle of all the pay-off. John Hecht – Stephens, Inc.: Great, thanks very much guys.

Thanks John.

I’m showing no further questions at this time, and I’d like to turn the call back over to Mr. Manuel Henriquez, your line is now open.

Thank you operator and thank you everyone for your continued interest and support of Hercules Technology Growth Capital. If you like to raise a meaning or have additional questions, feel free to contact our Investor Relations department. We’re also be participating at the JMP Financial Services and Real Estate Conference, in New York City on September 13, and presenting. At that conference, if you like to schedule one on one meetings, please contact JMP or Investor Relations department. Again, thank you very much and for being our shareholders and for being part of Hercules Technology Growth Capital story. Thank you operator.

Thank you, ladies and gentlemen for participating in today’s conference. This does conclude the program. And you all may disconnect. Everyone have a great day.