HTGC 10-K & 10-Q changes, risk factors and insider trading

However, as an internally managed BDC, our ability to offer more competitive and flexible compensation structures,structures is subject to the limitations imposed by the 1940 Act, such as limitations on offering both a profit-sharing plan and an equity incentive plan, is subject to the limitations imposed by the 1940 Act, which limitsmay limit our ability to attract and retain talented investment management professionals. As such, these limitations could inhibit our ability to grow, pursue our business plan and attract and retain professional talent, any or all of which may have a negative impact on our business, financial condition and results of operations.

Our business faces increasing public scrutiny related to corporate social responsibility, including ESGresponsibility activities. We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as diversity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency and considering ESGcorporate social responsibility factors in our investment processes. Adverse incidents with respect to ESGsuch corporate social responsibility activities could impact the value of our brand, the cost of our operations and relationships with investors, all of which could adversely affect our business and results of operations. Additionally,At newthe regulatorysame initiatives related to ESG could adversely affect our business. In addition,time, different stakeholder groups have divergent views on ESGcorporate social responsibility matters, which increases the risk that any action or lack thereof with respect to ESGcorporate social responsibility matters will be perceived negatively by at least some stakeholders and may adversely impact our reputation and business. If we do not successfully manage ESG-relatedcorporate social responsibility-related expectations across these varied stakeholder interests, it could erode stakeholder trust, impact our reputation and constrain our business.

We have invested and intend to continue investing in companies that operate in technology-related industries. A downturn in one or more technology-related industry sectors and particularly those in which we are heavily concentrated could materially adversely affect our financial condition more than if we invested in a wider range of industries. As of December 31, 2024,2025, approximately 85.9%87.1% of the fair value of our portfolio comprised investments in fourfive industries: 29.5%24.3% comprised investments in the “"Application Software”" industryindustry, , 29.5%23.3% comprised investments in the “"Drug Discovery and& Development”" industry,16.7%industry,18.8% comprised investments in the “"Healthcare Services, Other”" industry, 10.6% in the "System Software" industry, and 10.2%10.1% comprised investments in the “"Consumer & Business Services" industry”.industry. Companies in technology-related industries are subject to numerous risks, including:

•Technology Industry (including Application Software, System Software and Consumer & Business Services Industries) Risk. The market prices and values of companies operating in the technology industry – including application software, system software and consumer and business services companies – tend to exhibit a greater degree of risk and volatility than other types of investments. These companies may fall in and out of favor with the public and investors rapidly, which may cause sudden selling and dramatically lower market prices. These companies also may be affected adversely by changes in technology, consumer and business purchasing patterns, short product cycles, falling prices and profits, government regulation, lack of standardization or compatibility with existing technologies, intense competition, aggressive pricing, advances in artificial intelligence and machine learning, dependence on copyright and/or patent protection and/or obsolete products or services. Certain technology-related companies may face special risks that their products or services may not prove to be commercially successful. Technology-related companies are also strongly affected by worldwide scientific or technological developments. As a result, their products may rapidly become obsolete.

•Drug Discovery & Development Industry Risk. The success of pharmaceutical companies operating in the drug discovery and development industry is highly dependent on the development, procurement and marketing of drugs. The valuations of pharmaceutical companies are also dependent on the development, protection and exploitation of intellectual property rights and other proprietary information, and the profitability of pharmaceutical companies may be significantly affected by such things as the expiration of patents or the loss of, or the inability to enforce, intellectual property rights. The research and other costs associated with developing or procuring new drugs and the related intellectual property rights can be significant, and the results of such research and expenditures are unpredictable. There can be no assurance that those efforts or costs will result in the development of a profitable drug. Pharmaceutical companies may be susceptible to product obsolescence. Many pharmaceutical companies face intense competition from new products and less costly generic products. Moreover, the process for obtaining regulatory approval by the FDA or other governmental regulatory authorities is long and costly and there can be no assurance that the necessary approvals will be obtained or maintained. Furthermore, it is unclear whether the new U.S. presidential administration will propose or implement significant regulatory or policy changes that may significantly impact the drug discovery and development industry. Such changes could impact the actions or inactions of the FDA or other governmental regulatory authorities with respect to the receipt or continuation of approvals.

Pharmaceutical companies are also subject to rapid and significant technological change and competitive forces that may make drugs obsolete or make it difficult to raise prices and, in fact, may result in price discounting. Pharmaceutical companies may also be subject to expenses and losses from extensive litigation based on intellectual property, product liability and similar claims. Failure of pharmaceutical companies to comply with applicable laws and regulations can result in the imposition of civil and criminal fines, penalties and, in some instances, exclusion of participation in government sponsored programs such as Medicare and Medicaid. Pharmaceutical companies may be adversely affected by government regulation and changes in reimbursement rates. The ability of many pharmaceutical companies to commercialize current and any future products depends in part on the extent to which reimbursement for the cost of such products and related treatments are available from third party payors, such as Medicare, Medicaid, private health insurance plans and health maintenance organizations. Third-party payors are increasingly challenging the price and cost-effectiveness of medical products. Significant uncertainty exists as to the reimbursement status of health care products, and there can be no assurance that adequate third-party coverage will be available for pharmaceutical companies to obtain satisfactory price levels for their products.

•Healthcare Services Industry Risk. The operations of healthcare services companies are subject to extensive federal, state and local government regulations, including Medicare and Medicaid payment rules and regulations, federal and state anti-kickback laws, the physician self-referral law and analogous state self-referral prohibition statutes, Federal Acquisition Regulations, the False Claims Act and federal and state laws regarding the collection, use and disclosure of patient health information and the storage, handling and administration of pharmaceuticals. The Medicare and Medicaid reimbursement rules related to claims submission, enrollment and licensing requirements, cost reporting, and payment processes impose complex and extensive requirements upon dialysis providers as well. A violation or departure from any of these legal requirements may result in government audits, lower reimbursements, significant fines and penalties, the potential loss of certification, recoupment efforts or voluntary repayments. If healthcare services companies fail to adhere to all of the complex government regulations that apply to their businesses, such companies could suffer severe consequences that would substantially reduce revenues, earnings, cash flows and stock prices. If healthcare companies are unable to successfully expand their product lines through internal research and development and acquisitions, their business may be materially and adversely affected. In addition, if these companies are unable to successfully grow their businesses through marketing partnerships and acquisitions, their businessbusinesses may be materially and adversely affected. Furthermore, it is unclear whether the new U.S. presidential administration will propose or implement significant regulatory or policy changes that may significantly impact, directly or indirectly, the healthcare services industry.

In some instances, we may control our portfolio companies or provide our portfolio companies with significant managerial assistance. “Control” under the 1940 Act is presumed at more than 25% equity ownership and may also be present at lower ownership levels where we provide managerial assistance. However, we do not, and do not expect to, control the ultimate decision making in most of our portfolio companies, even though we may have board representation or board observation rights, and our debt agreements may contain certain restrictive covenants. As a result, we are subject to the risk that a portfolio company in which we invest will make business decisions with which we disagree, and the management of such company will take risks or otherwise act in ways that do not serve our interests as debt investors or minority equity holders. Due to the lack of liquidity for our investments in non-traded companies, we may not be able to dispose of our interests in our portfolio companies as readily as we would like or at an appropriate valuation. As a result, a portfolio company may make decisions that would decrease the value of our portfolio holdings.

To the extent we borrow money or issue debt securities or preferred stock to make investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds or pay interest or dividends on such debt securities or preferred stock and the rate at which we invest these funds. In addition, many of our debt investments and borrowings have floating interest rates that reset on a periodic basis, and many of our investments are subject to interest rate floors and caps. As of December 31, 2024,2025, approximately 97.4%97.9% of our debt investments were at floating rates or floating rates with a floor, and 2.6%2.1% of our debt investments were at fixed rates. As a result, a change in market interest rates could have a material adverse effect on our net investment income, in particular with respect to increases from current levels to the level of the interest rate caps on certain investments. In periods of rising interest rates, our cost of funds will increase because the interest rates on the amounts borrowed under our Credit Facilities (as defined below) are floating and are not subject to interest rate caps, which could reduce our net investment income to the extent any debt investments have either fixed interest rates, or floating interest rates subject to an interest rate cap below the then current levels, and as a result such interest rates on these debt investments will not increase. In periods of declining interest rates, our interest income and our net investment income could be reduced as the interest income earned on our floating rate debt investments declines and any new fixed rate debt may be issued at lower coupon rates.

Certain investments that we have made in the past and may make in the future include warrants or other equity securities. Investments in equity securities involve a number of significant risks, including the risk of further dilution as a result of additional issuances, inability to access additional capital and failure to pay current distributions. We may from time to time make non-control, equity investments in portfolio companies. Our goal is ultimately to realize gains upon our disposition of such equity interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience. We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity interests. We may seek puts or similar rights to give us the right to sell our equity securities back to the portfolio company issuer; however, we may not be unableable to exercise these put rights for the consideration provided in our investment documents if the issuer is in financial distress. In addition, we anticipate that approximately 50% of our warrants may not realize any exit or generate any returns. Furthermore, because of the financial reporting requirements under U.S. GAAP, of those approximately 50% of warrants that we do not realize any exit, the assigned costs to the initial warrants may lead to realized losses when the warrants either expire or are not exercised.

Our ability to service our debt depends largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. Our secured credit facilities with Sumitomo Mitsui Banking Corporation (the “SMBC Facility”) and MUFG Union Bank, N.A.,Ltd., (the “MUFG Bank Facility”) and our letter of credit facility with Sumitomo Mitsui Banking Corporation (the “SMBC LC Facility” and together with the SMBC Facility and MUFG Bank Facility, our “Credit Facilities”), as well as the February 2025 Notes, June 2025 Notes, June 2025 3-Year Notes, March 2026 A Notes, March 2026 B Notes, September 2026 Notes, January 2027 Notes, 2028 Convertible Notes, June 2030 Notes, 2031 Asset-Backed Notes and 2033 Notes (each term as is individually defined under “Note 5 - Debt” and collectively, the “Notes”), each outstanding as of December 31, 2024,2025, contain financial and operating covenants that could restrict our business activities, including our ability to declare dividend distributions if we default under certain provisions. As of December 31, 2024,2025, we had $283.6$277.9 million and $116.0$168.0 million in borrowings under the SMBC Facility and MUFG Bank Facility, respectively, and approximately $1.10$1.52 billion in aggregate principal outstanding Notes. Further we have an additional $175.0 million and $104.0$175.0 million SBA debentures outstanding and incurred by our wholly owned subsidiaries, Hercules Capital IV, LPL.P. (“HC IV”) and Hercules SBIC V, L.P. (“SBIC V”), respectively, as of December 31, 2024.2025.

If our operating performance declines and we are not able to generate sufficient cash flow to service our debt obligations, we may in the future need to refinance or restructure our debt, sell assets, reduce or delay capital investments, seek to raise additional capital or seek to obtain waivers from the required lenders under our senior securities to avoid being in default. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under our senior securities. If we breach our covenants under our senior securities and seek a waiver, we may not be able to obtain a waiver from the required lenders or debt holders. If this occurs, we would be in default under our senior securities, the lenders or debt holders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation. If we are unable to repay debt, lenders having secured obligations could proceed against the collateral securing the debt. Because certain of our senior securities have customary cross-default and cross-acceleration provisions, if the indebtedness under our senior securities is accelerated, we may not be unableable to repay or finance the amounts due.

The 1940 Act and the Code impose numerous constraints on the operations of BDCs and RICs that do not apply to certain of the other investment vehicles that we may compete with. BDCs are required, for example, to invest at least 70% of their total assets in certain qualifying assets, including U.S. private or smaller U.S. public companies, cash, cash equivalents, U.S. government securities and other high-quality debt instruments that mature in one year or less from the date of investment. See “Item 1. Business – Regulation.” Moreover, qualification for taxation as a RIC requires satisfaction of both the Income Test and Asset Test, as well as complying with the Distribution Requirements as set forth in the Code. See “Certain United States Federal Income Tax Considerations — Qualifying as a Regulated Investment Company.” Operating under these constraints may hinder our ability to take advantage of attractive investment opportunities and to achieve our investment objective. Any failure to do so could subject us to enforcement action by the SEC, cause us to fail to satisfy the tests and requirements associated with our RIC status and subject us to entity-level U.S. federal income taxation, cause us to fail the 70% test described above or otherwise have a material adverse effect on our business, financial condition or results of operations.

•Preferred stock or any convertible or exchangeable securities that we have issued or may issue in the future may have rights, preferences and privileges more favorable than those of our common stock, including separate voting rights and could delay or prevent a transaction or a change in control to the detriment of the holders of our common stock.

Additional Common Stock. We are not generally able to issue and sell our common stock at a price below NAV per share. We may, however, sell our common stock or warrants, options or rights to acquire our common stock at a price below the current NAV per share of the common stock in accordance with the requirements of Section 63(2) of the 1940 Act if our Board determines that such sale is in the best interests of our stockholders, and if our stockholders approve such sale. OurWe stockholdersdo not currently have authorizedthe usauthorization from our stockholders to issue common stock at a price below the then-current NAV per share,share subjectand tothere certainis conditionsno includingguarantee Boardthat approval,we forwill aobtain twelve-monthsuch periodauthorization expiringfrom onour Auguststockholders 15,in 2025.the future. See “Risk Factors – Risks Related to our Securities — Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current NAV per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock” for a discussion of the risks related to us issuing shares of our common stock below NAV per share. We may also make rights offerings to our stockholders at prices per share less than the NAV per share, without stockholder approval but subject to certain other applicable regulatory requirements. Our stockholders have also authorized us to issue debt with warrants or debt convertible into shares of common stock at an exercise or conversion price that, at the time such warrants or convertible debt are issued, will not be less than the market value per share but may be below our then current NAV per share, in accordance with the requirements of Section 61(a)(4) of the 1940 Act. There is no expiration date on our ability to issue such warrants or convertible debt securities based on this stockholder approval. If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, the percentage ownership of our stockholders at that time would decrease, and they may experience dilution. Moreover, we can offer no assurance that we will be able to issue and sell additional equity securities in the future, on favorable terms or at all.

Shares of closed-end investment companies, including BDCs, may trade at a discount to their NAV. This characteristic of closed-end investment companies and BDCs is separate and distinct from the risk that our NAV per share may decline. We cannot predict whether our common stock will trade at, above or below NAV. In addition, if our common stock trades below our NAV per share, we will generally not be able to issue additional common stock at the market price unless our stockholders approve such a sale and our Board makes certain determinations. While our stockholders have authorized us to issue common stock at a price below the then-current NAV per share, subject to certain conditions including Board approval, for a twelve-month period expiring on August 15, 2025, we cannot predict whether we will make any such sales. See “Risk Factors — Risks Related to our Securities — Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current NAV per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock” for a discussion related to us issuing shares of our common stock below NAV.

We intendhave made, and expect to paymake, distributions to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to pay a specified level of cash distributions, previously projected distributions for future periods, or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by, among other things, the impact of one or more of the risk factors described herein. In addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay distributions. All distributions will be paid at the discretion of our Board and will depend on our earnings, our financial condition, maintenance of our RIC status, compliance with applicable BDC regulations, compliance with our debt covenants and such other factors as our Board may deem relevant from time to time. We cannot assure you that we will pay distributions to our stockholders in the future.

The 1940 Act prohibits us from selling shares of our common stock at a price below the current NAV per share of such stock, with certain exceptions. One such exception is prior stockholder approval of issuances below NAV provided that our Board makes certain determinations. InWe connectiondo withnot ourcurrently 2024have Annual Meeting, we obtainedthe authorization from our stockholders to issue common stock at a price below ourthe then-current NAV per share, subject to certain conditions including Board approval, for a twelve-month period expiring on August 15, 2025.share. We maymay, alsohowever, seek such authorization at future annual or special meetings of stockholders. Our stockholders have previously approved a proposal to authorize us to issue securities to subscribe to, convert to, or purchase shares of our common stock in one or more offerings. Even though we have obtained authorization from our stockholders to issue common stock at a price below our NAV, we cannot predict whether we will make any such sales. Any decision to sell shares of our common stock below NAV per share of our common stock or securities to subscribe to, convert to, or purchase shares of our common stock would be subject to the determination by our Board that such issuance is in our and our stockholders’ best interests.

WeIf may in the future determine towe issue preferred stock,stock whichor couldconvertible adverselydebt affectsecurities, the NAV and market value of our common stock.stock may become more volatile.

The Unsecured Notes are obligations exclusively of Hercules Capital, Inc. and not of any of our subsidiaries (which includes, for purposes of this risk factor only, our affiliated securitization trust). None of our subsidiaries are or act as guarantors of the Unsecured Notes. Furthermore, the Unsecured Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future. OurA securedportion of our indebtedness with respect to the SBA debentures is held through onesubsidiary offinancing ourvehicles SBIC subsidiaries. Ourand secured indebtednessby with respect to the 2031 Asset-Backed Notes is held through our affiliated securitization trust. Thecertain assets of our subsidiariessubsidiaries. areSee not“Note directly5 available– toDebt” satisfyand the“Item claims7. Management’s Discussion and Analysis of ourFinancial creditors,Condition includingand holdersResults of theOperations Unsecured– Notes.Financial Condition, Liquidity, Capital Resources and Obligations.” Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors (including holders of preferred stock, if any, of our subsidiaries) will have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of the Unsecured Notes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our claims would still be subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims. As a result of not having a direct claim against any of our subsidiaries, the Unsecured Notes are structurally subordinated to all indebtedness and other liabilities (including trade payables) of our subsidiaries and any subsidiaries that we may in the future acquire or establish as financing vehicles or otherwise. In addition, our subsidiaries may incur substantial additional indebtedness in the future, all of which would be structurally senior to the Unsecured Notes.

ThereIf is noan active public trading market for the June 2025 Notes, June 2025 3-Year Notes, March 2026 A Notes, March 2026 B Notes, September 2026 Notes, January 2027 Notes, 2028 Convertible Notes, June 2030 Notes, or 2031 Asset-Backed Notes.Notes As a result, a holder maydoes not develop, holders could be ableunable to resell any of such notes.them.

There currently is no active public trading market for the June 2025 Notes, June 2025 3-Year Notes,The March 2026 A Notes, March 2026 B Notes, September 2026 Notes, January 2027 Notes, 2028 Convertible Notes, June 2030 Notes, or 2031 Asset-Backed Notes.Notes may or may not have an active trading market. We do not currently intend to apply for listing of any such notes on any securities exchange or for quotation of any such notes on any automated dealer quotation system. If no active trading market develops, a holder may not be able to resell any at their fair market value or at all. If any of such notes are traded after their initial issuance, they may trade at a discount from their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, general economic conditions, our financial condition, performance and prospects and other factors. If a market is made for any of such notes, any such market-making may be discontinued at any time. In addition, any market-making activity, if any, will be subject to limits imposed by law. Accordingly, we can provide no assurance that a liquid trading market, if any, will develop for such notes, that a holder will be able to sell any of such notes at a particular time, or that the price a holder may receive when it sells any of such notes will be favorable. To the extent an active trading market does not develop, the liquidity and trading price for such notes may be harmed. Accordingly, a holder may be required to bear the financial risk of an investment in such notes for an indefinite period of time.

The indentures under which the 2033 Notes, September 2026 Notes, January 2027 Notes, 2028 Convertible Notes and JanuaryJune 20272030 Notes were issued contain limited protections for the holders of such notes.

The indentures under which the 2033 Notes, September 2026 Notes, January 2027 Notes, 2028 Convertible Notes and JanuaryJune 20272030 Notes were issued offers limited protections to the holders of such notes. The terms of the respective 2033 Notes, September 2026 Notes, January 2027 Notes, 2028 Convertible Notes and JanuaryJune 20272030 Notes indentures do not restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances or events that could have an adverse impact on an investment in such notes. In particular, the terms of the respective 2033 Notes, September 2026 Notes, January 2027 Notes, 2028 Convertible Notes and JanuaryJune 20272030 Notes indentures do not place any restrictions on our or our subsidiaries’ ability to:

Furthermore, the terms of the respective 2033 Notes, September 2026 Notes, January 2027 Notes, 2028 Convertible Notes and JanuaryJune 20272030 Notes indentures do not protect their respective holders in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow or liquidity.

Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the 2033 Notes, September 2026 Notes, January 2027 Notes, 2028 Convertible Notes and JanuaryJune 20272030 Notes may have important consequences for their holders, including making it more difficult for us to satisfy our obligations with respect to the 2033 Notes, September 2026 Notes, January 2027 Notes, 2028 Convertible Notes and JanuaryJune 20272030 Notes or negatively affecting their trading value.

Certain of our debt instruments include more protections for their respective lenders than the 2033 Notes, September 2026 Notes, January 2027 Notes, 2028 Convertible Notes and JanuaryJune 20272030 Notes, and we may issue or incur additional debt in the future which could contain more protections for its holders, including additional covenants and events of default. The issuance or incurrence of any such debt with incremental protections could affect the market for and trading levels and prices of such notes.

We may not be able to prepay the Notes upon a change in control.control or fundamental change.

The agreements governing the June 2025 Notes, June 2025 3-Year Notes, March 2026 A Notes, March 2026 B Notes, September 2026 Notes, January 2027 Notes and JanuaryJune 20272030 Notes require us to offer to prepay all of the issued and outstanding notes upon a change in control and election by the holders, which could have a material adverse effect on our business, financial condition and results of operations. A change in control under the indentures or note purchase agreements, as applicable, occurs upon the consummation of a transaction which results in a “person” or “group” (as those terms are used in the Exchange Act and the rules promulgated thereunder) becoming the beneficial owner of more than 50% of our outstanding voting stock.

Upon a change in control or fundamental change event, as applicable, holders of the notes may require us to prepay for cash some or all of the notes at a prepayment price equal to 100% of the aggregate principal amount of the notes being prepaid, plus accrued and unpaid interest to, but not including, the date of prepayment. If a change in control or fundamental change event were to occur, we may not have sufficient funds to prepay any such accelerated indebtedness. The terms of the 2033 Notes and 2031 Asset-Backed Notes do not require us to purchase the 2033 Notes or 2031 Asset-Backed Notes, respectively, in connection with a change of control or any other event. Our Credit Facilities do not require us to repay the Credit Facilities in connection with a change of control, however, certain merger or consolidation transactions may trigger an event of default under the Credit Facilities, which may result in amounts outstanding under the Credit Facilities to be accelerated.

Our wholly owned subsidiaries HC IV and SBIC V, each have $175.0 million and $104.0 million of SBIC debentures outstanding,outstanding. respectively.Neither HC IV has no, andnor SBIC V has $71.0 million of,have additional debentures available, respectively.available. SBIC debentures are guaranteed by the SBA, have a maturity of ten years from the date of issuance (maturing in 2031, 2032 and 2035) and require semiannual payments of interest.

We will be subject to U.S. federal income tax if we are unable to qualify for taxation as a RIC under Subchapter M Part I of the Code.

To maintain RIC status under Subchapter M Part I of the Code, we must meet the following distribution, income and asset requirements (see “Item 1. Business — Certain United States Federal Income Tax Considerations — Qualifying as a Regulated Investment Company.”):

•The Distribution Requirements for a RIC will be satisfied if we distribute to our stockholders on an annual basis at least 90% of our net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% U.S. federal excise tax on such income. Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which generated such taxable income. For more information regarding tax treatment, see “Item 1. Business — Certain United States Federal Income Tax Considerations — Taxation as a Regulated Investment Company.” Because we use debt financing, we are subject to an asset coverage ratio requirements under the 1940 Act and are (and may in the future become) subject to certain financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirement. In addition, because we receive non-cash sources of income such as PIK interest which involves us recognizing taxable income without receiving the cash representing such income, we may have difficulty meeting the distribution requirement. If we are unable to obtain cash from other sources, we could fail to qualify as a RIC and thus become subject to U.S. federal income tax.

U.S. capital markets have experienced volatility and disruption in recent years, including as a result of the COVID-19 pandemic, certain regional bank failures, and an inflationary economic environment.environment and tariffs and global trade negotiations. Any future market disruptions and/or illiquidity could have an adverse effect on our business, financial condition, results of operations and cash flows, as well as the businesses of our portfolio companies, and the broader financial and credit markets.

At various times, such disruptions in the past have resulted in, and may in the future result in, a lack of liquidity in parts of the debt capital markets, significant write-offs in the financial services sector and the repricing of credit risk. Such conditions may occur for a prolonged period of time, and may materially worsen in the future, including as a result of U.S. government shutdowns, or future downgrades to the U.S. government's sovereign credit rating or the perceived credit worthiness of the U.S. or other large global economies. In addition, the current U.S. political environment and the new incoming U.S. federal administration and the resulting uncertainties regarding actual and potential shifts in U.S. foreign investment, trade, healthcare, taxation, economic, environmental and other policies, as well as the impact of geopolitical tension, such as a deterioration in the bilateral relationship between the U.S. and China or the conflict between Russia and Ukraine or conflict in the Middle East, could lead to disruption, instability and volatility in the global capital markets. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited in the past and could continue to limit our investment originations, and limit our ability to grow and could have a material negative impact on our operating results, financial condition, results of operations and cash flows and the value of our debt and equity investments.

The matters discussed in this Annual Report, as well as in future oral and written statements by management of Hercules Capital, Inc., that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties, including those discussed under “Item 1A. Risk Factors,Factors”, 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:

•the occurrence and impact of macro-economic developments (for example, tariffs and other trade or sanction issues, government shutdown, global pandemics, natural disasters, terrorism, international conflicts and war) on us and our portfolio companies;

Since inception through December 31, 2024,2025, we have originated more than $21.0$25.0 billion in commitments in over 600700 companies. We, through the Adviser Subsidiary, 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, through the Adviser Subsidiary may earn management or other fees for our services. As of December 31, 2024,2025, we, including through our Adviser Subsidiary, actively manage approximatelymore $4.8than $5.7 billion of assets.

We receive principal payments on 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 year ended December 31, 2024,2025, we received approximately $953.6$848.3 million in aggregate principal repayments. Approximately $31.6$37.1 million of the aggregate principal repayments related to scheduled principal payments and approximately $922.0$811.2 million were early principal repayments related to 5648 portfolio companies. Additionally, during the year ended December 31, 2025, we received $54.5 million from the partial sale of three debt investments to external parties and sold four debt investments for $20.0 million to the Adviser Funds.

Total portfolio investment activity (inclusive of unearned income and excluding activity related to taxes payable and escrow receivables) as of and for the years ended December 31, 20242025 and December 31, 20232024 was as follows:

Additionally, we may hold investments in debt, warrant, or equity positions of portfolio companies that have filed a registration statement with the SEC in contemplation of a potential IPO. There can be no assurance that companies that have yet to complete their IPOIPOs will do so in a timely manner or at all.

The following table presents certain additional selected information regarding our debt investment portfolio as of December 31, 20242025 and December 31, 2023.2024. This includes information on benchmark index rate floors which we have in place on all of our floating rate debt investments.

The capital markets are subject to fluctuations caused by various external factors such as changes in the inflationary environment, interest rate movements, concerns over slowing economic growth and possible global recession, changes to U.S. tariff and import/export regulations, uncertainty and disruption caused by geopolitical events, including the conflicts in Ukraine, Russia,tensions and thedisruptions Middlecaused East,by government shutdowns, among other factors. These macroeconomic developments are outside our control and could require us to adjust our plan of operations, and impact our financial position, results of operations or cash flows in the future. We monitor macroeconomic market developments and their related impact to our business, including impacts to our portfolio companies, employees, due diligence and underwriting processes, and the broader financial markets.

We believe that these measures are useful for our stockholders as it provides further insight into the yield of our portfolio to allow a more meaningful comparison with our competitors. As noted above, Core Yield, a Non-GAAP financial measure, is derived by dividing Core investment income, as defined above, by the weighted average GAAP basis value of debt investment portfolio assets at amortized cost outstanding. The reconciliation to calculate “Core investment income” from GAAP basis “Total investment income” are as follows:

The following table presents the fair value of the Company’sour portfolio by industry sector as of December 31, 20242025 and December 31, 20232024:

(12)See “Note 4 – Investments” for complete list of industry sectors and corresponding amounts of investments at fair value as a percentage of the total portfolio. As of December 31, 2024,2025, the fair value as a percentage of total portfolio does not exceed 5.0% for any individual industry sector other than “Application Software”, “Drug Discovery & Development”, “Healthcare Services, Other”, “System Software”, and “Consumer & Business Services.Services”.

For the years ended December 31, 20242025 and 2023,2024, our ten largest portfolio companies represented approximately 31.6%28.6% and 29.7%31.6%, respectively, of the total fair value of our investments in portfolio companies, respectively.companies. As of December 31, 20242025 and December 31, 2023,2024, we had sixseven and fivesix investmentsinvestments, respectively, that represented 5% or more of our net assets, respectively.assets. As of December 31, 20242025 and December 31, 2023,2024, we had threetwo and fivethree equity investments, respectively, that represented 5% or more of the total fair value of our equity investments. These equity investments represented approximately 49.7%48.4% and 56.5%49.7% of the total fair value of our equity investments as of December 31, 20242025 and December 31, 2023,2024, respectively.

As of December 31, 20242025 and 2023,2024, approximately 97.4%97.9% and 95.9%97.4%, respectively, of the debt investment portfolio was priced at floating interest rates orwith floatinga floor. Our interest rates with ause Prime, SOFR, SONIA, or BSBY-basedSONIA interestas ratebenchmark floor,index respectively.rates. Changes in interestthese rates,benchmark includingindex Prime, SOFR, SONIA, or BSBY rates,rates may affect the interest income and the value of our investment portfolio for portfolio investments with floating rates.

Our investments in Structured Debt generally have detachable equity enhancement features in the form of warrants or other equity securities designed to provide us with an opportunity for capital appreciation. These features are treated as OID and are accreted into interest income over the term of the loan as a yield enhancement. 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 December 31, 2024,2025, we held warrants in 98108 portfolio companies, with a fair value of approximately $30.5$41.1 million. The fair value of our warrant portfolio decreasedincreased by approximately $3.4$10.6 million, as compared to a fair value of $33.9$30.5 million as of December 31, 2023,2024, primarily related to the decreaseincrease in fair value of the portfolio companies.

As of December 31, 20242025 and December 31, 2023,2024, our debt investments had a weighted average investment grading of 2.262.20 and 2.242.26 on a cost basis, respectively. Changes in a portfolio company's investment grading may be a result of changes in portfolio company's performance and/or timing of expected liquidity events. For instance, we may downgrade a portfolio company if it is not meeting our financing criteria or areis underperforming relative to its respective business plan. We may also downgrade a portfolio company as it approaches a point in time when it will require additional equity capital to continue operations. Conversely, we may upgrade a portfolio company's investment grading when it is exceeding our financial performance expectations and/or is expected to mature/repay in full due to a liquidity event. The overall downgrade of the portfolio's weighted average investment grading is reflective of the impact of the current macroeconomic environment.

Debt investments are placed on non-accrual status when it is probable that principal, interestinterest, or fees will not be collected according to contractual terms. When a debt investment is placed on non-accrual status, we cease to recognize interest and fee income until the portfolio company has paid all principal and interest due or demonstrated the ability to repay our current and future contractual obligations. We may choose not to apply the non-accrual status to a loan where the investment has sufficient collateral value to collect all of the contractual amount due and is in the process of collection. Interest collected on non-accrual investments are generally applied to principal.

The decrease in fee income for the year ended December 31, 20242025, wasas similarcompared to the year ended December 31, 2023. This2024, is primarily due to higherlower weightedprepayment averagepenalty principalfrom outstandingearly repayments and feelower incomefees fromrecognized on expired commitments, partially offset by lowerhigher acceleration ofrecurring fee income from earlyan repayments.increase in the weighted average principal outstanding.

Interest and fees on our debt totaled approximately $86.0$103.2 million and $77.5$86.0 million for the years ended December 31, 20242025 and 2023,2024, respectively. Interest and fee expense during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, increased due to higher weighted average borrowing costs and debt outstanding.

Our weighted average cost of debt was approximately 5.0% andfor 4.8%each forof the years ended December 31, 20242025 and 2023, respectively.2024. The weighted average cost of debt includes interest and fees on our debt, but excludes the impact of fee accelerations due to the extinguishment of debt, as applicable. The increase in the weighted average cost of debt during 2024 as compared to 2023, was attributable to increased usage of our Credit Facilities which are floating rate instruments and have higher borrowing rates.

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 increaseddecreased to $19.7$19.0 million from $18.7$19.7 million for the years ended December 31, 20242025 and 2023,2024, respectively. The increasedecrease in general and administrative expenses for the year ended December 31, 20242025 is primarily attributable to ana increasedecrease in costs of office and professional fees and expenses. Tax expenses were $5.8 million andfor $6.1each million forof the years ended December 31, 20242025 and December 31, 2023, respectively.2024. Our tax expenses primarily relate to excise tax accruals.

Employee stock-basedcompensation compensationand benefits totaled approximately $12.8$63.3 million for the year ended December 31, 2024,2025, as compared to approximately $13.2$54.2 million for the year ended December 31, 2023.2024. The decreaseincrease for the year ended December 31, 20242025 was primarily attributabledue to a decreasefluctuations in variable compensation expenseand related to Performance Awards (as defined below) which vestedincrease in 2023.headcount.

The shared services agreement with the Adviser Subsidiary (the “Sharing Agreement”), provides the Adviser Subsidiary access to our human capital resources, including deal professionals, finance, and administrative functions, as well as other resources including infrastructure assets such as office space and technology. Under the terms of the Sharing Agreement, we allocate the related expenses of shared services to the Adviser Subsidiary. Our total net operating expenses for the years ended December 31, 20242025 and 2023,2024, are net of expenses allocated to the Adviser Subsidiary of $10.8$15.2 million and $9.1$10.8 million, respectively. The increase in expenses allocated to the Adviser Subsidiary for the year ended December 31, 20242025 compared to 20232024 is due to higheran averageincrease assetsin undertime managementspent on the Adviser Funds and higheran allocationsincrease in investments allocated to the Adviser Funds. As of December 31, 20242025 and 2023,2024, there was $1.7 million and less than $0.1 million and $0.1 million, respectively, was due from the Adviser Subsidiary.Subsidiary, respectively.

(21)IncludedFor inthe years ended December 31, 2025 and 2024, reversals of prior period net changes in unrealized appreciation (depreciation) areinclude $45.2 million and $44.6 millionmillion, respectively, of reversed unrealized depreciation, related to the $57.7 million and $63.1 millionmillion, respectively, of realized debt losslosses from the write-off of certain debt investments noted above.

The Adviser Subsidiary’s contribution to our net investment income is primarily derived from dividend income declared by the Adviser SubsidiarySubsidiary, expenses allocated to the Adviser Subsidiary, and interest income earned on loans to the Adviser Subsidiary. ForA summary of the Adviser Subsidiary’s contribution to our net investment income for the years ended December 31, 20242025 and 2023,2024 $6.8is millionas and $1.4 million, respectively of dividends were declared by the Adviser Subsidiary.follows:

During the year ended December 31, 2024,2025, we principally funded our operations from (i) cash receipts from interest, dividend, and fee income from our investment portfolio, (ii) cash proceeds from the realization of portfolio investments through the repayments of debt investments and the sale of debt and equity investments, (iii) debt borrowings on our Credit Facilities, 2028 Convertible Notes and June 2030 Notes, and (iv) equity offerings.

During the year ended December 31, 2024,2025, our operating activities used $118.1$425.8 million of cash and cash equivalents, compared to $68.3$118.1 million provided by operating activitiesused during the year ended December 31, 2023.2024. The $186.4$307.7 million increase in cash used in operating activities was primarily due to a $176.2$271.9 million increase in net purchases of investments.

During the year ended December 31, 2024,2025, our financing activities provided $119.2$368.9 million of cash, compared to $22.7$119.2 million provided during the year ended December 31, 2023.2024. The $96.5$249.7 million increase in cash flows from financing activities during the year ended December 31, 20242025 was primarily due to an increase in net borrowingsborrowing activity of $236.9$289.2 million, partially offset by a $119.9decrease of $13.9 million decrease in equity issuedissued. We distributed dividends of $326.0 million compared to $303.5 million, during the years ended December 31, 2025 and a2024, $29.8 million increase in dividend distributions.respectively. During the year ended December 31, 2024, we distributed dividends of $303.5 million compared to $273.7 million during the year ended December 31, 2023. We also reduced the usage of2025, our overnight offering and ATM program, whichprogram provided (net of offering costs) approximately $204.4 million compared to $218.3 million downnet fromproceeds $338.2 million,received during the yearsyear ended December 31, 20242024. During the year ended December 31, 2025, we issued $287.5 million in aggregate principal amount of 2028 Convertible Notes and 2023.$350.0 million in aggregate principal amount of June 2030 Notes. Additionally, during the year ended December 31, 2025, we fully repaid the aggregate outstanding $50.0 million, $70.0 million, and $50.0 million principal of the February 2025 Notes, June 2025 Notes, and June 2025 3-Year Notes, respectively.

As of December 31, 2024,2025, we had $658.8$525.5 million in available liquidity, including $113.1$57.0 million in cash, cash equivalents and foreign cash, and available borrowing capacity of approximately $16.2$21.5 million (net of $0.5 million of outstanding letter of credits) under the SMBC Facility, $175.0 million under our SMBC letter of credit facility, $284.0and $272.0 million under the MUFG Bank Facility, and $71.0 million of SBA debentures, subject to certain conditions. Additional liquidity is available through accordion provisions within the terms of our Credit Facilities, through which the available borrowing capacity can be increased by an aggregate $400.0$360.0 million, subject to certain conditions. Further, the SMBC letter of credit facility may also be increased by an additional $225.0 million (up to $400.0 million), subject to certain conditions. Total amounts outstanding as of December 31, 2024,2025, were $399.8$445.9 million outstanding under our Credit Facilities, which are floating interest rate obligations, and the remaining $1,383.5$1,867.2 million of term debt outstanding, which are all fixed interest rate debt obligations.

The 1940 Act prohibits us from selling shares of our common stock at a price below the current NAV per share of such stock, with certain exceptions. One such exception is prior stockholder approval of issuances below NAV provided that our Board makes certain determinations. OnWe Augustdo 15,not 2024,currently wehave obtainedthe authorization from our stockholders to issue common stock at a price below our then-current NAV per share for a twelve-month period expiring on August 15, 2025. For a further discussion, refer to Part I, Item 1A “Risk Factors- Risks Related to our Securities - Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then-current NAV per share ofand there is no guarantee that we will obtain such authorization from our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock” appearing elsewherestockholders in thisthe Annual Report.future.

We may from time-to-time issue and sell shares of our common stock through public or ATM offerings. We currently sell shares through our equity distribution agreements (the “2024 Equity Distribution Agreements”) with Citizens JMP Securities LLC and Jefferies LLC (the “Sales Agents”) entered into on December 12, 2024. The 2024 Equity Distribution Agreements provide that we may offer and sell up to 30.0 million shares of our common stock from time to time through the Sales Agents. 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, 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. The 2024 Equity Distribution Agreements replaced the ATM equity distribution agreements between us, and the Sales Agents executed on May 5, 2023. Additionally, on August 7, 2023 we sold 6.5 million shares of our common stock through an upsized public offering, pursuant to an underwriting agreement entered with Morgan Stanley & Co. LLC, UBS Securities, and Wells Fargo Securities, LLC as joint book-running managers. We generally use net proceeds from these offerings to make investments, to repurchase or pay down liabilities and for general corporate purposes. As of December 31, 2024,2025, approximately 30.018.8 million shares remain available for issuance and sale under the 2024 Equity Distribution Agreements.

As of December 31, 2024,2025, we had approximately $448.5$385.6 million of available unfunded commitments, including undrawn revolving facilities, which were available at the request of the portfolio company and unencumbered by future or unachieved milestones, as well as uncalled capital commitments to make investments in private equity funds. In order to draw a portion of the Company'sour available unfunded commitments, a portfolio company must submit to the Companyus a formal funding request that complies with the applicable advance notice and other operational requirements. The available unfunded commitments excludes unfunded commitments (i) for which, with respect to a portfolio company's agreement, a milestone was achieved after the last day on which the portfolio company could have requested a drawdown funding to be completed within the reporting period; and (ii) $139.7$96.2 million of unfunded commitments which represent the portion of portfolio company commitments assigned to or directly committed by the Adviser Funds.

Additionally, we had approximately $297.6$814.6 million of non-binding term sheets outstanding to fiveeight new companies and three 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.

For a further discussion and disclosure of key inputs and considerations related to this estimate, refer to "“Note 3 -Fair- Fair Value of Financial Instruments"” included in the notes to our consolidated financial statements appearing elsewhere in this report.

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 as of MarchJune 31,30, 2026 that represent greater than 5% of our net assets:

Since inception through MarchJune 31,30, 2026, we have originated more than $27.0$28.0 billion in commitments in over 700 companies. We, through the Adviser Subsidiary, 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, through the Adviser Subsidiary may earn management or other fees for our services. As of MarchJune 31,30, 2026, we, including through our Adviser Subsidiary, actively manage approximately $6.1 billion of assets.

The total fair value of our investment portfolio as of MarchJune 31,30, 2026 and December 31, 2025 was as follows:

Our portfolio activity for the threesix months ended MarchJune 31,30, 2026 and 2025 was comprised of the following:

(2)Excludes $44.2 million investment commitments sold to Adviser funds during the threesix months ended MarchJune 31,30, 2026.

(4)Amount represents unfunded commitments, including undrawn revolving facilities, which are available at the request of the portfolio company. Amount excludes unfunded commitments which are unavailable due to the borrower having not met certain milestones. This excludes $160.6$117.7 million and $136.0$129.7 million of unfunded commitments as of MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively, to portfolio companies related to loans assigned to or directly committed by the Adviser Funds.

We receive principal payments on 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 threesix months ended MarchJune 31,30, 2026, we received approximately $227.5$843.3 million in aggregate principal repayments. Approximately $1.7$45.4 million of the aggregate principal repayments related to scheduled principal payments and approximately $225.8$797.9 million were early principal repayments related to 1225 portfolio companies. Additionally, during the threesix months ended MarchJune 31,30, 2026, we received $7.5$24.1 million from the partial sale of onetwo debt investmentinvestments to external parties.

Total portfolio investment activity (inclusive of unearned income and excluding activity related to taxes payable and escrow receivables) as of and for the threesix months ended MarchJune 31,30, 2026 and 2025 was as follows:

The following table presents certain additional selected information regarding our debt investment portfolio as of MarchJune 31,30, 2026, December 31, 2025, and MarchJune 31,30, 2025. This includes information on benchmark index rate floors which we have in place on all of our floating rate debt investments.

(3)The core and effective yields represent the weighted average yields for the three-month periods ended MarchJune 31,30, 2026, December 31, 2025 and MarchJune 31,30, 2025. Please refer to the “Portfolio Yield” section below for further discussion of these measures.

Our investment portfolio continues to be focused on industries and sectors that are generally expected to be more resilient to U.S. and global economic cycles. This includes being partially insulated from declining interest rates as all of our floating rate debt investments, which represent 98.0%97.8% and 97.9% of our debt portfolio as of MarchJune 31,30, 2026 and December 31, 2025, respectively, are subject to interest rate floors. While our portfolio is not immune to the impact of macroeconomic events, we believe we and our portfolio are well positioned to manage the current environment. Given the unpredictability and fluidity of the macroeconomic market, neither our management nor our Board is able to predict the full impact of the macroeconomic events on our business, future results of operations, financial position, or cash flows. For additional information, see “Part I - Item 1A. Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 12, 2026.

As of MarchJune 31,30, 2026, our debt investments generally have a term of between two and five years and typically bear interest at a rate ranging from approximately 7% 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: exit fees, balloon payment fees, commitment fees, success fees, PIK provisions or prepayment fees which may be required to be included in income prior to receipt.

Loan origination and commitment fees are generally 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. As of MarchJune 31,30, 2026 and December 31, 2025, unamortized capitalized fee income was recorded as follows:

Loan exit fees to be paid at the termination of the loan are accreted into interest income over the contractual life of the loan. As of MarchJune 31,30, 2026 and December 31, 2025, loan exit fees receivable were recorded as follows:

Additionally, we have debt investments in our portfolio that earn PIK interest. The PIK interest, computed at the contractual rate specified in each loan agreement, is recorded as interest income and added to the principal balance of the loan on specified capitalization dates. To maintain our status as a RIC, the non-cash PIK income must be distributed to stockholders with other sources of income in the form of dividend distributions even though we have not yet collected any cash from the borrower. Amounts necessary to pay these distributions may come from available cash or the liquidation of certain investments. During the three months ended MarchJune 31,30, 2026 and 2025, we recorded approximately $12.9$12.3 million and $13.5$13.6 million of PIK income, respectively. During the six months ended June 30, 2026 and 2025, we recorded approximately $25.3 million and $27.1 million of PIK income, respectively.

(1)Yield calculated using “Total investment income” excluding bank interest, dividend income, and investment income from other assets for the three months ended MarchJune 31,30, 2026 and 2025.

Another financial measure that we monitor is the total return for our investors, which was approximately (19.111.0%)% and (2.0%4.4%) during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The total return equals the change in the ending market value over the beginning of the period price per share plus distributions paid per share during the period, divided by the beginning price assuming the distribution is reinvested on the date of the distribution. The total return does not reflect any sales load that may be paid by investors. See “Note 10 – Financial Highlights” included in the notes to our consolidated financial statements appearing elsewhere in this report.

The following table presents the fair value of our portfolio by industry sector as of MarchJune 31,30, 2026 and December 31, 2025:

(1)See “Note 4 – Investments” for complete list of industry sectors and corresponding amounts of investments at fair value as a percentage of the total portfolio. As of MarchJune 31,30, 2026, the fair value as a percentage of total portfolio does not exceed 5.0% for any individual industry sector other than “Application Software", “Drug Discovery & Development”, “Healthcare Services, Other”, “Consumer & Business Services”, “System Software”, and “ConsumerDefense & Business ServicesTechnologies”.

As of MarchJune 31,30, 2026 and December 31, 2025, our ten largest portfolio companies represented approximately 26.2% and 28.6%, respectively, of the total fair value of our investments in portfolio companies. As of MarchJune 31,30, 2026 and December 31, 2025, we had seven6 and 7 investments, respectively, that represented 5% or more of our net assets. As of MarchJune 31,30, 2026 and December 31, 2025, we had two equity investments, respectively, that represented 5% or more of the total fair value of our equity investments. These equity investments represented approximately 49.2%43.5% and 48.4% of the total fair value of our equity investments as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

As of MarchJune 31,30, 2026 and December 31, 2025, approximately 98.0%97.8% and 97.9%, respectively, of the debt investment portfolio was priced at floating interest rates with a floor. Our interest rates use Prime, SOFR, or SONIA as benchmark index rates. Changes in these benchmark index rates may affect the interest income and the value of our investment portfolio for portfolio investments with floating rates.

Our investments in Structured Debt generally have detachable equity enhancement features in the form of warrants or other equity securities designed to provide us with an opportunity for capital appreciation. These features are treated as OID and are accreted into interest income over the term of the loan as a yield enhancement. 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 MarchJune 31,30, 2026, we held warrants in 113117 portfolio companies, with a fair value of approximately $42.5$51.3 million. The fair value of our warrant portfolio increased by approximately $1.4$10.2 million, as compared to a fair value of $41.1 million as of December 31, 2025, primarily driven bythe new warrants receivedincrease in connectionthe withfair debtvalue originations.of the portfolio companies.

Our existing warrant holdings would require us to invest approximately $65.7$66.0 million to exercise such warrants as of MarchJune 31,30, 2026. Warrants may appreciate or depreciate in value depending largely upon the underlying portfolio company’s performance and overall market conditions. As attractive investment opportunities arise, we may exercise certain of our warrants to purchase stock, and could ultimately monetize our investments. Of the warrants that we have monetized since inception, we have realized multiples in the range of approximately 1.00x to 42.71x based on the historical rate of return on our investments. We may also experience losses from our warrant portfolio in the event that warrants are terminated or expire unexercised.

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 MarchJune 31,30, 2026 and December 31, 2025, respectively:

As of MarchJune 31,30, 2026 and December 31, 2025, our debt investments had a weighted average investment grading of 2.112.17 and 2.20 on a cost basis, respectively. Changes in a portfolio company's investment grading may be a result of changes in portfolio company's performance and/or timing of expected liquidity events. For instance, we may downgrade a portfolio company if it is not meeting our financing criteria or is underperforming relative to its respective business plan. We may also downgrade a portfolio company as it approaches a point in time when it will require additional equity capital to continue operations. Conversely, we may upgrade a portfolio company's investment grading when it is exceeding our financial performance expectations and/or is expected to mature/repay in full due to a liquidity event.

The following table shows the amortized cost of our performing and non-accrual investments as of MarchJune 31,30, 2026 and December 31, 2025:

Our condensed consolidated operating results for the three and six months ended MarchJune 31,30, 2026 and 2025, were as follows:

Total investment income for the three and six months ended MarchJune 31,30, 2026 was approximately $141.5$149.1 million and $290.7 million, respectively as compared to approximately $119.5$137.5 million and $257.0 million, respectively for the three and six months ended MarchJune 31,30, 2025. Investment income is primarily composed of interest income earned on our debt investments, fee income from commitments, facilities, and other loan related fees and dividend income.

The following table summarizes the components of interest and dividend income for the three and six months ended MarchJune 31,30, 2026 and 2025:

Interest and dividend income for the three and six months ended MarchJune 31,30, 2026 totaled approximately $136.4$138.0 million and $274.4 million, respectively as compared to approximately $115.6$129.6 million and $245.2 million, respectively for the three and six months ended MarchJune 31,30, 2025. The increase in interest income for the three and six months ended MarchJune 31,30, 2026 as compared to the three and six months ended MarchJune 31,30, 2025 was primarily attributable to an increase in the weighted average principal outstanding, partially offset by lower core yield.

The following table summarizes recurring and non-recurring interest income and dividend income for the three and six months ended MarchJune 31,30, 2026 and 2025:

A portion of interest income is earned in the form of PIK interest. The following table shows the PIK-related activity for the threesix months ended MarchJune 31,30, 2026 and 2025, at cost:

The decrease in PIK interest income during the threesix months ended MarchJune 31,30, 2026 as compared to the threesix months ended MarchJune 31,30, 2025 was due to a decrease in the weighted average principal outstanding for debt investments which earn PIK interest. Payments on PIK loans are normally received only in the event of payoffs. The PIK receivable for MarchJune 31,30, 2026 and MarchJune 31,30, 2025 was approximately 2% and 2% of total debt investments, respectively.

Fee income is comprised of recurring fee income from commitment, facility, and loan related fees, fee income due to expired commitments, and acceleration of fee income due to early loan repayments during the period. The following table summarizes the components of fee income for the three and six months ended MarchJune 31,30, 2026 and 2025:

The fee income for the three and six months ended MarchJune 31,30, 2026 totaled approximately $5.1$11.1 million and $16.2 million, respectively as compared to approximately $3.9$7.9 million and $11.8 million, respectively for the three and six months ended MarchJune 31,30, 2025. The increase in fee income for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 was primarily attributable to higher prepayment penalty from early repayments, higher fees recognized on expired commitments and higher recurring fee income resulting from an increase in the weighted average principal outstanding.

Our operating expenses are comprised of interest and fees on our debt borrowings, general and administrative expenses, taxes, and employee compensation and benefits. During the three and six months ended MarchJune 31,30, 2026 and 2025, our net operating expenses totaled approximately $53.4$56.2 million and $42.1$48.7 million, respectively.respectively, for the three-month periods, and approximately $109.6 million and $90.8 million, respectively, for the six-month periods.

Interest and fees on our debt totaled approximately $30.8$31.1 million and $22.1$25.7 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively and approximately $62.0 million and $47.8 million for the six months ended June 30, 2026 and 2025, respectively. Interest and fee expense during the three and six months ended MarchJune 31,30, 2026 as compared to the three and six months ended MarchJune 31,30, 2025, increased due to higher weighted average debt outstanding.

Our weighted average cost of debt was approximately 5.1%5.2% and 4.9%5.0% for the three months ended MarchJune 31,30, 2026 and 2025, respectively and 5.1% and 4.9%, for the six months ended June 30, 2026 and 2025, respectively. The weighted average cost of debt includes interest and fees on our debt, but excludes the impact of fee accelerations due to the extinguishment of debt, as applicable.

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 weredecreased unchangedto at$4.9 $4.8million from $5.1 million for the three months ended MarchJune 31,30, 2026 and 2025.2025, Taxrespectively, and decreased to $9.7 million from $9.9 million for the six months ended June 30, 2026 and 2025, respectively. The decrease in general and administrative expenses for the three and six months ended June 30, 2026 is primarily attributable to a decrease in legal fees, recruiting, and other business expenses.Tax expenses were $1.0$2.8 million and $0.9$1.1 million during the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $3.8 million and $2.0 million for the six months ended June 30, 2026 and 2025, respectively. Our tax expenses primarily relate to excise tax accruals.

Employee compensation and benefits totaled approximately $17.3$18.4 million and $13.9$35.7 million for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to approximately $16.7 million and $30.6 million, respectively, for the three and six months ended June 30, 2025. The movement between the three and six months ended MarchJune 31,30, 2026 and 2025 was primarily due to fluctuations in variable compensation.

Employee stock-based compensation totaled approximately $4.1$3.9 million and $3.6$8.1 million, for the three and six months ended MarchJune 31,30, 2026 as compared to approximately $3.7 million and 2025,$7.3 respectively.million, respectively, for the three and six months ended June 30, 2025. The increase between the three and six months ended MarchJune 31,30, 2026 and 2025 was primarily attributable to higher overall grant size associated with Service Vesting Awards.

The Sharing Agreement provides the Adviser Subsidiary access to our human capital resources, including deal professionals, finance, and administrative functions, as well as other resources including infrastructure assets such as office space and technology. Under the terms of the Sharing Agreement, we allocate the related expenses of shared services to the Adviser Subsidiary. Our total net operating expenses for the three months ended MarchJune 31,30, 2026 and 2025, are net of expenses allocated to the Adviser Subsidiary of $4.6$4.9 million and $3.3$3.4 million, respectively, and $9.5 million and $6.7 million for the six months ended June 30, 2026 and 2025, respectively. The increase in expenses allocated to the Adviser Subsidiary for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025 was due to an increase in time spent on the Adviser Funds and an increase in investments allocated to the Adviser Funds. As of MarchJune 31,30, 2026 and December 31, 2025, there was approximately $0.9$0.7 million and $1.7 million due from the Adviser Subsidiary, respectively.

A summary of net realized gains and losses for the three and six months ended MarchJune 31,30, 2026 and 2025 is as follows:

During the three and six months ended MarchJune 31,30, 2026, we recognized a net realized lossgain of $0.6$7.7 million.million and $7.1 million, respectively. The net realized gains (losses) were generated from gross realized gains of $1.6$8.7 million and $10.3 million, respectively, primarily attributable to the sale of our equity position in Axsome Therapeutics, Inc., sales proceeds from the completed acquisitions of Armis, Inc. and Reltio, Inc., and contingent consideration received in the form of earnout equity shares of Planet Labs PBC. Our gains were offset by gross realized losses of $2.2$1.1 million and $3.3 million, respectively, primarily from the write-off of our equity investmentsinvestment in Carbon Health Technologies, IncInc. and Dynavaxwrite-off Technologies.of our warrant investment in Snagajob.com, Inc.

During the three and six months ended MarchJune 31,30, 2025, we recognized a net realized loss of $1.6$57.6 million.million and $59.2 million, respectively. The net realized gains (losses) were generated from gross realized gains of $0.4 million and $0.5 million, respectively, for the three and six month periods, primarily from collections from Codiak Biosciences, Inc. that was fully written off previously. Our gains were offset by gross realized losses of $0.9$56.5 million and $57.5 million, respectively, for the three and six month periods, from the write-off of equityour debt investments due to the restructure of Khoros, LLC and Annex Cloud, sale of AmplifyBio, LLC, and the write-off of our warrant investments in 3GTMS,bluebird bio, Inc., AmplifyBio, LLC, Fresh Tracks Therapeutics, Inc. and others. Additionally, we realized $0.7$1.5 million ofand $2.2 million, respectively, for the three and six month periods, from foreign exchange losses primarily from our investments in foreign denominated debt investments.investments and forward contract.

The net change in unrealized appreciation and depreciation of our investments is derived from the changes in fair value of each investment determined in good faith by our Valuation Committee (as defined in “Note 2 - Summary of Significant Accounting Policies - Valuation of Investments”) and approved by the Board. The following table summarizes the change in net unrealized appreciation or depreciation of investments for the three and six months ended MarchJune 31,30, 2026 and 2025:

During the three months ended MarchJune 31,30, 2026 and 2025, we recorded approximately $45.0 million and $25.6$29.6 million of net unrealized depreciation,appreciation and $47.8 million of net unrealized appreciation, respectively, on our investments. During the six months ended June 30, 2026 and 2025, we recorded approximately $15.4 million of net unrealized depreciation and $22.2 million of net unrealized appreciation, respectively, on our investments. The increase in unrealized depreciation during the threesix months ended MarchJune 31,30, 2026 was primarily related to the depreciation on our debt investments due to widening of spreads, depreciation of our private equity holdings due to compression of market multiples, depreciation of public equity and warrant holdings andthe reversal of previously recorded net unrealized appreciation of our debt investments as realization events occurred. This was offset by appreciation on our equity and warrant investments from the broad recovery in public and private market valuations during the three months ended June 30, 2026. The unrealized appreciation during the three months ended June 30, 2026 was primarily driven by market recovery across the equity and warrant portfolio and credit spread tightening on the debt portfolio.

The following table summarizes the key drivers of change in net unrealized appreciation (depreciation) of investments for the three and six months ended MarchJune 31,30, 2026 and 2025:

The Adviser Subsidiary’s contribution to our net investment income is primarily derived from expenses allocated to the Adviser Subsidiary, dividend income declared by the Adviser Subsidiary, and interest income earned on loans to the Adviser Subsidiary. A summary of the Adviser Subsidiary’s contribution to our net investment income for the three and six months ended MarchJune 31,30, 2026 and 2025 is as follows:

During the threesix months ended MarchJune 31,30, 2026, we principally funded our operations from (i) cash receipts from interest, dividend, and fee income from our investment portfolio, (ii) cash proceeds from the realization of portfolio investments through the repayments of debt investments and the sale of debt and equity investments, (iii) debt borrowings on our Credit Facilities and February 2029 Notes, and (iv) equity offerings.

During the threesix months ended MarchJune 31,30, 2026, our operating activities usedprovided $230.6$67.3 million of net cash and cash equivalents, compared to $222.2$367.0 million used during the threesix months ended MarchJune 31,30, 2025. TheA $8.4favorable swing of $434.3 million was primarily driven by a $428.8 million increase in cashprincipal usedand infee operatingrepayments activitiesreceived, wasreflecting primarilyelevated dueportfolio tocompany prepayment activity during the current period and a $111.8$14.1 million increase in netproceeds purchases of investments, which was partially offset by an increase of $90.5 million in principal, fee repayments, and proceedsreceived from the sale of debtequity and warrant investments.

During the threesix months ended MarchJune 31,30, 2026, our investing activities used approximately $19 thousand of cash, compared to $8$27 thousand used during the threesix months ended MarchJune 31,30, 2025. The $11$8 thousand increasedecrease in cash used in investing activities was due to ana increasedecrease in purchases of capital equipment.

During the threesix months ended MarchJune 31,30, 2026, our financing activities providedused $216.1$76.3 million of cash, compared to $160.1$303.9 million provided during the threesix months ended MarchJune 31,30, 2025. The $56.0$380.2 million increaseswing in cash flows from financing activities was primarily due to a $48.8$232.7 million increasedecrease in net borrowing activity and a $12.6$136.8 million increasedecrease in equity issued. During the threesix months ended MarchJune 31,30, 2026, we issued $300.0 million in aggregate principal amount of February 2029 Notes. Additionally, during the threesix months ended MarchJune 31,30, 2026, we fully repaid the aggregate outstanding $50.0 million each in principal of the March 2026 A Notes and March 2026 B Notes, respectively. During the threesix months ended MarchJune 31,30, 2026, our ATM program provided (net of offering costs) approximately $52.0 million, compared to $39.4$188.9 million net proceeds received during the threesix months ended MarchJune 31,30, 2025. During the threesix months ended MarchJune 31,30, 2026, we distributed dividends of $84.4$170.4 million compared to $78.9$159.4 million during the threesix months ended MarchJune 31,30, 2025.

As of MarchJune 31,30, 2026, our net assets totaled $2.2$2.3 billion, with a NAV per share of $11.90.$12.15. We intend to continue to operate in order to generate 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.

Available liquidity and capital resources as of MarchJune 31,30, 2026

As of MarchJune 31,30, 2026, we had $454.5$652.9 million in available liquidity, including $42.4$48.2 million in cash and cash equivalents and available borrowing capacity of approximately $17.1$77.7 million (net of $0.5 million of outstanding letter of credits) under the SMBC Facility, $175.0 million under our SMBC letter of credit facility, and $220.0$352.0 million under the MUFG Bank Facility, subject to certain conditions. Additional liquidity is available through accordion provisions within the terms of our Credit Facilities, through which the available borrowing capacity can be increased by an aggregate $360.0 million, subject to certain conditions. Further, the SMBC letter of credit facility may also be increased by an additional $225.0 million (up to $400.0 million), subject to certain conditions. Total amounts outstanding as of MarchJune 31,30, 2026, were $502.3$309.7 million outstanding under our Credit Facilities, which are floating interest rate obligations, and the remaining $2,067.0$2,053.3 million of term debt outstanding, which are all fixed interest rate debt obligations.

Not considered above, as of MarchJune 31,30, 2026, we held $2.6$2.3 million of cash classified as restricted cash. Our restricted cash relates to amounts that are held as collateral securing certain of our financing transactions, including collections of interest and principal payments on assets that are securitized related to the 2031 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 with any excess distributed to us or available for our general operations. Refer to “Note 5 – Debt” included in the notes to our consolidated financial statements appearing elsewhere in this report for additional discussion of our debt obligations.

The 1940 Act permits BDCs to incur borrowings, issue debt securities, or issue preferred stock unless immediately after the borrowings or issuance the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock is less than 200% (or 150% if certain requirements are met). On September 4, 2018 and December 6, 2018, our Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) and our stockholders, respectively, approved the application to us of the 150% minimum asset coverage ratio set forth in Section 61(a)(2) of the 1940 Act. As of MarchJune 31,30, 2026, our asset coverage ratio under our regulatory requirements as a BDC was 199.6%212.2% excluding our SBA debentures. We received an exemptive order from the SEC that allows us to exclude all SBA leverage as senior securities 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 150%, which while providing increased investment flexibility, also may increase our exposure to risks associated with leverage. Total asset coverage when including our SBA debentures as senior securities was 186.3%195.9% as of MarchJune 31,30, 2026.

We may from time-to-time issue and sell shares of our common stock through public or ATM offerings. We currently sell shares through the 2024 Equity Distribution Agreements with Citizens JMP Securities LLC and Jefferies LLC, as Sales Agents, entered into on December 12, 2024. The 2024 Equity Distribution Agreements provide that we may offer and sell up to 30.0 million shares of our common stock from time to time through the Sales Agents. 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, 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. We generally use net proceeds from these offerings to make investments, to repurchase or pay down liabilities and for general corporate purposes. As of MarchJune 31,30, 2026, approximately 15.3 million shares remain available for issuance and sale under the 2024 Equity Distribution Agreements.

During the three and six months ended MarchJune 31,30, 2026, we issued and sold zero and 3.5 million shares of our common stock receiving total accumulated net proceeds of zero and $52.0 million.million, respectively. This represents an increase from the approximately $39.4$149.5 million and $188.9 million of accumulated net proceeds received from the issuance and sale of 2.08.4 million and 10.4 million shares during the three and six months ended MarchJune 31,30, 2025.

We may from time to time seek to retire or repurchase our common stock through cash purchases, as well as retire, cancel or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. The amounts involved may be material. We had no common stock repurchases during the threesix months ended MarchJune 31,30, 2026 and 2025.