The Parent Company (KIDS)

Refinancing Transaction results in $1.5 Million Reduction
of PoshTots Acquisition Cost

JUPITER, FL., July 12, 2006 /PRNewswire-FirstCall/ -- BabyUniverse, Inc. (NASDAQ: POSH) a leading online retailer and content publisher in the pregnancy, baby and toddler marketplace, announced today that it has completed a $5.0 million debt financing transaction with Hercules Technology Growth Capital, Inc. (NASDAQ: HTGC), a leading specialty finance company providing venture capital and private equity backed technology and life science companies with debt and equity growth capital. 

Proceeds from the financing will be used primarily to refinance BabyUniverse’s existing senior debt, thereby enabling the company to realize a negotiated $1.5 million discount of the $6.0 million note that was previously incurred in connection with the company’s acquisition of PoshTots.

“We are extremely pleased to welcome Hercules as a financing partner of BabyUniverse,” said John Textor, Chairman and CEO of BabyUniverse, Inc.  “With a variety of capital alternatives available to the company, we believe the source of the capital, and the purpose of the capital, to be as important as the terms.  In this case, we secured attractive terms, from a reputable group, to fund an extremely efficient refinancing transaction.”

“The BabyUniverse portfolio of Internet commerce and content properties represents an impressive set of resources for expectant parents.  As the company continues its impressive pace of growth, with new opportunities through Amazon.com and the recently acquired ePregnancy.com, we are certainly pleased to have established this relationship,” said John Hershey, managing director of Hercules.