Document

Andy Grove was the iconic Chief Executive Officer of Intel Corporation. He once said, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” In my early days as a value analyst at Merrill Lynch Asset Management, my first boss, Paul Hoffman, often said, “In thinking about investments, always remember that cash is more important than your mother.” With apologies and all due respect to mothers, especially mine, I have never forgotten Paul’s commentary on the importance of cash and cash flow when making investments. Putting the two quotes together, 180 Degree Capital Corp. (“180”) is paranoid about its cash. It became obvious to all of us on the Board of Directors (the “Board”) and to members of management that we could no longer effectively run a publicly traded business development company focused on early-stage, privately held, equity investments. Our cost structure was entirely too high. We were not increasing net asset value, nor returning sufficient capital to shareholders due to the infrequent nature of monetization events from our private portfolio. A successful investment management business allows portfolio decisions to be made on the merits of the investment, not because of cash considerations to run the business. Left alone, our former company, Harris & Harris Group, may have been forced to liquidate investments for the sole purpose of funding its cost structure. This year, 2017, is the year where your Board, coupled with overwhelming support from you, our patient shareholders, changed the direction of our company towards a different path. 180’s strategy is specifically designed to: 1) reduce our cost structure, 2) grow our net asset value per share (“NAV”); and 3) narrow the discount our stock trades at relative to NAV. In short, we had to change, and we did change.

We have greatly reduced our operating expenses, which will make it far easier to grow our NAV than in years past. Over the last five years our quarterly on-going operating expenses averaged approximately $1.6 million per quarter. In 2016, our operating expenses averaged $1.3 million per quarter. In the first quarter of this year, our operating expenses, excluding a non-cash benefit for forfeited restricted stock, were approximately $1.05 million. In the second quarter of this year, the first quarter into our transition, our on-going operating expenses, net of sublet income, were approximately $735,000. Put another way, we have significantly reduced our burn rate from approximately 7.3 percent of net assets in 2016 to a run-rate of approximately 4 percent of net assets. It is much easier for us to grow NAV when the expense hurdle rate is where it is today. We aim to decrease this expense ratio further, however these decreases will likely come from an increase in net assets rather than further reductions in operating expenses.

Cash flow is the blood that keeps the heart of 180 pumping. It is the lifeline of our business. It will be managed with paranoia. We believe we are now in good shape on that front. At the end of the second quarter of 2017, our cash plus liquid securities totaled $22.6 million, or $0.73 per share. Our cash and liquid securities increased 18 percent from last quarter's $19.1 million or $0.61 per share. The more cash we have, the better positioned we will be to make new investments and/or return cash to you, our shareholders, through stock repurchases and/or dividends. We also may use some of our cash to make investments designed to grow our business.

Our ultimate goal is to constructively engage with existing management teams and boards to help unlock value. Some companies may need to realign their financial performance to achieve growth in cash flows, not just focusing on increasing revenues. Others need to improve their investor relations strategies and outreach. Others may need to evaluate strategic options including mergers, acquisitions, sales, and divestitures. Some may need access to management talent. The constructive part is entering into a collegial dialogue with our investee companies to work together on what is required to increase the value of the company’s stock. To 180, activism means that when and if required, we will not be averse to pursuing change through other routes, including proxy solicitations. Rather than just talking about our new investment strategy, we spent the second quarter of 2017 implementing it through establishing new portfolio positions in three publicly traded companies: Synacor, Inc. (NASDAQ:SYNC), USA Truck, Inc. (NASDAQ:USAK), and TheStreet, Inc. (NASDAQ:TST).

Synacor provides technology development, offers multi-platform services and is a revenue partner for video, internet and communications providers, device manufacturers, and enterprises. The company reaches over 100 million monthly visitors, over 100 service providers, over 3000 enterprises, over 500 million email boxes and more than 1000 web publishers. Most recently, AT&T selected Synacor to provide portal services to its customers. Synacor has publicly estimated that this engagement will generate approximately $100 million in revenues per year after full deployment. The company has also publicly stated its operating goals are to reach $300 million in revenues and $30 million in EBITDA in 2019. At our initial entry price, Synacor was trading at a multiple of 0.9x enterprise value to 2016 revenues. At its current multiple, we believe the stock has growth potential of over 100 percent from our cost basis if Synacor is able to achieve its $300 million in revenue goal in 2019.¹

USA Truck provides a broad range of truckload and logistics services to customers in a variety of industries. Following poor performance over the last two years, an entirely new management team joined the company and is presently implementing a turnaround plan focused on profitable revenue growth and improved operational efficiency. At our average cost of $6.59, the company’s multiple of enterprise value to its prior peak EBITDA in 2014 was 3x. For perspective, the company’s median multiple of enterprise value to EBITDA during the prior eight years was 5.4x. We believe a reversion to the median multiple may occur if the company is able to improve its EBITDA. The combination of these two factors could result in the potential increase of the company’s stock price of more than 150 percent, without requiring the company to reach its prior peak level of EBITDA. We currently believe any of USA Truck’s operational issues were the result of poor execution by former management teams rather than a systemic problem with its business or its segment of the trucking industry. We are excited about the potential for the new management team to turn around the business.¹

TheStreet is a financial news and information provider to consumers and businesses. The company’s brands and businesses include TheStreet.com, The Deal, BoardEx, and RateWatch. An entirely new senior management team and Chairman of the Board joined the company in the last two years. We like teams that have worked together successfully in prior companies. Many members of this team, including the CEO and the Chairman of the Board, worked together to build and sell MarketWatch. Following MarketWatch, they successfully turned around USA Today. This management team has been focused on fixing TheStreet’s businesses and returning it to profitability. We believe there are two major near-term issues that create an overhang on the stock and limit its ability to increase in value: 1) resolution of an expiring agreement with Jim Cramer; and 2) a $55 million convertible preferred security that has senior liquidation preference to the common stock. We believe both of these issues need to be resolved for the stock to trade to its full potential. We believe this potential could lead to a greater than 130 percent increase in value of the company’s common stock when valuing the business on market multiples for comparable financial data subscription companies (recurring revenue) and advertising-based media companies (non-recurring revenue).¹

While we are making progress implementing our new investment strategy, we note that a majority of our assets continue to be in private investments. To be clear, we are not running away from our private portfolio companies. We continue to believe there is considerable value in those companies. In fact, given our reduced operating expenses, we are in a much better position to determine when to realize value; rather than being forced to sell our positions just to survive. We continue to believe in the potential for our most mature companies, D-Wave Systems, Inc., AgBiome LLC, HZO, Inc. and Nanosys, Inc. to return more capital than we currently value these positions. There are other companies in the portfolio that also hold promise, however these companies generally are very early in stage and the timelines and potential exit values for these companies are highly uncertain.

Our current stock price translates to our existing business being worth approximately [65] percent of our NAV as of June 30, 2017. We note that during the prior quarter one of our privately held positions, Mersana Therapeutics, Inc., successfully completed an initial public offering. Our holdings of Mersana Therapeutics at its IPO price of $15 per share were valued at $4.4 million, or an increase of $1.6 million from the value of our holdings at March 31, 2017. We understand it is hard for investors to value our private holdings. We expect that not every one of our private holdings will end up returning their current values or more. As in the example of Mersana Therapeutics, however, we believe the potential return from some of our investments is greater than their current values. We stand ready to make decisions that we believe are in the best interests of our shareholders and position the business as a whole to be successful in the future. These decisions include taking advantage of near-term opportunities to transition capital out of privately held securities when such opportunities present themselves and where we believe the terms are appropriate from a risk/return perspective.

¹ We note that the discussions of potential appreciation of stock prices above are illustrations of what we currently believe are possible based on our financial models and historical performance of certain stocks or comparable companies. Past performance may not be indicative of future results and actual results may be materially different than those discussed above. We are not responsible for the accuracy of estimates provided by portfolio companies or analysts.

I hope this letter provides a clear sense for what we are driving towards. At its most maximized level, and as soon as we can, we seek to convert our private portfolio to cash. We seek to use the cash for either making new investments in publicly traded companies or for distribution to shareholders in the form of dividends or share repurchases. We are focused on growing our NAV. We can now do so against the backdrop of lower expenses. We also note that the first and second quarters of 2017 were the first time in nearly five years where NAV increased in two successive quarters.



	June 30, 2017
ASSETS
Investments, in portfolio securities at value:
Unaffiliated privately held companies (cost: $13,413,900)	$	16,061,037
Unaffiliated rights to milestone payments (adjusted cost basis: $548,998)	2,239,142
Unaffiliated publicly traded securities (cost: $10,278,446)	9,389,135
Non-controlled affiliated privately held companies (cost: $47,544,536)	32,060,980
Non-controlled affiliated publicly traded companies (cost: $16,843,447)	8,311,524
Controlled affiliated privately held companies (cost: $19,349,898)	4,371,659
Equity method privately held company (adjusted cost basis: $158,283)	158,283
Total, investments in private portfolio companies, rights to milestone payments and public securities at value (cost: $108,137,508)	$	72,591,760
Cash	4,877,878
Restricted funds	46,151
Receivable from funds in escrow from sales of investments at value	13,203
Receivable from portfolio companies	11,306
Interest receivable	490,906
Prepaid expenses	168,581
Other assets	103,762
Total assets	$	78,303,547
LIABILITIES & NET ASSETS
Post retirement plan liabilities	$	1,284,474
Accrued severance	404,066
Accounts payable and accrued liabilities	368,573
Deferred rent	118,136
Payable for purchases of investments	116,425
Total liabilities	$	2,291,674
Commitments and contingencies (Note 11)
Net assets	$	76,011,873
Net assets are comprised of:
Preferred stock, $0.10 par value, 2,000,000 shares authorized; none issued	$	0
Common stock, $0.01 par value, 45,000,000 shares authorized at 6/30/17; 34,623,341 issued at 6/30/17	334,594
Additional paid in capital	215,159,282
Accumulated net operating and realized loss	(99,526,475		)
Accumulated unrealized depreciation of investments	(35,545,748		)
Accumulated other comprehensive income	195,745
Treasury stock, at cost (3,501,779 shares at 6/30/17)	(4,605,525		)
Net assets	$	76,011,873
Shares outstanding	31,121,562
Net asset value per outstanding share	$	2.44



	Six Months Ended June 30, 2017
Income:
Interest from:
Unaffiliated companies	$	10,463
Non-controlled affiliated companies	264,116
Controlled affiliated companies	101,490
Cash and U.S. Treasury securities and other	5,333
Fees for providing managerial assistance to portfolio companies	218,306
Yield-enhancing fees on debt securities	76,114
Other income	12,060
Total income	687,882
Operating expenses:
Salaries, benefits and stock-based compensation (Note 7)	337,358
Administration and operations	184,845
Professional fees	279,287
Rent	139,361
Insurance expense	120,623
Directors' fees and expenses	128,172
Custody fees	15,945
Depreciation	19,856
Total operating expenses	1,225,447
Expenses related to restructure:
Severance	520,619
Loss on abandoned lease	139,778
Professional fees	138,402
Disposal of fixed assets	94,592
Administration and operations	82,235
Directors' fees and expenses	60,833
Other	(69,361		)
Total expenses related to restructure	967,098
Total expenses	2,192,545
Net operating loss	(1,504,663		)
Net realized loss
Realized gain (loss) from investments:
Unaffiliated companies	130,522
Controlled affiliated companies	(1,788,463		)
Unaffiliated rights to milestone payments	(232,865		)
Publicly traded companies	(45,489		)
Realized loss from investments	(1,936,295		)
Income tax expense	5,273
Net realized loss from investments	(1,941,568		)
Net decrease (increase) in unrealized depreciation on investments:
Unaffiliated companies	1,036,723
Controlled affiliated companies	694,263
Unaffiliated rights to milestone payments	(67,346		)
Non-controlled affiliated companies	774,299
Publicly traded non-controlled affiliated companies	4,023,003
Publicly traded unaffiliated companies	1,586,336
Net decrease in unrealized depreciation on investments	8,047,278
Net realized and unrealized gain on investments	6,105,710
Share of loss on equity method investment	(20,077		)
Net increase in net assets resulting from operations:
Total	$	4,580,970
Per average basic and diluted outstanding share	$	0.15
Average outstanding shares – basic and diluted	31,021,892



	Six Months Ended June 30, 2017
Cash flows used in operating activities:
Net increase in net assets resulting from operations	$	4,580,970
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Net realized loss and change in unrealized depreciation on investments	(6,110,983		)
Depreciation of fixed assets, amortization of premium or discount on U.S. government securities and prepaid assets and accretion of bridge note interest	(95,341		)
Share of loss on equity method investee	20,077
Stock-based compensation expense	(580,435		)
Amortization of prior service cost	(104,492		)
Purchase of affiliated portfolio companies	(3,325,001		)
Purchase of publicly traded portfolio companies	(4,926,929		)
Proceeds from sale of investments of affiliated portfolio companies	160,000
Proceeds from sale of publicly traded portfolio companies	4,655
Proceeds from unaffiliated portfolio companies	234,294
Changes in assets and liabilities:
Restricted funds	(46,151		)
Receivable from portfolio companies	(11,306		)
Interest receivable	(200,320		)
Prepaid expenses	75,470
Other assets	(16,163		)
Post retirement plan liabilities	15,451
Accrued severance	404,066
Accounts payable and accrued liabilities	(508,559		)
Deferred rent	(102,167		)
Payable for purchases of investments	116,425
Net cash used in operating activities	(10,416,439		)
Cash flows from investing activities:
Purchase of fixed assets	(1,978		)
Proceeds from fixed assets	2,156
Net cash provided by investing activities	178
Cash flows from financing activities:
Payment of withholdings related to net settlement of restricted stock	(139,780		)
Net cash used in financing activities	(139,780		)
Net decrease in cash	(10,556,041		)
Cash at beginning of the period	15,433,919
Cash at end of the period	$	4,877,878
Supplemental disclosures of cash flow information:
Income taxes paid	$	5,273

180 DEGREE CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS



	UNAUDITED
	Six Months Ended June 30, 2017			Year Ended December 31, 2016
Changes in net assets from operations:
Net operating loss	$	(1,504,663	)	$	(4,516,108	)
Net realized loss on investments	(1,941,568		)	(8,075,175		)
Net decrease (increase) in unrealized depreciation on investments	8,047,278			(3,683,822		)
Share of loss on equity method investment	(20,077		)	(91,255		)
Net increase (decrease) in net assets resulting from operations	4,580,970			(16,366,360		)
Changes in net assets from capital stock transactions:
Acquisition of vested restricted stock awards to pay required employee withholding tax	(139,780		)	(39,691		)
Stock-based compensation (benefit) expense	(580,435		)	158,973
Net decrease in net assets resulting from capital stock transactions	(720,215		)	119,282
Changes in net assets from accumulated other comprehensive loss:
Other comprehensive loss	(104,492		)	(208,983		)
Net decrease in net assets resulting from accumulated other comprehensive loss	(104,492		)	(208,983		)
Net increase (decrease) in net assets	3,756,263			(16,456,061		)
Net Assets:
Beginning of the period/year	72,255,610			88,711,671
End of the period/year	$	76,011,873		$	72,255,610



Investments in Unaffiliated Companies (2) -
36.4% of net assets at value

Private Placement Portfolio (Illiquid) (3) -
21.1% of net assets at value

D-Wave Systems, Inc. (4)(5)(6)		Technology Hardware, Storage & Peripherals
Developing high-performance quantum computing systems
Series 1 Class B Convertible Preferred Stock (acquired 9/30/08)	(H)		$	1,002,074	1,144,869		$	2,178,499
Series 1 Class C Convertible Preferred Stock (acquired 9/30/08)	(H)		487,804		450,450		859,923
Series 1 Class D Convertible Preferred Stock (acquired 9/30/08)	(H)		748,473		855,131		1,632,472
Series 1 Class E Convertible Preferred Stock (acquired 11/24/10)	(H)		248,049		269,280		520,632
Series 1 Class F Convertible Preferred Stock (acquired 11/24/10)	(H)		238,323		258,721		500,216
Series 1 Class H Convertible Preferred Stock (acquired 6/27/14)	(H)		909,088		460,866		957,608
Series 2 Class D Convertible Preferred Stock (acquired 9/30/08)	(H)		736,019		678,264		1,294,827
Series 2 Class E Convertible Preferred Stock (acquired 6/1/12-3/22/13)	(H)		659,493		513,900		998,547
Series 2 Class F Convertible Preferred Stock (acquired 6/1/12-3/22/13)	(H)		633,631		493,747		959,388
Warrants for Common Stock expiring 5/12/19 (acquired 5/12/14)	(I)		26,357		20,415		11,262
			5,689,311				9,913,374

Fleet Health Alliance, LLC (4)(5)		Health Care Technology
Developing software for information transfer amongst healthcare providers and consumers
Unsecured Convertible Bridge Note, 0%, (acquired 4/22/16)	(M)		225,000		$	225,000	225,000

Genome Profiling, LLC (4)		Life Sciences Tools & Services
Developing a platform to analyze and understand the epigenome
Unsecured Convertible Bridge Note, 8%, (acquired 8/4/16)	(M)		230,000		$	230,000	230,000



Investments in Unaffiliated Companies (2) -
36.4% of net assets at value (cont.)

Private Placement Portfolio (Illiquid) (3) -
21.1% of net assets at value (cont.)

Muses Labs, Inc. (4)		Life Sciences Tools & Services
Developing a data analytics platform for precision medicine
Unsecured Convertible Bridge Note, 5%, (acquired 5/25/16)	(I)		$	223,675	$	212,000	$	223,425

Nanosys, Inc. (4)(5)		Specialty Chemicals
Developing inorganic nanowires and quantum dots for use in LED-backlit devices
Series C Convertible Preferred Stock (acquired 4/10/03)	(I)		1,500,000		803,428		843,368
Series D Convertible Preferred Stock (acquired 11/7/05)	(I)		3,000,003		1,016,950		1,813,242
Series E Convertible Preferred Stock (acquired 8/13/10)	(I)		496,573		433,688		792,861
			4,996,576				3,449,471

NanoTerra, Inc. (4)(5)		Research & Consulting Services
Developing surface chemistry and nano-manufacturing solutions
Warrants for Common Stock expiring on 2/22/21 (acquired 2/22/11)	(I)		69,168		4,462		1,172
Warrants for Series A-3 Preferred Stock expiring on 11/15/22 (acquired 11/15/12)	(I)		35,403		47,508		125,776
			104,571				126,948

Petra Pharma Corporation (4)(5)		Pharmaceuticals
Developing small molecule inhibitors for treatment of cancer and metabolic diseases
Series A Convertible Preferred Stock (acquired 12/23/15-10/27/16)	(I)		1,525,050		1,525,050		1,540,426



Investments in Unaffiliated Companies (2) -
36.4% of net assets at value (cont.)

Private Placement Portfolio (Illiquid) (3) -
21.1% of net assets at value (cont.)

Phylagen, Inc. (4)		Research & Consulting Services
Developing technology to improve human health and business productivity
Secured Convertible Bridge Note, 5%, (acquired 2/5/15)	(M)		$	224,027	$	200,000	$	313,638
Secured Convertible Bridge Note, 5%, (acquired 6/5/15)	(M)		11,037		$	10,000	15,452
			235,064				329,090

Xenio Corp. (4)(5)(7)		Technology Hardware, Storage & Peripherals
Developing a smart platform for LED lighting that enables local intelligence and communication capabilities
Common Stock (acquired 8/1/16)	(M)		184,653		221,938		23,303

Total Unaffiliated Private Portfolio (cost: $13,413,900)							$	16,061,037

Rights to Milestone Payments (Illiquid) (8) -
2.9% of net assets at value

Amgen, Inc. (4)(9)		Biotechnology
Rights to Milestone Payments from Acquisition of BioVex Group, Inc. (acquired 3/4/11)	(I)		$	548,998	$	548,998	$	2,239,142

Laird Technologies, Inc. (4)(10)		Electronic Components
Rights to Milestone Payments from Merger & Acquisition of Nextreme Thermal Solutions, Inc. (acquired 2/13/13)	(I)		0		$	0	0

Total Unaffiliated Rights to Milestone Payments (cost: $548,998)							$	2,239,142



Publicly Traded Portfolio (11) -
12.4% of net assets at value

Champions Oncology, Inc. (5)		Life Sciences Tools & Services
Developing its TumorGraftTM platform for personalized medicine and drug development
Warrants for Common Stock expiring 1/28/19 (acquired 1/28/13)	(I)		$	400	5,500	$	1,849

Mersana Therapeutics, Inc. (4)(5)(12)		Biotechnology
Developing antibody drug conjugates for cancer therapy
Common Stock (acquired 7/27/12-6/28/17)	(M)		4,924,753		294,557	3,849,162

OpGen, Inc. (5)		Biotechnology
Developing tools for genomic sequence assembly and analysis
Warrants for the Purchase of Common Stock expiring 5/8/20 (acquired 5/5/15)	(M)		425,579		300,833	35,919
Warrants for the Purchase of Common Stock expiring 2/17/25 (acquired 5/5/15)	(I)		785		31,206	13,706
			426,364			49,625

Synacor, Inc. (5)(13)		Internet Software & Services
Providing technology development, multiplatform services and revenue partner for video, internet and communications providers, device manufacturers, and enterprises
Common Stock (acquired 4/6/17-6/8/17)	(M)		2,451,446		700,000	2,555,000

TheStreet, Inc. (5)(13)		Financial Exchanges & Data
Providing financial news and proprietary data to consumers and businesses
Common Stock (acquired 4/20/17-6/30/17)	(M)		827,833		925,902	768,499

USA Truck, Inc. (5)(13)		Trucking
Providing over-the-road trucking and freight logistics
Common Stock (acquired 5/19/17-6/7/17)	(M)		1,647,650		250,000	2,165,000

Total Unaffiliated Publicly Traded Portfolio (cost: $10,278,446)						$	9,389,135

Total Investments in Unaffiliated Companies (cost: $24,241,344)						27,689,314



Investments in Non-Controlled Affiliated Companies (2) -
53.1% of net assets at value

Private Placement Portfolio (Illiquid) (14) -
42.2% of net assets at value

ABSMaterials, Inc. (4)		Specialty Chemicals
Developing nano-structured absorbent materials for water remediation and consumer applications
Series A Convertible Preferred Stock (acquired 2/17/10-10/24/11)	(I)		$	435,000	390,000		$	253,587
Series B Convertible Preferred Stock (acquired 11/8/13-6/25/14)	(I)		1,217,644		1,037,751		1,067,285
Secured Convertible Bridge Note, 8%, (acquired 1/20/16)	(M)		111,573		$	100,000	111,573
Secured Convertible Bridge Note, 8%, (acquired 3/28/17)	(M)		25,521		$	25,000	25,521
			1,789,738				1,457,966

AgBiome, LLC (4)(5)		Fertilizers & Agricultural Chemicals
Providing early-stage research and discovery for agriculture and utilizing the crop microbiome to identify products that reduce risk and improve yield
Series A-1 Convertible Preferred Stock (acquired 1/30/13)	(I)		2,000,000		2,000,000		6,833,127
Series A-2 Convertible Preferred Stock (acquired 4/9/13-10/15/13)	(I)		521,740		417,392		1,475,755
Series B Convertible Preferred Stock (acquired 8/7/15)	(I)		500,006		160,526		759,567
			3,021,746				9,068,449

AgTech Accelerator Corporation (4)(5)(15)		Research & Consulting Services
Identifying and managing emerging agriculture technologies companies
Common Stock (acquired 5/4/16-11/17/16)	(M)		300,000		300,000		300
Class B Common Stock (acquired 11/17/16)	(M)		0		138,000		138
			300,000				438



Investments in Non-Controlled Affiliated Companies (2) -
53.1% of net assets at value (cont.)

Private Placement Portfolio (Illiquid) (14) -
42.2% of net assets at value (cont.)

EchoPixel, Inc. (4)(5)		Health Care Equipment
Developing virtual reality 3-D visualization software for life sciences and health care applications
Series Seed Convertible Preferred Stock (acquired 6/21/13-6/30/14)	(I)		$	1,250,000	4,194,630	$	935,395
Series Seed-2 Convertible Preferred Stock (acquired 1/22/16)	(I)		500,000		1,476,668	334,209
Series A-2 Convertible Preferred Stock (acquired 3/23/17)	(I)		350,000		1,471,577	411,869
			2,100,000			1,681,473

Ensemble Therapeutics Corporation (4)(5)(16)		Pharmaceuticals
Developed new classes of therapeutics
Series B Convertible Preferred Stock (acquired 6/6/07)	(I)		2,000,000		1,449,275	0
Series B-1 Convertible Preferred Stock (acquired 4/21/14)	(I)		679,754		492,575	779,511
			2,679,754			779,511

Essential Health Solutions, Inc. (4)(5)		Health Care Technology
Developing software for information transfer amongst healthcare providers and consumers
Common Stock (acquired 11/18/16)	(I)		20		200,000	111,581
Series A Convertible Preferred Stock (acquired 11/18/16)	(I)		2,750,000		2,750,000	2,772,929
			2,750,020			2,884,510

HZO, Inc. (4)		Semiconductor Equipment
Developing novel industrial coatings that protect electronics against damage from liquids
Common Stock (acquired 6/23/14)	(I)		666,667		405,729	448,764
Series I Convertible Preferred Stock (acquired 6/23/14)	(I)		5,709,835		2,266,894	4,034,473
Series II Convertible Preferred Stock (acquired 6/23/14-8/3/15)	(I)		2,500,006		674,638	1,728,107
Series II-A Convertible Preferred Stock (acquired 9/9/16)	(I)		226,070		69,053	255,727
Warrants for Series II-A Convertible Preferred Stock expiring 7/15/23 (acquired 7/15/16)	(I)		29,820		6,577	24,297
			9,132,398			6,491,368



Investments in Non-Controlled Affiliated Companies (2) -
53.1% of net assets at value (cont.)

Private Placement Portfolio (Illiquid) (14) -
42.2% of net assets at value (cont.)

Laser Light Engines, Inc. (4)(5)(16)		Technology Hardware, Storage & Peripherals
Manufactured solid-state light sources for digital cinema and large-venue projection displays
Series A Convertible Preferred Stock (acquired 5/6/08)	(M)		$	2,000,000	7,499,062		$	0
Series B Convertible Preferred Stock (acquired 9/17/10)	(M)		3,095,802		13,571,848		0
Secured Convertible Bridge Note, 12%, (acquired 10/7/2011)	(M)		200,000		$	200,000	0
Secured Convertible Bridge Note, 12%, (acquired 11/17/2011)	(M)		95,652		$	95,652	0
Secured Convertible Bridge Note, 12%, (acquired 12/21/2011)	(M)		82,609		$	82,609	0
Secured Convertible Bridge Note, 12%, (acquired 3/5/2012)	(M)		434,784		$	434,784	0
Secured Convertible Bridge Note, 12%, (acquired 7/26/2012)	(M)		186,955		$	186,955	0
Secured Convertible Bridge Note, 20%, (acquired 4/29/2013)	(M)		166,667		$	166,667	0
Secured Convertible Bridge Note, 20%, (acquired 7/22/2013)	(M)		166,667		$	166,667	0
Secured Convertible Bridge Note, 10%, (acquired 10/30/2013)	(M)		80,669		$	80,669	0
Secured Convertible Bridge Note, 10%, (acquired 2/5/2014)	(M)		19,331		$	19,331	0
Secured Convertible Bridge Note, 10%, (acquired 6/24/2014)	(M)		13,745		$	13,745	0
			6,542,881				0

Lodo Therapeutics Corporation (4)(5)		Pharmaceuticals
Developing and commercializing novel therapeutics derived from a metagenome-based Natural Product Discovery Platform
Series A Convertible Preferred Stock (acquired 12/21/15-4/22/16)	(I)		658,190		658,190		663,747



Investments in Non-Controlled Affiliated Companies (2) -
53.1% of net assets at value (cont.)

Private Placement Portfolio (Illiquid) (14) -
42.2% of net assets at value (cont.)

NGX Bio, Inc. (4)(17)		Research & Consulting Services
Developing translational genomics solutions
Series Seed Convertible Preferred Stock (acquired 6/6/14-1/10/16)	(I)		$	500,002	666,667		$	703,496
Series Seed 2 Convertible Preferred Stock (acquired 8/20/15-9/30/15)	(I)		499,999		329,989		459,718
Series Seed 3 Convertible Preferred Stock (acquired 6/24/17)	(I)		686,329		666,001		746,746
			1,686,330				1,909,960

ORIG3N, Inc. (4)		Health Care Technology
Developing precision medicine applications for induced pluripotent stems cells
Series 1 Convertible Preferred Stock (acquired 2/5/15-8/5/15)	(I)		500,000		1,195,315		949,223
Series A Convertible Preferred Stock (acquired 11/25/15-9/7/16)	(I)	Research & Consulting Services	1,500,000		1,364,666		1,308,087
Series A-2 Convertible Preferred Stock (acquired 5/11/17)	(I)		100,395		93,180		114,161
			2,100,395				2,371,471

Produced Water Absorbents, Inc. (4)(18)		Oil & Gas Equipment & Services
Providing integrated process separation solutions to the global oil and gas industries, enabling onsite treatment of produced and flowback water
Common Stock (acquired 4/30/16)	(M)		7,670,281		50,243,350		0
Warrants for Common Stock expiring upon liquidation event (acquired 4/30/16)	(I)		65,250		450,000		0
Senior Secured Debt, 15% commencing on 4/1/16, maturing on 12/31/19 (acquired 4/1/16)	(I)		2,058,255		$	2,533,766	1,248,600
			9,793,786				1,248,600



Investments in Non-Controlled Affiliated Companies (2) -
53.1% of net assets at value (cont.)

Private Placement Portfolio (Illiquid) (14) -
42.2% of net assets at value (cont.)

Senova Systems, Inc. (4)(16)		Life Sciences Tools & Services
Developed next-generation sensors to measure pH
Series B-1 Convertible Preferred Stock (acquired 8/1/13-1/15/14)	(I)		$	1,083,960	2,759,902	$	0
Series C Convertible Preferred Stock (acquired 10/24/14-4/1/15)	(I)		1,208,287		1,611,049	70,465
Warrants for Series B Preferred Stock expiring 10/15/17 (acquired 10/15/12)	(I)		131,538		164,423	0
Warrants for Series B Preferred Stock expiring 4/24/18 (acquired 4/24/13)	(I)		20,000		25,000	0
			2,443,785			70,465

TARA Biosystems, Inc. (4)		Specialty Chemicals
Developing human tissue models for toxicology and drug discovery applications
Common Stock (acquired 8/20/14)	(I)		20		2,000,000	658,013
Series A Convertible Preferred Stock (acquired 3/31/17)	(I)		2,545,493		6,878,572	2,775,009
			2,545,513			3,433,022

Total Non-Controlled Affiliated Private Portfolio (cost: $47,544,536)						$	32,060,980

Publicly Traded Portfolio (19) -
10.9% of net assets at value

Adesto Technologies Corporation (5)		Semiconductors
Developing low-power, high-performance memory devices
Common Stock (acquired 10/27/15)	(M)		$	11,482,417	1,769,868	$	8,052,899



Publicly Traded Portfolio (19) -
10.9% of net assets at value (cont.)

Enumeral Biomedical Holdings, Inc. (5)		Biotechnology
Developed therapeutics and diagnostics through functional assaying of single cells
Common Stock (acquired 7/31/14)	(M)		$	4,943,213	7,886,368		$	252,364
Warrants to purchase Common Stock expiring 2/2/2024 (acquired 7/31/14)	(I)		57,567		255,120		5,588
Warrants to purchase Common Stock expiring 7/30/2019 (acquired 7/31/14)	(I)		360,250		1,000,000		673
			5,361,030				258,625

Total Non-Controlled Affiliated Publicly Traded Portfolio (cost: $16,843,447)							$	8,311,524

Total Investments in Non-Controlled Affiliated Companies (cost: $64,387,983)							$	40,372,504

Investments in Controlled Affiliated Companies (2) -
5.8% of net assets at value

Private Placement Portfolio (Illiquid) (20) -
5.8% of net assets at value

Black Silicon Holdings, Inc. (4)(16)(21)		Semiconductors
Holding company for interest in a company that develops silicon-based optoelectronic products
Series A Convertible Preferred Stock (acquired 8/4/15)	(I)		$	750,000	233,499		$	0
Series A-1 Convertible Preferred Stock (acquired 8/4/15)	(I)		890,000		2,966,667		0
Series A-2 Convertible Preferred Stock (acquired 8/4/15)	(I)		2,445,000		4,207,537		0
Series B-1 Convertible Preferred Stock (acquired 8/4/15)	(I)		1,169,561		1,892,836		0
Series C Convertible Preferred Stock (acquired 8/4/15)	(I)		1,171,316		1,674,030		0
Secured Convertible Bridge Note, 8%, (acquired 8/25/16)	(I)		1,366,525		$	1,278,453	444,729
			7,792,402				444,729



Investments in Controlled Affiliated Companies (2) -
5.8% of net assets at value (cont.)

Private Placement Portfolio (Illiquid) (20) -
5.8% of net assets at value (cont.)

HALE.life Corporation (4)(22)		Health Care Technology
Developing a platform to facilitate precision health and medicine
Common Stock (acquired 3/1/16)	(M)		$	10	1,000,000		$	10
Series Seed Convertible Preferred Stock (acquired 3/28/17)	(M)		1,896,920		11,000,000		1,896,920
Unsecured Convertible Bridge Note, 0%, (acquired 3/28/17)	(M)		2,000,000		$	2,000,000	2,000,000
			3,896,930				3,896,930

SynGlyco, Inc. (4)(16)		Specialty Chemicals
Developed synthetic carbohydrates for pharmaceutical applications
Common Stock (acquired 12/13/11)	(I)		2,729,817		57,463		0
Series A' Convertible Preferred Stock (acquired 12/13/11-6/7/12)	(I)



7 N. Willow Street, Suite 4B, Montclair NJ		07042
(Address of Principal Executive Offices)		(Zip Code)



180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2017 (UNAUDITED)

	Method of Valuation (1)	Industry	Cost	Shares/ Principal	Value



180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2017 (UNAUDITED)

	Method of Valuation (1)	Industry	Cost	Shares/ Principal	Value



180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2017 (UNAUDITED)

	Method of Valuation (1)	Industry	Cost	Shares/ Principal	Value



180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2017 (UNAUDITED)

	Method of Valuation (1)	Industry	Cost	Shares/ Principal	Value


•	The price we pay relative to the business we buy is the most important driver of investment returns.


•	The public markets continuously overreact to near-term or environmental challenges in certain stocks, thus creating attractive valuations and buying opportunities.


•	Out-of-favor companies and industries create opportunities to identify investments that offer asymmetric return to risk potential.


•	Companies with strong franchises, managements, and balance sheets are best positioned for turnarounds, increased market share, and improved profitability.


•	A portfolio of strong business franchises, purchased at the right price, outperforms over a market cycle.