Document

In the fourth quarter of 2017, our net asset value per share ("NAV") declined to $2.60, or by $0.08, from $2.68 as of the end of the prior quarter. Further below, we discuss in detail all the puts and takes for what helped and hurt in the quarter. Our biggest holding, Adesto Technologies Corporation (NASDAQ:IOTS), declined from $7.85 to $6.45, which, for us, equates to a decline of $0.067 per share, or 84% of the total decline in our NAV. Given that Adesto started the year at $1.85 and rose to $7.85 at the end of the third quarter of 2017, we shouldn’t be surprised the stock pulled back. We continue to believe Adesto is positioned to deliver substantial revenue growth and significantly improved EBITDA and earnings. If we are right on the fundamentals, the stock should resume its growth trajectory and continue to add to our NAV.

180’s view is that persistent long-term performance trumps short-term results. Our goal is to make money for our shareholders. That didn’t happen in the fourth quarter. We mentioned last quarter that it would be irrational to annualize what was a staggeringly great quarter of 9.8% growth. We don’t think the fourth quarter is the new norm either. A year is more representative for evaluating success than is a quarter. For the first time since 2010, 180’s NAV grew on an annual basis. 180 started the year at NAV of $2.34 and ended at $2.60. One could argue the increase in our NAV was because of a bull market. Our response to that is simple: we have had a rising market each of the last six years, and during that time we never grew our NAV.

In the fourth quarter, 180 announced that it led a $7.85 million round of financing in TheStreet, Inc. (NASDAQ:TST), which we believe has the potential to materially increase our NAV over the next 1-2 years. This financing included $4 million of capital from our balance sheet and $3.85 million raised from a family office and high-net-worth individuals through a fund formed and managed by 180. The proceeds from this financing, along with cash from TST's balance sheet, were used to retire TST's preferred stock, which served as an overhang on TST's ability to build value for common stockholders. In conjunction with this investment, 180 received the right to appoint a board seat that I currently occupy.

The TST transaction serves as a model for the type of ‘constructive activism’ we talk about when describing our investment process. We found a good company with a strong management team whose value was hindered by a capital structure problem. The turnaround at TST was already underway when we became interested in the company and its story. We worked with TST’s management and board to find a solution to its preferred stock overhang that provided benefits to all parties involved. We are pleased that it came together the way it did. We have already rolled up our sleeves and are working to assist the company in creating value for all common shareholders. We believe TST is undervalued as it currently trades at less than 1x enterprise value to revenues. Given that 90 percent of TST’s revenues are recurring subscriptions, we would expect the business to trade at a minimum of twice that multiple based on comparable publicly traded companies. We are excited about TST’s prospects and look forward to updating you on our progress.

We have greatly reduced our operating expenses, which makes it easier to grow NAV than in years past. Over the last five years, our operating expenses, excluding stock-based compensation and interest on outstanding debt, averaged approximately $1.6 million per quarter. In 2016, our operating expenses, excluding stock-based compensation and interest on outstanding debt, averaged approximately $1.3 million per quarter. In 2017, our operating expenses, excluding stock-based compensation, one-time restructuring costs, and the year-end compensation pool and including sublease income, averaged approximately $730,000 per quarter. In other words, we have significantly reduced our on-going expense-related burn rate from 7.3% percent of net assets in 2016, to a run-rate of less than 4% of net assets.

We are aware that every dollar we spend is a dollar from the shareholders. Therefore, we are hawks when it comes to our cost structure. Over the past year, our professional fees declined 60% from $1.37 million to $550,000. Our administration and operations expenses declined 45% from $560,000 to $300,000. Our office in Montclair, New Jersey, costs $33,600 per year, or 89% less than the $300,000 per year for our old office space in New York City. All in all, as it relates to reducing our costs, we did what we said we would, and more.

We spoke last quarter about our compensation program for management. In general, the objectives of the company’s compensation program are to align the interests of shareholders and employees; motivate and retain employees by providing market-competitive total compensation; and attract talented new employees in a competitive market. Our compensation committee analyzes how to balance these factors, but at the end of the day it is simple: the growth of 180’s value is the prerequisite for an end-of-year compensation pool. The compensation committee has designed this pool to reward both annual and persistent performance of individuals and the company. Our NAV last quarter included an accrual for a year-end compensation pool. The NAV reported for this quarter includes an additional accrual of $150,000 for a year-end compensation. All in, including the year-end compensation pool for 2017, our total compensation expenses, not including a stock-based compensation net benefit, still decreased as a portion of net assets from 3.3% in 2016 to 2.9% in 2017. A material portion of the year-end compensation pool will be deferred and only paid to members of management if their performance on board-defined metrics during the prior year are persistent over subsequent years. We care about performance over one year, but true success should only be measured over a longer period of time. We will only earn compensation beyond base salaries and benefits if shareholders win. In 2017, we all won.

The strategy of our company is to convert, at the highest value possible, our private portfolio into cash. 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 to survive. We seek to use the returns from these investments for making new investments in publicly traded companies, or for distributions to shareholders in the form of dividends or share repurchases. Finally, as it relates to our quarterly NAV change, our operating expenses net of investment and other income reduced our NAV by $0.02.

As for calendar year 2017, we achieved a nearly 11% increase ($0.26 per share) in our NAV. More specifically, our public portfolio added $0.38 per share and our private portfolio added $0.03. Our operating expenses net of investment income were ($0.10) per share and we had ($0.05) per share in restructuring charges. We generated $12.0 million in growth from our public holdings on a starting value of $17.7 million (excluding warrants and including Mersana’s year-end 2016 valuation; Mersana completed an IPO June 2017) and achieved a 68% return on our public portfolio. Yes, it was a bull market, but by comparison, the Russell Microcap Value index total return was 15.1%. We generated nearly 4x the performance of our closest benchmark index. As for our new strategy, it was successful, and our stock selection in 2017 was exceptional.

As of end of 2017, TURN’s common stock traded at 75.8% of our NAV. Our liquid assets, cash and other assets net of liabilities were worth $0.83 per share ($25.9 million). Our stock price was $1.97 per share. If we received 100% credit for the value of these assets net of liabilities, the market is ascribing a value of $1.14 per share ($35.5 million) of TURN’s stock price to our private portfolio. Given our private assets are valued by us at $55.2 million, the market is discounting the value of our private portfolio assets by 35.8%. As we grow our cash and liquid securities, the discount our stock trades to NAV should narrow. At the beginning of 2016, our cash and liquid securities were 27.5% of our net assets. They are now 34.0%. In the beginning of the year our stock traded at 59% of our NAV. Today, that number is 76%. That’s progress and illustrates why our strategy to focus on public companies was conducive to restoring value in our share price.

In prior communications, we discussed strategic initiatives around managing third-party capital. We are continuing to pursue a broker dealer license to expand our ability to raise capital for special purpose vehicles and other managed funds. We are aiming to have that license by the end of the second quarter. The success of efforts to raise capital are often related directly to the people who have extensive networks of potential investors. The broker dealer license will enable us to hire, and appropriately compensate, individuals involved in raising such capital. Having the broker dealer license will also enable us to raise capital for other entities, raise capital for our portfolio companies, and generate income for 180 from such efforts. Our investment in TheStreet was our first foray into managed funds. We want to do more. As a strategic priority for 2018, we will look to engage with other like-minded investors to see if there are partnerships available that could lead to launching new funds; managed and/or co-managed by 180. By the end of 2018, our goal is for 180 to have significantly more assets in managed products.

We had a down quarter but a good year. My hope when we started was to be able to show progress sooner rather than later. For the year, our NAV was up 11%. Prior to that, one had to travel back to 2010 to find a year where our NAV increased. For the year, our share price was up 43%. The last time our share price was up for the year was 2009. While that’s hard to believe, it’s the stark reality of our past. Today, we are in a better place. The father of value investing, Benjamin Graham, explained the concept of voting and weighing machines. He said, in the short run, the market is like a voting machine --- it tallies up which firms are popular and unpopular. But in the long run, the market is like a weighing machine --- it assesses the substance of a company. What matters the most for 180 is our underlying business performance over the long term; not the investing public’s fickle opinion about our prospects in the short run. Don’t get me wrong, we are thrilled our shareholders have benefited in our new strategy and the performance of our stock in 2017. We have bigger goals in mind for 180. We want 180 to be known as a prominent and dominant leader in our world of public company constructive activism. We will continue to strive for excellence in investment performance. We want to be known as game changers in helping businesses generate positive shareholder returns. The first year was good. We hope the next several years provide a step function in our success and additional value creation for shareholders.



	December 31, 2017
ASSETS
Investments in portfolio securities, at value:
Unaffiliated privately held companies (cost: $13,142,865)	$	16,020,749
Unaffiliated publicly traded securities (cost: $9,338,744)	7,901,351
Non-controlled affiliated privately held companies (cost: $40,602,027)	32,491,545
Non-controlled affiliated publicly traded securities (cost: $14,882,779)	16,363,789
Controlled affiliated privately held companies (cost: $19,404,908)	4,215,689
Equity method privately held company (adjusted cost basis: $256,622)	256,622
Unaffiliated rights to payments (adjusted cost basis: $548,998)	2,211,867
Cash	3,452,389
Restricted cash	46,151
Receivable from funds in escrow from sales of investments, at value	12,955
Receivable from portfolio companies and managed fund	40,752
Interest receivable	711,240
Prepaid expenses	236,451
Other assets	166,196
Total assets	$	84,127,746
LIABILITIES & NET ASSETS
Post-retirement plan liabilities	$	1,339,346
Accounts payable and accrued liabilities	1,447,545
Accrued severance	140,923
Deferred rent	98,818
Directors' fee payable	58,125
Total liabilities	$	3,084,757
Commitments and contingencies (Note 11)
Net assets	$	81,042,989
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; 34,623,341 issued	334,594
Additional paid in capital	134,038,475
Accumulated net investment loss	(5,211,751		)
Accumulated net realized loss	(24,797,473		)
Accumulated net unrealized depreciation of investments	(18,715,331		)
Treasury stock, at cost 3,501,779 shares	(4,605,525		)
Net assets	$	81,042,989
Shares outstanding	31,121,562
Net asset value per outstanding share	$	2.60



	Year Ended December 31, 2017
Income:
Interest from:
Unaffiliated companies-cash	$	28,455
Unaffiliated companies-PIK	10,500
Non-controlled affiliated companies-cash	423,017
Non-controlled affiliated companies-PIK	57,223
Controlled affiliated companies-cash	30,457
Controlled affiliated companies-PIK	126,044
Cash and U.S. Treasury securities and other	9,012
Fees for providing managerial assistance to portfolio companies	241,306
Yield-enhancing fees on debt securities	158,856
Sub-lease income	134,892
Other income	10,161
Total income	1,229,923
Operating expenses:
Salaries and benefits	2,375,977
Administration and operations	306,662
Professional fees	547,940
Rent	257,003
Directors' fees and expenses	240,107
Insurance expense	237,309
Custody fees	31,571
Depreciation	23,391
Total operating expenses	4,019,960
Expenses related to restructure:
Severance	512,772
Loss on abandoned lease (Note 2)	144,138
Stock-based compensation (Note 7)	(190,347		)
Professional fees	138,402
Disposal of fixed assets	94,592
Administration and operations	82,235
Directors' fees and expenses	60,833
Total expenses related to restructure	842,625
Total expenses	4,862,585
Income tax expense	12,853
Net investment loss	(3,645,515		)
Net realized (loss) gain from investments:
Realized (loss) gain from investments:
Unaffiliated privately held companies	(184,653		)
Unaffiliated publicly traded securities	1,955,611
Non-controlled affiliated privately held companies	(7,769,743		)
Non-controlled affiliated publicly traded securities	(5,084,687		)
Controlled affiliated privately held companies	(569,116		)
Unaffiliated rights to payments	(232,865		)
Net realized loss from investments	(11,885,453		)
Realized gain from funds held in escrow	130,274
Net realized loss	(11,755,179		)
Change in unrealized appreciation (depreciation) on investments:
Unaffiliated privately held companies	1,388,972
Unaffiliated publicly traded securities	1,043,706
Non-controlled affiliated privately held companies	8,020,420
Non-controlled affiliated publicly traded securities	14,035,935
Controlled affiliated privately held companies	483,283



	Year Ended December 31, 2017
Cash flows used in operating activities:
Net increase in net assets resulting from operations	$	9,417,743
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Net realized loss from investments	11,885,453
Realized gain from funds held in escrow	(130,274		)
Net change in unrealized appreciation on investments	(24,877,695		)
Depreciation of fixed assets, amortization of premium or discount on U.S. government securities and prepaid assets and accretion of bridge note interest	(242,537		)
Share of loss on equity method investee	59,258
Stock-based compensation expense	(190,347		)
Amortization of prior service cost	(300,237		)
Purchase of unaffiliated publicly traded securities	(5,737,212		)
Purchase of non-controlled affiliated privately held portfolio companies	(949,804		)
Purchase of non-controlled affiliated publicly traded securities	(4,891,794		)
Purchase of controlled affiliated privately held portfolio companies	(2,425,000		)
Purchase of equity method privately held company	(137,520		)
Proceeds from sale of unaffiliated privately held companies	94,317
Proceeds from sale of unaffiliated publicly traded securities	3,705,597
Proceeds from sale of non-controlled affiliated privately held companies	528,813
Proceeds from sale of non-controlled affiliated publicly traded securities	1,817,917
Proceeds from sale of controlled affiliated privately held companies	160,885
Proceeds from funds held in escrow	234,295
Changes in assets and liabilities:
Increase in restricted cash	(46,151		)
Increase in receivable from portfolio companies and managed fund	(40,752		)
Increase in interest receivable	(420,654		)
Decrease on prepaid expenses	7,600
Increase in other assets	(78,716		)
Increase in post-retirement plan liabilities	70,323
Increase in accounts payable and accrued liabilities	570,413
Increase in accrued severance	140,923
Decrease in deferred rent	(121,485		)
Increase in directors' fee payable	58,125
Net cash used in operating activities	(11,838,516		)
Cash flows from investing activities:
Purchase of fixed assets	(5,390		)
Proceeds from sale of fixed assets	2,156
Net cash used in investing activities	(3,234		)
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	(11,981,530		)
Cash at beginning of the year	15,433,919
Cash at end of the year	$	3,452,389
Supplemental disclosures of cash flow information:
Income taxes paid	$	12,853
Restricted cash	46,151

180 DEGREE CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS



	Year Ended December 31, 2017			Year Ended December 31, 2016
Changes in net assets from operations:
Net investment loss	$	(3,645,515	)	$	(4,516,108	)
Net realized loss	(11,755,179		)	(8,075,175		)
Net change in unrealized appreciation (depreciation) on investments	24,877,695			(3,683,822		)
Share of loss on equity method investment	(59,258		)	(91,255		)
Net increase (decrease) in net assets resulting from operations	9,417,743			(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	(190,347		)	158,973
Net (decrease) increase in net assets resulting from capital stock transactions	(330,127		)	119,282
Changes in net assets from accumulated other comprehensive loss:
Other comprehensive loss	(300,237		)	(208,983		)
Net decrease in net assets resulting from accumulated other comprehensive loss	(300,237		)	(208,983		)
Net increase (decrease) in net assets	8,787,379			(16,456,061		)
Net Assets:
Beginning of the year	72,255,610			88,711,671
End of the year	$	81,042,989		$	72,255,610

Accumulated net investment loss	$	(5,211,751	)	$	(5,139,783	)



	Year Ended Dec. 31, 2017				Year Ended Dec. 31, 2016			Year Ended Dec. 31, 2015			Year Ended Dec. 31, 2014			Year Ended Dec. 31, 2013
Per Share Operating Performance
Net asset value per share, beginning of year	$	2.34			$	2.88		$	3.51		$	3.93		$	4.13
Net investment loss*	(0.12		)		(0.15		)	(0.23		)	(0.25		)	(0.26		)
Net realized (loss) gain from investments*	(0.38		)		(0.26		)	0.15			(0.16		)	0.59
Net change in unrealized appreciation (depreciation) on investments and written call options*¹	0.80				(0.12		)	(0.56		)	(0.02		)	(0.58		)
Share of loss on equity method investment*²	0.00				0.00			(0.01		)	0.00			0.00
Total*	0.30				(0.53		)	(0.65		)	(0.43		)	(0.25		)
Net (decrease) increase as a result of stock-based compensation expense*²	(0.01		)		0.01			0.03			0.03			0.04
Net increase as a result of purchase of treasury stock	0.00				0.00			0.01			0.00			0.00
Net decrease as a result of acquisition of vested restricted stock awards related to employee withholding²	(0.02		)		(0.01		)	(0.01		)	(0.01		)	(0.01		)
Total (decrease) increase from capital stock transactions	(0.03		)		0.00			0.03			0.02			0.03
Net (decrease) increase as a result of other comprehensive (loss) income*²	(0.01		)		(0.01		)	(0.01		)	(0.01		)	0.02
Net increase (decrease) in net asset value	0.26				(0.54		)	(0.63		)	(0.42		)	(0.20		)
Net asset value per share, end of year	$	2.60			$	2.34		$	2.88		$	3.51		$	3.93
Stock price per share, end of year	$	1.97			$	1.38		$	2.20		$	2.95		$	2.98
Total return based on stock price	42.75		%		(37.27		)%	(25.42		)%	(1.01		)%	(9.70		)%

Supplemental Data:
Net assets, end of year	$	81,042,989			$	72,255,610		$	88,711,671		$	109,654,427		$	122,701,575
Ratio of expenses, excluding taxes, to average net assets**	6.26		%		7.88		%	8.15		%	7.14		%	6.62		%
Ratio of expenses, including taxes, to average net assets**	6.28		%	³	7.89		%	8.15		%	7.15		%	6.65		%
Ratio of net investment loss to average net assets	(4.68		)%		(5.64		)%	(7.22		)%	(6.70		)%	(6.26		)%
Average debt outstanding	$	0			$	4,590,164		$	3,780,822		$	0		$	0
Average debt per share	$	0.00			$	0.15		$	0.12		$	0.00		$	0.00
Portfolio turnover	8.83		%		***			***			***			***
Number of shares outstanding, end of year	31,121,562				30,904,209			30,845,754			31,280,843			31,197,438



Investments in Unaffiliated Companies (2) -
29.5% of net assets at value

Privately Held Companies (Illiquid) (3) -
19.8% of net assets at value

AutoTech Ventures Management I, LLC (4)(5)(6)
Venture capital investing in automotive-related companies		Asset Management & Custody Banks
LLC Interests (acquired 12/1/17)	(M) (L3)		$	0	0		$	0

D-Wave Systems, Inc. (4)(5)(7)		Technology Hardware, Storage & Peripherals
Developing high-performance quantum computing systems
Series 1 Class B Convertible Preferred Stock (acquired 9/30/08)	(M) (L3)		1,002,074		1,144,869		2,071,959
Series 1 Class C Convertible Preferred Stock (acquired 9/30/08)	(M) (L3)		487,804		450,450		832,384
Series 1 Class D Convertible Preferred Stock (acquired 9/30/08)	(M) (L3)		748,473		855,131		1,580,191
Series 1 Class E Convertible Preferred Stock (acquired 11/24/10)	(M) (L3)		248,049		269,280		519,061
Series 1 Class F Convertible Preferred Stock (acquired 11/24/10)	(M) (L3)		238,323		258,721		498,708
Series 1 Class H Convertible Preferred Stock (acquired 6/27/14)	(M) (L3)		909,088		460,866		1,207,745
Series 2 Class D Convertible Preferred Stock (acquired 9/30/08)	(M) (L3)		736,019		678,264		1,253,360
Series 2 Class E Convertible Preferred Stock (acquired 6/1/12-3/22/13)	(M) (L3)		659,493		513,900		1,036,886
Series 2 Class F Convertible Preferred Stock (acquired 6/1/12-3/22/13)	(M) (L3)		633,631		493,747		996,224
Warrants for Common Stock expiring 5/12/19 (acquired 5/12/14)	(M) (L3)		26,357		20,415		10,504
			5,689,311				10,007,022

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, no maturity date)	(M) (L3)		225,000		$	225,000	225,000



Investments in Unaffiliated Companies (2) -
29.5% of net assets at value (cont.)

Privately Held Companies (Illiquid) (3) -
19.8% of net assets at value (cont.)

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, maturing 8/4/19)	(M) (L3)		$	230,000	$	230,000	$	230,000

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, maturing 3/31/18)	(I) (L3)		132,000		$	132,000	132,000

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) (L3)		1,500,000		803,428		867,135
Series D Convertible Preferred Stock (acquired 11/7/05)	(I) (L3)		3,000,003		1,016,950		1,806,882
Series E Convertible Preferred Stock (acquired 8/13/10)	(I) (L3)		496,573		433,688		791,598
			4,996,576				3,465,615

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) (L3)		69,168		4,462		215
Warrants for Series A-3 Preferred Stock expiring on 11/15/22 (acquired 11/15/12)	(I) (L3)		35,403		47,508		76,077
			104,571				76,292

Petra Pharma Corporation (4)(5)(8)		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) (L3)		1,525,050		1,525,050		1,548,319



Investments in Unaffiliated Companies (2) -
29.5% of net assets at value (cont.)

Privately Held Companies (Illiquid) (3) -
19.8% 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% PIK, (acquired 2/5/15, maturing 6/12/19)	(M) (L3)		$	229,068	$	200,000	$	320,696
Secured Convertible Bridge Note, 5% PIK, (acquired 6/5/15, maturing 6/12/19)	(M) (L3)		11,289		$	10,000	15,805
			240,357				336,501

Total Unaffiliated Privately Held Companies (cost: $13,142,865)							$	16,020,749

Unaffiliated Publicly Traded Securities (9) -
9.7% 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) (L3)		$	400	5,500		$	4,245

Mersana Therapeutics, Inc. (5)		Biotechnology
Developing antibody drug conjugates for cancer therapy
Common Stock (acquired 7/27/12-6/28/17)	(M) (L1)		4,924,753		294,554		4,839,522

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) (L2)		425,579		300,833		14,410
Warrants for the Purchase of Common Stock expiring 2/17/25 (acquired 5/5/15)	(I) (L3)		785		31,206		1,699
			426,364				16,109



Investments in Unaffiliated Companies (2) -
29.5% of net assets at value (cont.)

Unaffiliated Publicly Traded Securities (9) -
9.7% of net assets at value (cont.)

Synacor, Inc. (5)(10)		Internet Software & Services
Providing technology development, multiplatform services and revenue partner for video, internet and communications providers, device manufacturers, and enterprises
Common Stock (acquired 4/6/17-9/19/17)	(M) (L1)		$	3,672,646	1,180,200		$	2,714,460

Miscellaneous Common Stocks (10)(11)			314,581				327,015

Total Unaffiliated Publicly Traded Securities (cost: $9,338,744)							$	7,901,351

Total Investments in Unaffiliated Companies (cost: $22,481,609)							$	23,922,100

Investments in Non-Controlled Affiliated Companies (2) -
60.3% of net assets at value

Privately Held Companies (Illiquid) (12) -
40.1% 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) (L3)		$	435,000	390,000		$	64,160
Series B Convertible Preferred Stock (acquired 11/8/13-6/25/14)	(I) (L3)		1,217,644		1,037,751		527,055
Secured Convertible Bridge Note, 8% PIK, (acquired 1/20/16, maturing 12/31/18)	(M) (L3)		115,605		$	100,000	115,605
Secured Convertible Bridge Note, 8% PIK, (acquired 3/28/17, maturing 12/31/19)	(M) (L3)		26,529		$	25,000	26,529
			1,794,778				733,349



Investments in Non-Controlled Affiliated Companies (2) -
60.3% of net assets at value (cont.)

Privately Held Companies (Illiquid) (12) -
40.1% of net assets at value (cont.)

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) (L3)		$	2,000,000	2,000,000	$	8,583,935
Series A-2 Convertible Preferred Stock (acquired 4/9/13-10/15/13)	(I) (L3)		521,740		417,392	1,838,865
Series B Convertible Preferred Stock (acquired 8/7/15)	(I) (L3)		500,006		160,526	884,777
			3,021,746			11,307,577

EchoPixel, Inc. (4)		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) (L3)		1,250,000		4,194,630	945,726
Series Seed-2 Convertible Preferred Stock (acquired 1/22/16)	(I) (L3)		500,000		1,476,668	337,930
Series A-2 Convertible Preferred Stock (acquired 3/23/17)	(I) (L3)		350,000		1,471,577	412,209
			2,100,000			1,695,865

Ensemble Therapeutics Corporation (4)(5)(13)		Pharmaceuticals
Developed DNA-Programmed Chemistry^TM for the discovery of new classes of therapeutics
Series B Convertible Preferred Stock (acquired 6/6/07)	(I) (L3)		2,000,000		1,449,275	0
Series B-1 Convertible Preferred Stock (acquired 4/21/14)	(I) (L3)		574,079		492,575	173,143
			2,574,079			173,143



Investments in Non-Controlled Affiliated Companies (2) -
60.3% of net assets at value (cont.)

Privately Held Companies (Illiquid) (12) -
40.1% of net assets at value (cont.)

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) (L3)		$	20	200,000	$	145,218
Series A Convertible Preferred Stock (acquired 11/18/16)	(I) (L3)		2,750,000		2,750,000	3,169,662
			2,750,020			3,314,880

HZO, Inc. (4)(5)		Semiconductor Equipment
Developing novel industrial coatings that protect electronics against damage from liquids
Common Stock (acquired 6/23/14)	(I) (L3)		666,667		405,729	473,896
Series I Convertible Preferred Stock (acquired 6/23/14)	(I) (L3)		5,709,835		2,266,894	4,074,569
Series II Convertible Preferred Stock (acquired 6/23/14-8/3/15)	(I) (L3)		2,500,006		674,638	1,571,541
Series II-A Convertible Preferred Stock (acquired 9/9/16)	(I) (L3)		226,070		69,053	188,810
Warrants for Series II-A Convertible Preferred Stock expiring 7/15/23 (acquired 7/15/16)	(I) (L3)		29,820		6,577	17,925
			9,132,398			6,326,741

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) (L3)		658,190		658,190	777,896



Investments in Non-Controlled Affiliated Companies (2) -
60.3% of net assets at value (cont.)

Privately Held Companies (Illiquid) (12) -
40.1% of net assets at value (cont.)

NGX Bio, Inc. (4)		Research & Consulting Services
Developing translational genomics solutions
Series Seed Convertible Preferred Stock (acquired 6/6/14-1/10/16)	(I) (L3)		$	500,002	666,667		$	721,539
Series Seed 2 Convertible Preferred Stock (acquired 8/20/15-9/30/15)	(I) (L3)		499,999		329,989		477,157
Series Seed 3 Convertible Preferred Stock (acquired 6/26/17)	(I) (L3)		686,329		666,001		769,258
			1,686,330				1,967,954

ORIG3N, Inc. (4)(8)		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) (L3)		500,000		1,195,315		907,129
Series A Convertible Preferred Stock (acquired 11/25/15-9/7/16)	(I) (L3)		1,500,000		1,364,666		1,305,499
Series A-2 Convertible Preferred Stock (acquired 5/11/17-8/18/17)	(I) (L3)		150,198		134,783		169,890
			2,150,198				2,382,518

Produced Water Absorbents, Inc. (4)(14)		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) (L3)		7,670,281		50,243,350		0
Warrants for Common Stock expiring upon liquidation event (acquired 4/30/16)	(M) (L3)		65,250		450,000		0
Senior Secured Debt, 15% commencing on 4/1/16, maturing on 12/31/19 (acquired 4/1/16)	(M) (L3)		2,140,997		$	2,533,766	357,407
			9,876,528				357,407



Investments in Non-Controlled Affiliated Companies (2) -
60.3% of net assets at value (cont.)

Privately Held Companies (Illiquid) (12) -
40.1% of net assets at value (cont.)

Senova Systems, Inc. (4)(5)(13)		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) (L3)		$	1,083,960	2,759,902	$	0
Series C Convertible Preferred Stock (acquired 10/24/14-4/1/15)	(I) (L3)		1,208,287		1,611,049	0
Warrants for Series B Preferred Stock expiring 4/24/18 (acquired 4/24/13)	(I) (L3)		20,000		25,000	0
			2,312,247			0

TARA Biosystems, Inc. (4)		Life Sciences Tools & Services
Developing human tissue models for toxicology and drug discovery applications
Common Stock (acquired 8/20/14)	(I) (L3)		20		2,000,000	651,642
Series A Convertible Preferred Stock (acquired 3/31/17)	(I) (L3)		2,545,493		6,878,572	2,802,573
			2,545,513			3,454,215

Total Non-Controlled Affiliated Privately Held Companies (cost: $40,602,027)						$	32,491,545

Non-Controlled Affiliated Publicly Traded Securities (15) -
20.2% of net assets at value

Adesto Technologies Corporation (5)		Semiconductors
Developing low-power, high-performance memory devices
Common Stock (acquired 10/27/15)	(M) (L1)		$	9,990,986	1,539,983	$	9,932,890

TheStreet, Inc. (4)(5)(10)(16)(17)		Financial Exchanges & Data
Providing financial news and proprietary data to consumers and businesses
Common Stock (acquired 4/19/17-11/10/17)	(M) (L1)(L3)		4,891,793		4,636,363	6,387,423
Restricted Stock Units (acquired 11/10/17)	(M) (L3)		0		32,189	43,476
			4,891,793			6,430,899

Total Non-Controlled Affiliated Publicly Traded Securities (cost: $14,882,779)						$	16,363,789



Total Investments in Non-Controlled Affiliated Companies (cost: $55,484,806)						$	48,855,334

Investments in Controlled Affiliated Companies (2) -
5.2% of net assets at value

Privately Held Companies (Illiquid) (18) -
5.2% of net assets at value

Black Silicon Holdings, Inc. (4)(13)(19)		Semiconductors
Holding company for interest in a company that develops silicon-based optoelectronic products
Series A Convertible Preferred Stock (acquired 8/4/15)	(I) (L3)		$	750,000	233,499	$	0
Series A-1 Convertible Preferred Stock (acquired 8/4/15)	(I) (L3)		890,000		2,966,667	0
Series A-2 Convertible Preferred Stock (acquired 8/4/15)	(I) (L3)		2,445,000		4,207,537	0
Series B-1 Convertible Preferred Stock (acquired 8/4/15)	(I) (L3)		1,169,561		1,892,836	0
Series C Convertible Preferred Stock (acquired 8/4/15)	(I) (L3)		1,171,316		1,674,030	0
Secured Convertible Bridge Note, 8% PIK, (acquired 8/25/16, maturing 8/4/21)	(I) (L3)



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 DECEMBER 31, 2017

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



180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017

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



180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017

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



180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017

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


•	TheStreet rallied 34% in the quarter and increased our NAV by $0.04 per share. We note that the value of our unregistered shares of TheStreet included a discount for lack of marketability of 6.4% to the closing price of TST’s stock at the end of the year.


•	Finally, Mersana (NASDAQ:MRSN) declined 5% in the quarter against general weakness in the biotech sector.


•	AgBiome increased by $527,206 ($0.017 per share) due to an increase in the value of publicly traded comparable companies used to derive valuation.


•	Essential Health Solutions increased $418,735 (shade over $0.013 per share) for the same reason.


•	Produced Water Absorbents, our biggest decrease in value, declined by $839,343 ($0.027 per share.) This decrease resulted primarily from the terms of additional capital the company needed to fund operations.




180 DEGREE CAPITAL CORP. CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)

	Year Ended December 31, 2017
Unaffiliated rights to payments	(94,621		)
Net change in unrealized appreciation on investments	$	24,877,695
Net realized loss and change in unrealized appreciation on investments	13,122,516
Share of loss on equity method investment	(59,258		)
Net increase in net assets resulting from operations	$	9,417,743