UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM N-CSR
 
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-07074

180 DEGREE CAPITAL CORP.
(Exact Name of Registrant as Specified in Its Charter)
  
7 N. Willow Street, Suite 4B, Montclair NJ
 
07042
(Address of Principal Executive Offices)
 
(Zip Code)

Daniel B. Wolfe
President and Chief Financial Officer
180 Degree Capital Corp.
7 N. Willow Street, Suite 4B
Montclair, NJ 07042
(Name and address of agent for service)
 
Copy to:
John J. Mahon, Esq.
Schulte Roth & Zabel, LLP
1152 Fifteenth Street, NW
Suite 850
Washington, DC 20005
(202) 729-7477 

Registrant's telephone number, including area code: (973) 746-4500

Date of fiscal year end: December 31

Date of reporting period: December 31, 2017




1





Item 1. Report to Shareholders.

Dear Shareholders,

"Rome was not built in a day." "This is a marathon, not a sprint." "Slow and steady wins the race." "Even a long journey begins with a single step." "Don’t worry if you’re not where you want to be yet; great things take time." There are probably 20 other sayings like these. Here’s what is most relevant to our fourth quarter at 180 Degree Capital Corp. and our shareholders.  "Stocks don’t go up all the time and forever."

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.  

The TST transaction also affords us the opportunity to manage third-party capital, which provides 180 with income and the potential for additional returns on invested capital.  It also allows us to take advantage of opportunities for investment that would otherwise be difficult to complete solely from cash on our balance sheet. Consequently, this transaction embodies everything we aimed to accomplish when we changed our strategy to build our brand of constructive activism.

In previous communications, we have talked about our three key strategic imperatives: 1) reduce our cost structure, 2) grow our NAV, and 3) narrow the discount our stock trades relative to NAV. We will add a fourth as we think about 2018: more on that after we discuss our progress on our three 2017 imperatives.

1. EXPENSES

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.  

2






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. 

2. NET ASSET VALUE PER SHARE

Following last quarter’s nearly 10% increase in our NAV, our NAV declined 3.0% from $2.68 to $2.60 in the fourth quarter. As noted above, 84% of the decrease in our NAV ($0.067 per share) came from a decrease in the value of Adesto. A deeper dive into the quarter shows in total, our total public markets portfolio declined by $0.05 per share.

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.
Synacor (NASDAQ:SYNC) declined 15% in the quarter after the company lowered expectations for the ramp up of revenues from the AT&T portal. Synacor trades at what we believe is an incomprehensible 0.35x enterprise value to estimated 2018 revenue. The company also has growing EBITDA. So, what is the problem? The issue is the company’s credibility with Wall Street; it currently has none. The company did a secondary offering in the spring of 2017 and made bold predictions for its revenue growth. Quite simply, they over-promised and under-delivered. Financial analysts reduced their financial expectations for 2018 and the share price has reset at lower levels. With lowered and more reasonable assumptions for forecasted revenues in 2018, we are hopeful the current trend in its stock price can be reversed. If the company focuses on cost control, we believe they should have double-digit EBITDA margins on current revenues. If they achieve double-digit EBITDA margins, the stock should be meaningfully higher.
Finally, Mersana (NASDAQ:MRSN) declined 5% in the quarter against general weakness in the biotech sector.

Combined, Synacor and Mersana reduced our NAV by $0.023 per share.

Our private portfolio companies decreased in value by $237,000, or slightly less than $0.01 per share. The largest sources of change in value during the quarter are discussed below.

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.

We continue to believe in the potential for our most mature companies, D-Wave Systems, Inc., AgBiome LLC, HZO, Inc. and Nanosys, Inc. There are other companies in the portfolio that also hold promise, however, these companies are in early stages of development and the timelines and potential exit values for these companies are highly uncertain.

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.

3






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.

3. TURN/NAV; SUM OF THE PARTS

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.  

4. THINKING ABOUT 2018

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. 

Best Regards,
sig2a02.jpg
Kevin M. Rendino
Chairman and Chief Executive Officer
180 Degree Capital Corp.

4


180 DEGREE CAPITAL CORP.
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
 
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

 
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.


5


180 DEGREE CAPITAL CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
 
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

 
 

6


 
 
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

 
 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.


7


180 DEGREE CAPITAL CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
 
 
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


The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

8


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
)
 
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.


9


180 DEGREE CAPITAL CORP.
FINANCIAL HIGHLIGHTS
 
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

 
*Based on average shares outstanding.
**The Company has entered into an expense offsetting arrangement with one of its unaffiliated brokers relating to broker fees paid. The total broker fee charged to the Company was applied as a credit to fees charged by an affiliate of the unaffiliated broker who the Company subscribes to for data services billed during the year. The Company received an offset to expense totaling approximately $5,700 with that broker during the year.
***Prior to March 2017, the Company was a business development company investing primarily in privately held securities. Portfolio turnover was not a relevant indicator for such investments given that the Company did not generally pay brokerage fees on such investments.

1 Net unrealized losses include rounding adjustments to reconcile change in net asset value per share.
2 Amounts listed as zero are amounts calculated as less than $0.005.
3 Ratio of expenses, including taxes and excluding expenses related to restructuring, to average net assets for the year ended December 31, 2017 was 5.19%.


The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.


10

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


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

 
 
 
 
 
 
 
 
 
 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
11

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


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

 
 
 
 
 
 
 
 
 
 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
12

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


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

 
 
 
 
 
 
 
 
 
 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
13

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


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

 
 
 
 
 
 
 
 
 
 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
14

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


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 ChemistryTM 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

 
 
 
 
 
 
 
 
 
 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
15

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


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

 
 
 
 
 
 
 
 
 
 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
16

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


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

 
 
 
 
 
 
 
 
 
 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
17

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


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

 
 
 
 
 
 
 
 
 
 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
18

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


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)