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: June 30, 2018




1





Item 1. Report to Shareholders.

Fellow Shareholders:

I have many friends in the news business. They always tell me, “never bury the lead.” Meaning, when telling a story, don’t lead with the secondary importance while postponing more essential points or facts. The lead story is we grew our net asset value per share (“NAV”) this quarter by over 10%, to $2.91. In fact, it has been 7 years since we last reported a greater than 10% increase in our NAV for a single quarter. The entire increase is due to the continued positive performance of our public companies.

Even though my age says I am now in my 50’s, I like to think I keep current and stay up with the times. I have to. My kids are 16, 14 and 12 years old. I either get with the program, or I become a laughingstock in my house for being an old curmudgeonly dinosaur. I killed it the other night. My entire family was in the kitchen. My middle child was playing music. I walked in and said, “I love this song. Cardi B sings it, right?” They all looked at each other in amazement and said, “Look at you Dad, knowing all the hip-hop rockers of 2018! How do you know Cardi B?” I was on top of the world. I impressed my kids. As side note, and for those that don’t know, Cardi B is an award-winning, Bronx-born, breakout, hip-hop rapper. You are probably thinking, what is the point of this story as it relates to 180? The point is: A good investor stays current.

Legendary investor Peter Lynch’s core principles for investing were as follows: buy what you understand; always do your homework; and invest for the long term. He often talked about what information you could learn just by walking through a mall and observing what people are buying. 180 had a fantastic Q2 2018 and increased our book value by over 10%. Our growth was led by our investment in Turtle Beach Corporation, a company that designs and markets audio peripherals for video game consoles, personal computers, and mobile devices. If you have been reading about video games in the last few months, you will know that Fortnite is the hottest video game currently being played by gamers all over the world; a true pop-culture phenomenon. Turtle Beach’s headsets are used by gamers while they play Fortnite and other multiplayer games. We found Turtle Beach because of our investment in TheStreet, Inc. (“TST”). If you recall, we initiated a privately negotiated investment in TST’s publicly traded common stock with the purpose of retiring a $55 million preferred stock at a significant discount. Turtle Beach had a similar capital structure issue whereby the balance sheet included a preferred stock security with $19.3 million in redemption value that was accruing interest at a relatively high rate and had a distant maturity date. In the same manner as TST, we assisted Turtle Beach by participating in the buyout and retirement of the preferred stock for $7.5 million. We bought shares of common stock of Turtle Beach at $3.50 per share as part of that transaction. As the trade was being consummated, and resulting primarily from the explosion in Fortnite, Turtle Beach announced its Q1 and Q2 2018 revenue numbers would be twice the estimates of $21 million. In one short month, our investment in Turtle Beach rose nearly 400% and contributed $0.13 to our NAV, or nearly half the quarter’s increase.

What’s the moral of the story? It helps to stay current. It improves one’s ability to be a successful investor. It helps to know what the trends are. I never thought we would have spent so much time analyzing a video game named Fortnite and a maker of headsets to the gaming industry. But we did. As a result, that research helped propel 180 into having one of the best quarters in recent history.

NET ASSET VALUE PER SHARE

Our NAV increased this quarter from $2.64 to $2.91, an over 10% increase. 180 has three principal components to the variance in our NAV; our public portfolio, our private portfolio, and our expenses. For the quarter, our public companies contributed $0.30 to our NAV while the net change in our private portfolio companies was relatively flat. Operating expenses, net of income, reduced our NAV by $0.016. We also accrued $0.017 in expenses for bonus compensation. More on each of these items in the sections below.

Public Portfolio

A year and a half ago, we embarked on a new strategy to invest in small public companies. How has that worked out so far? Glad you asked. Over the course of the last six quarters, we have added $0.71 of NAV from our investments in public companies. That equates to $22 million in investment gains. Over that same period of time, we generated $0.07 of NAV growth from our private portfolio. I think it’s fair to say the decision to shift our investment focus has been nothing short of a wild success. Let’s dig into our public portfolio holdings:


2





Adesto Technologies Corporation (NASDAQ:IOTS) continued its upward trend rising 14% in the quarter. As the stock reached a price that we believed made it fully valued, we sold 62% of our remaining position during the quarter at an average price of $8.81. Most recently, the company announced two separate acquisitions. Following the end of the quarter, the company also preannounced a disappointing quarter and conducted a $40 million equity raise at $6.00 per share. As such, the stock has declined to a more interesting entry price. For the quarter, Adesto added $0.06 to our NAV.

Mersana Therapeutics, Inc. (NASDAQ:MRSN) advanced 13% in the quarter. Mersana is biotech company that produces novel drug conjugates. It specializes in oncology agents for the treatment of tumors and cancer. As everyone knows, there is tremendous volatility for a biotech company that is currently in the middle of clinical trials. In this quarter, we benefited as some of the early clinical data for one of Mersana’s trials looked promising and expectations increased for additional promising data to be released. As such, the stock price reacted favorably. We sold 22% of our holdings at an average price per share of $21.55. Following the end of the quarter, one patient in one of Mersana’s two ongoing trials died and the stock collapsed to $11. We are awaiting news on what occurred and whether the death was related to Mersana’s drug or another reason. We expect continued volatility around each and every data point associated with the company’s clinical trials. It is too early in Mersana’s lifecycle to claim either victory or defeat. For the quarter, Mersana added $0.03 to our NAV.

Synacor, Inc. (NASDAQ:SYNC) advanced 25% in the quarter. As we have told you previously, our view is that the issue at Synacor isn’t fundamental problems with its overall business; it is rather a management credibility issue resulting from the company over-promising and under-delivering. Finally, and at least for one quarter, the company got it right and reported in-line revenues and earnings for Q1 2018. The stock price responded positively. Approximately 40% of Synacor's revenues are recurring and fee-based from its email and Cloud ID businesses. Investors typically pay a minimum of 1x revenues for companies with such sources of revenue, and in many cases, significantly higher multiples. Synacor has approximately $60 million of recurring and fee-based revenue and an enterprise value of $66 million, which means that the market is valuing the rest of Synacor’s $80 million of revenue at $6 million. That valuation, in our view, is absurd. The issue isn’t the absolute numbers for Synacor. As I said before, it’s about management setting reasonable expectations, and then executing to those expectations. If they can execute, we think the stock has meaningful upside. For the quarter, Synacor added $0.02 to our NAV.

TheStreet, Inc. (NASDAQ:TST) continued its climb and advanced 22% in the quarter. As we have said previously, we believe the retirement of TST’s preferred stock cleared the path to enhance value for all common shareholders. When we first got involved, we highlighted that if investors ascribed a multiple of 1x the company’s business-to-consumer revenues and 2x the company’s business-to-business revenues, the math said we would have upside of 100% to our cost. What did the TST management and Board do this past quarter? They sold its deposit and loan data collection subsidiary, RateWatch, to S&P Global for $33.5 million. At that valuation, RateWatch sold for a price that equals 4x its $8 million of revenues. Clearly, we underestimated the value for some of TST’s businesses. After nine months on TST’s Board, I have been thoroughly impressed with the management team, the Board, and the collection of its strategic assets. 180’s investment in TST symbolizes the kind of constructive activism that is core to our strategy. Since the announcement of our significant investment last fall, the stock is up 100%. For the quarter, TST added $0.06 to our NAV.

Turtle Beach Corporation (NASDAQ:HEAR) was bought and sold in the quarter. We are, for the most part, investors and not traders. When we generate a 389% gross return or nearly a “4 bagger” in 42 days, we won’t apologize for taking a profit, especially when the stock price far surpasses our price target. Like TST, Turtle Beach also symbolizes the kind of constructive activism that is core to our strategy. For the quarter, Turtle Beach added $0.13 to our NAV.

Private Portfolio

As for the private portfolio, although it was relatively flat in the aggregate for the quarter, we did have several positions move around quite a bit. On the positive side, AgBiome, LLC and ORIG3N, Inc., added $0.06 and $0.02, respectively, to our NAV following the successful raise of new rounds of financing by each company. On the negative side, NGX Bio, Inc., and Petra Pharma Corporation reduced our NAV by $0.05 and $0.02, respectively, due to financing and/or business-related issues at each company.

We continue to believe in the potential for our most mature companies to build value, including AgBiome, LLC, D-Wave Systems, Inc., and Nanosys, Inc. With some of the recent progress at ORIG3N, Inc., we believe it should be added to this list as well. 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.


3





We have often talked about our desire to actively shepherd our existing private portfolio to exits or opportunities to sell our positions in those companies at what we believe are reasonable valuations. We are pleased to report that on July 5, 2018, we sold our entire position in HZO, Inc. to undisclosed buyers for $7 million, which is an 8% premium to its value as of March 31, 2018. This significant event helps us de-risk our private portfolio on the one hand, and on the other gives us more cash to invest in our core strategy of investing in small public companies. Had the sale of HZO occurred in Q2 2018, we would have reported cash and liquid securities of $43.8 million, which represents $1.40 of our NAV per share. For the quarter, this sale increased our NAV by $0.02.

Expenses

As we have noted, we have dramatically reduced our cost structure under our new strategy. Over the last 5 years, our operating expenses, excluding stock-based compensation and interest on outstanding debt, averaged approximately $1.6 million per quarter. In 2016, and before 180’s existence, our operating expenses, excluding stock-based compensation and interest on outstanding debt averaged $1.3 million per quarter. For Q1 2018, our operating expenses equaled $740,000 versus $1.05 million in Q1 2017, a 30% year-over-year reduction. Please note that Q1 2017 was the last quarter for our predecessor company, Harris & Harris Group. We told you last quarter that going forward the quarterly year-over-year comparisons will no longer show the drastic drop in expenses as those reported over the last four quarters. For Q2 2018, our operating expenses excluding sublease income equaled $778,000, a 3% increase from a year ago. This increase resulted from the costs associated with an additional employee and director, offset by decreases in rent and administration and operating expenses. We remain committed to treating every dollar of shareholder money with the utmost care and consideration.

Given our performance this quarter, our Compensation Committee determined that it was appropriate for us to accrue for the probable payment of a bonus to management at year-end. This expense accrual of $0.017 per share, or approximately $540,000, was derived using the same framework and considerations used to determine the bonus compensation in 2017. It also includes the concept of the deferral of a meaningful portion of the bonus to future years to encourage and reward persistent performance. We note that the final bonus amounts will be determined at year end and could change materially from what was accrued this quarter.

TURN/NAV: SUM OF THE PARTS:

For purposes of this exercise, because the sale of our position in HZO closed shortly after the end of the quarter and the $7 million in cash is currently on 180’s balance sheet, we’re going to treat HZO as no longer a holding of the Company and instead include the $7 million in proceeds in cash and liquid securities. At the end of Q2 2018, our stock price was $2.31 and traded at 79% of its NAV. Our liquid assets, cash, and other assets, net of liabilities represent $1.36 of our NAV. If we received 100% credit for the value of these assets net of liabilities, the market is ascribing a value of $0.95 per share, or $29.5 million, of TURN’s stock price to our private portfolio. Given our private assets are valued at $48.2 million, the market is discounting the value of our private portfolio assets by 39%. As we grow our cash and liquid securities, the discount our stock trades to NAV should narrow. In September 2016, we had 20% of our net assets in cash and liquid securities less outstanding debt. At the beginning of our strategy in January 2017, we had 27% of our net assets in cash and liquid securities. At the end of this quarter, that number is 48%. We want that trend to continue. We have made substantial progress in reinventing ourselves and our balance sheet reflects just how far we have come.

Our goal at 180 is to be known as a leader in the small cap activist investing world, with a relentless focus on achieving excellence in our investment performance. Our Turtle Beach investment is the second time we have assisted a company in removing an overhang to its stock. The result was the same: there was a significant increase in shareholder value for Turtle Beach and its shareholders, and most importantly for 180 and our shareholders.

Here are some stats for you to consider. We have increased our cash and liquid securities from $0.64 per share on December 31, 2016, to $1.40 per share today. In our new strategy, our public market stock picking generated a 31% gross return this past quarter, 41% year to date, and 93% for the last six quarters. Over the same period, the Russell Microcap Value Index was up 10%, 11%, and 24%, respectively. Over the same period, the Russell 3000 Index was up by 4%, 3%, and 25%, respectively. I would humbly call that exceptional stock picking. We have drastically reduced our expense base, raised money for two special purpose vehicles, and have successfully exited two of our private portfolio companies, Mersana and HZO, through an IPO and a cash sale, respectively. When we first started, we told you what we were hoping to accomplish over the upcoming quarters. It’s nice to be able to report to you that we have exceeded our own expectations, and hopefully your expectations as well. All of these achievements resulted in a stock price that has increased 67% since we started.


4





And all that said, I am having more fun than I would have if I were at a Cardi B concert!

sig2a02.jpg
Kevin Rendino
Chairman and Chief Executive Officer

5


180 DEGREE CAPITAL CORP.
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
 
June 30, 2018

ASSETS
 

Investments in portfolio securities, at value:
 

Unaffiliated privately held companies (cost: $13,385,820)
$
15,377,406

Unaffiliated publicly traded securities (cost: $14,787,634)
14,781,296

Non-controlled affiliated privately held companies (cost: $38,580,570)
33,510,263

Non-controlled affiliated publicly traded securities (cost: $4,949,734)
10,250,872

Controlled affiliated privately held companies (cost: $11,767,175)
3,993,103

Equity method privately held company (adjusted cost basis: $187,950)
187,950

Unaffiliated rights to payments (adjusted cost basis: $548,998)
2,178,165

Cash
11,720,454

Restricted cash
46,151

Interest receivable
944,255

Prepaid expenses
159,305

Receivable from portfolio companies and managed funds
68,800

Other assets
123,775

Total assets
$
93,341,795

LIABILITIES & NET ASSETS
 

Post-retirement plan liabilities
$
1,346,050

Accounts payable and accrued liabilities
1,140,843

Deferred rent
76,198

Directors' fee payable
69,375

Payable for securities purchased
50,250

Total liabilities
$
2,682,716

Commitments and contingencies (Note 10)
 

Net assets
$
90,659,079

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
(6,851,634
)
Accumulated net realized loss
(28,328,005
)
Accumulated net unrealized depreciation of investments
(3,928,826
)
Treasury stock, at cost 3,501,779 shares
(4,605,525
)
Net assets
$
90,659,079

Shares outstanding
31,121,562

Net asset value per outstanding share
$
2.91

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

6


180 DEGREE CAPITAL CORP.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
 
Six Months Ended
June 30, 2018

Income:
 

Interest from:
 

Unaffiliated companies-cash
$
9,730

Unaffiliated companies-PIK
5,207

Non-controlled affiliated companies-cash
233,087

Non-controlled affiliated companies-PIK
7,925

Controlled affiliated companies-PIK
25,569

Cash
533

Fees for providing managerial assistance to portfolio companies
95,440

Yield-enhancing fees on debt securities
87,531

Sub-lease income
124,333

Other income
33,109

Total income
622,464

Operating expenses:
 

Salaries, bonus and benefits (Notes 7 and 8)
1,405,011

Administration and operations
156,149

Professional fees
264,907

Rent
137,048

Directors' fees and expenses
138,750

Insurance expense
109,991

Custody fees
15,697

Depreciation
2,430

Total operating expenses
2,229,983

Income tax expense
32,364

Net investment loss
(1,639,883
)
Net realized gain (loss) from investments:
 

Realized gain (loss) from investments:
 

Unaffiliated publicly traded securities
6,445,334

Non-controlled affiliated privately held companies
(2,293,743
)
Controlled affiliated privately held companies
(7,613,301
)
Net realized loss from investments
(3,461,710
)
Realized loss from funds in escrow
(150
)
Net realized loss
(3,461,860
)
Change in unrealized (depreciation) appreciation on investments:
 

Unaffiliated privately held companies
(886,300
)
Unaffiliated publicly traded securities
1,489,151

Non-controlled affiliated privately held companies
3,040,177

Non-controlled affiliated publicly traded securities
3,762,033

Controlled affiliated privately held companies
7,415,146

Unaffiliated rights to payments
(33,702
)
Net change in unrealized appreciation on investments
14,786,505

Net realized loss and change in unrealized appreciation on investments
11,324,645

Share of loss on equity method investment
(68,672
)
Net increase in net assets resulting from operations
$
9,616,090

 
 

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



7


180 DEGREE CAPITAL CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
 
Six Months Ended
June 30, 2018

Cash flows used in operating activities:
 

Net increase in net assets resulting from operations
$
9,616,090

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
 

Net realized loss from investments
3,461,710

Realized loss from funds held in escrow
150

Net change in unrealized appreciation on investments
(14,786,505
)
Depreciation of fixed assets, prepaid assets and accretion of bridge note interest
(123,803
)
Share of loss on equity method investee
68,672

Purchase of unaffiliated privately held portfolio companies
(369,748
)
Purchase of unaffiliated publicly traded securities
(4,288,846
)
Purchase of non-controlled affiliated privately held portfolio companies
(195,334
)
Purchase of non-controlled affiliated publicly traded securities
(57,940
)
Proceeds from sale of unaffiliated privately held companies
132,000

Proceeds from sale of unaffiliated publicly traded securities
15,165,146

Proceeds from sale of non-controlled affiliated privately held companies
18,507

Proceeds from sale of non-controlled affiliated publicly traded securities
111,131

Proceeds from sale of controlled affiliated privately held companies
50,000

Proceeds from funds held in escrow
12,805

Changes in assets and liabilities:
 

Increase in interest receivable
(233,015
)
Decrease on prepaid expenses
77,146

Increase in receivable from portfolio companies and managed fund
(28,048
)
Decrease in other assets
41,106

Increase in post-retirement plan liabilities
6,704

Decrease in accounts payable and accrued liabilities
(306,702
)
Decrease in accrued severance
(140,923
)
Decrease in deferred rent
(22,620
)
Increase in directors' fee payable
11,250

Increase in payable for securities purchased
50,250

Net cash provided by operating activities
8,269,183

Cash flows from investing activities:
 

Purchase of fixed assets
(1,118
)
Net cash used in investing activities
(1,118
)
Net increase in cash
8,268,065

Cash and restricted cash at beginning of the period
3,498,540

Cash and restricted cash at end of the period
$
11,766,605

Supplemental disclosures of cash flow information:
 

Income taxes paid
$
32,364


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

8


180 DEGREE CAPITAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
 
Six Months Ended
June 30, 2018

 
Year Ended
December 31, 2017

Changes in net assets from operations:
UNAUDITED

 
 

Net investment loss
$
(1,639,883
)
 
$
(3,645,515
)
Net realized loss
(3,461,860
)
 
(11,755,179
)
Net change in unrealized appreciation on investments
14,786,505

 
24,877,695

Share of loss on equity method investment
(68,672
)
 
(59,258
)
Net increase in net assets resulting from operations
9,616,090

 
9,417,743

Changes in net assets from capital stock transactions:
 

 
 

Acquisition of vested restricted stock awards to pay required employee withholding tax
0

 
(139,780
)
Stock-based compensation benefit
0

 
(190,347
)
Net decrease in net assets resulting from capital stock transactions
0

 
(330,127
)
Changes in net assets from accumulated other comprehensive loss:
 

 
 

Other comprehensive loss
0

 
(300,237
)
Net decrease in net assets resulting from accumulated other comprehensive loss
0

 
(300,237
)
Net increase in net assets
9,616,090

 
8,787,379

Net Assets:
 

 
 

Beginning of the period
81,042,989

 
72,255,610

End of the period
$
90,659,079

 
$
81,042,989

 
 
 
 
Accumulated net investment loss
$
(6,851,634
)
 
$
(5,211,751
)
 
The accompanying unaudited notes are an integral part of these unaudited consolidated financial statements.


9


180 DEGREE CAPITAL CORP.
FINANCIAL HIGHLIGHTS
 
Six Months Ended June 30, 2018
 
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
UNAUDITED

 
 
 
 

 
 

 
 

 
 

Net asset value per share, beginning of period/year
$
2.60

 
$
2.34

 
$
2.88

 
$
3.51

 
$
3.93

 
$
4.13

Net investment loss*
(0.05
)
 
(0.12
)
 
(0.15
)
 
(0.23
)
 
(0.25
)
 
(0.26
)
Net realized (loss) gain from investments*
(0.11
)
 
(0.38
)
 
(0.26
)
 
0.15

 
(0.16
)
 
0.59

Net change in unrealized appreciation (depreciation) on investments and written call options*1
0.47

 
0.80

 
(0.12
)
 
(0.56
)
 
(0.02
)
 
(0.58
)
Share of loss on equity method investment*2
0.00

 
0.00

 
0.00

 
(0.01
)
 
0.00

 
0.00

Total*
0.31

 
0.30

 
(0.53
)
 
(0.65
)
 
(0.43
)
 
(0.25
)
Net (decrease) increase as a result of stock-based compensation expense*2
0.00

 
(0.01
)
 
0.01

 
0.03

 
0.03

 
0.04

Net increase as a result of purchase of treasury stock
0.00

 
0.00

 
0.00

 
0.01

 
0.00

 
0.00

Net decrease as a result of acquisition of vested restricted stock awards related to employee withholding2
0.00

 
(0.02
)
 
(0.01
)
 
(0.01
)
 
(0.01
)
 
(0.01
)
Total (decrease) increase from capital stock transactions
0.00

 
(0.03
)
 
0.00

 
0.03

 
0.02

 
0.03

Net (decrease) increase as a result of other comprehensive (loss) income*2
0.00

 
(0.01
)
 
(0.01
)
 
(0.01
)
 
(0.01
)
 
0.02

Net increase (decrease) in net asset value
0.31

 
0.26

 
(0.54
)
 
(0.63
)
 
(0.42
)
 
(0.20
)
Net asset value per share, end of period/year
$
2.91

 
$
2.60

 
$
2.34

 
$
2.88

 
$
3.51

 
$
3.93

Stock price per share, end of period/year
$
2.31

 
$
1.97

 
$
1.38

 
$
2.20

 
$
2.95

 
$
2.98

Total return based on stock price
17.26
 %
 
42.75
 %
 
(37.27
)%
 
(25.42
)%
 
(1.01
)%
 
(9.70
)%
Supplemental Data:
 
 
 
 
 
 
 

 
 

 
 

Net assets, end of period/year
$
90,659,079

 
$
81,042,989

 
$
72,255,610

 
$
88,711,671

 
$
109,654,427

 
$
122,701,575

Ratio of expenses, excluding taxes, to average net assets3
2.63
 %
** 
6.26
 %
** 
7.88
 %
 
8.15
 %
 
7.14
 %
 
6.62
 %
Ratio of expenses, including taxes, to average net assets3
2.67
 %
** 
6.28
 %
4 ** 
7.89
 %
 
8.15
 %
 
7.15
 %
 
6.65
 %
Ratio of net investment loss to
average net assets
3
(1.94
)%
 
(4.68
)%
 
(5.64
)%
 
(7.22
)%
 
(6.70
)%
 
(6.26
)%
Average debt outstanding
$
0

 
$
0

 
$
4,590,164

 
$
3,780,822

 
$
0

 
$
0

Average debt per share
$
0.00

 
$
0.00

 
$
0.15

 
$
0.12

 
$
0.00

 
$
0.00

Portfolio turnover
6.11
 %
 
8.83
 %
 
***

 
***

 
***

 
***

Number of shares outstanding, end of period/year
31,121,562

 
31,121,562

 
30,904,209

 
30,845,754

 
31,280,843

 
31,197,438

 

10



*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 $11,000 and $5,700 with that broker for the six months ended June 30, 2018 and the year ended December 31, 2017.
***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 Not annualized.
4 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 unaudited notes are an integral part of these unaudited consolidated financial statements.


11

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2018 (UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


Investments in Unaffiliated Companies (2) -
 
 
 
 
 
 
 
 
 
33.3% of net assets at value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Privately Held Companies (Illiquid) (3) -
 
 
 
 
 
 
 
 
 
17.0% 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

 
2,033,089

Series 1 Class C Convertible Preferred Stock (acquired 9/30/08)
(M) (L3)
 
 
 
487,804

 
450,450

 
816,769

Series 1 Class D Convertible Preferred Stock (acquired 9/30/08)
(M) (L3)
 
 
 
748,473

 
855,131

 
1,550,548

Series 1 Class E Convertible Preferred Stock (acquired 11/24/10)
(M) (L3)
 
 
 
248,049

 
269,280

 
509,324

Series 1 Class F Convertible Preferred Stock (acquired 11/24/10)
(M) (L3)
 
 
 
238,323

 
258,721

 
489,352

Series 1 Class H Convertible Preferred Stock (acquired 6/27/14)
(M) (L3)
 
 
 
909,088

 
460,866

 
1,185,088

Series 2 Class D Convertible Preferred Stock (acquired 9/30/08)
(M) (L3)
 
 
 
736,019

 
678,264

 
1,229,847

Series 2 Class E Convertible Preferred Stock (acquired 6/1/12-3/22/13)
(M) (L3)
 
 
 
659,493

 
513,900

 
1,017,435

Series 2 Class F Convertible Preferred Stock (acquired 6/1/12-3/22/13)
(M) (L3)
 
 
 
633,631

 
493,747

 
977,535

Warrants for Common Stock expiring 5/12/19 (acquired 5/12/14)
(M) (L3)
 
 
 
26,357

 
20,415

 
10,307

 
 
 
 
 
5,689,311

 
 
 
9,819,294

 
 
 
 
 
 
 
 
 
 
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 unaudited notes are an integral part of these unaudited consolidated financial statements.
12

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2018 (UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


Investments in Unaffiliated Companies (2) -
 
 
 
 
 
 
 
 
 
33.3% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Privately Held Companies (Illiquid) (3) -
 
 
 
 
 
 
 
 
 
17.0% 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

 
$
287,500

 
 
 
 
 
 
 
 
 
 
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

 
901,696

Series D Convertible Preferred Stock (acquired 11/7/05)
(I) (L3)
 
 
 
3,000,003

 
1,016,950

 
1,790,363

Series E Convertible Preferred Stock (acquired 8/13/10)
(I) (L3)
 
 
 
496,573

 
433,688

 
793,372

 
 
 
 
 
4,996,576

 
 
 
3,485,431

 
 
 
 
 
 
 
 
 
 
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

 
37

Warrants for Series A-3 Preferred Stock expiring on 11/15/22 (acquired 11/15/12)
(I) (L3)
 
 
 
35,403

 
47,508

 
55,667

 
 
 
 
 
104,571

 
 
 
55,704

 
 
 
 
 
 
 
 
 
 
Petra Pharma Corporation (4)(5)(8)
 
 
Pharmaceuticals
 
 
 
 
 
 
Developing small molecule inhibitors for treatment of cancer and metabolic diseases
 
 
 
 
 
 
 
 
 
Series A Convertible Preferred Stock (acquired 12/23/15-1/8/18)
(I) (L3)
 
 
 
1,894,798

 
1,894,798

 
1,160,687

 
 
 
 
 
 
 
 
 
 

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

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2018 (UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


Investments in Unaffiliated Companies (2) -
 
 
 
 
 
 
 
 
 
33.3% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Privately Held Companies (Illiquid) (3) -
 
 
 
 
 
 
 
 
 
17.0% 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)
 
 
 
$
234,027

 
$
200,000

 
$
327,638

Secured Convertible Bridge Note, 5% PIK, (acquired 6/5/15, maturing 6/12/19)
(M) (L3)
 
 
 
11,537

 
$
10,000

 
16,152

 
 
 
 
 
245,564

 
 
 
343,790

 
 
 
 
 
 
 
 
 
 
Total Unaffiliated Privately Held Companies (cost: $13,385,820)
 
 
 
 
 
 
 
 
$
15,377,406

 
 
 
 
 
 
 
 
 
 
Unaffiliated Publicly Traded Securities (9) -
 
 
 
 
 
 
 
 
 
16.3% 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)
 
 
 
$
3,796,189

 
585,134

 
$
4,915,126

 
 
 
 
 
 
 
 
 
 
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

 
10,882

 
 
 
 
 
 
 
 
 
 
Mersana Therapeutics, Inc. (5)
 
 
Biotechnology
 
 
 
 
 
 
Developing antibody drug conjugates for cancer therapy
 
 
 
 
 
 
 
 
 
Common Stock (acquired 7/27/12-6/7/18)
(M) (L1)
 
 
 
3,960,261

 
240,155

 
4,289,168

 
 
 
 
 
 
 
 
 
 
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

 
12,033

 
8,712

Warrants for the Purchase of Common Stock expiring 2/17/25 (acquired 5/5/15)
(I) (L3)
 
 
 
785

 
1,248

 
536

 
 
 
 
 
426,364

 
 
 
9,248

 
 
 
 
 
 
 
 
 
 

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

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2018 (UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


Investments in Unaffiliated Companies (2) -
 
 
 
 
 
 
 
 
 
33.3% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated Publicly Traded Securities (9) -
 
 
 
 
 
 
 
 
 
16.3% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Synacor, Inc. (5)
 
 
Internet Software & Services
 
 
 
 
 
 
Providing technology development, multiplatform services and revenue partner for video, internet and communications providers, device manufacturers, and enterprises
 
 
 
 
 
 
 
 
 
Common Stock (acquired 4/6/17-4/12/18)
(M) (L1)
 
 
 
$
4,040,458

 
1,400,000

 
$
2,800,000

 
 
 
 
 
 
 
 
 
 
Miscellaneous Common Stocks (10)(11)
(M) (L1)
 
 
 
2,563,962

 
 
 
2,756,872

 
 
 
 
 
 
 
 
 
 
Total Unaffiliated Publicly Traded Securities (cost: $14,787,634)
 
 
 
 
 
 
 
 
$
14,781,296

 
 
 
 
 
 
 
 
 
 
Total Investments in Unaffiliated Companies (cost: $28,173,454)
 
 
 
 
 
 
 
 
$
30,158,702

 
 
 
 
 
 
 
 
 
 
Investments in Non-Controlled Affiliated Companies (3) -
 
 
 
 
 
 
 
 
 
48.3% of net assets at value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Privately Held Companies (Illiquid) (12) -
 
 
 
 
 
 
 
 
 
37.0% 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

 
$
21,097

Series B Convertible Preferred Stock (acquired 11/8/13-6/25/14)
(I) (L3)
 
 
 
1,217,644

 
1,037,751

 
354,165

Secured Convertible Bridge Note, 8% PIK, (acquired 1/20/16, maturing 12/31/18)
(M) (L3)
 
 
 
119,573

 
$
100,000

 
119,573

Secured Convertible Bridge Note, 8% PIK, (acquired 3/28/17, maturing 12/31/19)
(M) (L3)
 
 
 
27,521

 
$
25,000

 
27,521

 
 
 
 
 
1,799,738

 
 
 
522,356

 
 
 
 
 
 
 
 
 
 

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

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2018 (UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


Investments in Non-Controlled Affiliated Companies (3) -
 
 
 
 
 
 
 
 
 
48.3% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Privately Held Companies (Illiquid) (12) -
 
 
 
 
 
 
 
 
 
37.0% 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

 
$
9,881,094

Series A-2 Convertible Preferred Stock (acquired 4/9/13-10/15/13)
(I) (L3)
 
 
 
521,740

 
417,392

 
2,106,090

Series B Convertible Preferred Stock (acquired 8/7/15)
(I) (L3)
 
 
 
500,006

 
160,526

 
936,039

 
 
 
 
 
3,021,746

 
 
 
12,923,223

 
 
 
 
 
 
 
 
 
 
Coba Therapeutics Corporation (4)
 
 
 
 
 
 
 
 
 
Developing therapeutics for obesity, diabetes and liver diseases
 
 
Pharmaceuticals
 
 
 
 
 
 
Unsecured Convertible Bridge Note, 6%, (acquired 2/27/18, maturing 2/27/19)
(M) (L3)
 
 
 
148,496

 
$
145,530

 
148,496

 
 
 
 
 
 
 
 
 
 
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) (L3)
 
 
 
1,250,000

 
4,194,630

 
1,026,604

Series Seed-2 Convertible Preferred Stock (acquired 1/22/16)
(I) (L3)
 
 
 
500,000

 
1,476,668

 
366,825

Series A-2 Convertible Preferred Stock (acquired 3/23/17)
(I) (L3)
 
 
 
350,000

 
1,471,577

 
442,167

 
 
 
 
 
2,100,000

 
 
 
1,835,596

 
 
 
 
 
 
 
 
 
 
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

 
282,714

 
 
 
 
 
2,574,079

 
 
 
282,714

 
 
 
 
 
 
 
 
 
 

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

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2018 (UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


Investments in Non-Controlled Affiliated Companies (2) -
 
 
 
 
 
 
 
 
 
48.3% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Privately Held Companies (Illiquid) (12) -
 
 
 
 
 
 
 
 
 
37.0% 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

 
$
123,297

Series A Convertible Preferred Stock (acquired 11/18/16)
(I) (L3)
 
 
 
2,750,000

 
2,750,000

 
2,755,000

 
 
 
 
 
2,750,020

 
 
 
2,878,297

 
 
 
 
 
 
 
 
 
 
HZO, Inc. (4)(5)(14)
 
 
Semiconductor Equipment
 
 
 
 
 
 
Developing novel industrial coatings that protect electronics against damage from liquids
 
 
 
 
 
 
 
 
 
Common Stock (acquired 6/23/14)
(M) (L2)
 
 
 
666,667

 
405,729

 
829,738

Series I Convertible Preferred Stock (acquired 6/23/14)
(M) (L2)
 
 
 
5,709,835

 
2,266,894

 
4,635,923

Series II Convertible Preferred Stock (acquired 6/23/14-8/3/15)
(M) (L2)
 
 
 
2,500,006

 
674,638

 
1,379,672

Series II-A Convertible Preferred Stock (acquired 9/9/16)
(M) (L2)
 
 
 
226,070

 
69,053

 
141,217

Warrants for Series II-A Convertible Preferred Stock expiring 7/15/23 (acquired 7/15/16)
(M) (L2)
 
 
 
29,820

 
6,577

 
13,450

 
 
 
 
 
9,132,398

 
 
 
7,000,000

 
 
 
 
 
 
 
 
 
 
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

 
766,208

 
 
 
 
 
 
 
 
 
 
NGX Bio, Inc. (4)(5)
 
 
Research & Consulting Services
 
 
 
 
 
 
Developing translational genomics solutions
 
 
 
 
 
 
 
 
 
Series Seed Convertible Preferred Stock (acquired 6/6/14-1/10/16)
(M) (L3)
 
 
 
500,002

 
666,667

 
156,417

Series Seed 2 Convertible Preferred Stock (acquired 8/20/15-9/30/15)
(M) (L3)
 
 
 
499,999

 
329,989

 
117,313

Series Seed 3 Convertible Preferred Stock (acquired 6/26/17)
(M) (L3)
 
 
 
686,329

 
666,001

 
175,012

 
 
 
 
 
1,686,330

 
 
 
448,742

 
 
 
 
 
 
 
 
 
 

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

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2018 (UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


Investments in Non-Controlled Affiliated Companies (2) -
 
 
 
 
 
 
 
 
 
48.3% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Privately Held Companies (Illiquid) (12) -
 
 
 
 
 
 
 
 
 
37.0% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ORIG3N, Inc. (4)(5)
 
 
Health Care Technology
 
 
 
 
 
 
Developing precision medicine applications for induced pluripotent stems cells
 
 
 
 
 
 
 
 
 
Series 1 Convertible Preferred Stock (acquired 2/5/15-8/5/15)
(H) (L3)
 
 
 
$
500,000

 
1,195,315

 
$
1,311,901

Series A Convertible Preferred Stock (acquired 11/25/15-9/7/16)
(H) (L3)
 
 
 
1,500,000

 
1,364,666

 
1,510,188

Series A-2 Convertible Preferred Stock (acquired 5/11/17-2/8/18)
(H) (L3)
 
 
 
200,002

 
176,386

 
197,647

 
 
 
 
 
2,200,002

 
 
 
3,019,736

 
 
 
 
 
 
 
 
 
 
Produced Water Absorbents, Inc. (4)(15)
 
 
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)
 
 
 
2,228,527

 
$
2,533,766

 
218,337

 
 
 
 
 
9,964,058

 
 
 
218,337

 
 
 
 
 
 
 
 
 
 
TARA Biosystems, Inc. (4)(5)
 
 
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

 
659,019

Series A Convertible Preferred Stock (acquired 3/31/17)
(I) (L3)
 
 
 
2,545,493

 
6,878,572

 
2,807,539

 
 
 
 
 
2,545,513

 
 
 
3,466,558

 
 
 
 
 
 
 
 
 
 
Total Non-Controlled Affiliated Privately Held Companies (cost: $38,580,570)
 
 
 
 
 
 
 
 
$
33,510,263

 
 
 
 
 
 
 
 
 
 

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

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2018 (UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


Investments in Non-Controlled Affiliated Companies (2) -
 
 
 
 
 
 
 
 
 
48.3% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Controlled Affiliated Publicly Traded Securities (16) -
 
 
 
 
 
 
 
 
 
11.3% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TheStreet, Inc. (4)(5)(17)
 
 
Financial Exchanges & Data
 
 
 
 
 
 
Providing financial news and proprietary data to consumers and businesses
 
 
 
 
 
 
 
 
 
Common Stock (acquired 4/19/17-5/18/18)
(M) (L1)
 
 
 
$
4,949,734

 
4,668,552

 
$
10,177,443

Stock Options for Common Stock Expiring 1/1/25 (acquired 1/1/18)
(I) (L3)
 
 
 
0

 
3,333

 
2,719

Stock Options for Common Stock Expiring 5/18/25 (acquired 5/18/18)
(I) (L3)
 
 
 
0

 
10,000

 
5,801

Restricted Stock Units (acquired 11/10/17)
(M) (L3)
 
 
 
0

 
33,333

 
64,909

 
 
 
 
 
4,949,734

 
 
 
10,250,872

 
 
 
 
 
 
 
 
 
 
Total Non-Controlled Affiliated Publicly Traded Securities (cost: $4,949,734)
 
 
 
 
 
 
 
 
$
10,250,872

 
 
 
 
 
 
 
 
 
 
Total Investments in Non-Controlled Affiliated Companies (cost: $43,530,304)
 
 
 
 
 
 
 
 
$
43,761,135

 
 
 
 
 
 
 
 
 
 
Investments in Controlled Affiliated Companies (2) -
 
 
 
 
 
 
 
 
 
4.4% of net assets at value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Privately Held Companies (Illiquid) (18) -
 
 
 
 
 
 
 
 
 
4.4% 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)
 
 
 
1,444,368

 
1,278,453

 
96,173

 
 
 
 
 
7,870,245

 
 
 
96,173

 
 
 
 
 
 
 
 
 
 

The accompanying unaudited notes are an integral part of these unaudited consolidated financial statements.
19

180 DEGREE CAPITAL CORP.
CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2018 (UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Method of
Valuation (1)
 
Industry
 
Cost
 
Shares/
Principal
 
Value


Investments in Controlled Affiliated Companies (2) -
 
 
 
 
 
 
 
 
 
4.4% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Privately Held Companies (Illiquid) (18) -
 
 
 
 
 
 
 
 
 
4.4% of net assets at value (cont.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HALE.life Corporation (4)(5)(8)
 
 
Health Care Technology
 
 
 
 
 
 
Developing a platform to facilitate precision health and medicine
 
 
 
 
 
 
 
 
 
Common Stock (acquired 3/1/16)
(M) (L3)
 
 
 
$
10

 
1,000,000

 
$
10

Series Seed Convertible Preferred Stock (acquired 3/28/17)
(M) (L3)
 
 
 
1,896,920

 
11,000,000

 
1,896,920

Unsecured Convertible Bridge Note, 0%, (acquired 3/28/17, no maturity date)
(M) (L3)
 
 
 
2,000,000

 
$
2,000,000

 
2,000,000

 
 
 
 
 
3,896,930

 
 
 
3,896,930

 
 
 
 
 
 
 
 
 
 
Total Controlled Affiliated Privately Held Companies (cost: $11,767,175)
 
 
 
 
 
 
 
 
$
3,993,103

 
 
 
 
 
 
 
 
 
 
Total Investments in Controlled Affiliated Privately Held Companies (cost: $11,767,175)
 
 
 
 
 
 
 
 
$
3,993,103

 
 
 
 
 
 
 
 
 
 
Total Investments in Privately Held Companies and Publicly Traded Securities (cost: $83,470,933)
 
 
 
 
 
 
 
 
$
77,912,940

 
 
 
 
 
 
 
 
 
 
Investment in Equity Method Privately Held Company (20) -
 
 
 
 
 
 
 
 
 
0.2% of net assets at value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Privately Held Company (Illiquid) (20) -