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 |
– | 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. |
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 |
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 | |
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 |
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 | ) |
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 assets3 | (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 |
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 | ||||||||||
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 | |||||||||||
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 | ||||||||||||||
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 | ||||||||||||||
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 | ||||||||||||||
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 | ||||||||||||||
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 | |||||||||||||
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 | ||||||||||||||
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) - |