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) had been on an uptrend through Q2 2018. As the stock reached a price that we believed made it fully valued, we sold 62% of our position during Q2 at an average price of $8.81. As we mentioned in last quarter’s letter, the company announced two separate acquisitions. In May of 2018, IOTS acquired S3 Semiconductors, a mixed-signal ASIC company. This acquisition materially increases the total addressable market for IOTS and provides additional geographies for IOTS's products in industrial Internet of Things (“IoT”) applications. IOTS followed up that acquisition with the purchase of Echelon, a company focused on developing open-standard control networking platforms. These two deals have completely transformed IOTS from a specialty memory company into a leading provider of innovative, application-specific semiconductors and embedded systems that comprise the essential building blocks of IoT edge devices. Unfortunately, IOTS coupled these announcements with a disappointing Q2 2018 financial report followed by a $40 million equity raise at $6.00 per share. The fourth quarter saw significant deterioration in the entire semiconductor space due to excess inventory and concerns of a continued trade war with China. We have nearly doubled our position since exiting Q2 2018 at an average cost of $5.21. We believe the inventory overhang will dissipate as 2019 unfolds and expect IOTS to achieve notable revenue and cost synergies from its recent two acquisitions. For the quarter, IOTS reduced our NAV by $0.05. |
– | Mersana Therapeutics, Inc. (NASDAQ: MRSN) 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 Q3 2018, one patient in one of MRSN's trials died, possibly from side effects of the drug, and the stock collapsed to $10 per share when the trial was put on partial clinical hold. Although MRSN announced that the U.S. Food and Drug Administration lifted the partial clinical hold, the stock continued its decline in Q4 2018. We note that the NASDAQ Biotechnology Index declined 21% in Q4 2018. Most early stage biotech companies either burn cash or are in need of raising cash to fund expensive clinical trials. During a bear market, like the one we saw in Q4 2018, investors flee from the speculative biotech sector. In the case of MRSN, there was no significant news during the quarter. For the quarter, MRSN reduced our NAV by $0.05. |
– | TheStreet, Inc. (NASDAQ: TST) has been a successful investment for our shareholders. A year ago, we helped TST retire its preferred stock at a significant discount, and we joined the board of directors. In the first half of 2018, TST sold its deposit and loan data collection subsidiary, RateWatch, to S&P Global for $33.5 million. In this last quarter, TST sold the rest of its institutional businesses, BoardEx and The Deal, to Euromoney Institutional Investor for $87.3 million.TST stated it plans to return a significant portion of the proceeds from these sales and its available cash in the form of a special distribution. Additionally, TST continues to look at strategic alternatives for its remaining consumer businesses. Since the announcement of our significant investment in the fall of 2017, the stock is up 100%. In the fourth quarter, the stock trended down with the overall market, only to rally significantly following the sale announcement. TST's year-end close of $2.03 was less than the projected cash per share of $2.14 to $2.23. TST is our signature investment for how we define constructive activism. For the quarter, TST reduced our NAV by $0.03. |
– | Airgain, Inc. (NASDAQ: AIRG) is a provider of advanced antenna technologies used to enable high performance wireless networking across a broad range of devices and markets, including connected home, enterprise, automotive, and IoT. We bought the stock following a CEO change and a new commitment to move quickly on not only product refresh cycles, but also on operating expense reductions and a focus on profitable growth. Unfortunately, this past quarter, AIRG came under pressure against the backdrop of very weak technology sector performance. Despite this pressure, the underlying secular uptrend of increased rollouts of technologies that enable high-speed wireless communications is gaining momentum and plays to the strengths of AIRG; that is, increasing speeds require high-quality, complex antennas. For the quarter, AIRG reduced our NAV by $0.02. |
– | Emcore Corporation (NASDAQ: EMKR) is a provider of advanced mixed-signal optics products that provide the foundation for today’s high-speed communication network infrastructures and leading-edge defense systems. EMKR had a myriad of recent revenue challenges in its CATV (community access television, or cable) business, including inventory corrections at one of its largest customers. Essentially, this customer over-ordered in 2017, and as a result, had a dramatic decline in its ordering pattern in 2018. It has been our view this inventory correction would dissipate by fiscal year 2018 fourth quarter (September 30) and EMKR's visibility to future revenues and growth would resume. That view proved accurate. At the same time, EMKR's state-of-the-art Fiber Optic Gyroscope (“FOG”) products are designed for fast, accurate navigation and gyrocompassing, and low noise, line of sight stabilization. These FOG products are critical components of high-performance drones and other systems where highly accurate navigation is critical. Like AIRG and IOTS, EMKR suffered with the rest of the market and technology meltdown. With an enterprise value of less than 1x revenues and with approximately half the market capitalization of EMKR in cash, we believe the stock has a favorable risk-reward profile. For the quarter, EMKR reduced our NAV by $0.01. |
– | Lantronix, Inc. (NASDAQ: LTRX) is a global provider of secure data access and management solutions for IoT assets. The IoT gateway market (75% of LTRX sales) is experiencing strong growth as businesses are becoming increasingly connected. Following years of declining revenues and net losses, a new management team took over in 2015 and embarked on a dramatic turnaround of the business. In its most recent earnings report, LTRX pointed to the expectation of nearly double-digit revenue growth in the upcoming quarters. We participated in a secondary offering in Q3 2018 that strengthened LTRX’s balance sheet and gave it firepower to make strategic and accretive acquisitions. Unfortunately, like almost every other technology stock, and despite no negative company specific news, the stock sold off in Q4 2018. For the quarter, LTRX reduced our NAV by $0.01. |
– | Synacor, Inc. (NASDAQ: SYNC) is a holding we have discussed extensively in our communications with shareholders. The issue at SYNC isn’t fundamental problems with its overall business; it is rather a management credibility issue resulting from the company historically and consistently over-promising and under-delivering. Approximately 40% of SYNC's revenues are recurring and fee-based from its email and Cloud ID businesses. Investors typically pay a minimum of 1x recurring revenues, and in many cases, significantly higher multiples if such revenues are coupled with high margins and growth rates. SYNC's management team has made considerable strides in improving its business. For instance, EBITDA is expected to increase from $2.3 million in 2017 to $7.7 million in 2018. Unfortunately, last August, AT&T (SYNC's largest individual customer), delivered notice to SYNC that it would not automatically renew an expiring contract and sought to initiate renewal negotiations on a potential new definitive agreement. While it is not certain how this will turn out, investors viewed this announcement as negative, with many assuming SYNC would lose the AT&T business in its entirety. As such, the stock has traded off 38% following the announcement. Going forward, if SYNC can resolve the AT&T contract renewal uncertainty and execute on its business, we think the stock has meaningful upside. For the quarter, SYNC reduced our NAV by $0.01. |
– | Intermolecular, Inc. (NASDAQ: IMI) provides customers with a platform and multi-disciplinary development team for the research and development of advanced materials in the semiconductor, display, and glass and coatings industries. Coincident with the downturn of the semiconductor sector, we purchased approximately 1.4 million shares at an average cost of $0.94. At that valuation, the stock was trading at approximately 2x the cash on its balance sheet and an enterprise value of 0.67x revenues. IMI announced a slowdown in revenue for Q4 2018 due to the timing of certain program completions as well as a temporary delay in the scheduled commencement of a new program. IMI also announced a new program with a leading semiconductor manufacturer. We believe this new relationship, as well as improved operational efficiencies, will lead to a better 2019. We also note that the sell-off in Q4 2018 was not 100% fundamentally driven. As we noted earlier in this letter, Q4 2018 forced liquidations exacerbated the decline in the overall stock market. In the particular case of IMI, we became aware that its fourth largest shareholder was liquidating its entire IMI holdings. We took advantage of this liquidation. For the quarter, IMI did not materially impact our NAV. |
– | PDL BioPharma, Inc. (NASDAQ: PDLI) was a new holding last quarter. We sold our position in PDLI in Q4 2018 for a realized gain of 26.2% in a total holding period of less than 100 days. Our investment thesis centered on our expectation that PDLI's Board and management would use a meaningful portion of the its cash on hand to buy back stock. Subsequent to our investment, the company authorized a $100 million stock repurchase program. As the stock moved directly to our short-term price target, we exited the position. |
180 DEGREE CAPITAL CORP. CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES |
December 31, 2018 | |||
ASSETS | |||
Investments in portfolio securities, at value: | |||
Unaffiliated privately held companies (cost: $14,631,117) | $ | 16,139,296 | |
Unaffiliated publicly traded securities (cost: $18,556,002) | 13,032,576 | ||
Non-controlled affiliated privately held companies (cost: $27,027,538) | 26,429,303 | ||
Non-controlled affiliated publicly traded securities (cost: $9,288,130) | 11,907,377 | ||
Controlled affiliated privately held companies (cost: $12,267,175) | 5,271,414 | ||
Equity method privately held company (adjusted cost basis: $246,229) | 246,229 | ||
Unaffiliated rights to payments (adjusted cost basis: $548,998) | 2,019,283 | ||
Cash | 7,801,712 | ||
Restricted cash | 46,151 | ||
Interest receivable | 661,677 | ||
Prepaid expenses | 259,359 | ||
Receivable from portfolio companies and managed funds | 106,662 | ||
Other assets | 132,015 | ||
Total assets | $ | 84,053,054 | |
LIABILITIES & NET ASSETS | |||
Post-retirement plan liabilities | $ | 1,140,406 | |
Accounts payable and accrued liabilities | 732,324 | ||
Payable for securities purchased | 92,371 | ||
Deferred rent | 53,185 | ||
Total liabilities | $ | 2,018,286 | |
Commitments and contingencies (Note 10) | |||
Net assets | $ | 82,034,768 | |
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 | 127,652,787 | ||
Total distributable loss | (41,347,088 | ) | |
Treasury stock, at cost 3,501,779 shares | (4,605,525 | ) | |
Net assets | $ | 82,034,768 | |
Shares outstanding | 31,121,562 | ||
Net asset value per outstanding share | $ | 2.64 |
180 DEGREE CAPITAL CORP. CONSOLIDATED STATEMENT OF OPERATIONS |
Year Ended December 31, 2018 | |||
Income: | |||
Interest from: | |||
Unaffiliated companies-cash | $ | 19,206 | |
Unaffiliated companies-PIK | 17,883 | ||
Non-controlled affiliated companies-cash | (49,562 | ) | |
Non-controlled affiliated companies-PIK | 16,219 | ||
Controlled affiliated companies-PIK | 25,569 | ||
Cash and U.S. government securities | 19,018 | ||
Yield enhancing fee income on debt securities-non-cash | 182,683 | ||
Sub-lease income | 248,666 | ||
Fee income for providing managerial assistance to portfolio companies-cash | 75,000 | ||
Fee income for providing managerial assistance to portfolio companies-non-cash | 57,940 | ||
Management fee income | 73,214 | ||
Total income | 685,836 | ||
Operating fees and expenses: | |||
Salaries, bonus and benefits | 1,464,381 | ||
Professional | 561,650 | ||
Directors | 277,500 | ||
Rent | 252,110 | ||
Administration and operations | 251,237 | ||
Insurance | 223,901 | ||
Custody | 30,188 | ||
Other | 4,885 | ||
Total operating expenses | 3,065,852 | ||
Net investment loss before income tax expense | (2,380,016 | ) | |
Income tax expense | 6,003 | ||
Net investment loss | (2,386,019 | ) | |
Net realized gain (loss) from investments: | |||
Realized gain (loss) from investments: | |||
Unaffiliated publicly traded securities | 6,802,818 | ||
Non-controlled affiliated privately held companies | (6,882,890 | ) | |
Controlled affiliated privately held companies | (7,613,301 | ) | |
Net realized loss from investments | (7,693,373 | ) | |
Realized loss from funds in escrow | (150 | ) | |
Net realized loss | (7,693,523 | ) | |
Change in unrealized (depreciation) appreciation on investments: | |||
Unaffiliated privately held companies | (1,369,705 | ) | |
Unaffiliated publicly traded securities | (4,986,125 | ) | |
Non-controlled affiliated privately held companies | 7,512,247 | ||
Non-controlled affiliated publicly traded securities | 2,038,330 | ||
Controlled affiliated privately held companies | 8,193,457 | ||
Unaffiliated rights to payments | (192,584 | ) | |
Net change in unrealized appreciation on investments | 11,195,620 | ||
Net realized loss and change in unrealized appreciation on investments | 3,502,097 | ||
Share of loss on equity method investment | (124,299 | ) | |
Net increase in net assets resulting from operations | $ | 991,779 |
180 DEGREE CAPITAL CORP. CONSOLIDATED STATEMENT OF CASH FLOWS |
Year Ended December 31, 2018 | |||
Cash flows provided by operating activities: | |||
Net increase in net assets resulting from operations | $ | 991,779 | |
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: | |||
Net realized loss from investments | 7,693,373 | ||
Realized loss from funds held in escrow | 150 | ||
Net change in unrealized appreciation on investments | (11,195,620 | ) | |
Share of loss on equity method investee | 124,299 | ||
Depreciation of fixed assets | 4,879 | ||
Accretion of bridge note PIK interest income | (59,671 | ) | |
Yield enhancing fee income on debt securities-non-cash | (182,683 | ) | |
Fee income for providing managerial assistance to portfolio companies-non-cash | (57,940 | ) | |
Purchase of U.S. government securities | (7,983,711 | ) | |
Maturity of U.S. government securities | 7,983,711 | ||
Purchase of equity method investee | (113,906 | ) | |
Purchase of unaffiliated privately held portfolio companies | (1,602,368 | ) | |
Purchase of unaffiliated publicly traded securities | (12,935,685 | ) | |
Purchase of non-controlled affiliated privately held portfolio companies | (245,334 | ) | |
Purchase of non-controlled affiliated publicly traded securities | (665,750 | ) | |
Purchase on controlled affiliated privately held companies | (500,000 | ) | |
Proceeds from sale of unaffiliated privately held companies | 132,000 | ||
Proceeds from sale of unaffiliated publicly traded securities | 16,728,458 | ||
Proceeds from sale of non-controlled affiliated privately held companies | 7,135,834 | ||
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: | |||
Decrease in interest receivable | 49,563 | ||
Increase on prepaid expenses | (22,908 | ) | |
Increase in receivable from portfolio companies and managed funds | (65,910 | ) | |
Decrease in other assets | 31,182 | ||
Decrease in post-retirement plan liabilities | (198,940 | ) | |
Decrease in accounts payable and accrued liabilities | (715,221 | ) | |
Decrease in accrued severance | (140,923 | ) | |
Decrease in deferred rent | (45,633 | ) | |
Decrease in directors' fee payable | (58,125 | ) | |
Increase in payable for securities purchased | 92,371 | ||
Net cash provided by operating activities | 4,351,207 | ||
Cash flows from investing activities: | |||
Purchase of fixed assets | (1,884 | ) | |
Net cash used in investing activities | (1,884 | ) | |
Net increase in cash and restricted cash | 4,349,323 | ||
Cash and restricted cash at beginning of the year | 3,498,540 | ||
Cash and restricted cash at end of the year | $ | 7,847,863 | |
Supplemental disclosures of cash flow information: | |||
Income taxes paid | $ | 6,003 | |
Cash | $ | 7,801,712 | |
Restricted cash | 46,151 | ||
Total cash and restricted cash shown in the consolidated statement of cash flows | $ | 7,847,863 |
180 DEGREE CAPITAL CORP. CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS |
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||
Changes in net assets from operations: | |||||||
Net investment loss | $ | (2,386,019 | ) | $ | (3,645,515 | ) | |
Net realized loss | (7,693,523 | ) | (11,755,179 | ) | |||
Net change in unrealized appreciation on investments | 11,195,620 | 24,877,695 | |||||
Share of loss on equity method investment | (124,299 | ) | (59,258 | ) | |||
Net increase in net assets resulting from operations | 991,779 | 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 | 991,779 | 8,787,379 | |||||
Net Assets: | |||||||
Beginning of the year | 81,042,989 | 72,255,610 | |||||
End of the year1 | $ | 82,034,768 | $ | 81,042,989 | |||
1 Includes accumulated net investment loss of $5,211,751 as of December 31, 2017. The Securities Exchange Commission ("SEC") eliminated the requirement to disclose accumulated net investment income (loss) in 2018. |
180 DEGREE CAPITAL CORP. FINANCIAL HIGHLIGHTS |
Year Ended Dec. 31, 2018 | Year Ended Dec. 31, 2017 | Year Ended Dec. 31, 2016 | Year Ended Dec. 31, 2015 | Year Ended Dec. 31, 2014 | |||||||||||||||
Per Share Operating Performance | |||||||||||||||||||
Net asset value per share, beginning of the year | $ | 2.60 | $ | 2.34 | $ | 2.88 | $ | 3.51 | $ | 3.93 | |||||||||
Net investment loss* | (0.07 | ) | (0.12 | ) | (0.15 | ) | (0.23 | ) | (0.25 | ) | |||||||||
Net realized (loss) gain from investments* | (0.25 | ) | (0.38 | ) | (0.26 | ) | 0.15 | (0.16 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) on investments and written call options*1 | 0.36 | 0.80 | (0.12 | ) | (0.56 | ) | (0.02 | ) | |||||||||||
Share of loss on equity method investment*2 | 0.00 | 0.00 | 0.00 | (0.01 | ) | 0.00 | |||||||||||||
Total* | 0.04 | 0.30 | (0.53 | ) | (0.65 | ) | (0.43 | ) | |||||||||||
Net (decrease) increase as a result of stock-based compensation expense*2 | 0.00 | (0.01 | ) | 0.01 | 0.03 | 0.03 | |||||||||||||
Net increase as a result of purchase of treasury stock | 0.00 | 0.00 | 0.00 | 0.01 | 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 | ) | ||||||||||
Total (decrease) increase from capital stock transactions | 0.00 | (0.03 | ) | 0.00 | 0.03 | 0.02 | |||||||||||||
Net (decrease) increase as a result of other comprehensive (loss) income*2 | 0.00 | (0.01 | ) | (0.01 | ) | (0.01 | ) | (0.01 | ) | ||||||||||
Net increase (decrease) in net asset value | 0.04 | 0.26 | (0.54 | ) | (0.63 | ) | (0.42 | ) | |||||||||||
Net asset value per share, end of the year | $ | 2.64 | $ | 2.60 | $ | 2.34 | $ | 2.88 | $ | 3.51 | |||||||||
Stock price per share, end of the year | $ | 1.75 | $ | 1.97 | $ | 1.38 | $ | 2.20 | $ | 2.95 | |||||||||
Total return based on stock price | (11.17 | )% | 42.75 | % | (37.27 | )% | (25.42 | )% | (1.01 | )% | |||||||||
Supplemental Data: | |||||||||||||||||||
Net assets, end of the year | $ | 82,034,768 | $ | 81,042,989 | $ | 72,255,610 | $ | 88,711,671 | $ | 109,654,427 | |||||||||
Ratio of expenses, excluding taxes, to quarterly average net assets | 3.62 | % | ** | 6.26 | % | ** | 7.88 | % | 8.15 | % | 7.14 | % | |||||||
Ratio of expenses, including taxes, to quarterly average net assets | 3.63 | % | ** | 6.28 | % | 3 ** | 7.89 | % | 8.15 | % | 7.15 | % | |||||||
Ratio of net investment loss to quarterly average net assets | (2.82 | )% | (4.68 | )% | (5.64 | )% | (7.22 | )% | (6.70 | )% | |||||||||
Average debt outstanding | $ | 0 | $ | 0 | $ | 4,590,164 | $ | 3,780,822 | $ | 0 | |||||||||
Average debt per share | $ | 0.00 | $ | 0.00 | $ | 0.15 | $ | 0.12 | $ | 0.00 | |||||||||
Portfolio turnover | 20.43 | % | 8.83 | % | *** | *** | *** | ||||||||||||
Number of shares outstanding, end of the year | 31,121,562 | 31,121,562 | 30,904,209 | 30,845,754 | 31,280,843 |
180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2018 | |||||||||
Method of Valuation (1) | Industry | Cost | Shares/ Principal | Value |
Investments in Unaffiliated Companies (2) - | |||||||||||||||
35.6% of net assets at value | |||||||||||||||
Privately Held Companies (Illiquid) - | |||||||||||||||
19.7% of net assets at value | |||||||||||||||
AutoTech Ventures Management I, LLC (3)(4)(5) | |||||||||||||||
Venture capital investing in automotive-related companies | Asset Management & Custody Banks | ||||||||||||||
LLC Interests (acquired 12/1/17) | (M) (L3) | $ | 0 | 0 | $ | 150,000 | |||||||||
D-Wave Systems, Inc. (3)(4)(6) | 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 | 1,958,033 | |||||||||||
Series 1 Class C Convertible Preferred Stock (acquired 9/30/08) | (M) (L3) | 487,804 | 450,450 | 786,616 | |||||||||||
Series 1 Class D Convertible Preferred Stock (acquired 9/30/08) | (M) (L3) | 748,473 | 855,131 | 1,493,305 | |||||||||||
Series 1 Class E Convertible Preferred Stock (acquired 11/24/10) | (M) (L3) | 248,049 | 269,280 | 490,521 | |||||||||||
Series 1 Class F Convertible Preferred Stock (acquired 11/24/10) | (M) (L3) | 238,323 | 258,721 | 471,287 | |||||||||||
Series 1 Class H Convertible Preferred Stock (acquired 6/27/14) | (M) (L3) | 909,088 | 460,866 | 1,141,337 | |||||||||||
Series 2 Class D Convertible Preferred Stock (acquired 9/30/08) | (M) (L3) | 736,019 | 678,264 | 1,184,445 | |||||||||||
Series 2 Class E Convertible Preferred Stock (acquired 6/1/12-3/22/13) | (M) (L3) | 659,493 | 513,900 | 979,874 | |||||||||||
Series 2 Class F Convertible Preferred Stock (acquired 6/1/12-3/22/13) | (M) (L3) | 633,631 | 493,747 | 941,447 | |||||||||||
Warrants for Common Stock expiring 5/12/19 (acquired 5/12/14) | (I) (L3) | 26,357 | 20,415 | 242 | |||||||||||
5,689,311 | 9,447,107 | ||||||||||||||
Fleet Health Alliance, LLC (3)(4) | 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) | (I) (L3) | 225,000 | $ | 225,000 | 112,500 | ||||||||||
180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2018 | |||||||||
Method of Valuation (1) | Industry | Cost | Shares/ Principal | Value |
Investments in Unaffiliated Companies (2) - | |||||||||||||||
35.6% of net assets at value (cont.) | |||||||||||||||
Privately Held Companies (Illiquid) - | |||||||||||||||
19.7% of net assets at value (cont.) | |||||||||||||||
Genome Profiling, LLC (3)(7) | 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 | ||||||||
Magnolia Neurosciences Corporation (3)(4) | Pharmaceuticals | ||||||||||||||
Developing and commercializing novel therapeutics for treatment of neurodegeneration | |||||||||||||||
Series A Convertible Preferred Stock (acquired 8/3/18) | (I) (L3) | 862,872 | 862,872 | 867,417 | |||||||||||
Nanosys, Inc. (3)(4) | 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 | 926,994 | |||||||||||
Series D Convertible Preferred Stock (acquired 11/7/05) | (I) (L3) | 3,000,003 | 1,016,950 | 1,779,526 | |||||||||||
Series E Convertible Preferred Stock (acquired 8/13/10) | (I) (L3) | 496,573 | 433,688 | 795,737 | |||||||||||
4,996,576 | 3,502,257 | ||||||||||||||
NanoTerra, Inc. (3)(4) | 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 | 0 | |||||||||||
Warrants for Series A-3 Preferred Stock expiring on 11/15/22 (acquired 11/15/12) | (I) (L3) | 35,403 | 47,508 | 31,645 | |||||||||||
104,571 | 31,645 | ||||||||||||||
180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2018 | |||||||||
Method of Valuation (1) | Industry | Cost | Shares/ Principal | Value |
Investments in Unaffiliated Companies (2) - | |||||||||||||||
35.6% of net assets at value (cont.) | |||||||||||||||
Privately Held Companies (Illiquid) - | |||||||||||||||
19.7% of net assets at value (cont.) | |||||||||||||||
Petra Pharma Corporation (3)(4)(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 | $ | 1,018,718 | |||||||||
Secured Convertible Bridge Note, 7% PIK, (acquired 8/30/18, maturing 1/31/19) | (M) (L3) | 378,541 | $ | 369,748 | 378,541 | ||||||||||
2,273,339 | 1,397,259 | ||||||||||||||
Phylagen, Inc. (3) | Research & Consulting Services | ||||||||||||||
Developing technology to improve human health and business productivity | |||||||||||||||
Series A Convertible Preferred Stock (acquired 11/14/18) | (I) (L3) | 249,448 | 584,597 | 401,111 | |||||||||||
Total Unaffiliated Privately Held Companies (cost: $14,631,117) | $ | 16,139,296 | |||||||||||||
Unaffiliated Publicly Traded Securities - | |||||||||||||||
15.9% of net assets at value | |||||||||||||||
Adesto Technologies Corporation (4) | Semiconductors | ||||||||||||||
Developing low-power, high-performance solutions for the Internet of Things (IoT) | |||||||||||||||
Common Stock (acquired 10/27/15-12/31/18) | (M) (L1) | $ | 6,564,931 | 1,116,675 | $ | 4,913,370 | |||||||||
Airgain, Inc. (4) | Electronic Components | ||||||||||||||
Providing advanced antenna technologies for high-performance wireless networking | |||||||||||||||
Common Stock (acquired 6/4/18-12/27/18) | (M) (L1) | 1,614,289 | 188,784 | 1,870,849 | |||||||||||
Emcore Corporation (4) | Communications Equipment | ||||||||||||||
Providing mixed-signal optical products | |||||||||||||||
Common Stock (acquired 5/3/18-9/19/18) | (M) (L1) | 2,684,497 | 564,828 | 2,372,278 | |||||||||||
Intermolecular, Inc. (4) | Semiconductors | ||||||||||||||
Providing advanced materials innovation services and solutions | |||||||||||||||
Common Stock (acquired 11/9/18-12/20/18) | (M) (L1) | 1,328,661 | 1,411,729 | 1,425,846 | |||||||||||
180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2018 | |||||||||
Method of Valuation (1) | Industry | Cost | Shares/ Principal | Value |
Investments in Unaffiliated Companies (2) - | |||||||||||||||
35.6% of net assets at value (cont.) | |||||||||||||||
Unaffiliated Publicly Traded Securities - | |||||||||||||||
15.9% of net assets at value (cont.) | |||||||||||||||
Lantronix, Inc. (4) | Communications Equipment | ||||||||||||||
Providing secure data access and management solutions | |||||||||||||||
Common Stock (acquired 9/18/18-12/17/18) | (M) (L1) | $ | 1,475,580 | 400,000 | $ | 1,176,000 | |||||||||
Mersana Therapeutics, Inc. (4) | Biotechnology | ||||||||||||||
Developing antibody drug conjugates for cancer therapy | |||||||||||||||
Common Stock (acquired 7/27/12-12/31/18) | (M) (L1) | 4,414,817 | 301,100 | 1,228,488 | |||||||||||
OpGen, Inc. (4) | 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 | 989 | |||||||||||
Warrants for the Purchase of Common Stock expiring 2/17/25 (acquired 5/5/15) | (I) (L3) | 785 | 1,248 | 202 | |||||||||||
426,364 | 1,191 | ||||||||||||||
Miscellaneous Common Stocks (4)(9) | (M) (L1) | 46,863 | 44,554 | ||||||||||||
Total Unaffiliated Publicly Traded Securities (cost: $18,556,002) | $ | 13,032,576 | |||||||||||||
Total Investments in Unaffiliated Companies (cost: $33,187,119) | $ | 29,171,872 | |||||||||||||
180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2018 | |||||||||
Method of Valuation (1) | Industry | Cost | Shares/ Principal | Value |
Investments in Non-Controlled Affiliated Companies (2) - | |||||||||||||||
46.7% of net assets at value | |||||||||||||||
Privately Held Companies (Illiquid) - | |||||||||||||||
32.2% of net assets at value | |||||||||||||||
ABSMaterials, Inc. (3) | 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 | $ | 15,864 | |||||||||
Series B Convertible Preferred Stock (acquired 11/8/13-6/25/14) | (I) (L3) | 1,217,644 | 1,037,751 | 286,562 | |||||||||||
Secured Convertible Bridge Note, 8% PIK, (acquired 1/20/16, maturing 12/31/19) | (M) (L3) | 123,605 | $ | 100,000 | 123,605 | ||||||||||
Secured Convertible Bridge Note, 8% PIK, (acquired 3/28/17, maturing 12/31/19) | (M) (L3) | 28,529 | $ | 25,000 | 28,529 | ||||||||||
1,804,778 | 454,560 | ||||||||||||||
AgBiome, LLC (3)(4) | 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 Units (acquired 1/30/13) | (I) (L3) | 2,000,000 | 2,000,000 | 10,442,684 | |||||||||||
Series A-2 Convertible Preferred Units (acquired 4/9/13-10/15/13) | (I) (L3) | 521,740 | 417,392 | 2,214,058 | |||||||||||
Series B Convertible Preferred Units (acquired 8/7/15) | (I) (L3) | 500,006 | 160,526 | 951,079 | |||||||||||
3,021,746 | 13,607,821 | ||||||||||||||
Coba Therapeutics Corporation (3)(10) | |||||||||||||||
Developed therapeutics for obesity, diabetes and liver diseases | Pharmaceuticals | ||||||||||||||
Unsecured Convertible Bridge Note, 6% PIK, (acquired 2/27/18, maturing 2/27/19) | (I) (L3) | 151,606 | $ | 145,530 | 21,776 | ||||||||||
180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2018 | |||||||||
Method of Valuation (1) | Industry | Cost | Shares/ Principal | Value |
Investments in Non-Controlled Affiliated Companies (2) - | |||||||||||||||
46.7% of net assets at value (cont.) | |||||||||||||||
Privately Held Companies (Illiquid) - | |||||||||||||||
32.2% of net assets at value (cont.) | |||||||||||||||
EchoPixel, Inc. (3)(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 | $ | 1,201,023 | |||||||||
Series Seed-2 Convertible Preferred Stock (acquired 1/22/16) | (I) (L3) | 500,000 | 1,476,668 | 429,732 | |||||||||||
Series A-2 Convertible Preferred Stock (acquired 3/23/17) | (I) (L3) | 350,000 | 1,471,577 | 499,616 | |||||||||||
2,100,000 | 2,130,371 | ||||||||||||||
Essential Health Solutions, Inc. (3) | Health Care Technology | ||||||||||||||
Developing software for information transfer amongst healthcare providers and consumers | |||||||||||||||
Common Stock (acquired 11/18/16) | (I) (L3) | 20 | 200,000 | 128,339 | |||||||||||
Series A Convertible Preferred Stock (acquired 11/18/16) | (I) (L3) | 2,750,000 | 2,750,000 | 2,781,300 | |||||||||||
Unsecured Convertible Bridge Note, 8% PIK, (acquired 12/19/18, maturing 12/19/19) | (M) (L3) | 50,142 | $ | 50,000 | 50,142 | ||||||||||
2,800,162 | 2,959,781 | ||||||||||||||
Lodo Therapeutics Corporation (3)(4) | 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 | 779,467 | |||||||||||
NGX Bio, Inc. (3)(4)(10) | 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 | 17,273 | |||||||||||
Series Seed 2 Convertible Preferred Stock (acquired 8/20/15-9/30/15) | (I) (L3) | 499,999 | 329,989 | 8,550 | |||||||||||
Series Seed 3 Convertible Preferred Stock (acquired 6/26/17) | (I) (L3) | 686,329 | 666,001 | 17,256 | |||||||||||
1,686,330 | 43,079 | ||||||||||||||
180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2018 | |||||||||
Method of Valuation (1) | Industry | Cost | Shares/ Principal | Value |
Investments in Non-Controlled Affiliated Companies (2) - | |||||||||||||||
46.7% of net assets at value (cont.) | |||||||||||||||
Privately Held Companies (Illiquid) - | |||||||||||||||
32.2% of net assets at value (cont.) | |||||||||||||||
ORIG3N, Inc. (3)(4) | Health Care Technology | ||||||||||||||
Developing consumer focused genetic tests | |||||||||||||||
Series 1 Convertible Preferred Stock (acquired 2/5/15-8/5/15) | (H) (L3) | $ | 500,000 | 1,195,315 | $ | 1,232,502 | |||||||||
Series A Convertible Preferred Stock (acquired 11/25/15-9/7/16) | (H) (L3) | 1,500,000 | 1,364,666 | 1,431,936 | |||||||||||
Series A-2 Convertible Preferred Stock (acquired 5/11/17-2/8/18) | (H) (L3) | 200,002 | 176,386 | 189,592 | |||||||||||
2,200,002 | 2,854,030 | ||||||||||||||
Produced Water Absorbents, Inc. (3)(4)(11) | 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) | 2,323,680 | $ | 2,533,766 | 76,863 | ||||||||||
10,059,211 | 76,863 | ||||||||||||||
TARA Biosystems, Inc. (3)(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 | 659,162 | |||||||||||
Series A Convertible Preferred Stock (acquired 3/31/17) | (I) (L3) | 2,545,493 | 6,878,572 | 2,842,393 | |||||||||||
2,545,513 | 3,501,555 | ||||||||||||||
Total Non-Controlled Affiliated Privately Held Companies (cost: $27,027,538) | $ | 26,429,303 | |||||||||||||
180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2018 | |||||||||
Method of Valuation (1) | Industry | Cost | Shares/ Principal | Value |
Investments in Non-Controlled Affiliated Companies (2) - | |||||||||||||||
46.7% of net assets at value (cont.) | |||||||||||||||
Non-Controlled Affiliated Publicly Traded Securities - | |||||||||||||||
14.5% of net assets at value | |||||||||||||||
Synacor, Inc. (4)(12) | Application Software | ||||||||||||||
Providing technology development, multiplatform services and revenue partner for video, internet and communications providers, device manufacturers, and enterprises | |||||||||||||||
Common Stock (acquired 4/6/17-12/31/18) | (M) (L1) | $ | 4,338,396 | 1,595,306 | $ | 2,361,053 | |||||||||
TheStreet, Inc. (4)(13) | 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 | 9,477,161 | |||||||||||
Stock Options for Common Stock Expiring 1/1/25 (acquired 1/1/18) | (I) (L3) | 0 | 3,333 | 1,995 | |||||||||||
Stock Options for Common Stock Expiring 5/18/25 (acquired 5/18/18) (3) | (I) (L3) | 0 | 10,000 | 2,500 | |||||||||||
Restricted Stock Units (acquired 5/18/18) (3) | (M) (L3) | 0 | 33,333 | 64,668 | |||||||||||
4,949,734 | 9,546,324 | ||||||||||||||
Total Non-Controlled Affiliated Publicly Traded Securities (cost: $9,288,130) | $ | 11,907,377 | |||||||||||||
Total Investments in Non-Controlled Affiliated Companies (cost: $36,315,668) | $ | 38,336,680 | |||||||||||||
180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2018 | |||||||||
Method of Valuation (1) | Industry | Cost | Shares/ Principal | Value |
Investments in Controlled Affiliated Companies (2) - | |||||||||||||||
6.4% of net assets at value | |||||||||||||||
Privately Held Companies (Illiquid) - | |||||||||||||||
6.4% of net assets at value | |||||||||||||||
Black Silicon Holdings, Inc. (3)(10)(14) | Semiconductors | ||||||||||||||
Holding company for interest in a company that develops silicon-based optoelectronic products | |||||||||||||||
Series A Convertible Preferred Stock (acquired 8/4/15) | (M) (L3) | $ | 750,000 | 233,499 | $ | 0 | |||||||||
Series A-1 Convertible Preferred Stock (acquired 8/4/15) | (M) (L3) | 890,000 | 2,966,667 | 0 | |||||||||||
Series A-2 Convertible Preferred Stock (acquired 8/4/15) | (M) (L3) | 2,445,000 | 4,207,537 | 0 | |||||||||||
Series B-1 Convertible Preferred Stock (acquired 8/4/15) | (M) (L3) | 1,169,561 | 1,892,836 | 0 | |||||||||||
Series C Convertible Preferred Stock (acquired 8/4/15) | (M) (L3) | 1,171,316 | 1,674,030 | 0 | |||||||||||
Secured Convertible Bridge Note, 8% PIK, (acquired 8/25/16, maturing 8/4/21) | (M) (L3) | 1,444,368 | $ | 1,278,453 | 476,187 | ||||||||||
7,870,245 | 476,187 | ||||||||||||||
HALE.life Corporation (3)(4) | Health Care Technology | ||||||||||||||
Developing a platform to facilitate precision health and medicine | |||||||||||||||
Common Stock (acquired 3/1/16) | (I) (L3) | 10 | 1,000,000 | 146,462 | |||||||||||
Series Seed-1 Convertible Preferred Stock (acquired 3/28/17) | (I) (L3) | 1,896,920 | 11,000,000 | 2,147,894 | |||||||||||
Series Seed-2 Convertible Preferred Stock (acquired 12/28/18) | (I) (L3) | 2,500,000 | 12,083,132 | 2,500,871 | |||||||||||
4,396,930 | 4,795,227 | ||||||||||||||
Total Controlled Affiliated Privately Held Companies (cost: $12,267,175) | $ | 5,271,414 | |||||||||||||
Total Investments in Controlled Affiliated Privately Held Companies (cost: $12,267,175) | $ | 5,271,414 | |||||||||||||
Total Investments in Privately Held Companies and Publicly Traded Securities (cost: $81,769,962) | $ | 72,779,966 | |||||||||||||
180 DEGREE CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2018 | |||||||||
Method of Valuation (1) | Industry | Cost | Shares/ Principal | Value |
Investment in Equity Method Privately Held Company (2) - | |||||||||||||||
0.3% of net assets at value | |||||||||||||||