NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
NOTE 1 – NATURE OF OPERATIONS
References herein to “we”,
“us” or “our” refer to Princeton Capital Corporation (the “Company” or “Princeton Capital”),
unless the context specifically requires otherwise.
Princeton Capital Corporation, a Maryland
corporation, was incorporated under the general laws of the State of Maryland on July 25, 2013, with its principal office located
in North Andover, MA. We are a non-diversified, closed-end investment company that has filed an election to be regulated as a business
development company (“BDC”), under the Investment Company Act of 1940, as amended (the “1940 Act”). As
a BDC, our goal is to annually qualify and elect to be treated as a regulated investment company (“RIC”) under Subchapter
M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company, however, did not meet the requirements
to qualify as a RIC for the 2016 or 2017 tax years and expects to be taxed as a corporation under Subchapter C of the Code for
those years. We invest primarily in private small and lower middle-market companies through first lien loans, second lien loans,
unsecured loans, unitranche and mezzanine debt financing, often times with a corresponding equity investment. Our investment objective
is to maximize the total return to our stockholders in the form of current income and capital appreciation through debt and related
equity investments.
Prior to March 13, 2015, Princeton Capital’s
predecessor operated under the name Regal One Corporation (“Regal One”). Regal One had been located in Scottsdale,
Arizona, and was a Florida corporation initially incorporated in 1959 as Electro-Mechanical Services Inc. In 1998 Electro-Mechanical
Services Inc. changed its name to Regal One Corporation.
On March 7, 2005, Regal One’s board
of directors determined it was in the shareholders’ best interest to change the focus of its operations to providing financial
consulting services through its network of advisors and professionals, and to be regulated as a BDC under the 1940 Act. On September
16, 2005, Regal One filed a Form N54A (Notification of Election by Business Development Companies) with the Securities and Exchange
Commission (“SEC”), which transformed Regal One into a BDC in accordance with sections 55 through 65 of the 1940 Act.
Regal One reported as an operating BDC from March 31, 2006 until March 13, 2015 and since March 13, 2015 (following the Reincorporation
described below) Princeton Capital has reported as an operating BDC.
On July 9, 2014, Regal One acquired Princeton
Capital as a wholly owned subsidiary. On July 14, 2014, Regal One, Princeton Capital, Capital Point Partners, LP, a Delaware limited
partnership (“CPP”), and Capital Point Partners II, LP, a Delaware limited partnership (“CPPII” and, together
with CPP, the “Partnerships”), entered into an Asset Purchase Agreement (the “Purchase Agreement”). Pursuant
to the Purchase Agreement, Regal One would acquire cash, equity and debt investments of the Partnerships in exchange for shares
of common stock of Regal One. In addition to the customary conditions to closing the transactions contemplated by the Purchase
Agreement, Regal One was required to (i) to effect a reverse stock split of Regal One’s outstanding common stock at a ratio
of 1-for-2 (the “Reverse Stock Split”), (ii) reincorporate from Florida to Maryland by merging into Princeton Capital
(the “Reincorporation”) and (iii) become an externally managed BDC by entering into an external investment advisory
agreement with Princeton Investment Advisors, LLC, (“Princeton Investment Advisors”) a Delaware limited liability company.
On March 13, 2015, following the Reverse
Stock Split and the Reincorporation, we completed our previously announced acquisition in the approximate amounts of $11.2 million
in cash, $43.5 million in equity and debt investments, and $1.9 million in restricted cash escrow deposits of the Partnerships
with an aggregate value of approximately $56.6 million and issued approximately 115.5 million shares of our common stock to the
Partnerships. The shares issued were based on a pre-valuation presumed fair value of $60.9 million. We also entered into an investment
advisory agreement with Princeton Investment Advisors, which subsequently was terminated by the Company’s Board of Directors
on January 18, 2016, effective as of June 9, 2016.
On January 18, 2016, the Board of Directors
of the Company conditionally approved the investment advisory agreement with Princeton Advisory Group, Inc., a New Jersey corporation
(“Princeton Advisory Group”) (the “PAG Investment Advisory Agreement”), subject to the approval of the
Company’s stockholders at the 2016 Annual Meeting of Stockholders. At the 2016 Annual Meeting of Stockholders held on June
9, 2016, the Company’s stockholders approved the PAG Investment Advisory Agreement, effective June 9, 2016. From June 9,
2016 through September 30, 2017 (the date covered by this quarterly report), Princeton Advisory Group acted as the Company’s
investment advisor pursuant to the terms of the PAG Investment Advisory Agreement. The PAG Investment Advisory Agreement was subsequently
terminated on December 31, 2017 as disclosed in Note 10.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
NOTE 2 – SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying financial statements (unaudited)
have been prepared in accordance with accounting principles generally accepted in the United States of America, (“U.S. GAAP”).
In accordance with Regulation S-X under the Securities Act of 1933 and Securities Exchange Act of 1934, the Company does not consolidate
portfolio company investments. The accounting records of the Company are maintained in U.S. dollars. As an investment company,
as defined by the 1940 Act, the Company follows investment company accounting and reporting guidance of Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 – Financial Services - Investment
Companies, which is U.S. GAAP.
Use of Estimates
The preparation of financial statements
in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period.
Changes in the economic environment, financial markets, creditworthiness of our portfolio companies and any other parameters used
in determining these estimates could cause actual results to differ.
Portfolio Investment Classification
The Company classifies its investments
in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Control Investments” are defined as investments
in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation.
Under the 1940 Act, “Affiliated Investments” are defined as those non-control investments in companies in which the
Company owns between 5% and 25% of the voting securities. Under the 1940 Act, “Non-affiliated Investments” are defined
as investments that are neither Control Investments nor Affiliated Investments. As of September 30, 2017, the Company had control
investments in Advantis Certified Staffing Solutions, Inc. Rockfish Seafood Grill, Inc., Rockfish Holdings, LLC, Integrated Medical
Partners, LLC, and PCC SBH Sub, Inc., as defined under the 1940 Act. As of December 31, 2016, the Company had control investments
in Rockfish Seafood Grill, Inc., Rockfish Holdings, LLC, and Integrated Medical Partners, LLC and affiliated investments in Spencer
Enterprises Holdings, LLC, as defined under the 1940 Act
Investments are recognized when we assume
an obligation to acquire a financial instrument and assume the risks for gains or losses related to that instrument. Investments
are derecognized when we assume an obligation to sell a financial instrument and forgo the risks for gains and losses related to
that instrument. Specifically, we record all security transactions on a trade date basis. Investments in other non-security financial
instruments, such as limited partnerships or private companies, are recorded on the basis of subscription date or redemption date,
as applicable. Amounts for investments recognized or derecognized but not yet settled are reported as receivables for investments
sold or payable for investments acquired, respectively, in the Statements of Assets and Liabilities.
Valuation of Investments
In accordance with U.S. GAAP, fair value
is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”)
in an orderly transaction between market participants at the measurement date.
In determining fair value, our board of
directors uses various valuation approaches. In accordance with U.S. GAAP, ASC 820 establishes a fair value hierarchy for inputs
and is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by
requiring that the most observable inputs be used when available.
Observable inputs are those that market
participants would use in pricing the asset or liability based on market data obtained from sources independent of the board of
directors. Unobservable inputs reflect our board of director’s assumptions about the inputs market participants would use
in pricing the asset or liability developed based on the best information available in the circumstances.
With respect to investments for which market
quotations are not readily available, our board of directors undertakes a multi-step valuation process each quarter, as described
below:
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Our
quarterly valuation process begins with each portfolio company or investment being initially
valued by an independent valuation firm, except for those investments where market quotations
are readily available;
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Preliminary
valuation conclusions are then documented and discussed with our senior management and
our investment advisor (our investment advisor, as disclosed in various public filings
and elsewhere in this Form 10-Q, changed on June 9, 2016 from Princeton Investment Advisors
to Princeton Advisory Group as disclosed in Note 1);
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PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
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●
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The
valuation committee of our board of directors then reviews these preliminary valuations
and approves them for recommendation to the board of directors;
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The
board of directors then discusses valuations and determines the fair value of each investment
in our portfolio in good faith, based on the input of our investment advisor (our investment
advisor, as disclosed in various public filings and elsewhere in this Form 10-Q, changed
on June 9, 2016 from Princeton Investment Advisors to Princeton Advisory Group as disclosed
in Note 1), the independent valuation firm and the valuation committee.
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U.S. GAAP establishes a framework for measuring
fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs
to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair
value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels
of the fair value hierarchy are as follows:
Level 1 — Valuations
based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.
Valuation adjustments and block discounts are not applied to Level 1 securities. Since valuations are based on quoted prices that
are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of
judgment.
Level 2 — Valuations
based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 — Valuations
based on inputs that are unobservable and significant to the overall fair value measurement.
The availability of valuation techniques
and observable inputs can vary from security to security and is affected by a wide variety of factors including, the type of security,
whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination
of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized
due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation,
those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities
existed. Accordingly, the degree of judgment exercised by the board of directors in determining fair value is greatest for securities
categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement
in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement.
Fair value is a market-based measure considered
from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are
not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing
the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date,
including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced
for many securities. This condition could cause a security to be reclassified to a lower level within the fair value hierarchy.
Valuation Processes
The Company establishes valuation processes
and procedures to ensure that the valuation techniques for investments that are categorized within Level 3 of the fair value hierarchy
are fair, consistent, and verifiable. The Company’s board of directors designates a Valuation Committee (the “Committee”)
to oversee the entire valuation process of the Company’s Level 3 investments. The Committee is comprised of independent
directors and reports to the Company’s board of directors. The Committee is responsible for developing the Company’s
written valuation processes and procedures, conducting periodic reviews of the valuation policies, and evaluating the overall fairness
and consistent application of the valuation policies.
The Committee meets on a quarterly basis,
or more frequently as needed, to determine the valuations of the Company’s Level 3 investments. Valuations determined
by the Committee are required to be supported by market data, third-party pricing sources, industry accepted pricing models, counterparty
prices, or other methods that the Committee deems to be appropriate.
The Company will periodically test its
valuations of Level 3 investments through performing back testing of the sales of such investments by comparing the amounts realized
against the most recent fair values reported, and if necessary, uses the findings to recalibrate its valuation procedures.
On a quarterly basis, the Company engages the services of a nationally recognized third-party valuation firm to perform an independent
valuation of the Company’s Level 3 investments.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
Investment Valuation
We expect that most of our portfolio investments
will take the form of securities that are not publicly traded. The fair value of loans, securities and other investments that are
not publicly traded may not be readily determinable, and we will value these investments at fair value as determined in good faith
by our board of directors, including reflecting significant events affecting the value of our investments. Most, if not all, of
our investments (other than cash and cash equivalents) will be classified as Level 3 under Financial Accounting Standards Board
Accounting Standards Codification “Fair Value Measurements and Disclosures”, or ASC 820. This means that our portfolio
valuations will be based on unobservable inputs and our own assumptions about how market participants would price the asset or
liability in question. We expect that inputs into the determination of fair value of our portfolio investments will require significant
management judgment or estimation. Even if observable market data are available, such information may be the result of consensus
pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual
transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability
of such information. We expect to retain the services of one or more independent service providers to review the valuation of these
loans and securities. The types of factors that the board of directors may take into account in determining the fair value of our
investments generally include, as appropriate, comparison to publicly traded securities including such factors as yield, maturity
and measures of credit quality, the enterprise value of a portfolio company, the nature and realizable value of any collateral,
the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio
company does business and other relevant factors. Because such valuations, and particularly valuations of private securities and
private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations
of fair value may differ materially from the values that would have been used if a ready market for these loans and securities
existed. Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were
materially higher than the values that we ultimately realize upon the disposal of such loans and securities.
We will adjust the valuation of our portfolio
quarterly to reflect our board of directors’ determination of the fair value of each investment in our portfolio. Any changes
in fair value are recorded in our statement of operations as net change in unrealized gain or loss.
Debt Securities
The Company’s portfolio consists
primarily of first lien loans, second lien loans, and unsecured loans. Investments for which market quotations are readily available
(“Level 2 Loans”) are generally valued using market quotations, which are generally obtained from an independent pricing
service or broker-dealers. For other debt investments (“Level 3 Loans”), market quotations are not available and other
techniques are used to determine fair value. The Company considers its Level 3 Loans to be performing if the borrower is not in
default, the borrower is remitting payments in a timely manner, the loan is in covenant compliance or is otherwise not deemed to
be impaired. In determining the fair value of the performing Level 3 Loans, the Board considers fluctuations in current interest
rates, the trends in yields of debt instruments with similar credit ratings, financial condition of the borrower, economic conditions,
success and prepayment fees, and other relevant factors, both qualitative and quantitative. In the event that a Level 3 Loan instrument
is not performing, as defined above, the Board may evaluate the value of the collateral utilizing the same framework described
above for a performing loan to determine the value of the Level 3 Loan instrument.
Equity Investments
The Company’s equity investments,
including common stock, membership interests, and warrants, are generally valued using a market approach and income approach.
The income approach utilizes primarily the discount rate to value the investment whereas the primary inputs for the market approach
are the earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiple and revenue multiples.
The Black-Scholes Option Pricing Model, a valuation technique that follows the income approach, is used to allocate the value
of the equity to the investment. The pricing model takes into account the contract terms (including maturity) as well as multiple
inputs, including time value, implied volatility, equity prices, risk free rates, and interest rates.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
Valuation of Other Financial Instruments
The carrying amounts of the Company’s
other, non-investment, financial instruments, consisting of cash, receivables, accounts payable, and accrued expenses, approximate
fair value due to their short-term nature.
Cash and Restricted Cash
The Company deposits its cash and restricted
cash in financial institutions and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insured
limit; however, management does not believe it is exposed to any significant credit risk.
The following table provides a reconciliation
of cash and restricted cash as of September 30, 2017 and 2016 reported within the statements of assets and liabilities that sum
to the total of the same such amounts shown in the statements of cash flows:
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September 30, 2017
(unaudited)
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September 30, 2016
(unaudited)
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Cash
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$
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3,113,560
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$
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4,801
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Restricted cash
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-
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470,000
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Total Cash and Restricted Cash
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$
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3,113,560
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$
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474,801
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As of September 30, 2016, restricted cash
consisted of cash held for purpose of purchasing U.S. Treasury Bills on margin.
Notes Receivable
As of December 31, 2016, the Company had
$500,000 in receivables relating to the sale of its equity investment in Advantis Certified Staffing Solutions, Inc. A notice of
default on the note receivable was sent to the party that purchased the equity investment in Advantis Certified Staffing Solutions,
Inc. and the Company reclaimed the shares on July 3, 2017. See Note 10.
U.S. Treasury Bills
At the end of each fiscal quarter, we may
take proactive steps to ensure we are in compliance with the RIC diversification requirements under Subchapter M of the Code, which
are dependent upon the composition of our total assets at quarter end. We may accomplish this in several ways, including purchasing
U.S. Treasury Bills and closing out positions after quarter-end. As of September 30, 2017, no U.S. Treasury Bills were purchased.
Revenue Recognition
Realized gains or losses on the sale of
investments are calculated using the specific identification method. The Company measures realized gains or losses by the difference
between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized
appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties.
Interest income, adjusted for amortization
of premium and accretion of discount, is recorded on an accrual basis. Origination, closing and/or commitment fees associated with
senior and subordinated secured loans are accreted into interest income over the respective terms of the applicable loans. Upon
the prepayment of a senior or subordinated secured loan, any prepayment penalties and unamortized loan origination, closing and
commitment fees are recorded as interest income. Generally, when a payment default occurs on a loan in the portfolio, or if the
Company otherwise believes that borrower will not be able to make contractual interest payments, the Company may place the loan
on non-accrual status and cease recognizing interest income on the loan until all principal and interest is current through payment,
or until a restructuring occurs, and the interest income is deemed to be collectible. The Company may make exceptions to this policy
if a loan has sufficient collateral value, is in the process of collection or is viewed to be able to pay all amounts due if the
loan were to be collected on through an investment in or sale of the business, the sale of the assets of the business, or some
portion or combination thereof.
Dividend income is recorded on the ex-dividend
date.
Structuring fees, excess deal deposits,
prepayment fees and similar fees are recognized as income as earned, usually when paid. Other fee income, including annual fees
and monitoring fees are included in other income. Income from such sources for the three and nine months ended September 30,
2017 was $14,188 and $37,891, respectively. Income from such sources for the three and nine months ended September 30, 2016 was
$13,351 and $32,359, respectively. Interest income earned on cash in the Company’s bank account is included in other income
from non-investment sources. Income from such sources for the three and nine months ended September 30, 2017 was $1,669 and $1,819,
respectively. Income from such sources for the three and nine months ended September 30, 2016 was $10 and $174, respectively.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
Payment-in-Kind Interest (“PIK”)
We have investments in our portfolio that
contain a PIK interest provision. Any PIK interest is added to the principal balance of such investments and is recorded as income,
if the portfolio company valuation indicates that such PIK interest is collectible. For the three and nine months ended September
30, 2017, PIK interest was $33,717 and $99,555, respectively. For the three and nine months ended September 30, 2016, PIK interest
was $33,042 and $473,817, respectively. In order to qualify as a RIC, substantially all of this income must be paid out to stockholders
in the form of dividends, even if we have not collected any cash. For the three and nine months ended September 30, 2017 and 2016
and through the date of issuance of this report, no dividends have been paid out to stockholders.
Net Change in Unrealized Gain or Loss
Net change in unrealized gain or loss will
reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized
appreciation or depreciation, when gains or losses are realized.
Legal Fees
The Company incurred legal fees related
to the lawsuit captioned
Capital Link Fund I, LLC, et al. v. Capital Point Management, LP, et al.
as disclosed in Note 8.
Through September 30, 2017, it was undeterminable the ultimate responsibility for amounts invoiced to the Company by two
law firms that provided services, as these invoices were for all of such law firm’s fees even though they represented multiple
parties and the Company believed that some of these services rendered were provided solely or primarily for the benefit of other
represented parties. For the three and nine months ended September 30, 2017, the Company was not invoiced any legal fees by these
two law firms related to this lawsuit. For the three and nine months ended September 30, 2016, the Company was invoiced $22,294
and $351,513, respectively, by these two law firms related to this lawsuit. As of December 31, 2017, the Company reached an agreement
with the two law firms and paid them $330,000 to settle all outstanding invoices. Other legal fees invoiced to the Company for
the three and nine months ended September 30, 2017 and 2016, were incurred in the normal operating course of business and are included
in professional fees on the Statements of Operations.
Federal and State Income Taxes
The Company was taxed as a regular corporation
(a “C corporation”) under subchapter C of the Internal Revenue Code of 1986, as amended, for its 2016 taxable year.
The Company uses the liability method of accounting for income taxes. Deferred tax assets and liabilities are recorded for tax
loss carryforwards and temporary differences between the tax basis of assets and liabilities and their reported amounts in the
financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse.
A valuation allowance is provided against deferred tax assets when it is more likely than not that some portion or all of the deferred
tax assets will not be realized.
The Company did not meet the qualifications
of a RIC for the 2016 or 2017 tax years and expects to be taxed as a corporation under Subchapter C of the Code. The failure to
qualify as a RIC, however, did not impact the 2016 tax year as the Company incurred tax losses. As a result of the loss incurred
for the year ended December 31, 2016, the Company intends to carry back the net operating loss to prior periods in which the Company
generated taxable income and apply for a refund of federal taxes paid. Accordingly, the Company has recorded a deferred tax asset
for the expected refund. In order to qualify as a RIC, among other things, the Company is required to distribute to its stockholders
on a timely basis at least 90% of investment company taxable income, as defined by the Code, for each year. If the Company hereafter
achieves and maintains status as a RIC, it generally would not pay corporate-level U.S. federal and state income taxes on any ordinary
income or capital gains that it distributes at least annually to its stockholders as dividends. Rather, any tax liability related
to income earned by the Company would represent obligations of the Company’s investors and will not be reflected in the financial
statements of the Company.
The Company evaluates tax positions taken
or expected to be taken while preparing its financial statements to determine whether the tax positions are “more-likely-than-not”
of being sustained by the applicable tax authority. The Company recognizes the tax benefits of uncertain tax positions only where
the position has met the “more-likely-than-not” threshold. The Company classifies penalties and interest associated
with income taxes, if any, as income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted
at a later date based on factors including, but not limited to, ongoing analyses of tax laws, regulations and interpretations thereof.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
Dividends and Distributions
Dividends and distributions to common stockholders
are recorded on the ex-dividend date. The amount, if any, to be paid as a dividend is approved by our board of directors each quarter
and is generally based upon our management’s estimate of our earnings for the quarter. For the three and nine
months ended September 30, 2017 and 2016 and through the date of issuance of this report, no dividends have been declared or distributed
to stockholders.
Per Share Information
Basic and diluted earnings (loss) per common
share is calculated using the weighted average number of common shares outstanding for the period presented.
Basic net loss per share is computed by
dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per
share is computed by dividing net loss per share by the weighted average number of shares outstanding, plus, any potentially dilutive
shares outstanding during the period. For the three and nine months ended September 30, 2017 and 2016, basic and diluted earnings
(loss) per share were the same, since there were no potentially dilutive securities outstanding.
Capital Accounts
Certain capital accounts including undistributed
net investment income, accumulated net realized gain or loss, accumulated net unrealized gain or loss, and paid-in capital in excess
of par, are adjusted, at least annually, for permanent differences between book and tax. In addition, the character of income and
gains to be distributed is determined in accordance with income tax regulations that may differ from U.S. GAAP.
Recent Accounting Pronouncements
In August 2014, the FASB issued ASU 2014-15,
Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s
Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires management to evaluate relevant conditions
or events that are known or reasonably knowable as of the evaluation date when determining whether substantial doubt about an entity’s
ability to continue as a going concern exists. If management concludes that substantial doubt about an entity’s ability to
continue as a going concern is not alleviated by its plans, the notes to the financial statements are required to include a statement
that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date
that the financial statements are issued (or available to be issued, when applicable). ASU 2014-15 is effective for annual periods
ending after December 15, 2016 and for annual periods and interim periods thereafter. Adoption of ASU 2014-15 did not have a material
effect on its financial position or results of operations.
In November
2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”).
ASU 2015-17 requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as
noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability.
ASU 2015-17 is effective for public business entities in fiscal years beginning after December 15, 2016, including interim periods
within those years. Adoption of ASU 2015-17
did not have a material impact on its Financial Statements.
In November 2016, the FASB issued ASU 2016-18,
Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that a statement of cash
flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted
cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents
should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown
on the statement of cash flows. ASU 2016-18 is effective for public business entities in fiscal years beginning after December
15, 2017, including interim periods within those years. The Company early adopted ASU 2016-18 as shown on the Statement of Cash
Flows.
In May 2014, the FASB issued a converged
standard to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability
within industries, across industries, and across capital markets. The core principle of the new guidance is that an entity
will recognize revenue to depict the transfer of goods or services to customers in an amount that the entity expects to be entitled
to in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers
(Topic 606) –Deferral of the Effective Date, formally amending the effective date of the new revenue recognition guidance.
The amended guidance defers the effective date of the new guidance to interim reporting periods within annual reporting periods
beginning after December 15, 2017. Public business entities are permitted to apply the new guidance early, but not before the original
effective date (
i.e
., interim periods within annual periods beginning after December 15, 2016). Adoption of ASU 2015-14
did not have a material impact on its Financial Statements.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
In March 2016, the FASB issued ASU 2016-08,
Revenue from Contracts with Customers (Topic 606) –Principal versus Agent Considerations (Reporting Revenue Gross Versus
Net) (“ASU 2016-08”). The amended guidance affects entities that enter into contracts with customers to transfer goods
or services in exchange for consideration. Under ASU 2016-08, when another party is involved in providing goods or services to
a customer, an entity must determine whether the nature of its promise is to provide the specified good or service itself (that
is, the entity is a principal) or to arrange for the good or service to be provided by the other party (that is, the entity is
an agent). An entity is a principal if it controls the specified good or service before that good or service is transferred to
a customer. The amended guidance includes indicators to assist an entity in determining whether it controls a specified good
or service before it is transferred to the customer. ASU 2016-08 affects the guidance in the new revenue standard issued in May
2014 and has the same effective date which is described above. Adoption of ASU 2016-08 did not have a material impact on its Financial
Statements.
NOTE 3 – CONCENTRATION OF CREDIT RISK
In the normal course of business, the Company
maintains its cash balances in financial institutions, which at times may exceed federally insured limits. The Company
is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual
obligations on its behalf. Management monitors the financial condition of such financial institutions and does not anticipate
any losses from these counterparties.
NOTE 4 – NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS PER COMMON SHARE
The following information sets forth the
computation of basic and diluted net increase (decrease) in net assets resulting from operations per common share for the three
months ended September 30, 2017 and September 30, 2016 and the nine months ended September 30, 2017 and September 30, 2016.
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Per Share Data
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net assets resulting from operations
|
|
$
|
977,028
|
|
|
$
|
(1,183,925
|
)
|
|
$
|
(1,096,001
|
)
|
|
$
|
(4,072,065
|
)
|
Weighted average shares outstanding for period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
120,486,061
|
|
|
|
120,486,061
|
|
|
|
120,486,061
|
|
|
|
120,486,061
|
|
Diluted
|
|
|
120,486,061
|
|
|
|
120,486,061
|
|
|
|
120,486,061
|
|
|
|
120,486,061
|
|
Basic and diluted net increase (decrease) in net assets resulting from operations per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.008
|
|
|
$
|
(0.010
|
)
|
|
$
|
(0.009
|
)
|
|
$
|
(0.034
|
)
|
Diluted
|
|
$
|
0.008
|
|
|
$
|
(0.010
|
)
|
|
$
|
(0.009
|
)
|
|
$
|
(0.034
|
)
|
(1)
Per share data based on
weighted average shares outstanding.
NOTE 5 – FAIR VALUE OF INVESTMENTS
The Company’s assets recorded at
fair value have been categorized based upon a fair value hierarchy in accordance with ASC Topic 820 – Fair Value Measurements
and Disclosures (“ASC 820”). See Note 2 for a discussion of the Company’s policies.
The following table presents information
about the Company’s assets measured at fair value as of September 30, 2017 and December 31, 2016, respectively:
|
|
As of September 30, 2017 (Unaudited)
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Portfolio Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Loans
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
16,103,795
|
|
|
$
|
16,103,795
|
|
Second Lien Loans
|
|
|
-
|
|
|
|
-
|
|
|
|
19,042,455
|
|
|
|
19,042,455
|
|
Unsecured Loans
|
|
|
-
|
|
|
|
-
|
|
|
|
1,084,147
|
|
|
|
1,084,147
|
|
Equity
|
|
|
-
|
|
|
|
-
|
|
|
|
5,210,898
|
|
|
|
5,210,898
|
|
Total Portfolio Investments
|
|
|
-
|
|
|
|
-
|
|
|
|
41,441,295
|
|
|
|
41,441,295
|
|
Total Investments
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
41,441,295
|
|
|
$
|
41,441,295
|
|
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
|
|
As of December 31, 2016
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Portfolio Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Loans
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
16,301,261
|
|
|
$
|
16,301,261
|
|
Second Lien Loans
|
|
|
-
|
|
|
|
-
|
|
|
|
17,250,000
|
|
|
|
17,250,000
|
|
Unsecured Loans
|
|
|
-
|
|
|
|
-
|
|
|
|
276,922
|
|
|
|
276,922
|
|
Equity
|
|
|
-
|
|
|
|
-
|
|
|
|
11,778,757
|
|
|
|
11,778,757
|
|
Total Portfolio Investments
|
|
|
-
|
|
|
|
-
|
|
|
|
45,606,940
|
|
|
|
45,606,940
|
|
U.S. Treasury Bill
|
|
|
52,398,952
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52,398,952
|
|
Total Investments
|
|
$
|
52,398,952
|
|
|
$
|
-
|
|
|
$
|
45,606,940
|
|
|
$
|
98,005,892
|
|
During the nine months ended September
30, 2017 and the year ended December 31, 2016, there were no transfers between Level, 1, Level 2 or Level 3.
The following table presents additional
information about Level 3 assets measured at fair value. Both observable and unobservable inputs may be used to determine
the fair value of positions that the Company has classified within the Level 3 category. As a result, the unrealized
gains and losses for assets within the Level 3 category may include changes in fair value that were attributable
to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities)
inputs.
Changes in Level 3 assets measured at fair value for the nine
months ended September 30, 2017 are as follows:
|
|
First Lien
Loans
|
|
|
Second Lien Loans
|
|
|
Unsecured Loans
|
|
|
Equity
|
|
|
Total
|
|
Fair value at beginning of period
|
|
$
|
16,301,261
|
|
|
$
|
17,250,000
|
|
|
$
|
276,922
|
|
|
$
|
11,778,757
|
|
|
$
|
45,606,940
|
|
Amortization
|
|
|
(13,138
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,138
|
)
|
Purchases of investments
|
|
|
1,233,111
|
|
|
|
-
|
|
|
|
1,090,147
|
|
|
|
450,000
|
|
|
|
2,773,258
|
|
Sales of investments
|
|
|
-
|
|
|
|
-
|
|
|
|
(282,922
|
)
|
|
|
(5,895,860
|
)
|
|
|
(6,178,782
|
)
|
Payment-in-kind interest
|
|
|
33,717
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,717
|
|
Realized gain (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
589,111
|
|
|
|
589,111
|
|
Change in unrealized gain (loss) on investments
|
|
|
1,074,325
|
|
|
|
1,792,455
|
|
|
|
-
|
|
|
|
(4,236,591
|
)
|
|
|
(1,369,811
|
)
|
Transfer due to restructuring
|
|
|
(2,525,481
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
2,525,481
|
|
|
|
-
|
|
Fair value at end of period
|
|
$
|
16,103,795
|
|
|
$
|
19,042,455
|
|
|
$
|
1,084,147
|
|
|
$
|
5,210,898
|
|
|
$
|
41,441,295
|
|
Change in unrealized gain (loss) on Level 3 investments still held as of September 30, 2017
|
|
$
|
288,841
|
|
|
$
|
1,792,455
|
|
|
$
|
-
|
|
|
$
|
(3,156,661
|
)
|
|
$
|
(1,075,365
|
)
|
Changes in Level 3 assets measured at fair value for the year
ended December 31, 2016 are as follows:
|
|
First Lien
Loans
|
|
|
Second Lien Loans
|
|
|
Unsecured Loans
|
|
|
Equity
|
|
|
Total
|
|
Fair value at beginning of year
|
|
$
|
16,064,535
|
|
|
$
|
21,386,494
|
|
|
$
|
371,922
|
|
|
$
|
10,876,569
|
|
|
$
|
48,699,520
|
|
Amortization
|
|
|
(16,161
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(16,161
|
)
|
Purchases of investments
|
|
|
463,211
|
|
|
|
-
|
|
|
|
280,000
|
|
|
|
-
|
|
|
|
743,211
|
|
Sales of investments
|
|
|
(50,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(500,000
|
)
|
|
|
(550,000
|
)
|
Payment-in-kind interest
|
|
|
473,818
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
473,818
|
|
Realized gain (loss)
|
|
|
-
|
|
|
|
(1,454,270
|
)
|
|
|
(375,000
|
)
|
|
|
367,383
|
|
|
|
(1,461,887
|
)
|
Change in unrealized gain (loss) on investments
|
|
|
(634,142
|
)
|
|
|
2,448,866
|
|
|
|
-
|
|
|
|
(4,096,285
|
)
|
|
|
(2,281,561
|
)
|
Transfer due to restructuring
|
|
|
-
|
|
|
|
(5,131,090
|
)
|
|
|
-
|
|
|
|
5,131,090
|
|
|
|
-
|
|
Fair value at end of year
|
|
$
|
16,301,261
|
|
|
$
|
17,250,000
|
|
|
$
|
276,922
|
|
|
$
|
11,778,757
|
|
|
$
|
45,606,940
|
|
Change in unrealized gain (loss) on Level 3 investments still held as of December 31, 2016
|
|
$
|
(634,141
|
)
|
|
$
|
463,275
|
|
|
$
|
-
|
|
|
$
|
(4,197,583
|
)
|
|
$
|
(4,368,449
|
)
|
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
The following table provides quantitative
information regarding Level 3 fair value measurements as of September 30, 2017:
Description
|
|
Fair Value
|
|
|
Valuation Technique
|
|
Unobservable
Inputs
|
|
Range (Average)
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Loans
|
|
$
|
6,631,000
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
14.00
|
%
|
|
|
|
8,472,795
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
12.10
|
%
|
|
|
|
|
|
|
Market Approach
|
|
Enterprise Value/Revenue Multiple
|
|
|
0.6x-0.9x (0.75x)
|
|
Total
|
|
|
15,103,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Lien Loans
|
|
|
8,410,002
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
85.00
|
%
|
|
|
|
3,882,453
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
14.10
|
%
|
|
|
|
|
|
|
Market Approach
|
|
Enterprise Value / Revenue & EBITDA Multiples
|
|
|
0.4
x-
0.6
x (0.5x)
|
|
|
|
|
6,750,000
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
9.40
|
%
|
|
|
|
|
|
|
Market Approach
|
|
Enterprise Value/Revenue Multiple
|
|
|
8.6
x-11.4x (10.0x)
|
|
Total
|
|
|
19,042,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured Loans
|
|
|
1,070,147
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
11.70%-14.10% (12.90%)
|
|
|
|
|
|
|
|
Market Approach
|
|
Enterprise Value / Revenue & EBITDA Multiples
|
|
|
0.4x– 0.6x (0.5x)
|
|
Total
|
|
|
1,070,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
3,470,898
|
|
|
Black-Scholes Option
|
|
Volatility
|
|
|
22.50%-33.70% (28.10%)
|
|
|
|
|
|
|
|
Pricing Model
|
|
Discount for lack of marketability
|
|
|
5.00%-30.00% (17.50%)
|
|
|
|
|
|
|
|
Market Approach
|
|
Enterprise Value / Revenue & EBITDA Multiples
|
|
|
0.4x – 17.9x (9.15x)
|
|
|
|
|
|
|
|
Income Approach
|
|
Discount Rate
|
|
|
9.4% - 14.1% (11.75%)
|
|
|
|
|
1,740,000
|
|
|
Market Approach
|
|
Real Estate Appraisal Values
|
|
|
N/A
|
|
Total
|
|
|
5,210,898
|
|
|
|
|
|
|
|
|
|
Total Level 3 Investments
|
|
$
|
40,427,295
|
|
|
|
|
|
|
|
|
|
The Company’s remaining Level 3 investments
aggregating approximately $1,014,000 have been valued using unadjusted third party transactions. As a result, there were
no unobservable inputs that have been internally developed by the Company in determining the fair values of these investments as
of September 30, 2017.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
The following table provides quantitative
information regarding Level 3 fair value measurements as of December 31, 2016:
Description
|
|
Fair Value
|
|
|
Valuation Technique
|
|
Unobservable
Inputs
|
|
Range (Average)
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Loans
|
|
$
|
6,531,000
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
14.00
|
%
|
|
|
|
8,030,261
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
12.20
|
%
|
|
|
|
|
|
|
Market Approach
|
|
Enterprise Value/Revenue Multiple
|
|
|
0.6x-0.9x (0.75x)
|
|
|
|
|
1,740,000
|
|
|
Market Approach
|
|
Real Estate Appraisal Values
|
|
|
N/A
|
|
Total
|
|
|
16,301,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Lien Loans
|
|
|
6,000,000
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
68.00
|
%
|
|
|
|
4,500,000
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
14.10
|
%
|
|
|
|
|
|
|
Market Approach
|
|
Enterprise Value / Revenue & EBITDA Multiples
|
|
|
0.6
|
x
|
|
|
|
6,750,000
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
9.00
|
%
|
|
|
|
|
|
|
Market Approach
|
|
Enterprise Value/Revenue Multiple
|
|
|
8.6
|
x
|
Total
|
|
|
17,250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured Loans
|
|
|
276,922
|
|
|
Discounted Cash Flow
|
|
Discount Rate
|
|
|
12.60
|
%
|
|
|
|
|
|
|
Market Approach
|
|
Enterprise Value / Revenue & EBITDA Multiples
|
|
|
1.10x– 20.60x (10.85x)
|
|
Total
|
|
|
276,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
11,778,757
|
|
|
Black-Scholes Option
|
|
Volatility
|
|
|
22.50%-39.50% (31.00%)
|
|
|
|
|
|
|
|
Pricing Model
|
|
Discount for lack of marketability
|
|
|
5.00%-32.00% (18.50%)
|
|
|
|
|
|
|
|
Market Approach
|
|
Enterprise Value / Revenue & EBITDA Multiples
|
|
|
0.4x – 20.6x (10.5x)
|
|
|
|
|
|
|
|
Income Approach
|
|
Discount Rate
|
|
|
9.4% - 14.1% (11.75%)
|
|
Total
|
|
|
11,778,757
|
|
|
|
|
|
|
|
|
|
Total Level 3 Investments
|
|
$
|
45,606,940
|
|
|
|
|
|
|
|
|
|
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
The primary significant unobservable input
used in the fair value measurement of the Company’s debt securities (first lien loans, second lien loans and unsecured loans),
including income-producing investments in funds, is the discount rate. Significant increases (decreases) in the discount rate in
isolation would result in a significantly lower (higher) fair value measurement. In determining the discount rate, for the income
(discounted cash flow) or yield approach, the Company considers current market yields and multiples, portfolio company performance,
leverage levels and credit quality, among other factors in its analysis. Changes in one or more of these factors can have a similar
directional change on other factors in determining the appropriate discount rate to use in the income approach.
The primary significant unobservable inputs
used in the fair value measurement of the Company’s equity investments are the EBITDA multiple and revenue multiple, which
is used to determine the Enterprise Value. Significant increases (decreases) in the Enterprise Value in isolation would result
in a significantly higher (lower) fair value measurement. To determine the Enterprise Value for the market approach, the Company
considers current market trading and/or transaction multiples, portfolio company performance (financial ratios) relative to public
and private peer companies and leverage levels, among other factors. Changes in one or more of these factors can have a similar
directional change on other factors in determining the appropriate multiple to use in the market approach.
The primary unobservable inputs used in
the fair value measurement of the Company’s equity investments, when using an option pricing model to allocate the equity
value to the investment, are the discount rate for lack of marketability and volatility. Significant increases (decreases) in the
discount rate in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases)
in the volatility in isolation would result in a significantly higher (lower) fair value measurement. Changes in one or more factors
can have a similar directional change on other factors in determining the appropriate discount rate or volatility to use in the
valuation of equity using an option pricing model.
NOTE 6 – RELATED PARTY TRANSACTIONS
Investment Advisory Agreement with Princeton Advisory Group
Our board of directors, including a majority
of our independent directors, conditionally approved the PAG Investment Advisory Agreement between the Company and Princeton Advisory
Group at its meeting held on January 18, 2016, subject to the approval of the Company’s stockholders at the 2016 Annual Meeting
of Stockholders. On June 9, 2016, the Company’s stockholders approved the PAG Investment Advisory Agreement. The effective
date of the PAG Investment Advisory Agreement was June 9, 2016. At a Special Meeting of the Board held on June 27, 2017, the Board,
including a majority of the independent directors of the Board, voted to renew the PAG Investment Advisory Agreement for another
one year term, pursuant to the requirements of Section 9(c) of the PAG Investment Advisory Agreement and Section 15(c) of the 1940
Act. Subject to the overall supervision of our board of directors and in accordance with the 1940 Act, Princeton Advisory Group
manages our day-to-day operations and provides investment advisory services to us. The PAG Investment Advisory Agreement was terminated
on December 31, 2017, as disclosed in Note 10.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
Under the PAG Investment Advisory Agreement,
the administrative services of the Company are provided by Princeton Advisory Group and subject to reimbursement of administrative
related expenses under the PAG Investment Advisory Agreement.
Advisory Services
Princeton Advisory Group is registered
as an investment adviser under the 1940 Act, and as of June 9, 2016, serves as the Company’s investment advisor pursuant
to the PAG Investment Advisory Agreement in accordance with the 1940 Act. Princeton Advisory Group is owned by and an affiliate
of Mr. Munish Sood, the Company’s former President and former Chief Executive Officer.
Subject to supervision by the Company’s
Board of Directors, Princeton Advisory Group oversees the Company’s day-to-day operations and provides the Company with investment
advisory services. Under the terms of the PAG Investment Advisory Agreement, Princeton Advisory Group, among other things: (i)
determines the composition and allocation of the portfolio of the Company, the nature and timing of the changes therein and the
manner of implementing such changes; (ii) identifies, evaluates and negotiates the structure of the investments made by the Company;
(iii) executes, monitors and services the Company’s investments; (iv) determines the securities and other assets that the
Company shall purchase, retain, or sell; (v) performs due diligence on prospective portfolio companies; (vi) provides the Company
with such other investment advisory, research and related services as the Company may, from time to time, reasonably require for
the investment of its funds; and (vii) if directed by the Board, will assist in the execution and closing of the sale of the Company’s
assets or a sale of the equity of the Company in one or more transactions. Princeton Advisory Group’s services under the
PAG Investment Advisory Agreement may not be exclusive and it is free to furnish similar services to other entities so long as
its services to the Company are not impaired.
Management Fee
Pursuant to the PAG Investment Advisory
Agreement, the Company pays Princeton Advisory Group a base management fee for investment advisory and management services. The
cost of the base management fee will ultimately be borne by the Company’s stockholders. The PAG Investment Advisory Agreement
does not include an incentive fee to Princeton Advisory Group.
The base management fee is calculated at
an annual rate of 1.00% of the Company’s gross assets, including assets purchased with borrowed funds or other forms of leverage
and excluding cash and cash equivalents net of all indebtedness of the Company for borrowed money and other liabilities of the
Company. The base management fee is payable quarterly in arrears, and determined as set forth in the preceding sentence at the
end of the two most recently completed calendar quarters prior to the quarter for which such fees are being calculated. The Board
of Directors may retroactively adjust the valuation of the Company’s assets and the resulting calculation of the base management
fee in the event the Company or any of its assets are sold or transferred to an independent third party or the Company or Princeton
Advisory Group receives an audit report or other independent third party valuation of the Company. To the extent that any such
adjustment increases or decreases the base management fee of any prior period, the Company will be obligated to pay the amount
of increase to Princeton Advisory Group or Princeton Advisory Group will be obligated to refund the decreased amount, as applicable.
Management fees under the PAG Investment
Advisory Agreement for the three and nine months ended September 30, 2017 were $110,740 and $323,131, respectively. Management
fees under the PAG Investment Advisory Agreement for the three months and nine months ended September 30, 2016 were $112,581 and
$163,704, respectively. The Company did not incur Management fees under the Terminated Investment Advisory Agreement for the three
months ended September 30, 2016, although there was an $18,133 true-up from the prior quarter. Management fees under the Terminated
Investment Advisory Agreement for the nine months ended September 30, 2016 were $365,805. As of September 30, 2017, management
fees of $84,803 and $341,559 were payable to Princeton Advisory Group and Princeton Investment Advisors, respectively. As of December
31, 2016, management fees of $194,224 and $341,559 were payable to Princeton Advisory Group and Princeton Investment Advisors,
respectively.
Incentive Fee
The Company will not pay Princeton Advisory
Group an incentive fee.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
Payment of Expenses
Princeton Advisory Group will bear all
compensation expense (including health insurance, pension benefits, payroll taxes and other compensation related matters) of its
employees and bear the costs of any salaries or directors’ fees of any officers or directors of the Company who are affiliated
persons (as defined in the 1940 Act) of Princeton Advisory Group. However, Princeton Advisory Group, subject to approval by the
Board of Directors of the Company, will be entitled to reimbursement for the portion of any compensation expense and the costs
of any salaries of any such employees to the extent attributable to services performed by such employees for the Company. During
the term of the PAG Investment Advisory Agreement, Princeton Advisory Group will also bear all of its costs and expenses for office
space rental, office equipment, utilities and other non-compensation related overhead allocable to performance of its obligations
under the PAG Investment Advisory Agreement.
Except as provided in the preceding paragraph
the Company will reimburse Princeton Advisory Group all direct and indirect costs and expenses incurred by it during the term of
the PAG Investment Advisory Agreement for: (i) due diligence of potential investments of the Company, (ii) monitoring performance
of the Company’s investments, (iii) serving as officers of the Company, (iv) serving as directors and officers of portfolio
companies of the Company, (v) providing managerial assistance to portfolio companies of the Company, and (vi) enforcing the Company’s
rights in respect of its investments and disposing of its investments; provided, however, that, any third party expenses incurred
by Princeton Advisory Group in excess of $50,000 in the aggregate in any calendar quarter will require advance approval by the
Board of Directors of the Company.
In addition to the foregoing, the Company
will also be responsible for the payment of all of the Company’s other expenses, including the payment of the following fees
and expenses:
|
●
|
organizational and offering expenses;
|
|
●
|
expenses incurred in valuing the Company’s assets and computing its net asset value per share (including the cost and expenses of any independent valuation firm);
|
|
●
|
subject to the guidelines approved by the Board of Directors, expenses incurred by Princeton Advisory Group that are payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for the Company and in monitoring the Company’s investments and performing due diligence on the Company’s prospective portfolio companies or otherwise related to, or associated with, evaluating and making investments;
|
|
●
|
interest payable on debt, if any, incurred to finance the Company’s investments and expenses related to unsuccessful portfolio acquisition efforts;
|
|
●
|
offerings of the Company’s common stock and other securities;
|
|
●
|
administration fees;
|
|
●
|
transfer agent and custody fees and expenses;
|
|
●
|
U.S. federal and state registration fees of the Company (but not Princeton Advisory Group);
|
|
●
|
all costs of registration and listing the Company’s shares on any securities exchange;
|
|
●
|
U.S. federal, state and local taxes;
|
|
●
|
independent directors’ fees and expenses;
|
|
●
|
costs of preparing and filing reports or other documents required of the Company (but not Princeton Advisory Group) by the SEC or other regulators;
|
|
●
|
costs of any reports, proxy statements or other notices to stockholders, including printing costs;
|
|
●
|
the costs associated with individual or group stockholders;
|
|
●
|
the Company’s allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
|
|
●
|
direct costs and expenses of administration and operation of the Company, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs;
|
|
●
|
and all other non-investment advisory expenses incurred by the Company regarding administering the Company’s business.
|
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
Duration and Termination
Unless terminated earlier as described
below, the PAG Investment Advisory Agreement will continue in effect for a period of one (1) year from its effective date. It will
remain in effect from year to year thereafter if approved annually by the Company’s Board or by the affirmative vote of the
holders of a majority of the Company’s outstanding voting securities, and, in either case, if also approved by a majority
of the of Company’s directors who are neither parties to the PAG Investment Advisory Agreement nor “interested persons”
(as defined under the 1940 Act) of any such party. The PAG Investment Advisory Agreement may be terminated at any time, without
the payment of any penalty, (i) upon written notice, effective on the date set forth in such notice, by the vote of a majority
of the outstanding voting securities of the Company or by the vote of the Company’s directors, or (ii) upon 60 days’
written notice, by Princeton Group. The PAG Investment Advisory Agreement automatically terminates in the event of its “assignment,”
as defined in the 1940 Act.
Indemnification
The PAG Investment Advisory Agreement provides
that, absent willful misfeasance, bad faith or negligence in the performance of their duties, or by reason of the material breach
or reckless disregard of their duties and obligations under the PAG Investment Advisory Agreement (and to the extent specified
in Section 36(b) of the Investment Company Act concerning loss resulting from a breach of fiduciary duty (as the same is finally
determined by judicial proceedings) with respect to the receipt of compensation for services), Princeton Advisory Group and its
officers, managers, employees and members are entitled to indemnification from the Company for any damages, liabilities, costs
and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering
of Princeton Advisory Group’s services under the PAG Investment Advisory Agreement or otherwise as the Company’s investment
advisor. The amounts payable for indemnification will be calculated net of payments recovered by the indemnified party under any
insurance policy with respect to such losses.
At all times during the term of the PAG
Investment Advisory Agreement and for one year thereafter, Princeton Advisory Group is obligated to maintain directors and officers/errors
and omission liability insurance in an amount and with a provider reasonably acceptable to the Board of Directors of the Company.
Administration Services
Princeton Advisory Group is entitled to
reimbursement of expenses under the PAG Investment Advisory Agreement for administrative services performed for the Company.
Sub-Administration Agreement
Princeton Advisory Group has engaged SS&C
Technologies Holdings, Inc. (the “Sub-Administrator”) to provide certain administrative services to us. In exchange
for provided services, the Administrator pays the Sub-Administrator an asset-based fee with a $200,000 annual minimum as adjusted
for any reimbursement of expenses. This asset-based fee will vary depending upon our gross assets, as adjusted, as follows:
Gross Assets
|
|
Fee
|
first $150 million of gross assets
|
|
20 basis points (0.20%)
|
next $150 million of gross assets
|
|
15 basis points (0.15%)
|
next $200 million of gross assets
|
|
10 basis points (0.10%)
|
in excess of $500 million of gross assets
|
|
5 basis points (0.05%)
|
Administration fees were $52,929 and $159,039
for the three and nine months ended September 30, 2017, respectively, and sub-administration fees were $39,354 and $101,854 for
the three and nine months ended September 30, 2017, respectively, as shown on the Statements of Operations under administration
fees. Administration fees were $0 and $125,562 for the three and nine months ended September 30, 2016, respectively, and sub-administration
fees were $31,250 and $126,923 for the three and nine months ended September 30, 2016, respectively, as shown on the Statements
of Operations under administration fees.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
Managerial Assistance
As a BDC, we offer, and must provide upon
request, managerial assistance to our portfolio companies. This assistance could involve monitoring the operations of our portfolio
companies, participating in board of directors and management meetings, consulting with and advising officers of portfolio companies
and providing other organizational and financial guidance. As of September 30, 2017, none of the portfolio companies had accepted
our offer for such services.
Other Related Party Transactions
On March 30, 2016, the Company, as Borrower,
entered into a Term Loan in the amount of $1,500,000 with Sema4, Inc. and Princeton Advisory Group, Inc., as Lenders in order to
purchase certain assets to qualify as a RIC. Sema4, Inc. committed $1,000,000 and Princeton Advisory Group, Inc. committed $500,000.
The loan was repaid in full with interest at a rate of 10.0% per annum on April 8, 2016. Sema4, Inc. is the general partner of
CPP and CPPII, which own approximately 87% and 9% of our common stock, respectively. Sema4, Inc. is solely owed by Mark DiSalvo,
a current director, Interim President, and Interim CEO of the Company as of the date of this filing. Princeton Advisory Group,
Inc. is wholly owned by Munish Sood, a former Director, former President, and former CEO of the Company as of the date of this
filing.
As disclosed in the Company’s Form
8-K filed with the SEC on June 30, 2016, on June 28, 2016, the Company, as Borrower, entered into a Term Loan in the amount of
$390,000 with Munish Sood, as Lender, in order to purchase certain assets to qualify as a RIC. Mr. Sood is a former Director, former
President, and former CEO of the Company. The board of directors of the Company, by unanimous written consent, authorized and approved
that the Company enter into the Loan Agreement. The loan was repaid in full with interest at a rate of 10.0% per annum on July
11, 2016.
As disclosed in the Company’s Form
8-K filed with the SEC on September 16, 2016, on September 12, 2016, the Company, as a Borrower, entered into a Term Loan in the
amount of $225,000 with Munish Sood, as Lender, in order to fund capital to one of its portfolio companies, Rockfish Seafood Grill,
Inc. Mr. Sood is a former Director, former President, and former CEO of the Company. The board of directors of the Company,
by unanimous written consent, authorized and approved that the Company enter into the Loan Agreement. The loan will bear
interest at a rate of 10.0% per annum and matures on December 12, 2016. As disclosed in the Company’s Form 8-K filed
with the SEC on October 27, 2016, on October 21, 2016, Munish Sood lent an additional $140,000 under this Term Loan. On March 29,
2017, Munish Sood, in order to purchase certain assets to qualify as a RIC, lent an additional $450,000 under this Term Loan and
extended the maturity date to June 30, 2017. On April 10, 2017, the Company made a principal and interest payment totaling $450,984
on this Term Loan. The loan was repaid in full with interest on July 17, 2017.
As disclosed in the Company’s Form
8-K filed with the SEC on October 5, 2016, on September 29, 2016 the Company, as Borrower, entered into a Term Loan in the amount
of $470,000 with Munish Sood, as Lender, in order to purchase certain assets to qualify as a RIC. Mr. Sood is a former Director,
former President, and former CEO of the Company. The board of directors of the Company, by unanimous written consent, authorized
and approved that the Company enter into the Loan Agreement. The loan was repaid in full with interest at a rate of 10.0% per annum
on October 7, 2016.
On June 28, 2017, Munish Sood made a non-interest
bearing short term loan to Advantis Certified Staffing Solutions, Inc., one of the Company’s portfolio companies, in the
amount of $89,225 for a short term working capital need. The loan was repaid without interest on July 5, 2017.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
NOTE 7 – FINANCIAL HIGHLIGHTS
|
|
Nine Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2017
|
|
|
September 30, 2016
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Per Share Data
(1)
:
|
|
|
|
|
|
|
Net asset value at beginning of period
|
|
$
|
0.365
|
|
|
$
|
0.400
|
|
Net investment loss
|
|
|
(0.003
|
)
|
|
|
(0.011
|
)
|
Realized gain
|
|
|
0.005
|
|
|
|
0.000
|
|
Change in unrealized gain (loss)
|
|
|
(0.011
|
)
|
|
|
(0.023
|
)
|
Net asset value at end of period
|
|
$
|
0.356
|
|
|
$
|
0.366
|
|
Total return based on net asset value
(2)
|
|
|
(2.5
|
)%
|
|
|
(8.5
|
)%
|
Weighted average shares outstanding for period, basic
|
|
|
120,486,061
|
|
|
|
120,486,061
|
|
Ratio/Supplemental Data:
|
|
|
|
|
|
|
|
|
Net assets at end of period
|
|
$
|
42,889,318
|
|
|
$
|
44,154,098
|
|
Average net assets
|
|
$
|
42,560,454
|
|
|
$
|
47,934,393
|
|
Annualized ratio of net operating expenses to average net assets
(3)
|
|
|
4.3
|
%
|
|
|
6.0
|
%
|
Annualized ratio of net investment income (loss) to average net assets
(3)
|
|
|
(1.0
|
)%
|
|
|
(3.4
|
)%
|
Annualized ratio of net operating expenses excluding management fees, incentive fees, and interest expense to average net assets
(3)
|
|
|
3.1
|
%
|
|
|
4.4
|
%
|
Annualized ratio of net increase (decrease) in net assets resulting from operations to average net assets
(3)
|
|
|
(3.4
|
)%
|
|
|
(11.1
|
)%
|
Portfolio Turnover
|
|
|
0.01
|
%
|
|
|
0.17
|
%
|
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
|
|
Year Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
Per Share Data
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value at beginning of period
|
|
$
|
0.400
|
|
|
$
|
0.254
|
|
|
$
|
0.564
|
|
|
$
|
0.174
|
|
|
$
|
0.204
|
|
Net investment loss
|
|
|
(0.004
|
)
|
|
|
(0.013
|
)
|
|
|
(0.144
|
)
|
|
|
(0.062
|
)
|
|
|
(0.068
|
)
|
Change in unrealized gain (loss)
|
|
|
(0.019
|
)
|
|
|
(0.081
|
)
|
|
|
(0.358
|
)
|
|
|
0.388
|
|
|
|
(0.004
|
)
|
Realized gain
|
|
|
(0.012
|
)
|
|
|
0.002
|
|
|
|
0.192
|
|
|
|
0.064
|
|
|
|
0.042
|
|
Change in capital share transactions
|
|
|
-
|
|
|
|
0.238
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net asset value at end of period
|
|
$
|
0.365
|
|
|
$
|
0.400
|
|
|
$
|
0.254
|
|
|
$
|
0.564
|
|
|
$
|
0.174
|
|
Total return based on net asset value
(2)
|
|
|
(8.8
|
)%
|
|
|
(36.2
|
)%
|
|
|
(55.0
|
)%
|
|
|
224.1
|
%
|
|
|
(14.7
|
)%
|
Weighted average shares outstanding for period, basic
|
|
|
120,486,061
|
|
|
|
97,402,398
|
|
|
|
1,816,534
|
|
|
|
1,816,534
|
|
|
|
1,816,534
|
|
Raito/Supplemental Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at end of period
|
|
$
|
43,985,319
|
|
|
$
|
48,225,563
|
|
|
$
|
462,022
|
|
|
$
|
1,025,493
|
|
|
$
|
317,502
|
|
Average net assets
|
|
$
|
46,991,446
|
|
|
$
|
45,472,971
|
|
|
$
|
743,758
|
|
|
$
|
671,498
|
|
|
$
|
343,572
|
|
Annualized ratio of net operating expenses to average net assets
|
|
|
5.8
|
%
|
|
|
9.5
|
%
|
|
|
35.2
|
%
|
|
|
16.6
|
%
|
|
|
35.6
|
%
|
Annualized ratio of net investment income (loss) to average net assets
|
|
|
(1.1
|
)%
|
|
|
(2.7
|
)%
|
|
|
(35.2
|
)%
|
|
|
(16.6
|
)%
|
|
|
(35.6
|
)%
|
Annualized ratio of net operating expenses
excluding management fees, incentive fees, and interest expense to average net assets
|
|
|
4.3
|
%
|
|
|
8.0
|
%
|
|
|
35.2
|
%
|
|
|
16.2
|
%
|
|
|
34.6
|
%
|
Annualized ratio of net increase (decrease) in net assets resulting from operations to average net assets
|
|
|
(9.0
|
)%
|
|
|
(19.5
|
)%
|
|
|
(75.8
|
)
(4)
%
|
|
|
105.4
|
(4)
%
|
|
|
(15.2
|
)
(4)
%
|
Portfolio Turnover
|
|
|
1.1
|
%
|
|
|
0.7
|
%
|
|
|
31.2
|
(4)
%
|
|
|
14.7
|
(4)
%
|
|
|
17.9
|
(4)
%
|
(1)
|
Financial highlights are based on weighted average shares outstanding.
|
(2)
|
Total return based on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share in the period. The total returns are not annualized.
|
(3)
|
Financial highlights for periods of less than one year are annualized and each of the ratios to average net assets are adjusted accordingly. Non-recurring expenses were not annualized. For the nine months ended September 30, 2016 the Company incurred $351,513 of legal fees that were deemed to be non-recurring.
|
(4)
|
Unaudited
|
NOTE 8 – COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company
may enter into investment agreements under which it commits to make an investment in a portfolio company at some future date or
over a specified period of time. The Company maintains sufficient assets to provide adequate cover to allow it to satisfy its unfunded
commitment amount as of September 30, 2017. The unfunded commitment is accounted for under ASC 820. As of the date of this report,
all commitments have been funded.
On June 2, 2015, the Company entered into
a Lease Guaranty Agreement to guaranty a portion of a lease entered into by Rockfish Seafood Grill, Inc. The Company’s guaranty
is limited to the total tenant improvement allowance and the total amount of commissions that the landlord provided in connection
with the lease. The total guaranteed amount by the Company is approximately $292,701 and reduces proportionally after each of the
first sixty months of the lease, which commenced in November 2015, so long as no uncured event of default exists. Through the date
of filing, the guaranteed amount has reduced to approximately $180,499.
Except as set forth under Note 10 and as
a subsequent event to the period covered by this filing, there are no other legal proceedings against the Company or any of its
officers or directors.
From time to time, the Company may be a
party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the
Company’s rights under contracts with its portfolio companies. While the outcome of these legal proceedings cannot be predicted
with certainty, the Company does not expect that these proceeding will have a material effect upon its business, financial condition
or results of operations.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
NOTE 9 – UNCONSOLIDATED SIGNIFICANT SUBSIDIARIES
The Company’s investments are primarily
in private small and lower middle-market companies. In accordance with Rules 3.09 and 4.08(g) of Regulation S-X, the Company must
determine which of its unconsolidated controlled portfolio companies are considered “significant subsidiaries”, if
any. In evaluating these investments, there are three tests utilized to determine if any of the Company’s control investments
are considered significant subsidiaries; the investment test, the asset test, and the income test. Rule 3.09 of Regulation S-X,
as interpreted by the SEC, requires the Company to include separate audited financial statements of any unconsolidated majority-owned
subsidiary in an annual report if any of the three tests exceed 20% of the Company’s total investments at fair value, total
assets or total income. Rule 4-08(g) of Regulation S-X requires summarized financial information of an unconsolidated subsidiary
in an annual report if any of the three tests exceeds 10% of the Company’s total investments at fair value, total assets
or total income and summarized financial information in a quarterly report if any of the three tests exceeds 20% of the Company’s
total amounts.
The Company has determined that Rockfish
Seafood Grill, Inc., Advantis Certified Staffing Solutions, Inc., and PCC SBH Sub, Inc. three of its majority owned control investments
were considered a significant subsidiaries at the 20% level at September 30, 2017.
Additionally, Integrated Medical Partners,
LLC, an unconsolidated portfolio company that was a control investment, but which was not majority-owned by the Company, as well
as Rockfish Seafood Grill, Inc., Advantis Certified Staffing Solutions, Inc., and PCC SBH Sub, Inc., three majority owned control
investments were also considered significant subsidiaries at the 10% level at September 30, 2017. The following tables shows the
summarized financial information for Rockfish Seafood Grill, Inc., Integrated Medical Partners, LLC, Advantis Certified Staffing
Solutions, Inc., and PCC SBH Sub, Inc. (numbers in thousands):
|
|
Rockfish Seafood Grill, Inc.
|
|
|
Integrated Medical Partners, LLC
|
|
|
Advantis Certified Staffing Solutions, Inc.
|
|
|
PCC SBH Sub, Inc.
|
|
|
|
As of
September 30, 2017
(unaudited)
|
|
|
As of
September 30, 2017
(unaudited)
|
|
|
As of
September 30, 2017
(unaudited)
|
|
|
As of
September 30, 2017
(unaudited)
|
|
Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$
|
61
|
|
|
$
|
2,314
|
|
|
$
|
1,123
|
|
|
$
|
315
|
|
Noncurrent Assets
|
|
|
3,526
|
|
|
|
5,588
|
|
|
|
12,773
|
|
|
|
2,420
|
|
Current Liabilities
|
|
|
1,579
|
|
|
|
4,019
|
|
|
|
5,023
|
|
|
|
283
|
|
Noncurrent Liabilities
|
|
|
8,917
|
|
|
|
722
|
|
|
|
7,595
|
|
|
|
-
|
|
|
|
Rockfish Seafood Grill, Inc.
|
|
|
Integrated Medical Partners, LLC
|
|
|
Advantis Certified Staffing Solutions, Inc.
|
|
|
PCC SBH Sub, Inc.
|
|
|
|
Nine Months Ended
September 30, 2017
(unaudited)
|
|
|
Nine Months Ended
September 30, 2017
(unaudited)
|
|
|
Nine Months Ended
September 30, 2017
(unaudited)
|
|
|
Nine Months Ended
September 30, 2017
(unaudited)
|
|
Income Statement
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue (Loss)
|
|
$
|
15,107
|
|
|
$
|
10,925
|
|
|
$
|
10,938
|
|
|
$
|
(42
|
)
|
Gross Profit
|
|
|
10,566
|
|
|
|
3,359
|
|
|
|
2,224
|
|
|
|
209
|
|
Net Income (Loss)
|
|
|
(279
|
)
|
|
|
(580
|
)
|
|
|
(972
|
)
|
|
|
(72
|
)
|
NOTE 10 – SUBSEQUENT EVENTS
Portfolio Activity
|
●
|
On October 25, 2017, the Company made a short term bridge loan to Advantis Certified Staffing Solutions, Inc. in the amount of $45,000 for working capital needs. The note will bear an annual interest rate of 5% with all interest and principal due on maturity of December 31, 2017.
|
|
●
|
On November 20, 2017, the Company made a short term loan to Dominion Medical Management, Inc., a wholly owned subsidiary of Integrated Medical Partners, LLC in the amount of $100,000 for working capital needs. The note will accrue and pay interest and equal principal payments on a monthly basis at an annual rate of 6.0% and have a second lien security interest in the assets of the company. The maturity date is May 20, 2018.
|
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
|
●
|
On December 13, 2017, the Company made a short term bridge loan to Advantis Certified Staffing Solutions, Inc. in the amount of $150,000 for working capital needs. The note will bear an annual interest rate of 5% with all interest and principal due on maturity of December 31, 2018.
|
|
●
|
On January 1, 2018, the Company consolidated the prior bridge loans to Advantis Certified Staffing Solutions, Inc. into one note in the amount of $813,225. The note will bear an annual interest rate of 5% paid quarterly with a maturity of December 31, 2018.
|
|
●
|
On January 25, 2018, the Company made a short term bridge loan to Advantis Certified Staffing Solutions, Inc. in the amount of $90,000 for working capital needs. The note will bear an annual interest rate of 5% paid quarterly with a maturity of December 31, 2018.
|
|
●
|
On February 13, 2018, the Company entered into a Forbearance Letter Agreement (the “Forbearance”) with Lone Star Brewery Development, Inc. for a maximum period of two years. During this period, the Company agreed to forbear from exercising and enforcing certain rights and remedies which the Company is entitled to and to accept a payoff equal to $7,500,000 plus 25% of the net sales proceeds/value of the property if by December 31, 2018 or $8,000,000 plus 25% of the net sales proceeds/value if on or after January 1, 2019. In return, Lone Star Brewery Development, Inc. refinanced out the first lien holder with a new lender in the amount of $11,000,000, put $3,248,000 into the project and paid the Company a forbearance fee at closing of $50,000. In connection with this Forbearance, the Company made a partial release of lien on an approximate three acre tract of land to a lender with a lien that was senior to the Company’s lien.
|
|
●
|
On February 20, 2018, the Company amended the Rockfish Seafood Grill, Inc. Revolving Line of Credit (“RSG Revolver”) to increase the maximum principal amount to $1,821,000 for restaurant improvements and enhancements. As part of the amendment, the maturity date was extended until December 31, 2018. In connection with this amendment, Rockfish Seafood Grill, Inc. agreed to make the RSG Revolver a performing loan on a quarter basis with payments resuming on March 31, 2018.
|
|
●
|
On February 26, 2018, the Company made a short term bridge loan to Advantis Certified Staffing Solutions, Inc. in the amount of $150,000 for working capital needs. The note will bear an annual interest rate of 8% with all interest and principal due on maturity of December 31, 2018.
|
|
●
|
On March 22, 2018, the Company made a loan to Dominion Medical Management, Inc. (“Dominion”), a wholly owned subsidiary of Integrated Medical Partners, LLC, in the amount of $600,000 for working capital needs and amended, restated and consolidated the two prior notes. The new consolidated note has a principal balance of $1,085,256 and will accrue and pay interest only on a quarterly basis at an annual rate of 18.0%. Dominion has the option to defer 6.0% of the annual rate of interest which will compound quarterly on the payment date. The maturity date of the new note is March 1, 2019.
|
|
●
|
On April 12, 2018, the Company funded $100,000 on the RSG Revolver.
|
|
●
|
On April 24, 2018, the Company made a short term bridge loan to Advantis Certified Staffing Solutions, Inc. in the amount of $110,000 for working capital needs. The note will bear an annual interest rate of 8% with all interest and principal due on maturity of December 31, 2018.
|
|
●
|
On June 4, 2018, the Company made a short term bridge loan to Advantis Certified Staffing Solutions, Inc. in the amount of $175,000 for working capital needs. The note will bear an annual interest rate of 10.75% with all interest and principal due on maturity of December 31, 2018.
|
|
●
|
On July 12, 2018, the Company funded $100,000 on the RSG Revolver, making it fully funded.
|
Additional Subsequent Events
Investigation
As a result of the allegations contained
in the Complaints filed by the United States of America filed Complaints against Munish Sood and others captioned
U.S. v. Lamont
Evans, et al.
and
U.S. v. James Gotto, et al.
, in the Southern District of New York., on September 27, 2017 and as previously
disclosed, the Board authorized and directed its Audit Committee (which consists of the Board’s three independent board members)
to conduct an independent investigation into whether such events impacted the Company, and the extent to which any officer or employee
of the Company may have been involved, and whether any corporate funds may have been utilized in the conduct alleged.
As set forth in the Company’s 8-K
filed on January 24, 2018, the Audit Committee conducted an independent investigation into this matter with the assistance of outside
advisors. The investigation concluded on January 24, 2018. The investigation uncovered (i) no evidence that the allegations contained
in the Complaints impacted the Company (other than the resignation of Mr. Sood), (ii) no evidence that any officer or employee
of the Company, other than (as has been alleged) Mr. Sood, had any involvement in the allegations contained in the Complaints,
and (iii) no evidence that any corporate or portfolio company funds were utilized in the conduct alleged in the Complaints. In
respect to Mr. Sood, the Audit Committee did not make any judgment regarding the criminal allegations made by the U.S. Attorney
in its Complaints. As a result of this investigation, the Company, its Audit Committee, and its advisors have concluded that the
Company’s internal controls over financial reporting are effective and do not recommend implementing any additional procedures
or controls at this time.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
Termination of Investment Advisory
Agreement with Princeton Advisory Group and Entry into Interim Investment Advisory Agreement with House Hanover
As set forth in the Company’s Form
8-K filed on January 2, 2018, on December 27, 2017, the Board determined that it would be in the best interests of the Company
and its stockholders to terminate the PAG Investment Advisory Agreement and sent a formal Notice of Termination to Princeton Advisory
Group notifying Princeton Advisory Group of its termination as the Company’s investment advisor, effective as of December
31, 2017 at 11:59 p.m. Eastern Time. Also on December 27, 2017, the Board approved (specifically in accordance with Rule 15a-4(b)(1)(ii)
of the Investment Company Act and authorized the Company to enter into an Interim Investment Advisory Agreement between the Company
and House Hanover, LLC, a Delaware limited liability company (“House Hanover”) (the “Interim Investment Advisory
Agreement”), in accordance with Rule 15a-4 of the Investment Company Act. The effective date of the Interim Investment Advisory
Agreement was January 1, 2018.
In accordance with Rule 15a-4(a)(2), the
Interim Investment Advisory Agreement does not need to be approved by the Company’s stockholders and the duration of the
interim contract may not be greater than 150 days following the date on which the PAG Investment Advisory Agreement terminates.
A summary of the Interim Investment Advisory
Agreement was included in the Form 8-K filed on January 2, 2018 and the full text of the Interim Investment Advisory Agreement
is attached as Exhibit 10.1 thereto and incorporated by reference therein.
As reported in the Company’s Form
8-K filed on May 31, 2018, on April 5, 2018, the Board, including a majority of the independent directors, conditionally approved
the Investment Advisory Agreement between the Company and House Hanover (the “House Hanover Investment Advisory Agreement”)
subject to the approval of the Company’s stockholders at the 2018 Annual Meeting of Stockholders. On May 30, 2018, the Company’s
stockholders approved the House Hanover Investment Advisory Agreement. The effective date of the New Advisory Agreement is May
31, 2018.
A summary of the House Hanover Investment
Advisory Agreement was included in the Form 8-K filed on Marcy 31, 2018 and the full text of the House Hanover Investment Advisory
Agreement is attached as Exhibit 10.1 thereto and incorporated by reference therein.
Resignation of Joy Sheehan as Chief
Compliance Officer
As set forth in the Company’s Form
8-K filed on January 2, 2018, as of December 31, 2017, Joy Sheehan, the Company’s Chief Compliance Officer, notified the
Company of her resignation as the Company’s Chief Compliance Officer, effective immediately. Ms. Sheehan did not resign pursuant
to any disagreement with the Company.
Election of Florina Klingbaum as
Chief Compliance Officer
As set forth in the Company’s Form
8-K filed on January 2, 2018, on December 30, 2017, the Board, including a majority of the directors who are not “interested
persons” (as such term is defined in Section 2(a)(19) of the Investment Company Act of 1940), unanimously approved the election
of Florina Klingbaum to serve as the Company’s Chief Compliance Officer, effective January 1, 2018. There are no related
party transactions involving Ms. Klingbaum that are reportable under Item 404(a) of Regulation S-K.
Pursuant to the Interim Investment Advisory
Agreement, the Company is responsible for its allocable portion of Ms. Klingbaum’s compensation including, but not limited
to, salaries and benefits while performing services to the Company.
Late Filings
As set forth in the Company’s Form
12b-25 filings on April 3, 2018, May 16, 2018 and August 15, 2018 the Company has not timely made its Form 10-Q filing for the
periods ending March 31, 2018 and June 30, 2018, or its 10-K filing for the year ended December 31, 2017 due to its inability to
do so without undue effort or expense.
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
Schedule 12-14
The table below represents the fair value of control and affiliate
investments at December 31, 2016 and any amortization, purchases, sales, and realized and change in unrealized gain (loss) made
to such investments, as well as the ending fair value as of September 30, 2017.
Portfolio Company/Type of Investment
|
|
Principal
Amount/Shares/
Ownership
% at
September 30, 2017
|
|
|
Amount
of Interest and Dividends Credited in Income
|
|
|
Fair
Value at December 31, 2016
|
|
|
Purchases
(2)
|
|
|
Sales
|
|
|
Transfers
from Restructuring/
Transfers into Control Investments
|
|
|
Change
in Unrealized Gains/Losses
|
|
|
Fair
Value at September 30, 2017
|
|
Control Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advantis Certified Staffing Solutions, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Lien Loan
|
|
$
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,500,000
|
|
|
$
|
(617,547
|
)
|
|
$
|
3,882,453
|
|
Unsecured Loan
|
|
$
|
618,225
|
|
|
|
3,858
|
|
|
|
-
|
|
|
|
618,225
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
618,225
|
|
Common Stock – Series A
|
|
|
225,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,150
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,871
|
)
|
|
|
6,279
|
|
Common Stock – Series B
|
|
|
9,500,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
428,571
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(163,454
|
)
|
|
|
265,117
|
|
Warrants
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,278
|
|
|
|
-
|
|
|
|
16,510
|
|
|
|
(1,276
|
)
|
|
|
26,512
|
|
Rockfish Seafood Grill, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Loan
(1)
|
|
$
|
6,352,944
|
|
|
|
-
|
|
|
|
6,549,261
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
302,534
|
|
|
|
6,851,795
|
|
Revolving Loan
(1)
|
|
$
|
1,621,000
|
|
|
|
-
|
|
|
|
1,481,000
|
|
|
|
140,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,621,000
|
|
Rockfish Holdings, LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant
(1)
|
|
|
10
|
%
|
|
|
-
|
|
|
|
102,826
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
845,307
|
|
|
|
948,133
|
|
Membership Interest
(1)
|
|
|
99.997
|
%
|
|
|
-
|
|
|
|
925,407
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(820,056
|
)
|
|
|
105,351
|
|
Integrated Medical Partners, LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured Loan
(1)
|
|
$
|
451,922
|
|
|
|
13,988
|
|
|
|
276,922
|
|
|
|
451,922
|
|
|
|
(276,922
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
451,922
|
|
Preferred Membership
– Class A
(1)
|
|
|
800
|
|
|
|
-
|
|
|
|
3,337,779
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,505,518
|
)
|
|
|
1,832,261
|
|
Preferred Membership
– Class B
(1)
|
|
|
760
|
|
|
|
-
|
|
|
|
365,884
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(284,217
|
)
|
|
|
81,667
|
|
Common Stock
(1)
|
|
|
14,082
|
|
|
|
-
|
|
|
|
20,059
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(16,335
|
)
|
|
|
3,724
|
|
PCC SBH Sub, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,525,481
|
|
|
|
(785,481
|
)
|
|
|
1,740,000
|
|
Unsecured
Loan
(1)
|
|
$
|
14,000
|
|
|
|
1,293
|
|
|
|
-
|
|
|
|
20,000
|
|
|
|
(6,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
14,000
|
|
Total Control Investments
|
|
|
|
|
|
$
|
19,139
|
|
|
$
|
13,059,138
|
|
|
$
|
1,680,146
|
|
|
$
|
(282,922
|
)
|
|
$
|
7,041,991
|
|
|
$
|
(3,049,914
|
)
|
|
$
|
18,448,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spencer Enterprises Holdings, LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Membership,
Class AA units
(1)
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
2,705,363
|
|
|
$
|
-
|
|
|
$
|
(2,071,043
|
)
|
|
$
|
-
|
|
|
$
|
(634,320
|
)
|
|
$
|
-
|
|
Preferred
Membership, Class BB units
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
3,681,316
|
|
|
|
-
|
|
|
|
(3,824,818
|
)
|
|
|
-
|
|
|
|
143,501
|
|
|
|
-
|
|
Total Affiliate Investments
|
|
|
|
|
|
$
|
-
|
|
|
$
|
6,386,679
|
|
|
$
|
-
|
|
|
$
|
(5,895,861
|
)
|
|
$
|
-
|
|
|
$
|
(490,819
|
)
|
|
$
|
-
|
|
(1)
|
Non-income producing security.
|
(2)
|
Includes
PIK interest and common stock issued in exchange for investments.
|
PRINCETON CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 2017 (Unaudited)
The table below represents the fair value of control and affiliate
investments at December 31, 2015 and any amortization, purchases, sales, and realized and change in unrealized gain (loss) made
to such investments, as well as the ending fair value as of September 30, 2016.
Portfolio Company/Type of Investment
|
|
Principal Amount/Shares/
Ownership % at September 30, 2016
|
|
|
Amount of Interest and Dividends Credited in Income
|
|
|
Fair Value at December 31, 2015
|
|
|
Purchases
(2)
|
|
|
Realized and Change in Unrealized Gains/Losses
|
|
|
Fair Value at September 30, 2016
|
|
Control Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rockfish Seafood Grill, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Loan
(1)
|
|
$
|
6,352,944
|
|
|
$
|
482,128
|
|
|
$
|
6,164,535
|
|
|
$
|
188,409
|
|
|
$
|
-
|
|
|
$
|
6,352,944
|
|
Revolving Loan
(1)
|
|
$
|
1,276,000
|
|
|
|
-
|
|
|
|
1,051,000
|
|
|
|
225,000
|
|
|
|
-
|
|
|
|
1,276,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rockfish Holdings, LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant
(1)
|
|
|
10.00
|
%
|
|
|
-
|
|
|
|
316,531
|
|
|
|
-
|
|
|
|
(129,848
|
)
|
|
|
186,683
|
|
Membership Interest
(1)
|
|
|
99.997
|
%
|
|
|
-
|
|
|
|
2,848,693
|
|
|
|
-
|
|
|
|
(1,168,594
|
)
|
|
|
1,680,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integrated Medical Partners, LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured Loan
(1)
|
|
$
|
276,922
|
|
|
|
-
|
|
|
|
276,922
|
|
|
|
-
|
|
|
|
-
|
|
|
|
276,922
|
|
Preferred Membership – Class A
(1)
|
|
|
800
|
|
|
|
-
|
|
|
|
2,331,439
|
|
|
|
-
|
|
|
|
323,517
|
|
|
|
2,654,956
|
|
Preferred Membership – Class B
(1)
|
|
|
760
|
|
|
|
-
|
|
|
|
32,923
|
|
|
|
-
|
|
|
|
194,124
|
|
|
|
227,047
|
|
Common Stock
(1)
|
|
|
14,082
|
|
|
|
-
|
|
|
|
65
|
|
|
|
-
|
|
|
|
15,140
|
|
|
|
15,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advantis Certified Staffing Solutions, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Lien Loan
(1)
|
|
$
|
6,435,000
|
|
|
|
-
|
|
|
|
4,104,994
|
|
|
|
-
|
|
|
|
567,697
|
|
|
|
4,672,691
|
|
Unsecured Loan
(1)
(due 3/31/2018)
|
|
$
|
95,000
|
|
|
|
-
|
|
|
|
95,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
95,000
|
|
Unsecured Loan
(1)
(due 3/31/2020)
|
|
$
|
195,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
195,000
|
|
|
|
-
|
|
|
|
195,000
|
|
Unsecured Loan
(1)
(due 3/31/2018)
|
|
$
|
85,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85,000
|
|
|
|
-
|
|
|
|
85,000
|
|
Warrant
(1)
|
|
|
1
|
|
|
|
-
|
|
|
|
691
|
|
|
|
-
|
|
|
|
349
|
|
|
|
1,040
|
|
Common Stock – Series A
(1)
|
|
|
225,000
|
|
|
|
-
|
|
|
|
622
|
|
|
|
-
|
|
|
|
314
|
|
|
|
936
|
|
Common Stock – Series B
(1)
|
|
|
9,500,000
|
|
|
|
-
|
|
|
|
26,256
|
|
|
|
-
|
|
|
|
13,274
|
|
|
|
39,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Control Investments
|
|
|
|
|
|
$
|
482,128
|
|
|
$
|
17,249,671
|
|
|
$
|
693,409
|
|
|
$
|
(184,027
|
)
|
|
$
|
17,759,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spencer Enterprises Holdings, LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Membership, Class AA units
(1)
|
|
|
500,000
|
|
|
$
|
-
|
|
|
$
|
2,353,965
|
|
|
$
|
-
|
|
|
$
|
550,393
|
|
|
$
|
2,904,358
|
|
Preferred Membership, Class BB units
(1)
|
|
|
500,000
|
|
|
|
-
|
|
|
|
2,960,434
|
|
|
|
-
|
|
|
|
1,169,385
|
|
|
|
4,129,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Affiliate Investments
|
|
|
|
|
|
$
|
-
|
|
|
$
|
5,314,399
|
|
|
$
|
-
|
|
|
$
|
1,719,778
|
|
|
$
|
7,034,177
|
|
(1)
|
Non-income producing security.
|
(2)
|
Includes PIK interest and common stock issued in exchange
for investments.
|
End of notes to financial statements.