Company Quick10K Filing
Quick10K
Harvest Capital Credit
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-06-11 Shareholder Vote
8-K 2019-05-10 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-03-18 Accountant, Exhibits
8-K 2018-11-01 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-06-12 Shareholder Vote
8-K 2018-04-29 Enter Agreement, Exhibits
8-K 2018-02-08 Other Events, Exhibits
ASG All Soft Gels 114
SCM Stellus Capital Investment 0
FDUS Fidus Investment 0
TCRD THL Credit 0
IGI Imagistics 0
GAIN Gladstone Investment Corporation 0
WHF Whitehorse Finance 0
SAR Saratoga Investment 0
SUNS Solar Senior Capital 0
PFLT Pennantpark Floating Rate Capital 0
HCAP 2019-06-30
Part I - Financial Information
Item 1. Consolidated Financial Statements
Note 1. Organization
Note 2. Summary of Significant Accounting Policies
Note 3. Borrowings
Note 4. Concentrations of Credit Risk
Note 5. Shareholders' Equity
Note 6. Fair Value Measurements
Note 7. Related Party Transactions
Note 8. Commitments and Contingencies
Note 9. Net Increase in Net Assets Resulting From Operations per Common Share
Note 10. Income Tax
Note 11. Financial Highlights
Note 12. Significant Subsidiaries
Note 13. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 exhibit311june302019q2-19.htm
EX-31.2 exhibit312june302019q2-19.htm
EX-32.1 exhibit321june302019q2-19.htm
EX-32.2 exhibit322june302019q2-19.htm

Harvest Capital Credit Earnings 2019-06-30

HCAP 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 hcap10qjune302019q2-1910xq.htm 10-Q Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2019
 OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-35906
 
HARVEST CAPITAL CREDIT CORPORATION
(Exact name of registrant as specified in its charter)  
 
Delaware
(State or other Jurisdiction of
 Incorporation or Organization)
46-1396995
(I.R.S. Employer
Identification Number)
 
 
767 Third Avenue, 29th Floor
New York, NY 10017
(Address of principal executive offices) (Zip Code)
 
(212) 906-3589
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value of $0.001 per share
HCAP
NASDAQ Global Market
6.125% Notes due 2022
HCAPZ
NASDAQ Global Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☐    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



 
 
Large accelerated filer
¨
Accelerated filer                    
¨
 
Non-accelerated filer
þ

 
 
 
Smaller reporting company    
¨
 
 
 
Emerging growth company
¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes ¨ No þ.

The number of shares of the registrant’s Common Stock, $0.001 par value, outstanding as of August 8, 2019 was 6,070,033.
 



HARVEST CAPITAL CREDIT CORPORATION
 
 QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER
ENDED JUNE 30, 2019
 
TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 

i


PART I - FINANCIAL INFORMATION
Item 1.           Consolidated Financial Statements

Harvest Capital Credit Corporation 
Consolidated Statements of Assets and Liabilities (Unaudited)

June 30,

December 31,

2019

2018
ASSETS:



Non-affiliated/non-control investments, at fair value (cost of $54,221,536 at 6/30/19 and $59,603,853 at 12/31/18)
$
55,414,945


$
61,919,954

Affiliated investments, at fair value (cost of $48,210,903 at 6/30/19 and $25,848,928 at 12/31/18)
47,447,273


24,645,597

Control investments, at fair value (cost of $13,719,123 at 6/30/19 and $13,430,013 at 12/31/18)
7,802,027


8,348,311

Cash
15,575,300


26,963,310

Restricted cash
1,732,874


1,812,238

Interest receivable
778,938


721,195

Accounts receivable – other
142,082


178,883

Deferred financing costs
522,086


623,442

Other assets
233,249


106,771

Total assets
$
129,648,774


$
125,319,701





LIABILITIES:



Revolving line of credit
$
27,000,000


$
17,000,000

2022 Notes (net of deferred offering costs of $724,309 at 6/30/19 and $821,879 at 12/31/18)
28,025,691


27,928,121

Payable for securities purchased
200,000



Accrued interest payable
142,422


115,919

Accounts payable - base management fees
539,727


531,628

Accounts payable - incentive management fees


361,090

Accounts payable - administrative services expenses
350,000


366,667

Accounts payable and accrued expenses
522,174


620,312

Total liabilities
56,780,014


46,923,737





Commitments and Contingencies (Note 8)




 



NET ASSETS:



Common stock, $0.001 par value, 100,000,000 shares authorized, 6,569,661 issued and 6,126,724 outstanding at 6/30/19 and 6,554,010 issued and 6,372,581 outstanding at 12/31/18
6,570


6,554

Capital in excess of common stock
92,426,143


92,270,273

Treasury shares, at cost, 442,937 and 181,429 shares at 6/30/19 and 12/31/18, respectively
(4,702,931
)

(1,956,055
)
Accumulated over distributed earnings
(14,861,022
)

(11,924,808
)
Total net assets
72,868,760


78,395,964

Total liabilities and net assets
$
129,648,774


$
125,319,701





Common stock outstanding
6,126,724


6,372,581





Net asset value per common share
$
11.89


$
12.30

 
 
See accompanying notes to unaudited financial statements.

1



Harvest Capital Credit Corporation 
Consolidated Statements of Operations (Unaudited) 

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018
Investment Income:







Interest:







Cash - non-affiliated/non-control investments
$
1,349,743


$
2,390,700


$
2,830,855


$
4,715,816

Cash - affiliated investments
1,100,708


811,059


2,061,654


1,517,630

Cash - control investments


47,546




130,934

PIK - non-affiliated/non-control investments
18,647


141,785


30,766


337,827

PIK - affiliated investments
187,598


182,426


382,112


350,303

Amortization of fees, discounts and premiums, net:











  Non-affiliated/non-control investments
200,200


440,680


427,062


631,713

  Affiliated investments
34,423


18,245


57,155


34,086

Total interest income
2,891,319


4,032,441


5,789,604


7,718,309

Other income
102,987


22,557


242,946


77,473

Total investment income   
2,994,306


4,054,998


6,032,550


7,795,782











Expenses:









Interest expense - revolving line of credit
92,295


150,335


102,781


289,174

Interest expense - unused line of credit
92,135


82,481


193,884


164,136

Interest expense - deferred financing costs
55,629


57,590


110,640


112,711

Interest expense - 2022 Notes
440,235


440,235


880,470


880,470

Interest expense - deferred offering costs
49,210


45,856


97,570


90,842

Total interest expense
729,504


776,497


1,385,345


1,537,333











Professional fees
297,546


209,382


817,880


1,241,669

General and administrative
236,619


283,062


491,572


573,348

Base management fees
539,727


605,237


1,034,573


1,185,880

Incentive management fees


187,293




187,293

Administrative services expense
350,000


366,666


700,000


666,666

Total expenses, before reimbursement  
2,153,396


2,428,137


4,429,370


5,392,189













     Less: Professional fees reimbursed by HCAP Advisors, LLC (Note 7)


(11,279
)



(449,835
)












Total expenses, after reimbursement
2,153,396


2,416,858


4,429,370


4,942,354













Net Investment Income, before taxes
840,910


1,638,140


1,603,180


2,853,428













Current income tax expense


32,833




32,833













Net Investment Income, after taxes
840,910


1,605,307


1,603,180


2,820,595













Net realized gains (losses):











  Non-affiliated / Non-control investments
6,151




52,451



  Affiliated investments
20,750




20,750


(885,642
)
  Control investments


156,347


(10,890
)

156,347

Net realized gains (losses)
26,901


156,347


62,311


(729,295
)
Net change in unrealized appreciation (depreciation) on investments:











  Non-affiliated / Non-control investments
49,377


68,338


(689,578
)

122,681

  Affiliated investments
67,816


(297,157
)

6,586


1,484,312

  Control investments
(898,894
)

(193,601
)

(835,394
)

(289,064
)
Net change in unrealized appreciation (depreciation) on investments
(781,701
)

(422,420
)

(1,518,386
)

1,317,929

Total net unrealized and realized gains (losses) on investments
(754,800
)

(266,073
)

(1,456,075
)

588,634


2


Provision for taxes on unrealized gains on investments
$


$
(523,478
)



(523,478
)
Net increase in net assets resulting from operations
$
86,110


$
815,756


$
147,105


$
2,885,751











Net investment income per share
$
0.14


$
0.25


$
0.26


$
0.44

Net increase in net assets resulting from operations per share
$
0.01


$
0.13


$
0.02


$
0.45

Weighted average shares outstanding (basic and diluted)
6,161,052


6,390,521


6,231,496


6,413,869

 
 
 See accompanying notes to unaudited financial statements.

3


 Harvest Capital Credit Corporation 
Consolidated Statements of Changes in Net Assets (Unaudited)


Common Stock




Three Months Ended June 30, 2019

Shares

Par

Capital in Excess of Common Stock

Treasury Shares

Accumulated Over Distributed Earnings

Total Net Assets
Balance as of March 31, 2019

6,189,542

$
6,562


$
92,347,663


$
(3,959,962
)

$
(13,468,725
)

$
74,925,538

Net increase in net assets resulting from operations:












Net investment income









840,910


840,910

Net realized gains









26,901


26,901

Net change in unrealized depreciation on investments









(781,701
)

(781,701
)
Distributions to shareholders (2):












Distributions









(1,478,407
)

(1,478,407
)
Capital share transactions












Reinvestment of dividends

7,929


8


78,480






78,488

Share repurchases

(70,747
)





(742,969
)



(742,969
)
Total increase (decrease) for the three months ended June 30, 2019

(62,818
)

8


78,480


(742,969
)

(1,392,297
)

(2,056,778
)
Balance as of June 30, 2019

6,126,724

$
6,570


$
92,426,143


$
(4,702,931
)

$
(14,861,022
)

$
72,868,760




Common Stock




Three Months Ended June 30, 2018

Shares

Par

Capital in Excess of Common Stock

Treasury Shares

Accumulated Over Distributed Earnings (1)

Total Net Assets
Balance as of March 31, 2018

6,401,175

$
6,528


$
93,132,713


$
(1,421,951
)

$
(10,421,353
)

$
81,295,937

Net increase in net assets resulting from operations:












Net investment income









1,605,307


1,605,307

Net realized gains









156,347


156,347

Net change in unrealized depreciation on investments









(422,420
)

(422,420
)
Provision for taxes on unrealized gains on investments









(523,478
)

(523,478
)
Distributions to shareholders (2):












Distributions









(1,820,978
)

(1,820,978
)
Capital share transactions












Reinvestment of dividends

8,695


9


85,276






85,285

Share repurchases

(14,678
)





(151,506
)



(151,506
)
Write-off of deferred offering costs





(146,446
)





(146,446
)
Total increase (decrease) for the three months ended June 30, 2018

(5,983
)

9


(61,170
)

(151,506
)

(1,005,222
)

(1,217,889
)
Balance as of June 30, 2018

6,395,192

$
6,537


$
93,071,543


$
(1,573,457
)

$
(11,426,575
)

$
80,078,048




4




Common Stock




Six Months Ended June 30, 2019

Shares

Par

Capital in Excess of Common Stock

Treasury Shares

Accumulated Over Distributed Earnings

Total Net Assets
Balance as of December 31, 2018

6,372,581

$
6,554


$
92,270,273


$
(1,956,055
)

$
(11,924,808
)

$
78,395,964

Net increase in net assets resulting from operations:












Net investment income









1,603,180


1,603,180

Net realized gains









62,311


62,311

Net change in unrealized depreciation on investments









(1,518,386
)

(1,518,386
)
Distributions to shareholders (2):












Distributions









(3,083,319
)

(3,083,319
)
Capital share transactions












Reinvestment of dividends

15,651


16


155,870






155,886

Share repurchases

(261,508
)





(2,746,876
)



(2,746,876
)
Total increase (decrease) for the six months ended June 30, 2019

(245,857
)

16


155,870


(2,746,876
)

(2,936,214
)

(5,527,204
)
Balance as of June 30, 2019

6,126,724

$
6,570


$
92,426,143


$
(4,702,931
)

$
(14,861,022
)

$
72,868,760




Common Stock




Six Months Ended June 30, 2018

Shares

Par

Capital in Excess of Common Stock

Treasury Shares

Accumulated Over Distributed Earnings (1)

Total Net Assets
Balance as of December 31, 2017

6,457,588

$
6,520


$
93,043,208


$
(724,039
)

$
(10,544,260
)

$
81,781,429

Net increase in net assets resulting from operations:












Net investment income









2,820,595


2,820,595

Net realized losses









(729,295
)

(729,295
)
Net change in unrealized appreciation on investments









1,317,929


1,317,929

Provision for taxes on unrealized gains on investments









(523,478
)

(523,478
)
Distributions to shareholders (2):












Distributions









(3,768,066
)

(3,768,066
)
Capital share transactions












Reinvestment of dividends

17,179


17


174,781






174,798

Share repurchases

(79,575
)





(849,418
)



(849,418
)
Write-off of deferred offering costs





(146,446
)





(146,446
)
Total increase (decrease) for the six months ended June 30, 2018

(62,396
)

17


28,335


(849,418
)

(882,315
)

(1,703,381
)
Balance as of June 30, 2018

6,395,192

$
6,537


$
93,071,543


$
(1,573,457
)

$
(11,426,575
)

$
80,078,048










5


(1)
The following tables provide a reconciliation of the components of accumulated over distributed earnings to conform to the current period presentation:


Undistributed Net Investment income

Accumulated Realized Losses on Investments

Net Unrealized Depreciation on Investments

Accumulated Over Distributed Earnings
Balance as of March 31, 2018
$
1,187,914


$
(9,809,603
)

$
(1,799,664
)

$
(10,421,353
)
Net increase in net assets resulting from operations:







Net investment income
1,605,307






1,605,307

Net realized gains on investments


156,347




156,347

Net change in unrealized appreciation on investments




(422,420
)

(422,420
)
Provision for taxes on unrealized gains on investments




(523,478
)

(523,478
)
Distributions to shareholders:







Distributions
(1,820,978
)





(1,820,978
)
Balance as of June 30, 2018
$
972,243


$
(9,653,256
)

$
(2,745,562
)

$
(11,426,575
)


Undistributed Net Investment income

Accumulated Realized Losses on Investments

Net Unrealized Depreciation on Investments

Accumulated Over Distributed Earnings
Balance as of December 31, 2017
$
1,919,713


$
(8,923,961
)

$
(3,540,012
)

$
(10,544,260
)
Net increase in net assets resulting from operations:







Net investment income
2,820,595






2,820,595

Net realized losses on investments


(729,295
)



(729,295
)
Net change in unrealized appreciation on investments




1,317,929


1,317,929

Provision for taxes on unrealized gains on investments




(523,479
)

(523,479
)
Distributions to shareholders:







Distributions
(3,768,065
)





(3,768,065
)
Balance as of June 30, 2018
$
972,243


$
(9,653,256
)

$
(2,745,562
)

$
(11,426,575
)

(2
)
Distributions exceeded net investment income for the three months ended June 30, 2019 and 2018 in the amount of $637,497 and $215,671, respectively. Distributions exceeded net investment income for the six months ended June 30, 2019 and 2018 in the amount of $1,480,139 and $947,471, respectively.See Dividends and Distributions Policy in Note 2.
 See accompanying notes to unaudited financial statements.


6



Harvest Capital Credit Corporation
Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30,

2019

2018
Cash flows from operating activities:



Net increase in net assets resulting from operations
$
147,105


$
2,885,751

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



Paid in kind income
(412,878
)

(688,130
)
Paid in kind income collected
87,065


21,269

Net realized losses (gains) on investments
(62,311
)

729,295

Net change in unrealized appreciation (depreciation) of investments
1,518,386


(1,317,929
)
Provision for taxes on unrealized gains on investments


523,478

Amortization of fees, discounts and premiums, net
(484,217
)

(665,799
)
Amortization of deferred financing costs
110,640


112,711

Amortization of deferred offering costs
97,570


90,842

Proceeds from sales of investments
6,078,795


331,710

Purchase of investments (net of loan origination and other fees)
(36,756,865
)

(13,012,633
)
Proceeds from principal payments
14,190,434


9,616,874

Changes in operating assets and liabilities



(Increase) decrease in interest receivable
(57,743
)

(153,144
)
Increase in accounts receivable - other and other assets
1,529


(261,859
)
Increase (decrease) in accrued interest payable
26,503


(3,192
)
Increase (decrease)in accounts payable and other liabilities
(267,796
)

264,910





Net cash used in operating activities
(15,783,783
)

(1,525,846
)




Cash flows from financing activities:



Borrowings on revolving credit facility
40,000,000


44,000,000

Repayment of borrowings on revolving credit facility
(30,000,000
)

(37,721,853
)
Financing costs
(9,282
)

(24,816
)
Repurchased shares (held in Treasury Stock)
(2,746,876
)

(849,418
)
Distributions to equity holders (net of stock issued under dividend reinvestment plan of $155,886 and $174,798, respectively)
(2,927,433
)

(3,593,268
)






Net cash provided by financing activities
4,316,409


1,810,645





Net increase (decrease) in cash during the period
(11,467,374
)

284,799






Cash at beginning of period
28,775,548


11,464,437





Cash at end of period (1)
$
17,308,174


$
11,749,236





Non-cash operating activities:



Fair value of warrants received from Kleen-Tech Acquisition, LLC
$
186,970


$

Conversion of Northeast Metal Works, LLC Revolving Credit Facility to Junior Secured Term Loan
$
446,494


$

Conversion of Coastal Screen & Rail, LLC Revolving Credit Facility to Senior Secured Term Loan
$
950,000


$





Non-cash financing activities:



Value of shares issued in connection with dividend reinvestment plan
$
155,886


$
174,798


7


Write-off of deferred offering costs
$


$
146,446





Supplemental disclosures of cash flow information:



Cash paid during the period for interest
$
1,150,631


$
1,336,972

Cash paid during the period for taxes
$
36,431


$
39,840

 
(1) Consists of cash and restricted cash of $15,575,300 and $1,732,874, respectively, at June 30, 2019, and $8,375,062 and $3,374,174, respectively at June 30, 2018.



See accompanying notes to unaudited financial statements.

8


Harvest Capital Credit Corporation
Consolidated Schedule of Investments (Unaudited)
As of June 30, 2019
Portfolio Company
Date**
Industry
Investment (1) (2) (13) (14) (15)

 Principal
 Cost
 Fair Value
Non-Control / Non-Affiliate Investments






Bradford Soap
International, Inc. (5.3%)*
08/2015
Consumer Goods - Non-Durable
Junior Secured Term Loan, due 10/2019 (18.50%; 1M LIBOR + 13.00% + 3.00% default rate)
(5) (10)
$
3,950,002

$
3,939,992

$
3,871,002






3,950,002

3,939,992

3,871,002









Brite Media LLC (0.3%)*
04/2014
Media: Advertising, Printing & Publishing
Class A Interest (139 Units)


125,000

188,200








125,000

188,200









CP Holding Co., Inc.
(Choice Pet) (3.9%)*
05/2013
Retailer
Junior Secured Term Loan, due 06/2020 (12.00%; 7.00% current and 5.00% deferred)
(11)
2,899,852

3,098,300

2,842,000






2,899,852

3,098,300

2,842,000









Deluxe Entertainment Services Group Inc.(6.2%)*
01/2019
Media: Diversified & Production
Senior Secured Term Loan, due 02/2020 (8.08%; LIBOR + 5.50%)

4,716,026

4,343,907

4,343,907




Senior Secured Term Loan, due 02/2020 (8.58%; LIBOR + 6.00%)

210,938

192,549

192,549






4,926,964

4,536,456

4,536,456











Flavors Holdings, Inc. (5.3%)*
10/2014
Beverage, Food & Tobacco
Junior Secured Term Loan, due 10/2021 (12.33%; 3M LIBOR +10.00% with a 1.00% LIBOR floor)

4,000,000

3,934,208

3,830,000






4,000,000

3,934,208

3,830,000









Fox Rent A Car, Inc. (1.3%)*
10/2014
Automotive
Common Equity Warrants (102 shares)



918,000









918,000









GK Holdings, Inc. (3.5%)*
01/2015
High Tech Industries
Junior Secured Term Loan, due 01/2022 (12.58%; 3M LIBOR +10.25% with a 1.00% LIBOR floor)
(5)
3,000,000

2,962,162

2,536,500






3,000,000

2,962,162

2,536,500









General Nutrition Centers, Inc. (5.7%)*
02/2019
Beverage, Food, & Tobacco
Senior Secured Term Loan, due 03/2021 (11.20%; LIBOR + 8.75%; ABR + 7.75%)

4,326,812

4,177,807

4,177,807






4,326,812

4,177,807

4,177,807









KC Engineering & Construction Services, LLC (2.6%)*
10/2017
Environmental Industries
Class A Membership Interest (105,784 Units)
(6)

664,392

1,859,822








664,392

1,859,822









Peerless Media, LLC (6.6%)*
02/2019
Media: Advertising, Printing & Publishing
Senior Secured Term Loan, due 02/2024 (11.44%; 1M LIBOR + 8.50% with a 2.40% LIBOR floor + 0.50% PIK)

4,835,712

4,799,409

4,799,409




Revolving Line of Credit, due 08/2020 (1M LIBOR + 8.50% with a 2.40% LIBOR floor + 0.50% PIK)
(4)








4,835,712

4,799,409

4,799,409










ProAir Holdings Corporation (8.8%)*
09/2017
Capital Equipment
Junior Secured Term Loan, due 12/2022 (12.75%)

6,500,000

6,427,907

6,387,000






6,500,000

6,427,907

6,387,000









Regional Engine
Leasing, LLC (3.6%)*
03/2015
Aerospace & Defense
Senior Secured Term Loan, due 03/2020 (11.00%; the greater of 11.00% or LIBOR +4.50%)

2,655,215

2,635,130

2,655,000




Residual Value
(3)

102,421







2,655,215

2,737,551

2,655,000












9


Portfolio Company
Date**
Industry
Investment (1) (2) (13) (14) (15)

 Principal
 Cost
 Fair Value
Safety Services Acquisition Corp. (6.6%)*
03/2017
Services: Business
Senior Secured Term Loan, due 12/2020 (10.38%; 3M LIBOR + 8.00% with a 1.00% LIBOR floor)
(5)
4,656,250

4,648,827

4,656,250


04/2012

Series A Preferred Stock (100,000 Shares)


100,000

173,000






4,656,250

4,748,827

4,829,250











Shannon Specialty Floors, LLC (3.5%)*
04/2017
Chemicals, Plastics & Rubber
Junior Secured Term Loan, due 04/2021 (13.10%; 3M LIBOR + 10.50% with a 1.00% LIBOR floor)
(5)
2,617,477

2,584,209

2,538,000






2,617,477

2,584,209

2,538,000









Surge Busy Bee Holdings, LLC (9.6%)*
11/2017
Services: Business
Senior Secured Term Loan, due 11/2022 (12.41%; 1M LIBOR + 10.00%)

4,468,750

4,315,116

4,339,499




Senior Secured Term Loan, due 11/2022 (14.00%; 12.00% cash/2.00% PIK)

2,424,563

2,360,072

2,329,000




Revolving Line of Credit, due 11/2021 (1M LIBOR+8.00%)
(4)






Class B Equity Warrants (210 Units)


152,950

316,000






6,893,313

6,828,138

6,984,499









Water-Land Manufacturing & Supply, LLC (3.4%)*
08/2018
Consumer Goods - Durable
Junior Secured Term Loan, due 05/2023 (12.88%; 3M LIBOR + 10.50% with a 2.25% LIBOR floor)

2,500,000

2,457,178

2,462,000






2,500,000

2,457,178

2,462,000









World Business Lenders, LLC (0.0%)*
12/2013
Banking, Finance, Insurance & Real Estate
Class B Equity Interest (49,209 Units)
(8)


200,000









200,000


Subtotal Non-Control / Non-Affiliate Investments


$
53,761,597

$
54,221,536

$
55,414,945









Affiliate Investments





Coastal Screen and Rail, LLC (10.4%)*
01/2018
Construction & Building
Senior Secured Term Loan, due 01/2023 (12.00%; 10.50% Cash/1.50% PIK)

$
7,240,625

$
7,115,026

$
7,123,536




Revolving Line of Credit, due 07/2022 (10.32%; 3M LIBOR + 8.00%)
(4)
100,000

100,000

100,000




Preferred Equity Interest (6.21% fully diluted Common Equity)
(6)


150,000

388,000






7,340,625

7,365,026

7,611,536










Flight Lease XII, LLC (0.9%)*
03/2017
Aerospace & Defense
Common Equity Interest (1,000 Units)
(6)

389,757

636,000








389,757

636,000









Kleen-Tech Acquisition, LLC (10.1%)*
05/2019
Services: Business
Senior Secured Term Loan, due 05/2024 (15.00%; 13.00% Cash/2.00% PIK)

7,232,917

6,901,318

6,901,318




Revolving Line of Credit, due 05/2022 (15.00%; 13.00% Cash/2.00% PIK)
(4)






Common Equity Units (13.51% fully diluted)
(6)


250,000

250,000




Common Equity Warrants (8.50% Common Equity)
(6)


186,970

186,970






7,232,917

7,338,288

7,338,288











National Program Management & Project Controls, LLC (15.1%)*
06/2018
Construction & Building
Senior Secured Term Loan, due 06/2023 (12.41%; 1M LIBOR + 10.00%)

6,860,283

6,771,783

6,858,401




Class A Membership Interest (574,392 Units)
(6)


2,791,241

4,147,000






6,860,283

9,563,024

11,005,401











Northeast Metal
Works, LLC (13.8%)*
09/2014
Metals & Mining
Junior Secured Term Loan, due 06/2020 (15.00%; 11.00% Cash/4.00% PIK)
(12)
11,201,886

11,190,987

10,057,000


05/2017

Preferred Equity Interest (2,368 Class A Units; 12.0% cumulative preferred return)
(6) (12)

1,515,520







11,201,886

12,706,507

10,057,000


10


Portfolio Company
Date**
Industry
Investment (1) (2) (13) (14) (15)

 Principal
 Cost
 Fair Value








Slappey Communications, LLC (8.1%)
05/2019
Telecommunications
Senior Secured Term Loan, due 05/2024 (13.00%; 3M LIBOR + 10.00% with a 2.50% LIBOR floor)

5,815,003

5,695,548

5,695,548




Revolving Line of Credit, due 05/2023 (13.00%; 3M LIBOR + 10.00% with a 2.50% LIBOR floor)
(4)






Common Equity Units (7.74% fully diluted)
(6)


200,000

200,000






5,815,003

5,895,548

5,895,548









V-Tek, Inc. (6.7%) *
03/2017
Capital Equipment
Senior Secured Term Loan, due 03/2022 (13.63%; 3M LIBOR + 11.00%)

3,325,000

3,266,656

3,239,000




Revolving Line of Credit, due 03/2021 (9.13%; 3M LIBOR + 6.50%)
(4)
1,536,097

1,536,097

1,535,500




Common Stock (90 Shares)
(6)

150,000

129,000






4,861,097

4,952,753

4,903,500

Subtotal Affiliate Investments


$
43,311,811

$
48,210,903

$
47,447,273









Control Investments





Flight Lease VII, LLC (0.9%) *
03/2016
Aerospace & Defense
Common Equity Interest (46.14% fully diluted interest)
(9)

$
673,421

$
685,527








673,421

685,527









Infinite Care, LLC (9.7%) *
02/2016
Healthcare & Pharmaceuticals
Senior Secured Term Loan, due 02/2019 (14.40%; 1M LIBOR+6.00% with a 0.42% LIBOR floor + 6.00% PIK)
(7)
4,782,404

3,377,702

3,402,000




Revolving Line of Credit, due 02/2019 (14.40%; 1M LIBOR+12.00% with a 0.42% LIBOR floor)

3,719,000

3,719,000

3,714,500




Membership Interest (100% membership interests)
(6)

5,949,000







8,501,404

13,045,702

7,116,500

Subtotal Control Investments


$
8,501,404

$
13,719,123

$
7,802,027






Total Investments at 6/30/19 (151.9%) *



$
105,574,812

$
116,151,562

$
110,664,245


* Fair value as a percentage of net assets
** Date refers to the origination date of the investment
(1)
Debt investments are income producing investments unless an investment is on non accrual. Common equity, residual values and warrants are non-income producing.
(2)
For each loan, the Company has provided the interest rate in effect on the date presented, as well as the contractual components of that interest rate. In the case of the Company's variable or floating rate loans, the interest rate in effect takes into account the applicable LIBOR rate in effect on June 30, 2019 or, if higher, the applicable LIBOR floor.
(3)
"Residual value" represents the value of the Company's share in the collateral securing the loan.
(4)
Credit facility has an unfunded commitment in addition to the amounts shown in the Consolidated Schedule of Investments. See Note 8 in the Notes to Consolidated Financial Statements for further discussion on unfunded commitments.
(5)
The coupon on the loan is subject to a pricing grid based on certain leverage ratios of the portfolio company.
(6)
The investment is owned by HCAP Equity Holdings, LLC, the Company's taxable blocker subsidiary.
(7)
Infinite Care LLC ("ICC") is in default under the terms of its credit agreement and was on non-accrual status as of June 30, 2019. ICC was current on its interest payments to the Company through December 31, 2017; however, it failed to repay the Company’s protective loan advances at various dates in the fourth quarter of 2017 as well as throughout 2018 and 2019.  ICC was previously in breach of its minimum EBITDA, minimum fixed charge and total leverage covenants, but these breaches were waived by the Company through December 31, 2017 in connection with its entry into an agreement, dated as of January 13, 2017, with ICC relating thereto.  In October 2017, the Company exercised its rights under a stock pledge of ICC. The Company formed a wholly owned subsidiary, HCAP ICC, LLC, to exercise its proxy right under the pledge agreement and take control of ICC’s board of directors. In January 2018, the Company took control of ICC's equity after accelerating the debt and auctioning ICC’s equity in a public sale.  The Company bid a portion of its outstanding debt to gain control of ICC in connection with the public sale process. Upon the completion of the sale process in January 2018, the Company converted $2.0 million of its debt investment in ICC into shares of ICC’s membership interests. ICC failed to pay its scheduled amortization payment to the Company as of June 30, 2019.
Refer to Note 12 in the accompanying notes to the unaudited consolidated financial statements for summarized financial information for ICC for both the three and six months ended June 30, 2019 and June 30, 2018.


11


(8)
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets The Company's non-qualifying assets, on a fair value basis, total approximately 1.3% of the Company's total assets.
(9)
This is an equity investment that receives a cash flow stream based on lease payments received by Flight Lease VII, LLC. Flight Lease VII, LLC owns an aircraft that was leased to one lessee. The lessee had been in arrears on its lease payments and in June of 2018, Flight Lease VII, LLC terminated the lease. As a result of the cessation of cash flows, future payments on this equity investment will resume only if Flight Lease VII, LLC is successful in obtaining a new lessee or sells the aircraft. For the six months ended June 30, 2019, the Company recognized an impairment charge of $10,890, which is presented in the net realized gains (losses) - control investments balance on the Consolidated Statement of Operations.
(10)
This portfolio company is in covenant default as of June 30, 2019 and the Company enforced its rights to charge the portfolio company the default interest rate. The portfolio company made all contractual interest and principal payments during the six months ended June 30, 2019.
(11)
This portfolio company failed to make its contractual deferred interest payment on July 23, 2018 and partially paid its December 31, 2018 contractual current interest payment. As such, this loan is on non-accrual status as of June 30, 2019. In addition, management determined as of June 30, 2019, that the contractual interest payments, including the deferred interest, was no longer collectible and, as a result, reversed the interest payment that had previously been viewed as collectible under the circumstances and accrued.
(12)
On May 22, 2019, Northeast Metal Works, LLC entered into a new financing agreement with a senior lender. In conjunction with this, Northeast Metal Works, LLC and the Company entered into a subordination and inter-creditor agreement where the Company thereby agreed to subordinate its indebtedness to the senior lender throughout the earlier of the due date of the new financing agreement, which expires on May 31, 2020, or the date in which Northeast Metal Works, LLC has fully satisfied the indebtedness to the new senior lender. In addition, the new senior lender obtained a first priority interest in certain assets of the entity. As a result, the Company has reclassified its term loan investment in Northeast Metal Works, LLC from senior secured to junior secured. In connection with the new financing agreement, Northeast Metal Works, LLC paid down the existing $1.5 million revolving line of credit by approximately $1.1 million. The remaining $0.4 million commitment under the revolving line of credit was transferred to the junior secured term loan as an increase in the outstanding principal amount. Finally, as part of the refinancing transaction, the Company sold 125 units of its preferred equity interest in Northeast Metal Works, LLC to a third party and recognized a realized gain of $20,750.

(13)
The Company's Credit Facility is secured by all of the Company's assets. Refer to Note 3 in the accompanying notes to the unaudited consolidated financial statements for more information.
(14)
All of the Company's portfolio investments are generally subject to restrictions on sale as "restricted securities", unless otherwise noted.
(15)
Unless otherwise indicated, all portfolio company investments are Level 3 assets whose values were determined using significant unobservable inputs.

As of June 30, 2019, investments consisted of the following:

Type
Amortized Cost

Fair Value

% of Fair Value

% of Net Assets
Senior Secured Debt
$
65,955,947


$
66,063,224


59.7
%

90.7
%
Junior Secured Debt
36,594,943


34,523,502


31.2
%

47.4
%
Equity
13,600,672


10,077,519


9.1
%

13.8
%
Total
$
116,151,562


$
110,664,245


100.0
%

151.9
%

The rate type of debt investments at fair value as of June 30, 2019 was as follows:

Rate Type
Amortized Cost
 
Fair Value
 
% of Fair Value
 
% of Net Assets
Fixed Rate
$
39,728,740

 
$
38,294,854

 
38.1
%
 
52.6
%
Floating Rate
62,822,150

 
62,291,872

 
61.9
%
 
85.4
%
Total
$
102,550,890

 
$
100,586,726

 
100.0
%
 
138.0
%













12


The industry composition of investments at fair value as of June 30, 2019 was as follows:

Industry
Amortized Cost

Fair Value

% of Fair Value

% of Net Assets
Aerospace & Defense
$
3,800,729


$
3,976,527


3.6
%

5.5
%
Automotive


918,000


0.8
%

1.3
%
Banking, Finance, Insurance & Real Estate
200,000




%

%
Beverage, Food & Tobacco
8,112,015


8,007,807


7.2
%

11.0
%
Capital Equipment
11,380,660


11,290,500


10.2
%

15.5
%
Chemicals, Plastics and Rubber
2,584,209


2,538,000


2.3
%

3.5
%
Construction & Building
16,928,051


18,616,937


16.8
%

25.5
%
Consumer Goods - Non-Durable
3,939,992


3,871,002


3.5
%

5.3
%
Consumer Goods - Durable
2,457,178


2,462,000


2.2
%

3.4
%
Environmental Industries
664,392


1,859,822


1.7
%

2.6
%
Healthcare & Pharmaceuticals
13,045,702


7,116,500


6.4
%

9.8
%
High Tech Industries
2,962,162


2,536,500


2.3
%

3.5
%
Media: Advertising, Printing & Publishing
4,924,409


4,987,609


4.5
%

6.8
%
Media: Diversified & Production
4,536,456


4,536,456


4.1
%

6.2
%
Metals & Mining
12,706,507


10,057,000


9.1
%

13.8
%
Retailer
3,098,300


2,842,000