Report of
Independent Certified Public Accountants |
1 | |||
Combined Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2008 and 2007 |
2 | |||
Combined Statements of Operations for the Nine Months Ended September 30, 2009 and 2008 (unaudited)
and for the Years Ended December 31, 2008 and 2007 |
3 | |||
Combined Statements of Changes in Members Equity and Partners Capital for the Nine Months Ended
September 30, 2009 (unaudited) and for the Years Ended December 31, 2008 and 2007 |
4 | |||
Combined Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008 (unaudited)
and for the Years Ended December 31, 2008 and 2007 |
5 | |||
Combined Schedules of Investments as of September 30, 2009 (unaudited) and December 31, 2008 and 2007 |
6 | |||
Notes to Combined Financial Statements |
16 |
1
September 30, | December 31, | |||||||||||
2009 | 2008 | 2007 | ||||||||||
(Unaudited) | ||||||||||||
ASSETS |
||||||||||||
Investments at fair value: |
||||||||||||
Control investments (cost: $38,182,778, $40,761,836, and $38,061,598
as of September 30, 2009, December 31, 2008 and
2007, respectively) |
$ | 31,588,348 | $ | 41,002,450 | $ | 39,192,926 | ||||||
Affiliate investments (cost: $39,395,499, $30,782,718, and $24,910,609
as of September 30, 2009, December 31, 2008 and
2007, respectively) |
31,840,792 | 22,957,869 | 19,955,498 | |||||||||
Non-Control/Non-Affiliate investments (cost: $4,421,893, $2,044,879, and
$5,846,444 as of September 30, 2009, December 31, 2008 and
2007, respectively) |
4,688,598 | 2,491,269 | 6,414,873 | |||||||||
Total investments (cost: $82,000,170, $73,589,433, and $68,818,651
as of September 30, 2009, December 31, 2008 and
2007, respectively) |
68,117,738 | 66,451,588 | 65,563,297 | |||||||||
Marketable securities and idle funds investments (cost: $8,143,707
as of September 30, 2009) |
8,271,411 | | | |||||||||
Cash and cash equivalents |
5,420,353 | 2,211,813 | 617,277 | |||||||||
Other assets |
695,312 | 810,867 | 674,371 | |||||||||
Deferred financing costs (net of accumulated amortization of $418,102,
$249,893, and $84,715 as of September 30, 2009,
December 31, 2008 and 2007, respectively) |
2,076,898 | 1,760,107 | 1,377,935 | |||||||||
Total assets |
$ | 84,581,712 | $ | 71,234,375 | $ | 68,232,880 | ||||||
LIABILITIES, MEMBERS EQUITY AND PARTNERS CAPITAL |
||||||||||||
SBIC debentures |
$ | 70,000,000 | $ | 50,000,000 | $ | 39,800,000 | ||||||
Bank line of credit |
| | 3,000,000 | |||||||||
Interest payable |
285,037 | 1,074,330 | 735,225 | |||||||||
Accounts payable and other liabilities |
168,722 | 201,237 | 72,083 | |||||||||
Total liabilities |
70,453,759 | 51,275,567 | 43,607,308 | |||||||||
Commitments and contingencies |
||||||||||||
Members equity (General Partner) |
(496,341 | ) | (496,341 | ) | (368,290 | ) | ||||||
Limited Partners capital |
14,624,294 | 20,455,149 | 24,993,862 | |||||||||
Total members equity and partners capital |
14,127,953 | 19,958,808 | 24,625,572 | |||||||||
Total liabilities, members equity and partners capital |
$ | 84,581,712 | $ | 71,234,375 | $ | 68,232,880 | ||||||
2
Nine Months Ended | ||||||||||||||||
September 30, | Years Ended December 31, | |||||||||||||||
2009 | 2008 | 2008 | 2007 | |||||||||||||
(Unaudited) | ||||||||||||||||
INVESTMENT INCOME: |
||||||||||||||||
Interest, fee and dividend income |
$ | 6,487,873 | $ | 6,598,918 | $ | 8,962,776 | $ | 6,490,402 | ||||||||
Interest from marketable securities, idle funds and other |
200,186 | 105,354 | 139,801 | 177,186 | ||||||||||||
Total investment income |
6,688,059 | 6,704,272 | 9,102,577 | 6,667,588 | ||||||||||||
EXPENSES: |
||||||||||||||||
Management fees to affiliate |
(2,493,900 | ) | (2,493,900 | ) | (3,325,200 | ) | (2,556,300 | ) | ||||||||
Interest |
(2,924,791 | ) | (2,461,549 | ) | (3,319,480 | ) | (1,483,282 | ) | ||||||||
General and administrative |
(118,219 | ) | (134,627 | ) | (178,198 | ) | (152,977 | ) | ||||||||
Total expenses |
(5,536,910 | ) | (5,090,076 | ) | (6,822,878 | ) | (4,192,559 | ) | ||||||||
NET INVESTMENT INCOME (LOSS) |
1,151,149 | 1,614,196 | 2,279,699 | 2,475,029 | ||||||||||||
NET REALIZED GAIN (LOSS) FROM
INVESTMENTS: |
474,880 | 787,750 | (1,973,970 | ) | 953,334 | |||||||||||
NET REALIZED INCOME (LOSS) |
1,626,029 | 2,401,946 | 305,729 | 3,428,363 | ||||||||||||
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION)
FROM INVESTMENTS: |
(6,616,884 | ) | (3,347,699 | ) | (3,882,491 | ) | (4,005,154 | ) | ||||||||
NET INCREASE (DECREASE) IN MEMBERS EQUITY
AND PARTNERS CAPITAL
RESULTING FROM OPERATIONS |
$ | (4,990,855 | ) | $ | (945,753 | ) | $ | (3,576,762 | ) | $ | (576,791 | ) | ||||
3
Members Equity | Limited Partners | |||||||||||
(General Partner) | Capital | Total | ||||||||||
Balances at December 31, 2006 |
$ | 242,103 | $ | 22,007,347 | $ | 22,249,450 | ||||||
Capital contributions |
| 6,142,668 | 6,142,668 | |||||||||
Distributions |
(492,792 | ) | (2,696,963 | ) | (3,189,755 | ) | ||||||
Net decrease resulting from operations: |
||||||||||||
Net investment income |
503,788 | 1,971,241 | 2,475,029 | |||||||||
Net realized gain from investments |
194,111 | 759,223 | 953,334 | |||||||||
Net change in unrealized depreciation from investments |
(815,500 | ) | (3,189,654 | ) | (4,005,154 | ) | ||||||
Balances at December 31, 2007 |
(368,290 | ) | 24,993,862 | 24,625,572 | ||||||||
Distributions |
(3,066 | ) | (1,086,936 | ) | (1,090,002 | ) | ||||||
Net decrease resulting from operations: |
||||||||||||
Net investment income |
462,192 | 1,817,507 | 2,279,699 | |||||||||
Net realized loss from investments |
(400,488 | ) | (1,573,482 | ) | (1,973,970 | ) | ||||||
Net change in unrealized depreciation from investments |
(186,689 | ) | (3,695,802 | ) | (3,882,491 | ) | ||||||
Balances at December 31, 2008 |
(496,341 | ) | 20,455,149 | 19,958,808 | ||||||||
Distributions (unaudited) |
(3,894 | ) | (836,106 | ) | (840,000 | ) | ||||||
Net decrease resulting from operations: |
||||||||||||
Net investment income (unaudited) |
233,360 | 917,789 | 1,151,149 | |||||||||
Net realized loss from investments (unaudited) |
96,346 | 378,534 | 474,880 | |||||||||
Net change in unrealized depreciation from investments (unaudited) |
(325,812 | ) | (6,291,072 | ) | (6,616,884 | ) | ||||||
Balances at September 30, 2009 (Unaudited) |
$ | (496,341 | ) | $ | 14,624,294 | $ | 14,127,953 | |||||
4
Nine Months Ended | ||||||||||||||||
September 30, | Years Ended December 31, | |||||||||||||||
2009 | 2008 | 2008 | 2007 | |||||||||||||
(Unaudited) | ||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||||||
Net decrease in net assets resulting from operations: |
$ | (4,990,855 | ) | $ | (945,753 | ) | $ | (3,576,762 | ) | $ | (576,791 | ) | ||||
Adjustments to reconcile net decrease in net assets resulting
from operations to net cash provided by (used in) operating
activities: |
||||||||||||||||
Net change in unrealized depreciation from investments |
6,616,884 | 3,347,699 | 3,882,491 | 4,005,154 | ||||||||||||
Net realized (gain) loss from investments |
(474,880 | ) | (787,750 | ) | 1,973,970 | (953,334 | ) | |||||||||
Accretion of unearned income |
(434,251 | ) | (884,212 | ) | (996,918 | ) | (388,406 | ) | ||||||||
Net payment-in-kind interest accrual |
(343,972 | ) | (335,176 | ) | (310,345 | ) | (353,154 | ) | ||||||||
Amortization of deferred financing costs |
168,209 | 122,428 | 165,178 | 44,455 | ||||||||||||
Deferred debt origination fees received and other |
(143,976 | ) | 131,049 | 282,909 | 885,346 | |||||||||||
Changes in other assets and liabilities: |
||||||||||||||||
Other assets |
75,555 | 165,749 | (96,497 | ) | (445,081 | ) | ||||||||||
Interest payable |
(789,293 | ) | (469,762 | ) | 339,105 | 646,466 | ||||||||||
Accounts payable and other liabilities |
(32,515 | ) | 29,016 | 129,154 | (28,203 | ) | ||||||||||
Net cash provided by (used in) operating activities |
(349,094 | ) | 373,288 | 1,792,285 | 2,836,452 | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||||||||||
Investments in portfolio companies |
(10,134,167 | ) | (11,138,061 | ) | (20,338,062 | ) | (48,143,082 | ) | ||||||||
Investments in marketable securities and idle funds investments |
(16,646,000 | ) | | | | |||||||||||
Proceeds from marketable securities and idle funds investments |
8,500,000 | | | | ||||||||||||
Principal payments received on loans and debt securities |
3,162,801 | 13,610,251 | 13,993,665 | 2,474,446 | ||||||||||||
Proceeds from sale of equity securities and related notes |
| 287,000 | 584,000 | 1,195,000 | ||||||||||||
Net cash provided by (used in) investing activities |
(15,117,366 | ) | 2,759,190 | (5,760,397 | ) | (44,473,636 | ) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||||||||
Proceeds from partners capital contributions |
| | | 6,140,611 | ||||||||||||
Distributions to members and partners |
(840,000 | ) | (849,999 | ) | (1,090,002 | ) | (3,187,698 | ) | ||||||||
Proceeds from issuance of SBIC debentures |
20,000,000 | 10,200,000 | 10,200,000 | 33,200,000 | ||||||||||||
Proceeds from bank line of credit |
| | | 3,000,000 | ||||||||||||
Payment of bank line of credit |
| (3,000,000 | ) | (3,000,000 | ) | | ||||||||||
Payment of deferred loan costs and SBIC debenture fees |
(485,000 | ) | (547,350 | ) | (547,350 | ) | (1,105,100 | ) | ||||||||
Net cash provided by financing activities |
18,675,000 | 5,802,651 | 5,562,648 | 38,047,813 | ||||||||||||
Net increase (decrease) in cash and cash equivalents |
3,208,540 | 8,935,129 | 1,594,536 | (3,589,371 | ) | |||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
2,211,813 | 617,277 | 617,277 | 4,206,648 | ||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 5,420,353 | $ | 9,552,406 | $ | 2,211,813 | $ | 617,277 | ||||||||
5
Portfolio Company/Type of Investment (1) | Industry | Principal (5) | Cost (5) | Fair Value | ||||||||||
Control Investments (2) |
||||||||||||||
Ceres Management, LLC (Lambs) |
Aftermarket Automotive | |||||||||||||
14% Secured Debt (Maturity May 31, 2013) |
Services Chain |
$ | 1,600,000 | $ | 1,574,413 | $ | 1,574,413 | |||||||
Class B Member Units (Non-voting) |
105,001 | 105,001 | ||||||||||||
Member Units (Fully diluted 28.0%) |
800,000 | 740,000 | ||||||||||||
2,479,414 | 2,419,414 | |||||||||||||
Gulf Manufacturing, LLC |
Industrial Metal | |||||||||||||
Prime plus 1% Secured Debt (Maturity August 31, 2012) |
Fabrication |
1,800,000 | 1,788,798 | 1,800,000 | ||||||||||
13% Secured Debt (Maturity August 31, 2012) |
1,800,000 | 1,679,261 | 1,770,000 | |||||||||||
Member Units (6) (Fully diluted 27.6%) |
708,000 | 3,540,000 | ||||||||||||
Warrants (Fully diluted 12.6%) |
240,000 | 1,620,000 | ||||||||||||
4,416,059 | 8,730,000 | |||||||||||||
Jensen Jewelers of Idaho, LLC |
Retail Jewelry | |||||||||||||
Prime Plus 2% Secured Debt (Maturity November 14, 2011) |
1,566,000 | 1,557,004 | 1,566,000 | |||||||||||
13% current / 6% PIK Secured Debt (Maturity November 14, 2011) |
1,576,852 | 1,547,968 | 1,576,852 | |||||||||||
Member Units (6) (Fully diluted 36.5%) |
564,000 | 435,000 | ||||||||||||
3,668,972 | 3,577,852 | |||||||||||||
Mid-Columbia Lumber Products, LLC |
||||||||||||||
Prime Plus 1% Secured Debt (Maturity June 30, 2010) |
Specialized Lumber Products | 375,000 | 372,500 | 372,500 | ||||||||||
12% Secured Debt (Maturity December 18, 2011) |
3,900,000 | 3,690,378 | 3,690,378 | |||||||||||
Member Units (Fully diluted 26.7%) |
500,000 | 300,000 | ||||||||||||
Warrants (Fully diluted 25.5%) |
250,000 | 290,000 | ||||||||||||
4,812,878 | 4,652,878 | |||||||||||||
The MPI Group, LLC |
Manufacturer of Custom | |||||||||||||
9% Secured Debt (Maturity October 2, 2013) |
Hollow Metal Doors, |
200,000 | 198,459 | 198,459 | ||||||||||
12% Secured Debt (Maturity October 2, 2013) |
Frames and Accessories |
5,000,000 | 4,775,870 | 4,775,870 | ||||||||||
Warrants (Fully diluted 47.1%) |
895,943 | 623,000 | ||||||||||||
5,870,272 | 5,597,329 | |||||||||||||
Universal Scaffolding & Equipment, LLC |
Manufacturer of Scaffolding | |||||||||||||
Prime plus 1% Secured Debt (Maturity August 17, 2012) (7) |
and Shoring Equipment |
1,748,250 | 1,736,715 | 1,736,715 | ||||||||||
13% current / 5% PIK Secured Debt (Maturity August 17, 2012) |
7,014,135 | 6,923,783 | 44,160 | |||||||||||
Member Units (Fully diluted 38.2%) |
2,060,438 | | ||||||||||||
10,720,936 | 1,780,875 | |||||||||||||
Vision Interests, Inc. |
Manufacturer/ | |||||||||||||
13% Secured Debt (Maturity June 5, 2012) |
Installer of Commercial |
5,640,000 | 5,416,247 | 4,830,000 | ||||||||||
Common Stock (Fully diluted 13.4%) |
Signage |
558,000 | | |||||||||||
Warrants (Fully diluted 16.8%) |
240,000 | | ||||||||||||
6,214,247 | 4,830,000 | |||||||||||||
Subtotal Control Investments |
38,182,778 | 31,588,348 | ||||||||||||
6
Portfolio Company/Type of Investment (1) | Industry | Principal (5) | Cost (5) | Fair Value | ||||||||||
Affiliate Investments (3) |
||||||||||||||
Advantage Millwork Company, Inc. |
Manufacturer/Distributor | |||||||||||||
12% Secured Debt (Maturity February 5, 2012) |
of Wood Doors |
4,600,000 | 4,431,899 | 2,910,000 | ||||||||||
Warrants (Fully diluted 18.3%) |
146,752 | | ||||||||||||
4,578,651 | 2,910,000 | |||||||||||||
Carlton Global Resources, LLC |
Processor of | |||||||||||||
13% PIK Secured Debt (Maturity November 15, 2011) |
Industrial Minerals |
7,187,915 | 6,942,264 | | ||||||||||
Member Units (Fully diluted 12.8%) |
600,000 | | ||||||||||||
7,542,264 | | |||||||||||||
California Healthcare Medical Billing, Inc. |
Healthcare Billing and Records | |||||||||||||
12% Secured Debt (Maturity October 17, 2013) |
Management |
893,000 | 741,028 | 805,808 | ||||||||||
Common Stock (Fully diluted 3.8%) |
247,000 | 475,000 | ||||||||||||
Warrants (Fully diluted 7.6%) |
152,000 | 715,667 | ||||||||||||
1,140,028 | 1,996,475 | |||||||||||||
CBT Nuggets, LLC |
Produces and Sells | |||||||||||||
14% Secured Debt (Maturity December 31, 2013) |
IT Certification |
1,120,000 | 1,082,793 | 1,120,000 | ||||||||||
10% Secured Debt (Maturity March 31, 2012) |
Training Videos |
610,000 | 610,000 | 610,000 | ||||||||||
10% Secured Debt (Maturity March 31, 2010) |
40,000 | 40,000 | 40,000 | |||||||||||
Member Units (6) (Fully diluted 16.3%) |
199,680 | 926,667 | ||||||||||||
1,932,473 | 2,696,667 | |||||||||||||
Condit Exhibits, LLC |
Tradeshow Exhibits/ | |||||||||||||
13% current / 5% PIK Secured Debt (Maturity July 1, 2013) |
Custom Displays |
1,649,230 | 1,624,362 | 1,624,362 | ||||||||||
Warrants (Fully diluted 18.8%) |
200,000 | 20,000 | ||||||||||||
1,824,362 | 1,644,362 | |||||||||||||
Hawthorne Customs & Dispatch Services, LLC |
Transportation/ | |||||||||||||
13% Secured Debt (Maturity January 31, 2011) |
Logistics |
275,000 | 264,465 | 264,465 | ||||||||||
Member Units (6) (Fully diluted 14.8%) |
137,500 | 280,000 | ||||||||||||
401,965 | 544,465 | |||||||||||||
Indianapolis Aviation Partners, LLC |
FBO / Aviation Support Services | |||||||||||||
12% Secured Debt (Maturity September 15, 2014) |
1,880,000 | 1,692,838 | 1,692,838 | |||||||||||
Warrants (Fully diluted 12.1%) |
451,714 | 451,714 | ||||||||||||
2,144,552 | 2,144,552 | |||||||||||||
Lighting Unlimited, LLC |
Commercial and Residential | |||||||||||||
Prime Plus 1% Secured Debt (Maturity August 22, 2012) (7) |
Lighting Products and |
1,233,333 | 1,225,742 | 1,225,742 | ||||||||||
14% Secured Debt (Maturity August 22, 2012) |
Design Services |
1,600,000 | 1,545,081 | 1,545,081 | ||||||||||
Warrants (Fully diluted 15.0%) |
50,000 | 50,000 | ||||||||||||
2,820,823 | 2,820,823 |
7
Portfolio Company/Type of Investment (1) | Industry | Principal (5) | Cost (5) | Fair Value | ||||||||||
Affiliate Investments (3) |
||||||||||||||
Olympus Building Services, Inc. |
Custodial/Facilities | |||||||||||||
12% Secured Debt (Maturity March 27, 2014) |
Services |
1,260,000 | 1,143,600 | 1,220,000 | ||||||||||
Warrants (Fully diluted 9.0%) |
100,000 | 266,667 | ||||||||||||
1,243,600 | 1,486,667 | |||||||||||||
OMi Holdings, Inc. |
Manufacturer of | |||||||||||||
12% Secured Debt (Maturity April 1, 2013) |
Overhead Cranes |
4,228,000 | 4,193,827 | 4,193,827 | ||||||||||
Common Stock (Fully diluted 19.2%) |
600,000 | 260,000 | ||||||||||||
4,793,827 | 4,453,827 | |||||||||||||
Schneider Sales Management, LLC |
Sales Consulting | |||||||||||||
13% Secured Debt (Maturity October 15, 2013) |
and Training |
1,320,000 | 1,271,131 | 1,271,131 | ||||||||||
Warrants (Fully diluted 8.0%) |
30,000 | | ||||||||||||
1,301,131 | 1,271,131 | |||||||||||||
Thermal & Mechanical Equipment, LLC |
Heat Exchange / Filtration | |||||||||||||
13% current / 5% PIK Secured Debt (Maturity September 25, 2014) |
Products and Services |
2,201,833 | 2,158,268 | 2,158,268 | ||||||||||
Prime plus 2% Secured Debt (Maturity September 25, 2014) (7) |
700,000 | 693,090 | 693,090 | |||||||||||
Warrants (Fully diluted 20.0%) |
400,000 | 400,000 | ||||||||||||
3,251,358 | 3,251,358 | |||||||||||||
Walden Smokey Point, Inc. |
Specialty Transportation/ | |||||||||||||
14% current / 4% PIK Secured Debt (Maturity December 30, 2013) |
Logistics |
3,297,422 | 3,238,590 | 3,238,590 | ||||||||||
Common Stock (Fully diluted 5.0%) |
400,000 | 600,000 | ||||||||||||
3,638,590 | 3,838,590 | |||||||||||||
Zieglers NYPD, LLC |
Casual Restaurant Group | |||||||||||||
Prime plus 2% Secured Debt (Maturity October 1, 2013) (7) |
400,000 | 396,660 | 396,660 | |||||||||||
13% current / 5% PIK Secured Debt (Maturity October 1, 2013) |
1,872,362 | 1,841,519 | 1,841,519 | |||||||||||
Warrants (Fully diluted 19.0%) |
240,000 | 240,000 | ||||||||||||
2,478,179 | 2,478,179 | |||||||||||||
Other |
303,696 | 303,696 | ||||||||||||
Subtotal Affiliate Investments |
39,395,499 | 31,840,792 | ||||||||||||
8
Portfolio Company/Type of Investment (1) | Industry | Principal (5) | Cost (5) | Fair Value | ||||||||||
Non-Control/Non-Affiliate Investments(4): |
||||||||||||||
Audio Messaging Solutions, LLC |
Audio Messaging | |||||||||||||
12% Secured Debt (Maturity May 8, 2014) |
Services |
2,273,600 | 2,096,995 | 2,096,995 | ||||||||||
Warrants (Fully diluted 3.4%) |
143,360 | 253,334 | ||||||||||||
2,240,355 | 2,350,329 | |||||||||||||
Compact Power Equipment Centers, LLC |
Light to Medium Duty | |||||||||||||
12% Secured Debt (Maturity September 23, 2014) |
Equipment Rental |
211,765 | 211,765 | 211,765 | ||||||||||
Member Units (Fully diluted 4.6%) |
458 | 458 | ||||||||||||
212,223 | 212,223 | |||||||||||||
East Teak Fine Hardwoods, Inc. |
Hardwood Products | |||||||||||||
Common Stock (Fully diluted 1.8%) |
70,000 | 199,231 | ||||||||||||
KBK Industries, LLC |
Specialty Manufacturer | |||||||||||||
14% Secured Debt (Maturity January 23, 2011) |
of Oilfield and |
1,312,500 | 1,274,176 | 1,274,176 | ||||||||||
8% Secured Debt (Maturity March 1, 2010) |
Industrial Products |
62,500 | 62,500 | 62,500 | ||||||||||
8% Secured Debt (Maturity March 31, 2010) |
150,000 | 150,000 | 150,000 | |||||||||||
Member Units (6) (Fully diluted 4.8%) |
62,500 | 90,000 | ||||||||||||
1,549,176 | 1,576,676 | |||||||||||||
Support Systems Homes, Inc. |
Manages Substance | |||||||||||||
15% Secured Debt (Maturity August 21, 2018) |
Abuse Treatment Centers |
350,139 | 350,139 | 350,139 | ||||||||||
Subtotal Non-Control/Non-Affiliate Investments |
4,421,893 | 4,688,598 | ||||||||||||
Total Portfolio Investments, September 30, 2009 |
$ | 82,000,170 | $ | 68,117,738 | ||||||||||
Marketable Securities and Idle Funds Investments |
Investments in Secured | |||||||||||||
Apria Healthcare Group Inc. Senior Secured Notes |
Debt Investments and |
$ | 4,800,000 | $ | 4,893,707 | $ | 5,021,411 | |||||||
11.25% (Maturity November 1, 2014) |
Certificates of Deposit |
|||||||||||||
1.65% Certificate of Deposit (Maturity December 11, 2009) |
1,000,000 | 1,000,000 | 1,000,000 | |||||||||||
1.15% Certificate of Deposit (Maturity December 7, 2009) |
2,250,000 | 2,250,000 | 2,250,000 | |||||||||||
$ | 8,143,707 | $ | 8,271,411 | |||||||||||
(1) | Debt investments are generally income producing. Equity and warrants are non-income producing, unless otherwise noted. | |
(2) | Controlled investments are defined by the Investment Company Act of 1940, as amended (1940 Act) as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. | |
(3) | Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned. | |
(4) | Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control Investments nor Affiliate Investments. | |
(5) | Principal is net of prepayments. Cost is net of prepayments and accumulated unearned income. | |
(6) | Income producing through payment of dividends or distributions. | |
(7) | Subject to contractual minimum interest rates. |
9
Portfolio Company/Type of Investment (1) | Industry | Principal (5) | Cost (5) | Fair Value | ||||||||||
Control Investments (2) |
||||||||||||||
CBT Nuggets, LLC |
Produces and Sells | |||||||||||||
14% Secured Debt (Maturity June 1, 2011) |
IT Certification |
$ | 1,120,000 | $ | 1,068,861 | $ | 1,120,000 | |||||||
10% Secured Debt (Maturity December 31, 2009) |
Training Videos |
100,000 | 100,000 | 100,000 | ||||||||||
Member Units (6) (Fully diluted 19.4%) |
288,000 | 1,083,333 | ||||||||||||
Warrants (Fully diluted 7.0%) |
48,000 | 333,333 | ||||||||||||
1,504,861 | 2,636,666 | |||||||||||||
Ceres Management, LLC (Lambs) |
Aftermarket Automotive | |||||||||||||
14% Secured Debt (Maturity May 31, 2013) |
Services Chain |
1,600,000 | 1,570,654 | 1,570,654 | ||||||||||
Member Units (Fully diluted 28.0%) |
800,000 | 866,667 | ||||||||||||
2,370,654 | 2,437,321 | |||||||||||||
Gulf Manufacturing, LLC |
Industrial Metal | |||||||||||||
Prime plus 1% Secured Debt (Maturity August 31, 2012) |
Fabrication |
1,800,000 | 1,786,146 | 1,800,000 | ||||||||||
13% Secured Debt (Maturity August 31, 2012) |
2,850,000 | 2,621,665 | 2,820,000 | |||||||||||
Member Units (6) (Fully diluted 27.6%) |
708,000 | 1,650,000 | ||||||||||||
Warrants (Fully diluted 12.6%) |
240,000 | 825,000 | ||||||||||||
5,355,811 | 7,095,000 | |||||||||||||
Jensen Jewelers of Idaho, LLC |
Retail Jewelry | |||||||||||||
Prime Plus 2% Secured Debt (Maturity November 14, 2011) |
1,566,000 | 1,551,604 | 1,566,000 | |||||||||||
13% current / 6% PIK Secured Debt (Maturity November 14, 2011) |
1,506,886 | 1,470,595 | 1,506,886 | |||||||||||
Member Units (6) (Fully diluted 36.5%) |
564,000 | 570,000 | ||||||||||||
3,586,199 | 3,642,886 | |||||||||||||
Mid-Columbia Lumber Products, LLC |
||||||||||||||
Prime Plus 1% Secured Debt (Maturity June 30, 2010) |
Specialized Lumber Products | 1,000,000 | 995,000 | 995,000 | ||||||||||
12% Secured Debt (Maturity December 18, 2011) |
3,900,000 | 3,630,919 | 3,280,000 | |||||||||||
Member Units (Fully diluted 26.7%) |
500,000 | | ||||||||||||
Warrants (Fully diluted 25.5%) |
250,000 | | ||||||||||||
5,375,919 | 4,275,000 | |||||||||||||
The MPI Group, LLC |
Manufacturer of Custom | |||||||||||||
9% Secured Debt (Maturity October 2, 2013) |
Hollow Metal Doors, |
200,000 | 198,233 | 198,233 | ||||||||||
12% Secured Debt (Maturity October 2, 2013) |
Frames and Accessories |
5,000,000 | 4,745,134 | 4,745,134 | ||||||||||
Warrants (Fully diluted 45.0%) |
700,000 | 963,000 | ||||||||||||
5,643,367 | 5,906,367 | |||||||||||||
Universal Scaffolding & Equipment, LLC |
Manufacturer of Scaffolding | |||||||||||||
Prime plus 1% Secured Debt (Maturity August 17, 2012) (7) |
and Shoring Equipment |
1,831,500 | 1,817,457 | 1,817,457 | ||||||||||
13% current / 5% PIK Secured Debt (Maturity August 17, 2012) |
6,984,065 | 6,880,454 | 6,563,078 | |||||||||||
Member Units (Fully diluted 38.2%) |
2,060,439 | | ||||||||||||
10,758,350 | 8,380,535 | |||||||||||||
Vision Interests, Inc. |
Manufacturer/ | |||||||||||||
13% Secured Debt (Maturity June 5, 2012) |
Installer of Commercial |
5,640,000 | 5,368,675 | 5,368,675 | ||||||||||
Common Stock (Fully diluted 13.4%) |
Signage |
558,000 | 630,000 | |||||||||||
Warrants (Fully diluted 16.8%) |
240,000 | 630,000 | ||||||||||||
6,166,675 | 6,628,675 | |||||||||||||
Subtotal Control Investments |
40,761,836 | 41,002,450 | ||||||||||||
10
Portfolio Company/Type of Investment (1) | Industry | Principal (5) | Cost (5) | Fair Value | ||||||||||
Affiliate Investments (3) |
||||||||||||||
Advantage Millwork Company, Inc. |
Manufacturer/Distributor | |||||||||||||
12% Secured Debt (Maturity February 5, 2012) |
of Wood Doors | 4,600,000 | 4,400,427 | 4,400,427 | ||||||||||
Warrants (Fully diluted 18.3%) |
146,752 | | ||||||||||||
4,547,179 | 4,400,427 | |||||||||||||
Carlton Global Resources, LLC |
Processor of | |||||||||||||
13% PIK Secured Debt (Maturity November 15, 2011) |
Industrial Minerals | 7,187,915 | 6,942,264 | | ||||||||||
Member Units (Fully diluted 12.8%) |
600,000 | | ||||||||||||
7,542,264 | | |||||||||||||
California Healthcare Medical Billing, Inc. |
Healthcare | |||||||||||||
12% Secured Debt (Maturity October 17, 2013) |
Services | 893,000 | 722,887 | 722,887 | ||||||||||
Common Stock (Fully diluted 3.8%) |
247,000 | 247,000 | ||||||||||||
Warrants (Fully diluted 7.6%) |
152,000 | 152,000 | ||||||||||||
1,121,887 | 1,121,887 | |||||||||||||
Condit Exhibits, LLC |
Tradeshow Exhibits/ | |||||||||||||
13% current / 5% PIK Secured Debt (Maturity July 1, 2013) |
Custom Displays | 1,538,716 | 1,510,627 | 1,510,627 | ||||||||||
Warrants (Fully diluted 18.8%) |
200,000 | 200,000 | ||||||||||||
1,710,627 | 1,710,627 | |||||||||||||
Hawthorne Customs & Dispatch Services, LLC |
Transportation/ | |||||||||||||
13% Secured Debt (Maturity January 31, 2011) |
Logistics | 400,000 | 383,175 | 383,175 | ||||||||||
Member Units (6) (Fully diluted 9.3%) |
125,000 | 145,000 | ||||||||||||
Warrants (Fully diluted 5.5%) |
12,500 | 76,667 | ||||||||||||
520,675 | 604,842 | |||||||||||||
Lighting Unlimited, LLC |
Commercial and Residential | |||||||||||||
Prime Plus 1% Secured Debt (Maturity August 22, 2012) (7) |
Lighting Products and | 1,533,333 | 1,521,905 | 1,521,905 | ||||||||||
14% Secured Debt (Maturity August 22, 2012) |
Design Services | 1,600,000 | 1,534,366 | 1,534,366 | ||||||||||
Warrants (Fully diluted 15.0%) |
50,000 | 50,000 | ||||||||||||
3,106,271 | 3,106,271 | |||||||||||||
OMi Holdings, Inc. |
Manufacturer of | |||||||||||||
12% Secured Debt (Maturity April 1, 2013) |
Overhead Cranes | 4,440,000 | 4,398,049 | 4,398,049 | ||||||||||
Common Stock (Fully diluted 19.2%) |
600,000 | 380,000 | ||||||||||||
4,998,049 | 4,778,049 | |||||||||||||
Schneider Sales Management, LLC |
Sales Consulting | |||||||||||||
13% Secured Debt (Maturity October 15, 2013) |
and Training | 1,320,000 | 1,264,901 | 1,264,901 | ||||||||||
Warrants (Fully diluted 8.0%) |
30,000 | 30,000 | ||||||||||||
1,294,901 | 1,294,901 | |||||||||||||
Walden Smokey Point, Inc. |
Specialty Transportation/ | |||||||||||||
14% current / 4% PIK Secured Debt (Maturity December 30,
2013) |
Logistics | 3,200,355 | 3,136,356 | 3,136,356 | ||||||||||
Common Stock (Fully diluted 5.0%) |
400,000 | 400,000 | ||||||||||||
3,536,356 | 3,536,356 | |||||||||||||
Zieglers NYPD, LLC |
Casual Restaurant | |||||||||||||
Prime plus 2% Secured Debt (Maturity October 1, 2013) (7) |
Group | 600,000 | 396,159 | 396,159 | ||||||||||
13% current / 5% PIK Secured Debt (Maturity October 1, 2013) |
2,704,262 | 1,768,350 | 1,768,350 | |||||||||||
Warrants (Fully diluted 19.0%) |
240,000 | 240,000 | ||||||||||||
2,404,509 | 2,404,509 | |||||||||||||
Subtotal Affiliate Investments |
30,782,718 | 22,957,869 | ||||||||||||
11
Portfolio Company/Type of Investment (1) | Industry | Principal (5) | Cost (5) | Fair Value | ||||||||||
Non-Control/Non-Affiliate Investments(4): |
||||||||||||||
East Teak Fine Hardwoods, Inc. |
Hardwood Products | |||||||||||||
Common Stock (Fully diluted 1.8%) |
70,000 | 263,846 | ||||||||||||
KBK Industries, LLC |
Specialty Manufacturer | |||||||||||||
14% Secured Debt (Maturity January 23, 2011) |
of Oilfield and | 1,312,500 | 1,255,789 | 1,312,500 | ||||||||||
8% Secured Debt (Maturity March 1, 2010) |
Industrial Products | 156,250 | 156,250 | 156,250 | ||||||||||
8% Secured Debt (Maturity March 31, 2009) |
150,000 | 150,000 | 150,000 | |||||||||||
Member Units (6) (Fully diluted 4.8%) |
62,500 | 258,333 | ||||||||||||
1,624,539 | 1,877,083 | |||||||||||||
Support Systems Homes, Inc. |
Manages Substance | |||||||||||||
15% Secured Debt (Maturity August 21, 2018) |
Abuse Treatment Centers | 350,340 | 350,340 | 350,340 | ||||||||||
Subtotal Non-Control/Non-Affiliate Investments |
2,044,879 | 2,491,269 | ||||||||||||
Total Portfolio Investments, December 31, 2008 |
$ | 73,589,433 | $ | 66,451,588 | ||||||||||
(1) | Debt investments are generally income producing. Equity and warrants are non-income producing, unless otherwise noted. | |
(2) | Controlled investments are defined by the Investment Company Act of 1940, as amended (1940 Act), as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. | |
(3) | Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned. | |
(4) | Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control Investments nor Affiliate Investments. | |
(5) | Principal is net of prepayments. Cost is net of prepayments and accumulated unearned income. | |
(6) | Income producing through payment of dividends or distributions. | |
(7) | Subject to contractual minimum interest rates. |
12
Investment (1) | Industry | Principal (5) | Cost (5) | Fair Value | ||||||||||
Control Investments (2) |
||||||||||||||
CBT Nuggets, LLC |
Produces and Sells | |||||||||||||
Prime plus 2% Secured Debt (Maturity June 1, 2011) |
IT Certification | $ | 240,000 | $ | 222,995 | $ | 222,995 | |||||||
14% Secured Debt (Maturity June 1, 2011) |
Training Videos | 1,240,000 | 1,165,343 | 1,165,343 | ||||||||||
Member Units (Fully diluted 19.4%) |
288,000 | 763,333 | ||||||||||||
Warrants (Fully diluted 7.0%) |
48,000 | 230,000 | ||||||||||||
1,724,338 | 2,381,671 | |||||||||||||
Gulf Manufacturing, LLC |
Industrial Metal | |||||||||||||
Prime plus 1% Secured Debt (Maturity August 31, 2012) |
Fabrication | 1,800,000 | 1,782,954 | 1,782,954 | ||||||||||
13% Secured Debt (Maturity August 31, 2012) |
3,000,000 | 2,713,824 | 2,713,824 | |||||||||||
Member Units (Fully diluted 27.6%) |
708,000 | 708,000 | ||||||||||||
Warrants (Fully diluted 12.6%) |
240,000 | 375,000 | ||||||||||||
5,444,778 | 5,579,778 | |||||||||||||
Jensen Jewelers of Idaho, LLC |
Retail Jewelry | |||||||||||||
Prime Plus 2% Secured Debt (Maturity November 14, 2011) |
1,800,000 | 1,771,200 | 1,771,200 | |||||||||||
13% current / 6% PIK Secured Debt (Maturity November 14, 2011) |
1,604,186 | 1,552,233 | 1,552,233 | |||||||||||
Member Units (6) (Fully diluted 37.6%) |
564,000 | 1,222,500 | ||||||||||||
3,887,433 | 4,545,933 | |||||||||||||
Mid-Columbia Lumber Products, LLC |
Specialized Lumber | |||||||||||||
Prime Plus 1% Secured Debt (Maturity June 30, 2010) |
Products | 500,000 | 491,667 | 491,667 | ||||||||||
12% Secured Debt (Maturity December 18, 2011) |
3,900,000 | 3,560,413 | 3,400,000 | |||||||||||
Member Units (Fully diluted 19.44%) |
300,000 | | ||||||||||||
Warrants (Fully diluted 28.0%) |
250,000 | | ||||||||||||
4,602,080 | 3,891,667 | |||||||||||||
The MPI Group, LLC |
Manufacturer of Custom | |||||||||||||
12% Secured Debt (Maturity October 2, 2013) |
Hollow Metal Doors, | 5,000,000 | 4,708,461 | 4,708,461 | ||||||||||
Warrants (Fully diluted 25.0%) |
Frames and Accessories | 500,000 | 500,000 | |||||||||||
Warrants (Fully diluted 20.0%) |
200,000 | 200,000 | ||||||||||||
5,408,461 | 5,408,461 | |||||||||||||
Universal Scaffolding & Equipment, LLC |
Manufacturer of Scaffolding | |||||||||||||
Prime plus 1% Secured Debt (Maturity August 16, 2012) (7) |
and Shoring Equipment | 2,330,999 | 2,309,001 | 2,309,001 | ||||||||||
13% current / 5% PIK Secured Debt (Maturity August 16, 2012) |
6,638,627 | 6,514,576 | 6,514,576 | |||||||||||
Member Units (Fully Diluted 38.1%) |
2,060,438 | 2,128,846 | ||||||||||||
10,884,015 | 10,952,423 | |||||||||||||
Vision Interests, Inc. |
Manufacturer/ | |||||||||||||
13% Secured Debt (Maturity June 5, 2012) |
Installer of Commercial | 5,640,000 | 5,312,493 | 5,312,493 | ||||||||||
Common stock (Fully diluted 13.4%) |
Signage | 558,000 | 558,000 | |||||||||||
Warrants (Fully diluted 16.8%) |
240,000 | 562,500 | ||||||||||||
6,110,493 | 6,432,993 | |||||||||||||
Subtotal Control Investments |
38,061,598 | 39,192,926 | ||||||||||||
13
Investment (1) | Industry | Principal (5) | Cost (5) | Fair Value | ||||||||||
Affiliate Investments (3) |
||||||||||||||
Advantage Millwork Company, Inc. |
Manufacturer/Distributor | |||||||||||||
12% Secured Debt (Maturity February 5, 2012) |
of Wood Doors | 4,000,000 | 3,781,013 | 3,781,013 | ||||||||||
Warrants (Fully diluted 16.3%) |
130,720 | 130,720 | ||||||||||||
3,911,733 | 3,911,733 | |||||||||||||
Carlton Global Resources, LLC |
Processor of | |||||||||||||
13% PIK Secured Debt (Maturity November 15, 2011) |
Industrial Minerals | 7,031,666 | 6,792,264 | 3,903,786 | ||||||||||
Member Units (Fully diluted 12.8%) |
600,000 | | ||||||||||||
7,392,264 | 3,903,786 | |||||||||||||
Hawthorne Customs & Dispatch Services, LLC |
Transportation/ | |||||||||||||
13% Secured Debt (Maturity January 31, 2011) |
Logistics | 450,000 | 425,302 | 425,302 | ||||||||||
Member Units (6) (Fully diluted 9.3%) |
125,000 | 145,000 | ||||||||||||
Warrants (Fully diluted 5.5%) |
12,500 | 76,667 | ||||||||||||
562,802 | 646,969 | |||||||||||||
Lighting Unlimited, LLC |
Commercial and Residential | |||||||||||||
Prime Plus 1% Secured Debt (Maturity August 22, 2012) (7) |
Lighting Products and | 1,900,000 | 1,881,059 | 1,881,059 | ||||||||||
14% Secured Debt (Maturity August 22, 2012) |
Design Services | 1,600,000 | 1,521,796 | 1,521,796 | ||||||||||
Warrants (Fully diluted 15.0%) |
50,000 | 50,000 | ||||||||||||
3,452,855 | 3,452,855 | |||||||||||||
Talens Marine and Fuel, Inc. |
Fuel Supplier Servicing | |||||||||||||
13% Secured Debt (Maturity September 9, 2012) |
Primarily the Marine | 7,050,000 | 6,663,288 | 6,663,288 | ||||||||||
Warrants (Fully diluted 14.0%) |
Markets | 262,000 | 262,000 | |||||||||||
6,925,288 | 6,925,288 | |||||||||||||
Wicks N More, LLC |
Manufacturer of | |||||||||||||
12% Secured Debt (Maturity April 26, 2011) |
High-end Candles | 2,480,000 | 2,285,667 | 1,114,867 | ||||||||||
Member Units (Fully diluted 7.7%) |
240,000 | | ||||||||||||
Warrants (Fully diluted 14.2%) |
140,000 | | ||||||||||||
2,665,667 | 1,114,867 | |||||||||||||
Subtotal Affiliate Investments |
24,910,609 | 19,955,498 | ||||||||||||
14
Investment (1) | Industry | Principal (5) | Cost (5) | Fair Value | ||||||||||
Non-Control/Non-Affiliate Investments (4): |
||||||||||||||
East Teak Fine Hardwoods, Inc. |
||||||||||||||
13% Current/5.5% PIK Secured Debt (Maturity April 13, 2011) |
Hardwood Products | 889,015 | 871,647 | 871,647 | ||||||||||
Common Stock (Fully diluted 1.8%) |
70,000 | 263,846 | ||||||||||||
941,647 | 1,135,493 | |||||||||||||
KBK Industries, LLC |
Specialty Manufacturer | |||||||||||||
14% Secured Debt (Maturity January 23, 2011) |
of Oilfield and | 1,312,500 | 1,234,310 | 1,234,310 | ||||||||||
8% Secured Debt (Maturity July 1, 2009) |
Industrial Products | 207,688 | 207,688 | 207,688 | ||||||||||
Prime Plus 2% Secured Debt (Maturity January 31, 2008) |
25,000 | 228,750 | ||||||||||||
Member Units (6) (Fully diluted 4.8%) |
62,500 | 233,333 | ||||||||||||
1,529,498 | 1,904,081 | |||||||||||||
Support Systems Homes, Inc. |
Manages Substance | |||||||||||||
14% Current/4% PIK Secured Debt (Maturity June 5, 2012) |
Abuse Treatment Centers | 2,288,511 | 2,238,737 | 2,238,737 | ||||||||||
8% Secured Debt (Maturity June 5, 2012) |
238,332 | 235,521 | 235,521 | |||||||||||
2,474,258 | 2,474,258 | |||||||||||||
Turbine Air Systems, Ltd. |
Commercial and | |||||||||||||
12% Secured Debt (Maturity October 11, 2011) |
Industrial Chilling Systems | 1,000,000 | 901,041 | 901,041 | ||||||||||
Subtotal Non-Control/Non-Affiliate Investments |
5,846,444 | 6,414,873 | ||||||||||||
Total Portfolio Investments, December 31, 2007 |
$ | 68,818,651 | $ | 65,563,297 | ||||||||||
(1) | Debt investments are generally income producing. Equity and warrants are non-income producing, unless otherwise noted. | |
(2) | Controlled investments are defined by the Investment Company Act of 1940, as amended (1940 Act), as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. | |
(3) | Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned. | |
(4) | Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control Investments nor Affiliate Investments. | |
(5) | Principal is net of prepayments. Cost is net of prepayments and accumulated unearned income. | |
(6) | Income producing through payment of dividends or distributions. | |
(7) | Subject to contractual minimum interest rates. |
15
16
17
18
September 30, | December 31, | |||||||||||
2009 | 2008 | 2007 | ||||||||||
(unaudited) | ||||||||||||
SBIC Debenture Commitment
Fees |
$ | 800,000 | $ | 800,000 | $ | 500,000 | ||||||
SBIC Debenture Leverage Fees |
1,695,000 | 1,210,000 | 962,650 | |||||||||
Subtotal |
2,495,000 | 2,010,000 | 1,462,650 | |||||||||
Less Accumulated Amortization |
(418,102 | ) | (249,893 | ) | (84,715 | ) | ||||||
$ | 2,076,898 | $ | 1,760,107 | $ | 1,377,935 | |||||||
Estimated | ||||
Year Ending December 31, | Amortization | |||
2009 |
$ | 228,084 | ||
2010 |
247,000 | |||
2011 |
249,500 | |||
2012 |
249,500 | |||
2013 |
249,500 | |||
2014 and thereafter |
1,021,523 |
19
20
| Quoted prices for similar assets in active markets (for example, investments in restricted stock); |
| Quoted prices for identical or similar assets in non-active markets (for example, investments in thinly traded public companies); |
| Pricing models whose inputs are observable for substantially the full term of the investment (for example, market interest rate indices); and |
| Pricing models whose inputs are derived principally from, or corroborated by, observable market data through correlation or other means for substantially the full term of the investment. |
| Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers; |
| Current and projected financial condition of the portfolio company; |
| Current and projected ability of the portfolio company to service its debt obligations; |
| Type and amount of collateral, if any, underlying the investment; |
| Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio, and net debt/EBITDA ratio) applicable to the investment; |
| Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio); |
| Pending debt or capital restructuring of the portfolio company; |
| Projected operating results of the portfolio company; |
| Current information regarding any offers to purchase the investment; |
| Current ability of the portfolio company to raise any additional financing as needed; |
| Changes in the economic environment which may have a material impact on the operating results of the portfolio company; |
| Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company; |
| Qualitative assessment of key management; |
| Contractual rights, obligations or restrictions associated with the investment; and |
| Other factors deemed relevant. |
21
Net | Net | |||||||||||||||||||||||||||
Changes from | Unrealized | |||||||||||||||||||||||||||
Type of | December 31, 2008 | Accretion of | Redemptions/ | New | Unrealized | Appreciation | September 30, 2009 | |||||||||||||||||||||
Investment | Fair Value | Unearned Income | Repayments (1) | Investments (1) | to Realized | (Depreciation) | Fair Value | |||||||||||||||||||||
Debt |
$ | 56,457,409 | $ | 436,542 | $ | (3,362,895 | ) | $ | 9,773,237 | $ | (163,927 | ) | $ | (8,208,063 | ) | $ | 54,932,303 | |||||||||||
Equity |
6,494,179 | | | 333,336 | (68,346 | ) | 1,495,885 | 8,255,054 | ||||||||||||||||||||
Warrant |
3,500,000 | | | 1,230,517 | (349,500 | ) | 549,364 | 4,930,381 | ||||||||||||||||||||
$ | 66,451,588 | $ | 436,542 | $ | (3,362,895 | ) | $ | 11,337,090 | $ | (581,773 | ) | $ | (6,162,814 | ) | $ | 68,117,738 | ||||||||||||
(1) | Includes the impact of non-cash conversions. |
Net | Net | |||||||||||||||||||||||||||
Changes from | Unrealized | |||||||||||||||||||||||||||
Type of | December 31, 2007 | Accretion of | Redemptions/ | New | Unrealized | Appreciation | December 31, 2008 | |||||||||||||||||||||
Investment | Fair Value | Unearned Income | Repayments (1) | Investments (1) | to Realized | (Depreciation) | Fair Value | |||||||||||||||||||||
Debt |
$ | 57,153,552 | $ | 996,918 | $ | (16,464,056 | ) | $ | 17,994,888 | $ | 967,048 | $ | (4,190,941 | ) | $ | 56,457,409 | ||||||||||||
Equity |
6,022,858 | | (240,000 | ) | 2,247,000 | 240,000 | (1,775,679 | ) | 6,494,179 | |||||||||||||||||||
Warrant |
2,386,887 | | (402,000 | ) | 638,032 | 140,000 | 737,081 | 3,500,000 | ||||||||||||||||||||
$ | 65,563,297 | $ | 996,918 | $ | (17,106,056 | ) | $ | 20,879,920 | $ | 1,347,048 | $ | (5,229,539 | ) | $ | 66,451,588 | |||||||||||||
(1) | Includes the impact of non-cash conversions. |
1. | Net Profits: |
a. | First, to the Partners to the extent and proportion of net losses allocated. |
b. | Second, any remaining amounts of net profits, 80% to the Limited Partners and 20% to the General Partner. |
2. | Net Losses: |
a. | First, to the Partners to the extent and in proportion to net profits previously allocated. |
b. | Second, the remaining amount of net losses to the Partners, in proportion to the positive balances in their respective capital accounts. |
3. | Not withstanding a) and b): |
a. | If the capital account of the General Partner or any Limited Partner is reduced to an amount equal to the aggregate capital contributions of such Partner, the balance of net losses will be allocated: |
i. | First, to the remaining capital accounts of the General Partner and Limited Partners in proportion to their respective positive capital accounts until their account balances have been reduced to zero. |
ii. | Second, to the General Partner. |
b. | If net losses have been allocated pursuant to 3.(a). above, any net profits that are required to be allocated after such special allocation of net losses as provided pursuant to 3.(a). will be allocated: |
i. | First, to the General Partner until the special allocation in 3.(a).ii. is reversed and eliminated. |
ii. | Second, to the General Partner and Limited Partners until the effect of any such special allocation of net losses has been reversed and eliminated. |
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Fixed | ||||||||||||||||
Pooling | Maturity | Interest | ||||||||||||||
Amount | Date | Date | Rate | |||||||||||||
$ | 5,000,000 | 9/27/2006 | 9/1/2016 | 6.48 | % | |||||||||||
7,100,000 | 3/28/2007 | 3/1/2017 | 6.32 | % | ||||||||||||
19,800,000 | 9/26/2007 | 9/1/2017 | 6.43 | % | ||||||||||||
7,900,000 | 9/26/2007 | 9/1/2017 | 6.47 | % | ||||||||||||
Balance at December 31, 2007 |
39,800,000 | |||||||||||||||
10,200,000 | 3/26/2008 | 3/1/2018 | 6.38 | % | ||||||||||||
Balance at December 31, 2008 |
50,000,000 | |||||||||||||||
20,000,000 | 9/22/2009 | 9/1/2019 | 4.95 | % | ||||||||||||
Balance at September 30,
2009 |
$ | 70,000,000 | ||||||||||||||
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Nine Months Ended | ||||||||||||||||
September 30, | Years Ended December 31, | |||||||||||||||
2009 (1) | 2008 (1) | 2008 (1) | 2007 (1) | |||||||||||||
Net assets at end of period |
$ | 14,127,953 | $ | 22,829,820 | $ | 19,958,808 | $ | 24,625,572 | ||||||||
Average net assets |
17,043,381 | 23,727,696 | 22,292,190 | 23,437,511 | ||||||||||||
Average outstanding debt |
60,000,000 | 46,400,000 | 46,400,000 | 24,700,000 | ||||||||||||
Ratio of total expenses, excluding interest expense, to average net
assets (2)(3) |
15.33 | % | 11.08 | % | 15.72 | % | 11.56 | % | ||||||||
Ratio of total expenses to average net assets (2)(3) |
32.49 | % | 21.45 | % | 30.61 | % | 17.89 | % | ||||||||
Ratio of net investment income to average net assets (2) |
6.75 | % | 6.80 | % | 10.23 | % | 10.56 | % | ||||||||
Ratio of contributed capital to total capital commitments |
50.31 | % | 50.31 | % | 50.31 | % | 50.31 | % | ||||||||
Total return based on change in net asset value (4)(5) |
-25.01 | % | -3.84 | % | -14.52 | % | -2.60 | % |
(1) | The amounts reflected in the financial highlights above represent the combined general partner and limited partner amounts. See the Combined Statements of Changes in Members Equity and Partners Capital for additional information. | |
(2) | Not annualized. | |
(3) | The Investment Manager voluntarily waived $526,050 of management fees for the year ended December 31, 2007. | |
(4) | Total return based on change in net asset value was calculated using the sum of ending net asset value plus distributions to members and partners during the period less capital contributions during the period, as divided by the beginning net asset value. | |
(5) | This ratio combines the total return for both the managing investors (the General Partner) and the non-managing investors (the Limited Partners). |
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Nine Months Ended | |||||||||||||||||
September 30, | Years Ended December 31, | ||||||||||||||||
2009 | 2008 | 2008 | 2007 | ||||||||||||||
Net Increase (decrease) in net assets resulting from operations |
$ | (4,990,855 | ) | $ | (945,753 | ) | $ | (3,576,762 | ) | $ | (576,791 | ) | |||||
Net Change in unrealized (appreciation) depreciation from investments |
6,616,884 | 3,347,699 | 3,882,491 | 4,005,154 | |||||||||||||
Accrual basis to cash basis adjustments: |
|||||||||||||||||
Deferred debt origination fees included in taxable income |
159,720 | 131,049 | 282,909 | 885,346 | |||||||||||||
Accretion of unearned fee income for book income |
(187,062 | ) | (104,141 | ) | (547,257 | ) | (231,150 | ) | |||||||||
Net Change in other assets |
115,555 | 165,749 | (96,496 | ) | (445,081 | ) | |||||||||||
Net Change in interest payable |
(789,293 | ) | (469,762 | ) | 339,105 | 646,466 | |||||||||||
Portfolio company pass through taxable income (loss) |
| | 226,232 | (590,720 | ) | ||||||||||||
Other |
(5,269 | ) | (9,863 | ) | (34,461 | ) | (74,090 | ) | |||||||||
Taxable Income |
$ | 919,680 | $ | 2,114,978 | $ | 475,761 | $ | 3,619,134 | |||||||||
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