(Mark One) | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2008 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Maryland | 41-2230745 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1300 Post Oak Boulevard, Suite 800 | ||
Houston, TX | ||
(Address of principal executive offices) | 77056 (Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, par value $0.01 per share | NASDAQ Global Select Market |
Large accelerated filero | Accelerated filer | Non-accelerated filer o | Smaller reporting companyo | |||
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Business | 1 | |||||||
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PART II | ||||||||
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PART III | ||||||||
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PART IV | ||||||||
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Item 1. |
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• | Delivering Customized Financing |
• | Focusing on Established Companies in the Lower Middle-Market.We generally invest in companies with established market positions, experienced management teams and proven revenue streams. Those companies generally possess better risk-adjusted return profiles than newer companies that are building management or are in the early stages of building a revenue base. In addition, established lower middle-market companies generally provide opportunities for capital appreciation. |
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• | Leveraging the Skills and Experience of Our Investment Team.Our investment team has |
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• | Capitalizing on Strong Transaction Sourcing |
• | Benefiting from Lower Cost of In addition, the SBIC leverage that we receive through the Fund represents a stable, long-term component of our capital structure. |
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• | Proven Management Team with Meaningful Financial Commitment.We look for operationally-oriented management with direct industry experience and a successful track record. In addition, we expect the management team of each portfolio company to have meaningful equity ownership in the portfolio company to better align our respective economic interests. We believe management teams with these attributes are more likely to manage the companies in a manner that protects our debt investment and enhances the value of our equity investment. |
• | Established Companies with Positive Cash |
• | Defensible Competitive Advantages/Favorable Industry Position.We primarily focus on companies having competitive advantages in their respective marketsand/or operating in industries with barriers to entry, which may help to protect their market position and profitability. |
• | Exit |
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• | a comprehensive financial model based on quantitative analysis of historical financial performance, projections and pro forma adjustments to determine the estimated internal rate of return; | |
• | a brief industry and market analysis; importing direct industry expertise from other portfolio companies or investors; | |
• | preliminary qualitative analysis of the management team’s competencies and backgrounds; | |
• | potential investment structures and pricing terms; and | |
• | regulatory compliance. |
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• | initial or additional site visits with management and key personnel; | |
• | detailed review of historical and projected financial statements; | |
• | operational reviews and analysis; | |
• | interviews with customers and suppliers; | |
• | detailed evaluation of company management, including background checks; | |
• | review of material contracts; | |
• | in-depth industry, market, and strategy analysis; and | |
• | review by legal, environmental or other consultants, if applicable. |
• | company history and overview; | |
• | transaction overview, history and rationale, including an analysis of transaction strengths and risks; | |
• | analysis of key customers and suppliers and key contracts; | |
• | a working capital analysis; | |
• | an analysis of the company’s business strategy; | |
• | a management background check and assessment; | |
• | third-party accounting, legal, environmental or other due diligence findings; | |
• | investment structure and expected returns; | |
• | anticipated sources of repayment and potential exit strategies; | |
• | pro forma capitalization and ownership; | |
• | an analysis of historical financial results and key financial ratios; | |
• | sensitivities to management’s financial projections; and | |
• | detailed reconciliations of historical to pro forma results. |
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• | Investment Rating 1represents a portfolio company that is performing in a manner which significantly exceeds our original expectations and projections; | |
• | Investment Rating 2represents a portfolio company that, in general, is performing above our original expectations; | |
• | Investment Rating 3represents a portfolio company that is generally performing in accordance with our original expectations; | |
• | Investment Rating 4represents a portfolio company that is underperforming our original expectations. Investments with such a rating require increased Main Street monitoring and scrutiny; and | |
• | Investment Rating 5represents a portfolio company that is significantly underperforming. Investments with such a rating require heightened levels of Main Street monitoring and scrutiny and involve the recognition of unrealized depreciation on such investment. |
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December 31, 2006 | December 31, 2007 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||||||||||
Investments at | Percentage of | Investments at | Percentage of | Investments at | Percentage of | Investments at | Percentage of | |||||||||||||||||||||||||
Investment Rating | Fair Value | Total Portfolio | Fair Value | Total Portfolio | Fair Value | Total Portfolio | Fair Value | Total Portfolio | ||||||||||||||||||||||||
(in thousands) | (in thousands) | (Dollars in thousands) | ||||||||||||||||||||||||||||||
1 | $ | 31,686 | 41.6 | % | $ | 25,153 | 27.8 | % | $ | 27,523 | 24.9 | % | $ | 24,619 | 28.0 | % | ||||||||||||||||
2 | 23,581 | 30.9 | 35,771 | 39.6 | 23,150 | 21.0 | % | 35,068 | 39.8 | % | ||||||||||||||||||||||
3 | 15,094 | 19.8 | 24,714 | 27.3 | 53,123 | 48.1 | % | 24,034 | 27.3 | % | ||||||||||||||||||||||
4 | 5,848 | 7.7 | — | — | 6,035 | 5.5 | % | — | 0.0 | % | ||||||||||||||||||||||
5 | — | — | 4,762 | 5.3 | 500 | 0.5 | % | 4,304 | 4.9 | % | ||||||||||||||||||||||
Totals | $ | 76,209 | 100.0 | % | $ | 90,400 | 100.0 | % | $ | 110,331 | 100.0 | % | $ | 88,025 | 100.0 | % | ||||||||||||||||
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• | Our quarterly valuation process will begin with each portfolio company or investment being initially valued by the deal team responsible for the portfolio investment; | |
• | Preliminary valuation conclusions will then be reviewed and discussed with senior management; | |
• | The Audit Committee of our Board of Directors will review the preliminary valuations, and the deal team will consider and assess, as appropriate, any changes that may be required to the preliminary valuation to address any comments provided by the Audit Committee; | |
• | The Board of Directors will assess the valuations and will ultimately approve the fair value of each investment in our portfolio in good faith; and | |
• | An independent valuation firm engaged by the Board of Directors will perform certain mutually agreed limited procedures that we have identified and asked them to perform on a selection of our final portfolio company valuation conclusions. |
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(1) Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company (as defined below), or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. (2) Securities of any eligible portfolio company that we control. (3) Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements. |
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(a) | is organized under the laws of, and has its principal place of business in, the United States; |
(b) | is not an investment company (other than a small business investment company wholly owned by the |
(c) | satisfies any of the following: |
(i) does not have any class of securities that is traded | |||
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• | pursuant toRule 13a-14 of the Exchange Act, our Chief Executive Officer and Chief Financial Officer are required to certify the accuracy of the financial statements contained in our periodic reports; | |
• | pursuant to Item 307 ofRegulation S-K, our periodic reports are required to disclose our conclusions about the effectiveness of our disclosure controls and procedures; | |
• | pursuant toRule 13a-15 of the Exchange Act, our management is required to prepare a report regarding its assessment of our internal control over financial reporting, and separately, our independent registered public accounting firm audits our internal controls over financial reporting; and | |
• | pursuant to Item 308 ofRegulation S-K andRule 13a-15 of the Exchange Act, our periodic reports must disclose whether there were significant changes in our internal control over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. |
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• | continue to qualify as a BDC under the 1940 Act at all times during each taxable year; | |
• | derive in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to certain securities, loans, gains from the sale of stock or other securities, net income from certain “qualified publicly traded partnerships,” or other income derived with respect to our business of investing in such stock or securities (the “90% Income Test”); and | |
• | diversify our holdings so that at the end of each quarter of the taxable year: |
• | at least 50% of the value of our assets consists of cash, cash equivalents, U.S. Government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and | ||
• | no more than 25% of the value of our assets is invested in the securities, other than U.S. government securities or securities of other RICs, of one issuer, of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or of certain |
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Item 1A. |
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• | Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% immediately after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we will be prohibited from issuing debt securities or preferred stockand/or borrowing money from banks or other financial institutions until such time as we satisfy this test. | |
• | Any amounts that we use to service our debt or make payments on preferred stock will not be available for dividends to our common stockholders. | |
• | It is likely that any senior securities or other indebtedness we issue will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, some of these securities or other indebtedness may be rated by rating agencies, and in obtaining a rating for such securities and other indebtedness, we may be required to abide by operating and investment guidelines that further restrict operating and financial flexibility. | |
• | We and, indirectly, our stockholders will bear the cost of issuing and servicing such securities and other indebtedness. | |
• | Preferred stock or any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock, including separate voting rights and could delay or prevent a transaction or a change in control to the detriment of the holders of our common stock. |
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(10.0)% | (5.0)% | 0.0% | 5.0% | 10.0% | ||||||||||||||||
Corresponding net return to common stockholder | (18.0 | )% | (10.4 | )% | (2.8 | )% | 4.8 | % | 12.3 | % |
(1) | Assumes $170.6 million in total assets, $55 million in debt outstanding, $112.4 million in net assets, and an average cost of funds of 5.8%. Actual interest payments may be different. |
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• | The annual distribution requirement for a RIC will be satisfied if we distribute to our stockholders on an annual basis at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% excise tax on such income. Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which generated such taxable income. For more information regarding tax treatment, see “Business — Regulation — Taxation as a Regulated Investment Company.” Because we use debt financing, we are subject to certain asset coverage ratio requirements under the 1940 Act and are (and may in the future become) subject to certain financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirement. If we are unable to obtain cash from other sources, we could fail to qualify for RIC tax treatment and thus become subject to corporate-level income tax. | |
• | The source income requirement will be satisfied if we obtain at least 90% of our income for each year from distributions, interest, gains from the sale of stock or securities or similar sources. | |
• | The asset diversification requirement will be satisfied if we meet certain asset diversification requirements at the end of each quarter of our taxable year. To satisfy this requirement, at least 50% of the value of our assets must consist of cash, cash equivalents, U.S. Government securities, securities of other RICs, and other acceptable securities; and no more than 25% of the value of our assets can be invested in the securities, other than U.S. government securities or securities of other RICs, of one issuer, of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or of certain “qualified publicly traded partnerships.” Failure to meet these requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private companies, and therefore will be relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. |
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Prior to Sale | Following Sale | Percentage | ||||||||||
Below NAV | Below NAV | Change | ||||||||||
Reduction to NAV | ||||||||||||
Total Shares Outstanding | 1,000,000 | 1,040,000 | 4.0 | % | ||||||||
NAV per share | $ | 10.00 | $ | 9.98 | (0.2 | )% | ||||||
Dilution to Existing Stockholder | ||||||||||||
Shares Held by Stockholder A | 10,000 | 10,000 | (1) | 0.0 | % | |||||||
Percentage Held by Stockholder A | 1.00 | % | 0.96 | % | (3.8 | )% | ||||||
Total Interest of Stockholder A in NAV | $ | 100,000 | $ | 99,808 | (0.2 | )% |
(1) | Assumes that Stockholder A does not purchase additional shares in the sale of shares below NAV. |
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• | may have limited financial resources and may be unable to meet their obligations under their debt instruments that we hold, which may be accompanied by a deterioration in the value of any collateral |
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and a reduction in the likelihood of us realizing any guarantees from subsidiaries or affiliates of our portfolio companies that we may have obtained in connection with our investment, as well as a corresponding decrease in the value of the equity components of our investments; |
• | may have shorter operating histories, narrower product lines, smaller market sharesand/or significant customer concentrations than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns; | |
• | are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us; | |
• | generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position; and | |
• | generally have less publicly available information about their businesses, operations and financial condition. We are required to rely on the ability of our management team and investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and may lose all or part of our investment. |
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• | significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which are not necessarily related to the operating performance of these companies; | |
• | changes in regulatory policies, accounting pronouncements or tax guidelines, particularly with respect to RICs, BDCs or SBICs; | |
• | inability to obtain any exemptive relief that may be required by us in the future from the SEC; | |
• | loss of our BDC or RIC status or the Fund’s status as an SBIC; | |
• | changes in our earnings or variations in our operating results; | |
• | changes in the value of our portfolio of investments; | |
• | any shortfall in our investment income or net investment income or any increase in losses from levels expected by investors or securities analysts; | |
• | loss of a major funding source; | |
• | fluctuations in interest rates; | |
• | the operating performance of companies comparable to us; |
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• | departure of our key personnel; | |
• | global or national credit market changes; and | |
• | general economic trends and other external factors. |
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Item 1B. |
Item 2. |
Item 3. |
Item 4. |
Item 5. |
High | Low | High | Low | |||||||||||||
Fiscal year 2008 | ||||||||||||||||
Fourth quarter | $ | 11.95 | $ | 8.82 | ||||||||||||
Third quarter | $ | 14.40 | $ | 11.38 | ||||||||||||
Second quarter | $ | 14.40 | $ | 10.90 | ||||||||||||
First quarter | $ | 14.10 | $ | 12.75 | ||||||||||||
Fiscal year 2007 | ||||||||||||||||
Fourth quarter (from October 5, 2007) | $ | 15.02 | $ | 13.60 | $ | 15.02 | $ | 13.60 |
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Date Declared | Record Date | Payment Date | Amount(1) | |||||
Fiscal year 2009 | ||||||||
December 3, 2008 | February 20, 2009 | March 16, 2009 | $ | 0.125 | ||||
December 3, 2008 | January 22, 2009 | February 16, 2009 | $ | 0.125 | ||||
December 3, 2008 | December 19, 2008 | January 15, 2009 | $ | 0.125 | (2) | |||
Total | $ | 0.375 | ||||||
Fiscal year 2008 | ||||||||
September 3, 2008 | November 19, 2008 | December 15, 2008 | $ | 0.125 | ||||
September 3, 2008 | October 17, 2008 | November 14, 2008 | $ | 0.125 | ||||
September 3, 2008 | September 18, 2008 | October 15, 2008 | $ | 0.125 | ||||
July 31, 2008 | August 14, 2008 | September 12, 2008 | $ | 0.36 | ||||
May 1, 2008 | May 12, 2008 | June 12, 2008 | $ | 0.35 | ||||
February 6, 2008 | February 15, 2008 | March 21, 2008 | $ | 0.34 | ||||
Total | $ | 1.425 | (2) | |||||
Fiscal year 2007 | ||||||||
November 5, 2007 | November 16, 2007 | November 30, 2007 | $ | 0.33 | (3) | |||
(1) | The determination of the tax attributes of Main Street’s distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Ordinary dividend distributions from a RIC do not qualify for the 15% maximum tax rate on dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. | |
(2) | These dividends attributable to fiscal year 2008 were comprised of ordinary income of $0.95 per share and long term capital gain of $0.60 per share and included dividends declared during fiscal year 2008 and dividends declared and accrued as of December 31, 2008 and paid on January 15, 2009, pursuant to the Code. | |
(3) | This quarterly dividend attributable to fiscal year 2007 was comprised of ordinary income of $0.105 per share and long term capital gain of $0.225 per share. |
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Maximum Number | ||||||||||||||||
(or Approximate | ||||||||||||||||
Total Number of | Dollar Value) of | |||||||||||||||
Shares Purchased | Shares that May | |||||||||||||||
as Part of Publicly | Yet be Purchased | |||||||||||||||
Total Number of | Average Price Paid | Announced Plans | Under the Plans or | |||||||||||||
Period | Shares Purchased | per Share | or Programs | Programs | ||||||||||||
October 1, 2008 through October 31, 2008 | — | $ | — | — | ||||||||||||
November 1, 2008 through November 30, 2008 | 8,500 | $ | 9.29 | 8,500 | ||||||||||||
December 1, 2008 through December 31, 2008 | 26,200 | $ | 9.62 | 26,200 | ||||||||||||
Total | 34,700 | $ | 9.54 | 34,700 | $ | 4,668,994 | ||||||||||
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(1) | Total return includes reinvestment of dividends through December 31, | |
(2) | The Main Street Peer Group index is composed of Triangle Capital Corporation, Prospect Capital Corporation, TICC Capital |
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Number of Securities | ||||||||||||
Remaining Available for | ||||||||||||
Number of Securities to be | Weighted-Average | Future Issuance Under | ||||||||||
Issued Upon Exercise of | Exercise Price of | Equity Compensation Plans | ||||||||||
Outstanding Options, | Outstanding Options, | (Excluding Securities | ||||||||||
Plan Category | Warrants and Rights | Warrants and Rights | Reflected in Column(a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders | — | $ | — | — | ||||||||
Equity compensation plans not approved by security holders | — | $ | — | 2,200,000 | (1) | |||||||
Total | — | $ | — | 2,200,000 | ||||||||
Item 6. |
Years Ended December 31, | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Statement of operations data: | ||||||||||||||||||||
Investment income: | ||||||||||||||||||||
Total interest, fee and dividend income | $ | 4,452 | $ | 7,338 | $ | 9,013 | $ | 11,312 | $ | 15,967 | ||||||||||
Interest from idle funds and other | 9 | 222 | 749 | 1,163 | 1,328 | |||||||||||||||
Total investment income | 4,461 | 7,560 | 9,762 | 12,475 | 17,295 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Interest | (869 | ) | (2,064 | ) | (2,717 | ) | (3,246 | ) | (3,778 | ) | ||||||||||
General and administrative | (184 | ) | (197 | ) | (198 | ) | (512 | ) | (1,684 | ) | ||||||||||
Expenses reimbursed to Investment Manager | — | — | — | — | (1,007 | ) | ||||||||||||||
Share-based compensation | — | — | — | — | (511 | ) | ||||||||||||||
Management fees to affiliate | (1,916 | ) | (1,929 | ) | (1,942 | ) | (1,500 | ) | — | |||||||||||
Professional costs related to initial public offering | — | — | — | (695 | ) | — | ||||||||||||||
Total expenses | (2,969 | ) | (4,190 | ) | (4,857 | ) | (5,953 | ) | (6,980 | ) | ||||||||||
Net investment income | 1,492 | 3,370 | 4,905 | 6,522 | 10,315 | |||||||||||||||
Total net realized gain from investments | 1,171 | 1,488 | 2,430 | 4,692 | 1,398 | |||||||||||||||
Net realized income | 2,663 | 4,858 | 7,335 | 11,214 | 11,713 | |||||||||||||||
Total net change in unrealized appreciation (depreciation) from investments | 1,764 | 3,032 | 8,488 | (5,406 | ) | (3,961 | ) | |||||||||||||
Income tax benefit (provision) | — | — | — | (3,263 | ) | 3,182 | ||||||||||||||
Net increase in net assets resulting from operations | $ | 4,427 | $ | 7,890 | $ | 15,823 | $ | 2,545 | $ | 10,934 | ||||||||||
Net investment income per share — basic and diluted | N/A | N/A | N/A | $ | 0.76 | $ | 1.15 | |||||||||||||
Net realized income per share — basic and diluted | N/A | N/A | N/A | $ | 1.31 | $ | 1.31 | |||||||||||||
Net increase in net assets resulting from operations per share — basic and diluted | N/A | N/A | N/A | $ | 0.30 | $ | 1.22 | |||||||||||||
Weighted average shares outstanding — basic | N/A | N/A | N/A | 8,587,701 | 8,967,383 | |||||||||||||||
Weighted average shares outstanding — diluted | N/A | N/A | N/A | 8,587,701 | 8,971,064 |
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As of December 31, | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Balance sheet data: | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Total portfolio investments at fair value | $ | 37,972 | $ | 51,192 | $ | 73,711 | $ | 105,650 | $ | 127,007 | ||||||||||
Idle funds investments | — | — | — | 24,063 | 4,390 | |||||||||||||||
Cash and cash equivalents | 796 | 26,261 | 13,769 | 41,889 | 35,375 | |||||||||||||||
Deferred tax asset | — | — | — | — | 1,121 | |||||||||||||||
Other assets | 262 | 439 | 630 | 1,576 | 1,101 | |||||||||||||||
Deferred financing costs, net of accumulated amortization | 984 | 1,442 | 1,333 | 1,670 | 1,635 | |||||||||||||||
Total assets | $ | 40,014 | $ | 79,334 | $ | 89,443 | $ | 174,848 | $ | 170,629 | ||||||||||
Liabilities and net assets: | ||||||||||||||||||||
SBIC debentures | $ | 22,000 | $ | 45,100 | $ | 45,100 | $ | 55,000 | $ | 55,000 | ||||||||||
Deferred tax liability | — | — | — | 3,026 | — | |||||||||||||||
Interest payable | 354 | 771 | 855 | 1,063 | 1,108 | |||||||||||||||
Accounts payable and other liabilities | 422 | 194 | 216 | 610 | 2,165 | |||||||||||||||
Total liabilities | 22,776 | 46,065 | 46,171 | 59,699 | 58,273 | |||||||||||||||
Total net assets | 17,238 | 33,269 | 43,272 | 115,149 | 112,356 | |||||||||||||||
Total liabilities and net assets | $ | 40,014 | $ | 79,334 | $ | 89,443 | $ | 174,848 | $ | 170,629 | ||||||||||
Other data: | ||||||||||||||||||||
Weighted average effective yield on debt investments(1) | 15.3 | % | 15.3 | % | 15.0 | % | 14.3 | % | 14.0 | % | ||||||||||
Number of portfolio companies(3) | 14 | 19 | 24 | 27 | 31 | |||||||||||||||
Expense ratios (as percentage of average net assets): | ||||||||||||||||||||
Operating expenses(2) | 13.7 | % | 9.0 | % | 5.5 | % | 4.8 | % | 2.8 | % | ||||||||||
Interest expense | 5.7 | % | 8.8 | % | 7.0 | % | 5.7 | % | 3.3 | % |
Years Ended December 31, | ||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Statement of operations data: | ||||||||||||||||||||
Investment income: | ||||||||||||||||||||
Total interest, fee and dividend income | $ | 3,397 | $ | 4,452 | $ | 7,338 | $ | 9,013 | $ | 11,312 | ||||||||||
Interest from idle funds and other | 7 | 9 | 222 | 749 | 1,163 | |||||||||||||||
Total investment income | 3,404 | 4,461 | 7,560 | 9,762 | 12,475 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Management fees to affiliate | (1,722 | ) | (1,916 | ) | (1,929 | ) | (1,942 | ) | (1,500 | ) | ||||||||||
Interest | (113 | ) | (869 | ) | (2,064 | ) | (2,717 | ) | (3,246 | ) | ||||||||||
General and administrative | (135 | ) | (184 | ) | (197 | ) | (198 | ) | (512 | ) | ||||||||||
Professional costs related to initial public offering | — | — | — | — | (695 | ) | ||||||||||||||
Total expenses | (1,970 | ) | (2,969 | ) | (4,190 | ) | (4,857 | ) | (5,953 | ) | ||||||||||
Net investment income | 1,434 | 1,492 | 3,370 | 4,905 | 6,522 | |||||||||||||||
Total net realized gain (loss) from investments | (225 | ) | 1,171 | 1,488 | 2,430 | 4,692 | ||||||||||||||
Net realized income | 1,209 | 2,663 | 4,858 | 7,335 | 11,214 | |||||||||||||||
Total net change in unrealized appreciation (depreciation) from investments | 300 | 1,764 | 3,032 | 8,488 | (5,406 | ) | ||||||||||||||
Income tax provision | — | — | — | — | (3,263 | ) | ||||||||||||||
Net increase in net assets resulting from operations | $ | 1,509 | $ | 4,427 | $ | 7,890 | $ | 15,823 | $ | 2,545 | ||||||||||
Net investment income per common share – basic and diluted | N/A | N/A | N/A | N/A | $ | 0.76 | ||||||||||||||
Net realized income per common share – basic and diluted | N/A | N/A | N/A | N/A | $ | 1.31 | ||||||||||||||
Net increase in net assets resulting from operations per common share – basic and diluted | N/A | N/A | N/A | N/A | $ | 0.30 | ||||||||||||||
Weighted average shares of common stock outstanding – basic and diluted | N/A | N/A | N/A | N/A | 8,587,701 |
As of December 31, | ||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | ||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
Balance sheet data: | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Total portfolio investments at fair value | $ | 19,920 | $ | 40,733 | $ | 53,795 | $ | 76,209 | $ | 108,025 | ||||||||||
Accumulated unearned income | (1,972 | ) | (2,761 | ) | (2,603 | ) | (2,498 | ) | (2,375 | ) | ||||||||||
Total portfolio investments net of accumulated unearned income | 17,948 | 37,972 | 51,192 | 73,711 | 105,650 | |||||||||||||||
Idle funds investments | — | — | — | — | 24,063 | |||||||||||||||
Cash and cash equivalents | 1,537 | 796 | 26,261 | 13,769 | 41,889 | |||||||||||||||
Other assets | 266 | 262 | 439 | 630 | 1,576 | |||||||||||||||
Deferred financing costs, net of accumulated amortization | 416 | 984 | 1,442 | 1,333 | 1,670 | |||||||||||||||
Total assets | $ | 20,167 | $ | 40,014 | $ | 79,334 | $ | 89,443 | $ | 174,848 | ||||||||||
Liabilities and net assets: | ||||||||||||||||||||
SBIC debentures | $ | 5,000 | $ | 22,000 | $ | 45,100 | $ | 45,100 | $ | 55,000 | ||||||||||
Deferred tax liability | — | — | — | — | 3,026 | |||||||||||||||
Interest payable | 60 | 354 | 771 | 855 | 1,063 | |||||||||||||||
Accounts payable and other liabilities | 139 | 422 | 194 | 216 | 610 | |||||||||||||||
Total liabilities | 5,199 | 22,776 | 46,065 | 46,171 | 59,699 | |||||||||||||||
Total net assets | 14,968 | 17,238 | 33,269 | 43,272 | 115,149 | |||||||||||||||
Total liabilities and net assets | $ | 20,167 | $ | 40,014 | $ | 79,334 | $ | 89,443 | $ | 174,848 | ||||||||||
Other data: | ||||||||||||||||||||
Weighted average effective yield on debt investments(1) | 16.2 | % | 15.3 | % | 15.3 | % | 15.0 | % | 14.3 | % | ||||||||||
Number of portfolio companies (3) | 8 | 14 | 19 | 24 | 27 | |||||||||||||||
Expense ratios (as percentage of average net assets): | ||||||||||||||||||||
Operating expenses(2) | 12.3 | % | 13.7 | % | 9.0 | % | 5.5 | % | 4.8 | % | ||||||||||
Interest expense | 0.7 | % | 5.7 | % | 8.8 | % | 7.0 | % | 5.7 | % |
(1) | Weighted-average effective yield is calculated based on our debt investments at the end of each period and includes amortization of deferred debt origination fees and accretion of original issue | |
(2) | The ratio for the year ended December 31, 2007 reflects the impact of professional costs related to the Offering. These costs were | |
(3) | Excludes the investment in affiliated Investment Manager, as referenced in “Formation Transactions” and in the notes to the financial statements elsewhere in this Annual Report onForm 10-K. |
3339
Item 7. |
34
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44
December 31, | ||||||||||||||||
Cost: | 2006 | 2007 | December 31, 2008 | December 31, 2007 | ||||||||||||
First lien debt | 77.1 | % | 81.7 | % | 76.2 | % | 81.5 | % | ||||||||
Equity | 11.0 | % | 10.7 | % | ||||||||||||
Second lien debt | 11.8 | 6.3 | 7.4 | % | 6.1 | % | ||||||||||
Equity | 7.6 | 10.3 | ||||||||||||||
Equity warrants | 3.5 | 1.7 | 5.4 | % | 1.7 | % | ||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
December 31, | ||||||||||||||||
Fair Value: | 2006 | 2007 | December 31, 2008 | December 31, 2007 | ||||||||||||
First lien debt | 63.9 | % | 70.6 | % | 67.0 | % | 70.1 | % | ||||||||
Second lien debt | 9.7 | 3.5 | ||||||||||||||
Equity | 12.6 | 18.1 | 15.7 | % | 18.6 | % | ||||||||||
Equity warrants | 13.8 | 7.8 | 10.2 | % | 8.0 | % | ||||||||||
Second lien debt | 7.1 | % | 3.3 | % | ||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
December 31, | ||||||||||||||||
Cost: | 2006 | 2007 | December 31, 2008 | December 31, 2007 | ||||||||||||
Southwest | 39.9 | % | 31.9 | % | 50.2 | % | 31.9 | % | ||||||||
West | 24.8 | 36.9 | 36.3 | % | 37.1 | % | ||||||||||
Northeast | 14.7 | 11.4 | ||||||||||||||
Southeast | 13.8 | 13.9 | 5.1 | % | 11.4 | % | ||||||||||
Midwest | 6.8 | 5.9 | 4.7 | % | 5.8 | % | ||||||||||
Northeast | 3.7 | % | 13.8 | % | ||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
December 31, | ||||||||||||||||
Fair Value: | 2006 | 2007 | December 31, 2008 | December 31, 2007 | ||||||||||||
Southwest | 47.2 | % | 41.0 | % | 56.0 | % | 41.2 | % | ||||||||
West | 20.8 | 32.9 | 31.1 | % | 32.9 | % | ||||||||||
Midwest | 5.1 | % | 6.5 | % | ||||||||||||
Southeast | 4.1 | % | 10.3 | % | ||||||||||||
Northeast | 11.1 | 9.1 | 3.7 | % | 9.1 | % | ||||||||||
Southeast | 13.1 | 10.4 | ||||||||||||||
Midwest | 7.8 | 6.6 | ||||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
37
45
Cost: | December 31, 2008 | December 31, 2007 | ||||||
Industrial equipment | 12.0 | % | 6.6 | % | ||||
Precast concrete manufacturing | 11.3 | % | — | |||||
Custom wood products | 9.3 | % | 8.4 | % | ||||
Agricultural services | 8.3 | % | 11.6 | % | ||||
Electronics manufacturing | 7.6 | % | 9.5 | % | ||||
Transportation/Logistics | 6.6 | % | 6.7 | % | ||||
Retail | 6.5 | % | 3.3 | % | ||||
Restaurant | 6.1 | % | 3.4 | % | ||||
Health care products | 5.8 | % | 4.2 | % | ||||
Mining and minerals | 4.8 | % | 9.1 | % | ||||
Manufacturing | 4.7 | % | 12.0 | % | ||||
Health care services | 4.2 | % | 5.9 | % | ||||
Professional services | 4.1 | % | 3.3 | % | ||||
Metal fabrication | 3.4 | % | 4.6 | % | ||||
Equipment rental | 2.1 | % | 2.6 | % | ||||
Infrastructure products | 1.7 | % | 2.4 | % | ||||
Information services | 0.9 | % | 1.2 | % | ||||
Industrial services | 0.5 | % | 0.4 | % | ||||
Distribution | 0.1 | % | 2.2 | % | ||||
Consumer products | — | 2.6 | % | |||||
100.0 | % | 100.0 | % | |||||
Fair Value: | December 31, 2008 | December 31, 2007 | ||||||
Precast concrete manufacturing | 13.7 | % | — | |||||
Industrial equipment | 10.2 | % | 6.0 | % | ||||
Agricultural services | 8.1 | % | 10.5 | % | ||||
Electronics manufacturing | 7.7 | % | 9.6 | % | ||||
Retail | 7.0 | % | 3.4 | % | ||||
Custom wood products | 6.8 | % | 7.5 | % | ||||
Restaurant | 6.7 | % | 4.5 | % | ||||
Transportation/Logistics | 6.5 | % | 6.6 | % | ||||
Health care services | 6.1 | % | 6.0 | % | ||||
Health care products | 5.8 | % | 4.1 | % | ||||
Professional services | 5.4 | % | 4.1 | % | ||||
Manufacturing | 5.1 | % | 9.5 | % | ||||
Metal fabrication | 4.3 | % | 4.2 | % | ||||
Industrial services | 2.8 | % | 2.9 | % | ||||
Equipment rental | 2.0 | % | 2.4 | % | ||||
Information services | 0.9 | % | 1.2 | % | ||||
Infrastructure products | 0.5 | % | 2.2 | % | ||||
Distribution | 0.4 | % | 2.4 | % | ||||
Mining and minerals | — | 12.9 | % | |||||
100.0 | % | 100.0 | % | |||||
46
December 31, | ||||||||
Cost: | 2006 | 2007 | ||||||
Manufacturing | 15.1 | % | 12.4 | % | ||||
Agricultural services | — | 11.4 | ||||||
Electronics manufacturing | 5.2 | 9.6 | ||||||
Construction/industrial minerals | 11.7 | 9.0 | ||||||
Custom wood products | 6.3 | 8.3 | ||||||
Transportation/logistics | 9.6 | 6.6 | ||||||
Industrial Equipment | — | 6.5 | ||||||
Health care services | 5.0 | 5.9 | ||||||
Metal Fabrication | — | 4.7 | ||||||
Health care products | 8.2 | 4.3 | ||||||
Restaurant | 5.3 | 3.4 | ||||||
Professional services | 4.8 | 3.3 | ||||||
Retail | 4.3 | 3.2 | ||||||
Consumer products | 3.2 | 2.6 | ||||||
Equipment rental | 2.9 | 2.6 | ||||||
Building products | 3.9 | 2.4 | ||||||
Distribution | 11.6 | 2.2 | ||||||
Information services | 2.4 | 1.2 | ||||||
Industrial services | 0.5 | 0.4 | ||||||
Total | 100.0 | % | 100.0 | % | ||||
December 31, | ||||||||
Fair Value: | 2006 | 2007 | ||||||
Construction/industrial minerals | 15.9 | % | 12.8 | % | ||||
Agricultural services | — | 10.4 | ||||||
Manufacturing | 14.1 | 9.8 | ||||||
Electronics manufacturing | 4.9 | 9.7 | ||||||
Custom wood products | 5.2 | 7.5 | ||||||
Transportation/logistics | 9.7 | 6.6 | ||||||
Health care services | 4.1 | 6.0 | ||||||
Industrial Equipment | — | 5.9 | ||||||
Restaurant | 5.3 | 4.4 | ||||||
Metal Fabrication | — | 4.3 | ||||||
Health care products | 8.3 | 4.1 | ||||||
Professional services | 4.4 | 4.1 | ||||||
Retail | 3.6 | 3.4 | ||||||
Industrial services | 2.4 | 2.8 | ||||||
Distribution | 12.3 | 2.4 | ||||||
Equipment rental | 2.3 | 2.4 | ||||||
Building products | 3.2 | 2.2 | ||||||
Information services | 1.8 | 1.2 | ||||||
Consumer products | 2.5 | — | ||||||
Total | 100.0 | % | 100.0 | % | ||||
38
December 31, 2006 | December 31, 2007 | December 31, 2008 | December 31, 2007 | |||||||||||||||||||||||||||||
Investments at | Percentage of | Investments at | Percentage of | Investments at | Percentage of | Investments at | Percentage of | |||||||||||||||||||||||||
Investment Rating | Fair Value | Total Portfolio | Fair Value | Total Portfolio | Fair Value | Total Portfolio | Fair Value | Total Portfolio | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
1 | $ | 31,686 | 41.6 | % | $ | 25,153 | 27.8 | % | $ | 27,523 | 24.9 | % | $ | 24,619 | 28.0 | % | ||||||||||||||||
2 | 23,581 | 30.9 | 35,771 | 39.6 | 23,150 | 21.0 | % | 35,068 | 39.8 | % | ||||||||||||||||||||||
3 | 15,094 | 19.8 | 24,714 | 27.3 | 53,123 | 48.1 | % | 24,034 | 27.3 | % | ||||||||||||||||||||||
4 | 5,848 | 7.7 | — | — | 6,035 | 5.5 | % | — | 0.0 | % | ||||||||||||||||||||||
5 | — | — | 4,762 | 5.3 | 500 | 0.5 | % | 4,304 | 4.9 | % | ||||||||||||||||||||||
Totals | $ | 76,209 | 100.0 | % | $ | 90,400 | 100.0 | % | $ | 110,331 | 100.0 | % | $ | 88,025 | 100.0 | % | ||||||||||||||||
47
Years Ended December 31, | Net Change | |||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Total investment income | $ | 17.3 | $ | 12.5 | $ | 4.8 | 39 | % | ||||||||
Total expenses | (7.0 | ) | (6.0 | ) | (1.0 | ) | 17 | % | ||||||||
Net investment income | 10.3 | 6.5 | 3.8 | 58 | % | |||||||||||
Total net realized gain from investments | 1.4 | 4.7 | (3.3 | ) | (70 | )% | ||||||||||
Net realized income | 11.7 | 11.2 | 0.5 | 4 | % | |||||||||||
Net change in unrealized appreciation (depreciation) from investments | (4.0 | ) | (5.4 | ) | 1.4 | N | A | |||||||||
Income tax benefit (provision) | 3.2 | (3.3 | ) | 6.5 | N | A | ||||||||||
Net increase in net assets resulting from operations | $ | 10.9 | $ | 2.5 | $ | 8.4 | 330 | % | ||||||||
Years Ended December 31, | Net Change | |||||||||||||||
2008 | 2007 | Amount | % | |||||||||||||
Net investment income | $ | 10.3 | $ | 6.5 | $ | 3.8 | 58 | % | ||||||||
Share-based compensation expense | 0.5 | — | 0.5 | N | A | |||||||||||
Distributable net investment income(a) | 10.8 | 6.5 | 4.3 | 66 | % | |||||||||||
Total net realized gain (loss) from investments | 1.4 | 4.7 | (3.3 | ) | (70 | )% | ||||||||||
Distributable net realized income(a) | $ | 12.2 | $ | 11.2 | $ | 1.0 | 9 | % | ||||||||
(a) | Distributable net investment income and distributable net realized income are net investment income and net realized income, respectively, as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. Main Street believes presenting distributable net investment income, distributable net realized income, and related per share measures are useful and appropriate supplemental disclosures for analyzing its financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income and distributable net realized income are non U.S. GAAP measures and should not be considered as replacements to net investment income, net realized income, and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income and distributable net realized income should be reviewed only in connection with such U.S. GAAP measures in analyzing Main Street’s financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income and distributable net realized income is presented in the table above. |
48
49
Years Ended December 31, | Net Change | |||||||||||||||
2007 | 2006 | Amount | % | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Total investment income | $ | 12.5 | $ | 9.8 | $ | 2.7 | 28% | |||||||||
Total expenses | (6.0 | ) | (4.9 | ) | (1.1 | ) | 23% | |||||||||
Net investment income | 6.5 | 4.9 | 1.6 | 33% | ||||||||||||
Total net realized gain (loss) from investments | 4.7 | 2.4 | 2.3 | 93% | ||||||||||||
Net realized income | 11.2 | 7.3 | 3.9 | 53% | ||||||||||||
Net change in unrealized appreciation (depreciation) from investments | (5.4 | ) | 8.5 | (13.9 | ) | NA | ||||||||||
Income tax benefit (provision) | (3.3 | ) | — | (3.3 | ) | NA | ||||||||||
Net increase in net assets resulting from operations | $ | 2.5 | $ | 15.8 | $ | (13.3 | ) | (84)% | ||||||||
50
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42
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2014 and | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 2009 | 2010 | 2011 | 2012 | 2013 | thereafter | ||||||||||||||||||||||||||||||||||||||||||||||||||
2013 and | (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 2008 | 2009 | 2010 | 2011 | 2012 | Thereafter | (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SBIC debentures payable | $ | 55,000 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 55,000 | $ | 55,000 | $ | — | $ | — | $ | — | $ | — | $ | 4,000 | $ | 51,000 | ||||||||||||||||||||||||||||
Interest due on SBIC debentures | 24,684 | 3,188 | 3,179 | 3,179 | 3,179 | 3,188 | 8,771 | 21,495 | 3,179 | 3,179 | 3,179 | 3,188 | 3,179 | 5,591 | ||||||||||||||||||||||||||||||||||||||||||
Total | $ | 79,684 | $ | 3,188 | $ | 3,179 | $ | 3,179 | $ | 3,179 | $ | 3,188 | $ | 63,771 | $ | 76,495 | $ | 3,179 | $ | 3,179 | $ | 3,179 | $ | 3,188 | $ | 7,179 | $ | 56,591 | ||||||||||||||||||||||||||||
55
44
Item 7A. |
Item 8. |
58 | ||||
60 | ||||
61 | ||||
62 | ||||
64 | ||||
72 |
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57
46
December 31, | ||||||||
2007 | 2006 | |||||||
(Consolidated) | (Combined) | |||||||
ASSETS | ||||||||
Portfolio investments at fair value: | ||||||||
Control investments (cost: $44,169,431 and $33,312,337 as of December 31, 2007 and 2006, respectively) | $ | 49,161,952 | $ | 42,429,000 | ||||
Affiliate investments (cost: $34,211,440 and $24,328,596 as of December 31, 2007 and 2006, respectively) | 37,412,907 | 28,822,245 | ||||||
Non-Control/Non-Affiliate investments (cost: $3,465,590 and $4,983,015 as of December 31, 2007 and 2006, respectively) | 3,825,590 | 4,958,183 | ||||||
Investment in affiliated Investment Manager (cost: $18,000,000) | 17,625,000 | — | ||||||
Total portfolio investments (cost: $99,846,461 and $62,623,948 as of December 31, 2007 and 2006, respectively) | 108,025,449 | 76,209,428 | ||||||
Accumulated unearned income | (2,375,035 | ) | (2,498,427 | ) | ||||
Total portfolio investments net of accumulated unearned income | 105,650,414 | 73,711,001 | ||||||
Idle funds investments | 24,063,261 | — | ||||||
Cash and cash equivalents | 41,889,324 | 13,768,719 | ||||||
Other assets | 1,574,888 | 630,058 | ||||||
Deferred financing costs (net of accumulated amortization of $529,952 and $343,846 as of December 31, 2007 and 2006, respectively) | 1,670,135 | 1,333,654 | ||||||
Total assets | $ | 174,848,022 | $ | 89,443,432 | ||||
LIABILITIES | ||||||||
SBIC debentures | $ | 55,000,000 | $ | 45,100,000 | ||||
Deferred tax liability | 3,025,672 | — | ||||||
Interest payable | 1,062,672 | 854,941 | ||||||
Accounts payable and other liabilities | 610,470 | 215,960 | ||||||
Total liabilities | 59,698,814 | 46,170,901 | ||||||
Commitments and contingencies | ||||||||
NET ASSETS | ||||||||
Common stock, $0.01 par value per share (150,000,000 shares authorized, 8,959,718 shares issued and outstanding as of December 31, 2007) | 89,597 | — | ||||||
Additional paid in capital | 104,076,033 | — | ||||||
Undistributed net realized income | 6,067,131 | 4,266,043 | ||||||
Net unrealized appreciation from investments, net of income taxes | 4,916,447 | 13,585,479 | ||||||
Members’ capital (General Partner) | — | 181,770 | ||||||
Limited Partners’ capital | — | 25,239,239 | ||||||
Total net assets | 115,149,208 | 43,272,531 | ||||||
Total liabilities and net assets | $ | 174,848,022 | $ | 89,443,432 | ||||
Net asset value per share | $ | 12.85 | N/A | |||||
47
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Consolidated) | (Combined) | |||||||||||
INVESTMENT INCOME: | ||||||||||||
Interest, fee and dividend income: | ||||||||||||
Control investments | $ | 5,201,382 | $ | 4,295,354 | $ | 3,335,879 | ||||||
Affiliate investments | 5,390,655 | 3,573,570 | 3,149,259 | |||||||||
Non-Control/Non-Affiliate investments | 720,076 | 1,144,213 | 852,841 | |||||||||
Total interest, fee and dividend income | 11,312,113 | 9,013,137 | 7,337,979 | |||||||||
Interest from idle funds and other | 1,162,865 | 748,670 | 221,765 | |||||||||
Total investment income | 12,474,978 | 9,761,807 | 7,559,744 | |||||||||
EXPENSES: | ||||||||||||
Management fees to affiliate | (1,499,937 | ) | (1,942,032 | ) | (1,928,763 | ) | ||||||
Interest | (3,245,839 | ) | (2,717,236 | ) | (2,063,726 | ) | ||||||
General and administrative | (512,253 | ) | (197,979 | ) | (197,192 | ) | ||||||
Professional costs related to initial public offering | (695,250 | ) | — | — | ||||||||
Total expenses | (5,953,279 | ) | (4,857,247 | ) | (4,189,681 | ) | ||||||
NET INVESTMENT INCOME | 6,521,699 | 4,904,560 | 3,370,063 | |||||||||
NET REALIZED GAIN (LOSS) FROM INVESTMENTS: | ||||||||||||
Control investments | 1,802,713 | (805,469 | ) | 221,837 | ||||||||
Affiliate investments | 3,160,034 | 1,940,794 | 623,681 | |||||||||
Non-Control/Non-Affiliate investments | (270,538 | ) | 1,294,598 | — | ||||||||
Derivative Instrument and related investment | — | — | 642,208 | |||||||||
Total net realized gain (loss) from investments | 4,692,209 | 2,429,923 | 1,487,726 | |||||||||
NET REALIZED INCOME | 11,213,908 | 7,334,483 | 4,857,789 | |||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) FROM INVESTMENTS: | ||||||||||||
Control investments | (3,075,392 | ) | 6,631,698 | 2,526,516 | ||||||||
Affiliate investments | (2,340,933 | ) | 2,831,649 | 347,000 | ||||||||
Non-Control/Non-Affiliate investments | 384,832 | (974,833 | ) | 685,000 | ||||||||
Investment in affiliated Investment Manager | (375,000 | ) | — | — | ||||||||
Derivative Instrument and related investment | — | — | (526,242 | ) | ||||||||
Total net change in unrealized appreciation (depreciation) from investments | (5,406,493 | ) | 8,488,514 | 3,032,274 | ||||||||
Income tax provision | (3,262,539 | ) | — | — | ||||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 2,544,876 | $ | 15,822,997 | $ | 7,890,063 | ||||||
�� | ||||||||||||
NET INVESTMENT INCOME PER COMMON SHARE-BASIC AND DILUTED | $ | 0.76 | N/A | N/A | ||||||||
NET REALIZED INCOME PER COMMON SHARE-BASIC AND DILUTED | $ | 1.31 | N/A | N/A | ||||||||
DIVIDENDS/DISTRIBUTIONS PER COMMON SHARE | $ | 1.10 | N/A | N/A | ||||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE-BASIC AND DILUTED | $ | 0.30 | N/A | N/A | ||||||||
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING- BASIC AND DILUTED | 8,587,701 | N/A | N/A | |||||||||
48
Net Unrealized | ||||||||||||||||||||||||||||||||
Appreciation from | ||||||||||||||||||||||||||||||||
Members' | Limited | Common Stock | Additional | Undistributed | Investments, | Total | ||||||||||||||||||||||||||
Capital | Partners' | Number | Par | Paid In | Net Realized | net of | Net | |||||||||||||||||||||||||
(General Partner) | Capital | of Shares | Value | Capital | Income | Income Taxes | Assets | |||||||||||||||||||||||||
Balances at December 31, 2004 | $ | 118,505 | $ | 14,453,688 | — | $ | — | $ | — | $ | 601,004 | $ | 2,064,691 | $ | 17,237,888 | |||||||||||||||||
Capital contributions | 61,437 | 10,962,290 | — | — | — | — | — | 11,023,727 | ||||||||||||||||||||||||
Distributions to partners | — | — | — | — | — | (2,882,936 | ) | — | (2,882,936 | ) | ||||||||||||||||||||||
Net increase resulting from operations: | — | — | — | — | — | 4,857,789 | 3,032,274 | 7,890,063 | ||||||||||||||||||||||||
Balances at December 31, 2005 | 179,942 | 25,415,978 | — | — | — | 2,575,857 | 5,096,965 | 33,268,742 | ||||||||||||||||||||||||
Capital contributions | 1,828 | 353,261 | — | — | — | — | — | 355,089 | ||||||||||||||||||||||||
Distributions to partners | — | (530,000 | ) | — | — | — | (5,644,297 | ) | — | (6,174,297 | ) | |||||||||||||||||||||
Net increase resulting from operations: | — | — | — | — | — | 7,334,483 | 8,488,514 | 15,822,997 | ||||||||||||||||||||||||
Balances at December 31, 2006 | 181,770 | 25,239,239 | — | — | — | 4,266,043 | 13,585,479 | 43,272,531 | ||||||||||||||||||||||||
Capital contributions | — | 300,081 | — | — | — | — | — | 300,081 | ||||||||||||||||||||||||
Distributions to partners | — | — | — | — | — | (6,500,000 | ) | — | (6,500,000 | ) | ||||||||||||||||||||||
Formation Transactions | (181,770 | ) | (25,539,320 | ) | 4,525,726 | 45,257 | 43,675,833 | — | — | 18,000,000 | ||||||||||||||||||||||
Initial capitalization | — | — | 1,000 | 10 | 990 | — | — | 1,000 | ||||||||||||||||||||||||
Public offering of common stock | — | — | 4,300,000 | 43,000 | 60,139,997 | — | — | 60,182,997 | ||||||||||||||||||||||||
Costs related to offering | — | — | — | — | (1,642,573 | ) | — | — | (1,642,573 | ) | ||||||||||||||||||||||
Dividends paid to stockholders | — | — | — | — | — | (2,912,820 | ) | — | (2,912,820 | ) | ||||||||||||||||||||||
Dividend reinvestment | — | — | 132,992 | 1,330 | 1,901,786 | — | — | 1,903,116 | ||||||||||||||||||||||||
Net increase resulting from operations | — | — | — | — | — | 11,213,908 | (8,669,032 | ) | 2,544,876 | |||||||||||||||||||||||
Balances at December 31, 2007 | $ | — | $ | — | 8,959,718 | $ | 89,597 | $ | 104,076,033 | $ | 6,067,131 | $ | 4,916,447 | $ | 115,149,208 | |||||||||||||||||
49
For the Years Ended | ||||||||||||
December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Consolidated) | (Combined) | (Combined) | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net increase in net assets resulting from operations | $ | 2,544,876 | $ | 15,822,997 | $ | 7,890,063 | ||||||
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: | ||||||||||||
Accretion of unearned income | (998,069 | ) | (1,380,351 | ) | (1,251,066 | ) | ||||||
Net payment-in-kind interest accrual | (260,806 | ) | (216,805 | ) | (144,150 | ) | ||||||
Amortization of deferred financing costs | 186,106 | 157,850 | 120,225 | |||||||||
Net change in unrealized (appreciation) depreciation from investments | 5,406,493 | (8,488,514 | ) | (3,032,274 | ) | |||||||
Net realized gain from investments | (4,692,209 | ) | (2,429,923 | ) | (1,487,726 | ) | ||||||
Changes in other assets and liabilities: | ||||||||||||
Interest receivable | (407,347 | ) | (93,480 | ) | (182,324 | ) | ||||||
Other assets | (469,598 | ) | 2,107 | 4,172 | ||||||||
Deferred tax liability | 3,025,672 | — | — | |||||||||
Interest payable | 207,731 | 83,459 | 417,325 | |||||||||
Accounts payable and other liabilities | 394,510 | 76,543 | 103,670 | |||||||||
Deferred debt origination fees received | 467,558 | 709,980 | 535,250 | |||||||||
Net cash provided by operating activities | 5,404,917 | 4,243,863 | 2,973,165 | |||||||||
CASH FLOWS FROM INVESTMENT ACTIVITIES | ||||||||||||
Investments in portfolio companies | (29,479,023 | ) | (28,088,005 | ) | (19,727,500 | ) | ||||||
Principal payments received on loans and debt securities | 9,614,338 | 12,199,956 | 10,322,470 | |||||||||
Proceeds from sale of equity securities and related notes | 5,934,420 | 5,021,313 | 1,117,143 | |||||||||
Proceeds from derivative instrument | — | — | 115,966 | |||||||||
Investments of idle funds | (24,063,261 | ) | — | — | ||||||||
Net cash used in investing activities | (37,993,526 | ) | (10,866,736 | ) | (8,171,921 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from initial public offering/capitalization | 60,183,997 | — | — | |||||||||
Proceeds from capital contributions | 300,081 | 355,089 | 11,023,727 | |||||||||
Distribution to members and partners | (6,500,000 | ) | (6,174,297 | ) | (2,882,936 | ) | ||||||
Dividends paid to stockholders | (1,009,704 | ) | — | — | ||||||||
Proceeds from issuance of SBIC debentures | 9,900,000 | — | 23,100,000 | |||||||||
Payment of deferred loan costs and SBIC debenture fees | (522,587 | ) | (50,000 | ) | (577,500 | ) | ||||||
Payment of initial public offering costs | (1,642,573 | ) | — | — | ||||||||
Net cash provided by (used in) financing activities | 60,709,214 | (5,869,208 | ) | 30,663,291 | ||||||||
Net increase (decrease) in cash and cash equivalents | 28,120,605 | (12,492,081 | ) | 25,464,535 | ||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 13,768,719 | 26,260,800 | 796,265 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 41,889,324 | $ | 13,768,719 | $ | 26,260,800 | ||||||
50
Portfolio Company/Type of Investment (1) (2) | Industry | Principal (6) | Cost (6) | Fair Value | ||||||||||||
Control Investments(3) | ||||||||||||||||
Café Brazil, LLC | Casual Restaurant | |||||||||||||||
12% Secured Debt (Maturity — April 20, 2009) | Group | $ | 2,750,000 | $ | 2,750,000 | $ | 2,750,000 | |||||||||
Member Units (7) (Fully diluted 42.3%) | 41,837 | 1,250,000 | ||||||||||||||
2,791,837 | 4,000,000 | |||||||||||||||
CBT Nuggets, LLC | Produces and Sells | |||||||||||||||
Prime plus 2% Secured Debt (Maturity — June 1, 2011) | IT Certification | 360,000 | 360,000 | 360,000 | ||||||||||||
14% Secured Debt (Maturity — June 1, 2011) | Training Videos | 1,860,000 | 1,860,000 | 1,860,000 | ||||||||||||
Member Units (Fully diluted 29.1%) | 432,000 | 1,145,000 | ||||||||||||||
Warrants (Fully diluted 10.5%) | 72,000 | 345,000 | ||||||||||||||
2,724,000 | 3,710,000 | |||||||||||||||
Gulf Manufacturing, LLC | Specialty Metal | |||||||||||||||
Prime plus 1% Secured Debt (Maturity — August 31, 2012) | Fabrication | 1,200,000 | 1,200,000 | 1,200,000 | ||||||||||||
13% Secured Debt (Maturity — August 31, 2012) | 2,000,000 | 2,000,000 | 2,000,000 | |||||||||||||
Member Units (Fully diluted 18.4%) | 472,000 | 472,000 | ||||||||||||||
Warrants (Fully diluted 8.4%) | 160,000 | 250,000 | ||||||||||||||
3,832,000 | 3,922,000 | |||||||||||||||
Hawthorne Customs & Dispatch Services, LLC | Transportation/ | |||||||||||||||
13% Secured Debt (Maturity — January 31, 2011) | Logistics | 1,350,000 | 1,350,000 | 1,350,000 | ||||||||||||
Member Units (7) (Fully diluted 27.8%) | 375,000 | 435,000 | ||||||||||||||
Warrants (Fully diluted 16.5%) | 37,500 | 230,000 | ||||||||||||||
1,762,500 | 2,015,000 | |||||||||||||||
Hayden Acquisition, LLC | Manufacturer of | |||||||||||||||
12% Secured Debt (Maturity — March 9, 2009) | Utility Structures | 1,955,000 | 1,955,000 | 1,955,000 | ||||||||||||
Hydratec Holdings, LLC | Agricultural Services | |||||||||||||||
12.5% Secured Debt (Maturity — October 31, 2012) | 5,700,000 | 5,700,000 | 5,700,000 | |||||||||||||
Prime plus 1% Secured Debt (Maturity — October 31, 2012) | 1,845,244 | 1,845,244 | 1,845,244 | |||||||||||||
Member Units (Fully diluted 60%) | 1,800,000 | 1,800,000 | ||||||||||||||
9,345,244 | 9,345,244 | |||||||||||||||
Jensen Jewelers of Idaho, LLC | Retail Jewelry | |||||||||||||||
Prime Plus 2% Secured Debt (Maturity — November 14, 2011) | 1,200,000 | 1,200,000 | 1,200,000 | |||||||||||||
13% current / 6% PIK Secured Debt (Maturity — November 14, 2011) | 1,069,457 | 1,069,457 | 1,069,457 | |||||||||||||
Member Units (7) (Fully diluted 25.1%) | 376,000 | 815,000 | ||||||||||||||
2,645,457 | 3,084,457 | |||||||||||||||
Magna Card, Inc. | Wholesale/Consumer | |||||||||||||||
12% current / 0.4% PIK Secured Debt (Maturity — September 30, 2010) | Magnetic Products | 2,021,079 | 2,021,079 | — | ||||||||||||
Warrants (Fully diluted 35.8%) | 100,000 | — | ||||||||||||||
2,121,079 | — | |||||||||||||||
Quest Design & Production, LLC | Design and Fabrication | |||||||||||||||
8% current / 5% PIK Secured Debt (Maturity — December 1, 2010) | of Custom Display | 3,991,542 | 3,991,542 | 3,991,542 | ||||||||||||
Warrants (Fully diluted 26.0%) | Systems | 40,000 | 40,000 | |||||||||||||
4,031,542 | 4,031,542 | |||||||||||||||
TA Acquisition Group, LP | Processor of | |||||||||||||||
12% Secured Debt (Maturity — July 29, 2010) | Construction | 1,870,000 | 1,870,000 | 1,870,000 | ||||||||||||
Partnership Interest (7) (Fully diluted 18.3%) | Aggregates | 357,500 | 3,435,000 | |||||||||||||
Warrants (Fully diluted 18.3%) | 82,500 | 3,450,000 | ||||||||||||||
2,310,000 | 8,755,000 | |||||||||||||||
Technical Innovations, LLC | Manufacturer of | |||||||||||||||
12% Secured Debt (Maturity — October 31, 2009) | Specialty Cutting | 787,500 | 787,500 | 787,500 | ||||||||||||
Prime Secured Debt (Maturity — October 31, 2009) | Tools and Punches | 262,500 | 262,500 | 262,500 | ||||||||||||
1,050,000 | 1,050,000 | |||||||||||||||
Universal Scaffolding & Equipment, LLC | Manufacturer of | |||||||||||||||
Prime plus 1% Secured Debt (Maturity — August 16, 2012) | Scaffolding and | 1,122,333 | 1,122,333 | 1,122,333 | ||||||||||||
13% current / 5% PIK Secured Debt (Maturity — August 16, 2012) | Shoring Equipment | 3,196,376 | 3,196,376 | 3,196,376 | ||||||||||||
Member Units (Fully Diluted 18.4%) | 992,063 | 1,025,000 | ||||||||||||||
5,310,772 | 5,343,709 | |||||||||||||||
Wicks N’ More, LLC | Manufacturer of | |||||||||||||||
12% Secured Debt (Maturity — April 26, 2011) | High-end Candles | 3,720,000 | 3,720,000 | 1,950,000 | ||||||||||||
Member Units (Fully diluted 11.5%) | 360,000 | — | ||||||||||||||
Warrants (Fully diluted 21.3%) | 210,000 | — | ||||||||||||||
4,290,000 | 1,950,000 | |||||||||||||||
Subtotal Control Investments | 44,169,431 | 49,161,952 | ||||||||||||||
See accompanying notes to consolidated financial statements.
5158
Portfolio Company/Type of Investment (1) (2) | Industry | Principal (6) | Cost (6) | Fair Value | ||||||||||||
Affiliate Investments(4) | ||||||||||||||||
Advantage Millwork Company, Inc. | Manufacturer/Distributor | |||||||||||||||
12% Secured Debt (Maturity — February 5, 2012) | of Wood Doors | 2,666,667 | 2,666,667 | 2,666,667 | ||||||||||||
Warrants (Fully diluted 10.89%) | 87,120 | 87,120 | ||||||||||||||
2,753,787 | 2,753,787 | |||||||||||||||
American Sensor Technologies, Inc. | Manufacturer of | |||||||||||||||
Prime plus 0.5% Secured Debt (Maturity — May 31, 2010) | Commercial/ | 3,500,000 | 3,500,000 | 3,500,000 | ||||||||||||
Warrants (Fully diluted 20.0%) | Industrial Sensors | 50,000 | 750,000 | |||||||||||||
3,550,000 | 4,250,000 | |||||||||||||||
Carlton Global Resources, LLC | Processor of | |||||||||||||||
13% PIK Secured Debt (Maturity — November 15, 2011) | Industrial Minerals | 4,687,777 | 4,687,777 | 2,812,667 | ||||||||||||
Member Units (Fully diluted 8.5%) | 400,000 | — | ||||||||||||||
5,087,777 | 2,812,667 | |||||||||||||||
Houston Plating & Coatings, LLC | Plating & Industrial | |||||||||||||||
Prime plus 2% Secured Debt (Maturity — July 19, 2011) | Coating Services | 100,000 | 100,000 | 100,000 | ||||||||||||
Member Units (7) (Fully diluted 11.8%) | 210,000 | 2,450,000 | ||||||||||||||
310,000 | 2,550,000 | |||||||||||||||
KBK Industries, LLC | Specialty Manufacturer | |||||||||||||||
14% Secured Debt (Maturity — January 23, 2011) | of Oilfield and | 3,937,500 | 3,937,500 | 3,937,500 | ||||||||||||
8% Secured Debt (Maturity — July 1, 2009) | Industrial Products | 623,063 | 623,063 | 623,063 | ||||||||||||
Prime Plus 2% Secured Debt (Maturity — January 31, 2008) | 75,000 | 686,250 | ||||||||||||||
Member Units (7) (Fully diluted 14.5%) | 187,500 | 700,000 | ||||||||||||||
4,823,063 | 5,946,813 | |||||||||||||||
Laurus Healthcare, LP | Healthcare Facilities | |||||||||||||||
13% Secured Debt (Maturity — May 7, 2009) | 3,010,000 | 3,010,000 | 3,010,000 | |||||||||||||
Warrants (Fully diluted 18.2%) | 105,000 | 715,000 | ||||||||||||||
3,115,000 | 3,725,000 | |||||||||||||||
National Trench Safety, LLC | Trench & Traffic | |||||||||||||||
10% PIK debt (Maturity — April 16, 2014) | Safety Equipment | 365,334 | 365,334 | 365,334 | ||||||||||||
Member Units (Fully diluted 10.9%) | 1,792,308 | 1,792,308 | ||||||||||||||
2,157,642 | 2,157,642 | |||||||||||||||
Pulse Systems, LLC | Manufacturer of | |||||||||||||||
14% Secured Debt (Maturity — June 1, 2009) | Components for | 2,307,498 | 2,307,498 | 2,307,498 | ||||||||||||
Warrants (Fully diluted 6.6%) | Medical Devices | 118,000 | 350,000 | |||||||||||||
2,425,498 | 2,657,498 | |||||||||||||||
Transportation General, Inc. | Taxi Cab/Transportation | |||||||||||||||
13% Secured Debt (Maturity — May 31, 2010) | Services | 3,600,000 | 3,600,000 | 3,600,000 | ||||||||||||
Warrants (Fully diluted 24.0%) | 70,000 | 340,000 | ||||||||||||||
3,670,000 | 3,940,000 | |||||||||||||||
Turbine Air Systems, Ltd. | Commercial/Industrial | |||||||||||||||
12% Secured Debt (Maturity — October 11, 2011) | Chilling Systems | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||||||
Vision Interests, Inc. | Manufacturer/ | |||||||||||||||
13% Secured Debt (Maturity — June 5, 2012) | Installer of Commercial | 3,760,000 | 3,760,000 | 3,760,000 | ||||||||||||
Common stock (Fully diluted 8.9%) | Signage | 372,000 | 372,000 | |||||||||||||
Warrants (Fully diluted 11.2%) | 160,000 | 375,000 | ||||||||||||||
4,292,000 | 4,507,000 | |||||||||||||||
WorldCall, Inc. | Telecommunication/ | |||||||||||||||
13% Secured Debt (Maturity — October 22, 2009) | Information Services | 782,500 | 782,500 | 782,500 | ||||||||||||
Common stock (Fully diluted 6.22%) | 169,173 | 180,000 | ||||||||||||||
Warrants (Fully diluted 13.4%) | 75,000 | 150,000 | ||||||||||||||
1,026,673 | 1,112,500 | |||||||||||||||
Subtotal Affiliate Investments | 34,211,440 | 37,412,907 | ||||||||||||||
See accompanying notes
52
59
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
Investments at fair value: | ||||||||
Control investments (cost: $60,767,805 and $43,053,372 as of December 31, 2008 and 2007, respectively) | $ | 65,542,608 | $ | 48,108,197 | ||||
Affiliate investments (cost: $37,946,800 and $33,037,053 as of December 31, 2008 and 2007, respectively) | 39,412,695 | 36,176,216 | ||||||
Non-Control/Non-Affiliate investments (cost: $6,245,405 and $3,381,001 as of December 31, 2008 and 2007, respectively) | 5,375,886 | 3,741,001 | ||||||
Investment in affiliated Investment Manager (cost: $18,000,000 as of December 31, 2008 and 2007) | 16,675,626 | 17,625,000 | ||||||
Total investments (cost: $122,960,010 and $97,471,426 as of December 31, 2008 and 2007, respectively) | 127,006,815 | 105,650,414 | ||||||
Idle funds investments (cost: $4,218,704 and $24,063,261 as of December 31, 2008 and 2007, respectively) | 4,389,795 | 24,063,261 | ||||||
Cash and cash equivalents | 35,374,826 | 41,889,324 | ||||||
Deferred tax asset | 1,121,681 | — | ||||||
Other assets | 1,100,922 | 1,574,888 | ||||||
Deferred financing costs (net of accumulated amortization of $956,037 and $529,952 as of December 31, 2008 and 2007, respectively) | 1,635,238 | 1,670,135 | ||||||
Total assets | $ | 170,629,277 | $ | 174,848,022 | ||||
LIABILITIES | ||||||||
SBIC debentures | $ | 55,000,000 | $ | 55,000,000 | ||||
Deferred tax liability | — | 3,025,672 | ||||||
Interest payable | 1,108,193 | 1,062,672 | ||||||
Accounts payable and other liabilities | 2,165,028 | 610,470 | ||||||
Total liabilities | 58,273,221 | 59,698,814 | ||||||
Commitments and contingencies | ||||||||
NET ASSETS | ||||||||
Common stock, $0.01 par value per share (150,000,000 shares authorized; 9,241,183 and 8,959,718 issued and 9,206,483 and 8,959,718 outstanding as of December 31, 2008 and 2007, respectively) | 92,412 | 89,597 | ||||||
Additional paid-in capital | 104,798,399 | 104,076,033 | ||||||
Undistributed net realized income | 3,658,495 | 6,067,131 | ||||||
Net unrealized appreciation from investments, net of income taxes | 4,137,756 | 4,916,447 | ||||||
Treasury stock, at cost (34,700 and 0 shares as of December 31, 2008 and 2007, respectively) | (331,006 | ) | — | |||||
Total net assets | 112,356,056 | 115,149,208 | ||||||
Total liabilities and net assets | $ | 170,629,277 | $ | 174,848,022 | ||||
NET ASSET VALUE PER SHARE | $ | 12.20 | $ | 12.85 | ||||
60
Years Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(Consolidated) | (Consolidated) | (Combined) | ||||||||||
INVESTMENT INCOME: | ||||||||||||
Interest, fee and dividend income: | ||||||||||||
Control investments | $ | 9,826,369 | $ | 5,201,382 | $ | 4,295,354 | ||||||
Affiliate investments | 4,842,442 | 5,390,655 | 3,573,570 | |||||||||
Non-Control/Non-Affiliate investments | 1,298,386 | 720,076 | 1,144,213 | |||||||||
Total interest, fee and dividend income | 15,967,197 | 11,312,113 | 9,013,137 | |||||||||
Interest from idle funds and other | 1,328,229 | 1,162,865 | 748,670 | |||||||||
Total investment income | 17,295,426 | 12,474,978 | 9,761,807 | |||||||||
EXPENSES: | ||||||||||||
Interest | (3,777,919 | ) | (3,245,839 | ) | (2,717,236 | ) | ||||||
General and administrative | (1,684,084 | ) | (512,253 | ) | (197,979 | ) | ||||||
Expenses reimbursed to Investment Manager | (1,006,835 | ) | — | — | ||||||||
Share-based compensation | (511,452 | ) | — | — | ||||||||
Management fees to affiliate | — | (1,499,937 | ) | (1,942,032 | ) | |||||||
Professional costs related to initial public offering | — | (695,250 | ) | — | ||||||||
Total expenses | (6,980,290 | ) | (5,953,279 | ) | (4,857,247 | ) | ||||||
NET INVESTMENT INCOME | 10,315,136 | 6,521,699 | 4,904,560 | |||||||||
NET REALIZED GAIN (LOSS) FROM INVESTMENTS: | ||||||||||||
Control investments | 188,214 | 1,802,713 | (805,469 | ) | ||||||||
Affiliate investments | 1,209,280 | 3,160,034 | 1,940,794 | |||||||||
Non-Control/Non-Affiliate investments | — | (270,538 | ) | 1,294,598 | ||||||||
Total net realized gain (loss) from investments | 1,397,494 | 4,692,209 | 2,429,923 | |||||||||
NET REALIZED INCOME | 11,712,630 | 11,213,908 | 7,334,483 | |||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) FROM INVESTMENTS: | ||||||||||||
Control investments | (217,717 | ) | (3,075,392 | ) | 6,631,698 | |||||||
Affiliate investments | (1,735,573 | ) | (2,340,933 | ) | 2,831,649 | |||||||
Non-Control/Non-Affiliate investments | (1,058,428 | ) | 384,832 | (974,833 | ) | |||||||
Investment in affiliated Investment Manager | (949,374 | ) | (375,000 | ) | — | |||||||
Total net change in unrealized appreciation (depreciation) from investments | (3,961,092 | ) | (5,406,493 | ) | 8,488,514 | |||||||
Income tax benefit (provision) | 3,182,401 | (3,262,539 | ) | — | ||||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 10,933,939 | $ | 2,544,876 | $ | 15,822,997 | ||||||
NET INVESTMENT INCOME PER SHARE | ||||||||||||
BASIC AND DILUTED | $ | 1.15 | $ | 0.76 | N/A | |||||||
NET REALIZED INCOME PER SHARE | ||||||||||||
BASIC AND DILUTED | $ | 1.31 | $ | 1.31 | N/A | |||||||
DIVIDENDS/DISTRIBUTIONS PAID PER SHARE BASIC AND DILUTED | $ | 1.43 | $ | 1.10 | N/A | |||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE | ||||||||||||
BASIC AND DILUTED | $ | 1.22 | $ | 0.30 | N/A | |||||||
WEIGHTED AVERAGE SHARES OUTSTANDING — | ||||||||||||
BASIC | 8,967,383 | 8,587,701 | N/A | |||||||||
DILUTED | 8,971,064 | 8,587,701 | N/A | |||||||||
61
Net | ||||||||||||||||||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||||||||||||||||||
Appreciation | ||||||||||||||||||||||||||||||||||||||||
Members’ | from | |||||||||||||||||||||||||||||||||||||||
Equity | Limited | Common Stock | Additional | Undistributed | Investments, | Treasry Stock | Total | |||||||||||||||||||||||||||||||||
(General | Partners’ | Number | Par | Paid-In | Net Realized | net of Income | Number | Net | ||||||||||||||||||||||||||||||||
Partner) | Capital | of Shares | Value | Capital | Income | Taxes | of Shares | Value | Assets | |||||||||||||||||||||||||||||||
Balances at December 31, 2005 | $ | 179,942 | $ | 25,415,978 | — | $ | — | $ | — | $ | 2,575,857 | $ | 5,096,965 | — | $ | — | $ | 33,268,742 | ||||||||||||||||||||||
Capital contributions | 1,828 | 353,261 | — | — | — | — | — | — | — | 355,089 | ||||||||||||||||||||||||||||||
Distributions to partners | — | (530,000 | ) | — | — | — | (5,644,297 | ) | — | — | — | (6,174,297 | ) | |||||||||||||||||||||||||||
Net increase resulting from operations | — | — | — | — | — | 7,334,483 | 8,488,514 | — | — | 15,822,997 | ||||||||||||||||||||||||||||||
Balances at December 31, 2006 | 181,770 | 25,239,239 | — | — | — | 4,266,043 | 13,585,479 | — | — | 43,272,531 | ||||||||||||||||||||||||||||||
Capital contributions | — | 300,081 | — | — | — | — | — | — | — | 300,081 | ||||||||||||||||||||||||||||||
Distributions to partners | — | — | — | — | — | (6,500,000 | ) | — | — | — | (6,500,000 | ) | ||||||||||||||||||||||||||||
Formation Transactions | (181,770 | ) | (25,539,320 | ) | 4,525,726 | 45,257 | 43,675,833 | — | — | — | — | 18,000,000 | ||||||||||||||||||||||||||||
Initial Capitalization | — | — | 1,000 | 10 | 990 | — | — | — | — | 1,000 | ||||||||||||||||||||||||||||||
Public offering of common stock | — | — | 4,300,000 | 43,000 | 60,139,997 | — | — | — | — | 60,182,997 | ||||||||||||||||||||||||||||||
Costs related to offering | — | — | — | — | (1,642,573 | ) | — | — | — | — | (1,642,573 | ) | ||||||||||||||||||||||||||||
Dividends paid to stockholders | — | — | — | — | — | (2,912,820 | ) | — | — | — | (2,912,820 | ) | ||||||||||||||||||||||||||||
Dividend reinvestment | — | — | 132,992 | 1,330 | 1,901,786 | — | — | — | — | 1,903,116 | ||||||||||||||||||||||||||||||
Net increase resulting from operations | — | — | — | — | — | 11,213,908 | (8,669,032 | ) | — | — | 2,544,876 | |||||||||||||||||||||||||||||
Balances at December 31, 2007 | — | — | 8,959,718 | 89,597 | 104,076,033 | 6,067,131 | 4,916,447 | — | — | 115,149,208 | ||||||||||||||||||||||||||||||
Issuance of restricted stock | — | — | 265,645 | 2,657 | (2,657 | ) | — | — | — | — | — | |||||||||||||||||||||||||||||
Issuance of stock — dividend reinvestment plan | — | — | 15,820 | 158 | 213,571 | — | — | — | — | 213,729 | ||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | — | — | (34,700 | ) | (331,006 | ) | (331,006 | ) | |||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | 511,452 | — | — | — | — | 511,452 | ||||||||||||||||||||||||||||||
Dividends declared to stockholders | — | — | — | — | — | (14,121,266 | ) | — | — | — | (14,121,266 | ) | ||||||||||||||||||||||||||||
Net increase resulting from operations | — | — | — | — | — | 11,712,630 | (778,691 | ) | — | — | 10,933,939 | |||||||||||||||||||||||||||||
Balances at December 31, 2008 | $ | — | $ | — | 9,241,183 | $ | 92,412 | $ | 104,798,399 | $ | 3,658,495 | $ | 4,137,756 | (34,700 | ) | $ | (331,006 | ) | $ | 112,356,056 | ||||||||||||||||||||
62
Years Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(Consolidated) | (Consolidated) | (Combined) | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net increase in net assets resulting from operations: | $ | 10,933,939 | $ | 2,544,876 | $ | 15,822,997 | ||||||
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: | ||||||||||||
Accretion of unearned income | (1,062,452 | ) | (998,069 | ) | (1,380,351 | ) | ||||||
Netpayment-in-kind interest accrual | (216,505 | ) | (260,806 | ) | (216,805 | ) | ||||||
Share-based compensation | 511,452 | — | — | |||||||||
Amortization of deferred financing costs | 426,084 | 186,106 | 157,850 | |||||||||
Net change in unrealized (appreciation) depreciation from investments | 3,961,092 | 5,406,493 | (8,488,514 | ) | ||||||||
Net realized gain from investments | (1,397,494 | ) | (4,692,209 | ) | (2,429,923 | ) | ||||||
Deferred taxes | (4,147,353 | ) | 3,025,672 | — | ||||||||
Changes in other assets and liabilities: | ||||||||||||
Other assets | 418,166 | (876,945 | ) | (91,373 | ) | |||||||
Interest payable | 45,521 | 207,731 | 83,459 | |||||||||
Accounts payable and other liabilities | 828,098 | 394,510 | 76,543 | |||||||||
Deferred debt origination fees received | 612,143 | 467,558 | 709,980 | |||||||||
Net cash provided by operating activities | 10,912,691 | 5,404,917 | 4,243,863 | |||||||||
CASH FLOWS FROM INVESTMENT ACTIVITIES | ||||||||||||
Investments in portfolio companies | (47,698,567 | ) | (29,479,023 | ) | (28,088,005 | ) | ||||||
Investments in idle funds | (4,218,704 | ) | (24,063,261 | ) | — | |||||||
Principal payments received on loans and debt securities | 16,300,750 | 9,614,338 | 12,199,956 | |||||||||
Proceeds from sale of equity securities and related notes | 8,029,339 | 5,934,420 | 5,021,313 | |||||||||
Proceeds from idle funds investments | 24,063,261 | — | — | |||||||||
Net cash used in investment activities | (3,523,921 | ) | (37,993,526 | ) | (10,866,736 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from initial public offering/capitalization | — | 60,183,997 | — | |||||||||
Proceeds from capital contributions | — | 300,081 | 355,089 | |||||||||
Purchase of treasury stock | (331,006 | ) | — | — | ||||||||
Payment of distributions to members and partners | — | (6,500,000 | ) | (6,174,297 | ) | |||||||
Payment of dividends to stockholders | (13,181,074 | ) | (1,009,704 | ) | — | |||||||
Proceeds from issuance of SBIC debentures | — | 9,900,000 | — | |||||||||
Payment of initial public offering costs | — | (1,642,573 | ) | — | ||||||||
Payment of deferred loan costs and SBIC debenture fees | (391,188 | ) | (522,587 | ) | (50,000 | ) | ||||||
Net cash provided by (used in) financing activities | (13,903,268 | ) | 60,709,214 | (5,869,208 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | (6,514,498 | ) | 28,120,605 | (12,492,081 | ) | |||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 41,889,324 | 13,768,719 | 26,260,800 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 35,374,826 | $ | 41,889,324 | $ | 13,768,719 | ||||||
63
Portfolio Company/Type of Investment (1) (2) | Industry | Principal (6) | Cost (6) | Fair Value | ||||||||||||
Non-Control/Non-Affiliate Investments(5): | ||||||||||||||||
East Teak Fine Hardwoods, Inc. | Hardwood Products | |||||||||||||||
13% Current/5.5% PIK Secured Debt (Maturity — April 13, 2011) | 1,651,028 | 1,651,028 | 1,651,028 | |||||||||||||
Common Stock (Fully diluted 3.3%) | 130,000 | 490,000 | ||||||||||||||
1,781,028 | 2,141,028 | |||||||||||||||
Support Systems Homes, Inc. | Manages Substance | |||||||||||||||
14% Current/4% PIK Secured Debt (Maturity — June 5, 2012) | Abuse Treatment | 1,525,674 | 1,525,674 | 1,525,674 | ||||||||||||
8% Secured Debt (Maturity — June 5, 2012) | Centers | 158,888 | 158,888 | 158,888 | ||||||||||||
1,684,562 | 1,684,562 | |||||||||||||||
Subtotal Non-Control/Non-Affiliate Investments | 3,465,590 | 3,825,590 | ||||||||||||||
Main Street Capital Partners, LLC (Investment Manager) | Asset Management | |||||||||||||||
100% of Membership Interests | 18,000,000 | 17,625,000 | ||||||||||||||
Total Portfolio Investments, December 31, 2007 | $ | 99,846,461 | $ | 108,025,449 | ||||||||||||
Accumulated unearned income | $ | (2,375,035 | ) | |||||||||||||
Total Portfolio Investments net of accumulated unearned income | $ | 105,650,414 | ||||||||||||||
Idle Fund Investments | Investments in U.S. | |||||||||||||||
4.691% Current Federal Home Loan Bank Discount Note (Maturity — April 11, 2008) | Agency Securities | 3,500,000 | $ | 3,421,791 | $ | 3,421,791 | ||||||||||
4.691% Current Federal National Mortgage Association Discount Note (Maturity — April 2, 2008) | 3,500,000 | 3,425,490 | 3,425,490 | |||||||||||||
4.675% Current Federal Home Loan Bank Discount Note (Maturity — March 20, 2008) | 3,500,000 | 3,431,089 | 3,431,089 | |||||||||||||
4.668% Current Federal Home Loan Bank Discount Note (Maturity — March 5, 2008) | 3,500,000 | 3,437,408 | 3,437,408 | |||||||||||||
4.673% Current Federal Home Loan Bank Discount Note (Maturity — February 20, 2008) | 3,500,000 | 3,443,197 | 3,443,197 | |||||||||||||
4.77% Current Federal Home Loan Mortgage Corp Discount Note (Maturity — February 7, 2008) | 3,500,000 | 3,448,948 | 3,448,948 | |||||||||||||
4.64% Current Federal National Mortgage Association Discount Note (Maturity — January 23, 2008) | 3,500,000 | 3,455,338 | 3,455,338 | |||||||||||||
Total Idle Fund Investments, December 31, 2007 | $ | 24,063,261 | $ | 24,063,261 | ||||||||||||
Portfolio Company/Type of Investment(1)(2) | Industry | Principal(6) | Cost(6) | Fair Value | ||||||||||
Control Investments(3) | ||||||||||||||
Café Brazil, LLC | ||||||||||||||
12% Secured Debt (Maturity — April 20, 2011) | Casual Restaurant Group | $ | 2,750,000 | $ | 2,728,113 | $ | 2,750,000 | |||||||
Member Units(7) (Fully diluted 42.3%) | 41,837 | 1,000,000 | ||||||||||||
2,769,950 | 3,750,000 | |||||||||||||
CBT Nuggets, LLC | Produces and Sells | |||||||||||||
14% Secured Debt (Maturity — June 1, 2011) | IT Certification | 1,680,000 | 1,642,518 | 1,680,000 | ||||||||||
10% Secured Debt (Maturity — December 31, 2009) | Training Videos | 150,000 | 150,000 | 150,000 | ||||||||||
Member Units(7) (Fully diluted 29.1%) | 432,000 | 1,625,000 | ||||||||||||
Warrants (Fully diluted 10.5%) | 72,000 | 500,000 | ||||||||||||
2,296,518 | 3,955,000 | |||||||||||||
Ceres Management, LLC (Lambs) | Aftermarket Automotive | |||||||||||||
14% Secured Debt (Maturity — May 31, 2013) | Services Chain | 2,400,000 | 2,372,601 | 2,372,601 | ||||||||||
Member Units (Fully diluted 42.0%) | 1,200,000 | 1,300,000 | ||||||||||||
3,572,601 | 3,672,601 | |||||||||||||
Condit Exhibits, LLC | Tradeshow Exhibits/ | |||||||||||||
13% current / 5% PIK Secured Debt (Maturity — July 1, 2013) | Custom Displays | 2,308,073 | 2,273,194 | 2,273,194 | ||||||||||
Warrants (Fully diluted 28.1%) | 300,000 | 300,000 | ||||||||||||
2,573,194 | 2,573,194 | |||||||||||||
Gulf Manufacturing, LLC | Industrial Metal | |||||||||||||
Prime plus 1% Secured Debt (Maturity — August 31, 2012) | Fabrication | 1,200,000 | 1,190,764 | 1,200,000 | ||||||||||
13% Secured Debt (Maturity — August 31, 2012) | 1,900,000 | 1,747,777 | 1,880,000 | |||||||||||
Member Units(7) (Fully diluted 18.6%) | 472,000 | 1,100,000 | ||||||||||||
Warrants (Fully diluted 8.4%) | 160,000 | 550,000 | ||||||||||||
3,570,541 | 4,730,000 | |||||||||||||
Hawthorne Customs & Dispatch Services, LLC | Transportation/ | |||||||||||||
13% Secured Debt (Maturity — January 31, 2011) | Logistics | 1,200,000 | 1,171,988 | 1,171,988 | ||||||||||
Member Units(7) (Fully diluted 27.8%) | 375,000 | 435,000 | ||||||||||||
Warrants (Fully diluted 16.5%) | 37,500 | 230,000 | ||||||||||||
1,584,488 | 1,836,988 | |||||||||||||
Hydratec Holdings, LLC | Agricultural Services | |||||||||||||
12.5% Secured Debt (Maturity — October 31, 2012) | 5,400,000 | 5,311,329 | 5,311,329 | |||||||||||
Prime plus 1% Secured Debt (Maturity — October 31, 2012) | 1,595,244 | 1,579,911 | 1,579,911 | |||||||||||
Member Units (Fully diluted 60%) | 1,800,000 | 2,050,000 | ||||||||||||
8,691,240 | 8,941,240 | |||||||||||||
Jensen Jewelers of Idaho, LLC | Retail Jewelry | |||||||||||||
Prime Plus 2% Secured Debt (Maturity — November 14, 2011) | 1,044,000 | 1,030,957 | 1,044,000 | |||||||||||
13% current / 6% PIK Secured Debt (Maturity — November 14, 2011) | 1,004,591 | 986,980 | 1,004,591 | |||||||||||
Member Units(7) (Fully diluted 24.3%) | 376,000 | 380,000 | ||||||||||||
2,393,937 | 2,428,591 | |||||||||||||
NAPCO Precast, LLC | Precast Concrete | |||||||||||||
18% Secured Debt (Maturity — February 1, 2013) | Manufacturing | 6,461,538 | 6,348,011 | 6,461,538 | ||||||||||
Prime Plus 2% Secured Debt (Maturity — February 1, 2013)(8) | 3,692,308 | 3,660,945 | 3,692,308 | |||||||||||
Member Units(7) (Fully diluted 36.1%) | 2,000,000 | 5,100,000 | ||||||||||||
12,008,956 | 15,253,846 | |||||||||||||
OMi Holdings, Inc. | Manufacturer of | |||||||||||||
12% Secured Debt (Maturity — April 1, 2013) | Overhead Cranes | 6,660,000 | 6,603,400 | 6,603,400 | ||||||||||
Common Stock (Fully diluted 28.8%) | 900,000 | 570,000 | ||||||||||||
7,503,400 | 7,173,400 |
64
Portfolio Company/Type of Investment(1)(2) | Industry | Principal(6) | Cost(6) | Fair Value | ||||||||||
Quest Design & Production, LLC | Design and Fabrication | |||||||||||||
10% Secured Debt (Maturity — June 30, 2013) | of Custom Display | 600,000 | 465,060 | 600,000 | ||||||||||
0% Secured Debt (Maturity — June 30, 2013) | Systems | 2,000,000 | 2,000,000 | 1,400,000 | ||||||||||
Warrants (Fully diluted 40.0%) | 1,595,858 | — | ||||||||||||
Warrants (Fully diluted 20.0%) | 40,000 | — | ||||||||||||
4,100,918 | 2,000,000 | |||||||||||||
Universal Scaffolding & Equipment, LLC | Manufacturer of Scaffolding | |||||||||||||
Prime plus 1% Secured Debt (Maturity — August 17, 2012)(8) | and Shoring Equipment | 881,833 | 875,072 | 875,072 | ||||||||||
13% current / 5% PIK Secured Debt (Maturity — August 17, 2012) | 3,362,698 | 3,311,508 | 3,160,000 | |||||||||||
Member Units (Fully diluted 18.4%) | 992,063 | — | ||||||||||||
5,178,643 | 4,035,072 | |||||||||||||
Uvalco Supply, LLC | Farm and Ranch Supply | |||||||||||||
Member Units (Fully diluted 39.6%) | 905,743 | 1,575,000 | ||||||||||||
Ziegler’s NYPD, LLC | Restaurant | |||||||||||||
Prime plus 2% Secured Debt (Maturity — October 1, 2013)(8) | 600,000 | 594,239 | 594,239 | |||||||||||
13% current / 5% PIK Secured Debt (Maturity — October 1, 2013) | 2,704,262 | 2,663,437 | 2,663,437 | |||||||||||
Warrants (Fully diluted 28.6%) | 360,000 | 360,000 | ||||||||||||
3,617,676 | 3,617,676 | |||||||||||||
Subtotal Control Investments | 60,767,805 | 65,542,608 | ||||||||||||
65
Portfolio Company/Type of Investment(1)(2) | Industry | Principal(6) | Cost(6) | Fair Value | ||||||||||
Affiliate Investments(4) | ||||||||||||||
Advantage Millwork Company, Inc. | Manufacturer/Distributor | |||||||||||||
12% Secured Debt (Maturity — February 5, 2012) | of Wood Doors | 3,066,667 | 2,955,442 | 2,955,442 | ||||||||||
Warrants (Fully diluted 12.2%) | 97,808 | — | ||||||||||||
3,053,250 | 2,955,442 | |||||||||||||
American Sensor Technologies, Inc. | Manufacturer of Commercial/ | |||||||||||||
Prime plus 0.5% Secured Debt (Maturity — May 31, 2010)(8) | Industrial Sensors | 3,800,000 | 3,800,000 | 3,800,000 | ||||||||||
Warrants (Fully diluted 20.0%) | 50,000 | 250,000 | ||||||||||||
3,850,000 | 4,050,000 | |||||||||||||
Carlton Global Resources, LLC | Processor of | |||||||||||||
13% PIK Secured Debt (Maturity — November 15, 2011) | Industrial Minerals | 4,791,944 | 4,655,836 | — | ||||||||||
Member Units (Fully diluted 8.5%) | 400,000 | — | ||||||||||||
5,055,836 | — | |||||||||||||
California Healthcare Medical Billing, Inc. | Healthcare | |||||||||||||
12% Secured Debt (Maturity — October 17, 2013) | Services | 1,410,000 | 1,141,706 | 1,141,706 | ||||||||||
Common Stock (Fully diluted 6%) | 390,000 | 390,000 | ||||||||||||
Warrants (Fully diluted 12%) | 240,000 | 240,000 | ||||||||||||
1,771,706 | 1,771,706 | |||||||||||||
Houston Plating & Coatings, LLC | Plating & Industrial | |||||||||||||
Prime plus 2% Secured Debt (Maturity — July 18, 2013) | Coating Services | 300,000 | 300,000 | 300,000 | ||||||||||
Member Units(7) (Fully diluted 11.1%) | 210,000 | 2,750,000 | ||||||||||||
510,000 | 3,050,000 | |||||||||||||
KBK Industries, LLC | Specialty Manufacturer | |||||||||||||
14% Secured Debt (Maturity — January 23, 2011) | of Oilfield and | 3,937,500 | 3,787,758 | 3,937,500 | ||||||||||
8% Secured Debt (Maturity — March 1, 2010) | Industrial Products | 468,750 | 468,750 | 468,750 | ||||||||||
8% Secured Debt (Maturity — March 31, 2009) | 450,000 | 450,000 | 450,000 | |||||||||||
Member Units(7) (Fully diluted 14.5%) | 187,500 | 775,000 | ||||||||||||
4,894,008 | 5,631,250 | |||||||||||||
Laurus Healthcare, LP | Healthcare Facilities | |||||||||||||
13% Secured Debt (Maturity — May 7, 2009) | 2,275,000 | 2,259,664 | 2,275,000 | |||||||||||
Warrants (Fully diluted 17.5%) | 105,000 | 2,500,000 | ||||||||||||
2,364,664 | 4,775,000 | |||||||||||||
National Trench Safety, LLC | Trench & Traffic | |||||||||||||
10% PIK Debt (Maturity — April 16, 2014) | Safety Equipment | 404,256 | 404,256 | 404,256 | ||||||||||
Member Units (Fully diluted 11.7%) | 1,792,308 | 1,792,308 | ||||||||||||
2,196,564 | 2,196,564 | |||||||||||||
Pulse Systems, LLC | Manufacturer of | |||||||||||||
14% Secured Debt (Maturity — June 1, 2009) | Components for | 1,831,274 | 1,819,464 | 1,831,274 | ||||||||||
Warrants (Fully diluted 7.4%) | Medical Devices | 132,856 | 450,000 | |||||||||||
1,952,320 | 2,281,274 | |||||||||||||
Schneider Sales Management, LLC | Sales Consulting | |||||||||||||
13% Secured Debt (Maturity — October 15, 2013) | and Training | 1,980,000 | 1,909,972 | 1,909,972 | ||||||||||
Warrants (Fully diluted 12.0%) | 45,000 | 45,000 | ||||||||||||
1,954,972 | 1,954,972 | |||||||||||||
Vision Interests, Inc. | Manufacturer/ | |||||||||||||
13% Secured Debt (Maturity — June 5, 2012) | Installer of Commercial | 3,760,000 | 3,579,117 | 3,579,117 | ||||||||||
Common Stock (Fully diluted 8.9%) | Signage | 372,000 | 420,000 | |||||||||||
Warrants (Fully diluted 11.2%) | 160,000 | 420,000 | ||||||||||||
4,111,117 | 4,419,117 | |||||||||||||
Walden Smokey Point, Inc. | Specialty Transportation/ | |||||||||||||
14% current / 4% PIK Secured Debt (Maturity — December 30, 2013) | Logistics | 4,800,533 | 4,704,533 | 4,704,533 | ||||||||||
Common Stock (Fully diluted 7.6%) | 600,000 | 600,000 | ||||||||||||
5,304,533 | 5,304,533 | |||||||||||||
WorldCall, Inc. | Telecommunication/ | |||||||||||||
13% Secured Debt (Maturity — October 22, 2009) | Information Services | 646,225 | 631,199 | 640,000 | ||||||||||
Common Stock (Fully diluted 9.9%) | 296,631 | 382,837 | ||||||||||||
927,830 | 1,022,837 | |||||||||||||
Subtotal Affiliate Investments | 37,946,800 | 39,412,695 | ||||||||||||
66
Portfolio Company/Type of Investment(1)(2) | Industry | Principal(6) | Cost(6) | Fair Value | ||||||||||
Non-Control/Non-Affiliate Investments(5): | ||||||||||||||
East Teak Fine Hardwoods, Inc. | Hardwood Products | |||||||||||||
Common Stock (Fully diluted 3.3%) | 130,000 | 490,000 | ||||||||||||
Hayden Acquisition, LLC | Manufacturer of | |||||||||||||
8% Secured Debt (Maturity — March 9, 2009) | Utility Structures | 1,800,000 | 1,781,303 | 500,000 | ||||||||||
Support Systems Homes, Inc. | Manages Substance | |||||||||||||
15% Secured Debt | Abuse Treatment | |||||||||||||
(Maturity — August 21, 2018) | Centers | 226,589 | 226,589 | 226,589 | ||||||||||
Technical Innovations, LLC | Manufacturer of Specialty | |||||||||||||
7% Secured Debt (Maturity — August 31, 2009) | Cutting Tools and Punches | 416,364 | 409,297 | 409,297 | ||||||||||
13.5% Secured Debt (Maturity — January 16, 2015) | 3,750,000 | 3,698,216 | 3,750,000 | |||||||||||
4,107,513 | 4,159,297 | |||||||||||||
Subtotal Non-Control/Non-Affiliate Investments | 6,245,405 | 5,375,886 | ||||||||||||
Main Street Capital Partners, LLC (Investment Manager) | Asset Management | |||||||||||||
100% of Membership Interests | 18,000,000 | 16,675,626 | ||||||||||||
Total Portfolio Investments, December 31, 2008 | $ | 122,960,010 | $ | 127,006,815 | ||||||||||
Idle Funds Investments | Investments in High-Quality | |||||||||||||
8.3% General Electric Capital Corporate Bond | Debt Investments and | 1,218,704 | 1,218,704 | 1,218,704 | ||||||||||
(Maturity — September 20, 2009) | Diversified Bond Funds | |||||||||||||
4.50% National City Bank Bond | 1,000,000 | 1,000,000 | 1,000,000 | |||||||||||
(Maturity — March 15, 2010) | ||||||||||||||
Vanguard High-Yield Corp Fund Admiral Shares | 1,000,000 | 1,000,000 | 1,086,514 | |||||||||||
Vanguard Long-Term Investment-Grade Fund Admiral Shares | 1,000,000 | 1,000,000 | 1,084,577 | |||||||||||
$ | 4,218,704 | $ | 4,389,795 | |||||||||||
(1) | ||
(2) | See companies. | |
(3) | ||
(4) | Affiliate investments are defined by the 1940 Act as | |
(5) | Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control Investments Investments. | |
(6) | ||
(7) | Income producing through payment of dividends or distributions. | |
(8) | Subject to contractual minimum rates. |
See accompanying notes to consolidated financial statements.
53
67
Portfolio Company/Type of Investment (1) (2) | Industry | Principal(6) | Cost(6) | Fair Value | ||||||||||||||||||||||||||
Portfolio Company/Type of Investment(1)(2) | Industry | Principal(6) | Cost(6) | Fair Value | ||||||||||||||||||||||||||
Control Investments(3) | ||||||||||||||||||||||||||||||
Café Brazil, LLC | Casual Restaurant | Casual Restaurant | ||||||||||||||||||||||||||||
12% Secured Debt (Maturity — April 20, 2009) | Group | $ | 3,150,000 | $ | 3,150,000 | $ | 3,150,000 | Group | $ | 2,750,000 | $ | 2,702,931 | $ | 2,702,931 | ||||||||||||||||
Member Units(7) (Fully diluted 41.0%) | 41,837 | 900,000 | ||||||||||||||||||||||||||||
Member Units(7) (Fully diluted 42.3%) | 41,837 | 1,250,000 | ||||||||||||||||||||||||||||
3,191,837 | 4,050,000 | 2,744,768 | 3,952,931 | |||||||||||||||||||||||||||
CBT Nuggets, LLC | Produces and sells | |||||||||||||||||||||||||||||
CBT Nuggets , LLC | Produces and Sells | |||||||||||||||||||||||||||||
Prime plus 2% Secured Debt (Maturity — June 1, 2011) | IT Certification | 660,000 | 660,000 | 660,000 | IT Certification | 360,000 | 354,678 | 354,678 | ||||||||||||||||||||||
14% Secured Debt (Maturity — June 1, 2011) | Training Videos | 1,860,000 | 1,860,000 | 1,860,000 | Training Videos | 1,860,000 | 1,805,275 | 1,805,275 | ||||||||||||||||||||||
Member Units (Fully diluted 29.1%) | 432,000 | 610,000 | 432,000 | 1,145,000 | ||||||||||||||||||||||||||
Warrants (Fully diluted 10.5%) | 72,000 | 200,000 | 72,000 | 345,000 | ||||||||||||||||||||||||||
3,024,000 | 3,330,000 | 2,663,953 | 3,649,953 | |||||||||||||||||||||||||||
Gulf Manufacturing, LLC | Industrial Metal | |||||||||||||||||||||||||||||
Prime plus 1% Secured Debt (Maturity — August 31, 2012) | Fabrication | 1,200,000 | 1,188,636 | 1,188,636 | ||||||||||||||||||||||||||
13% Secured Debt (Maturity — August 31, 2012) | 2,000,000 | 1,809,216 | 1,809,216 | |||||||||||||||||||||||||||
Member Units (Fully diluted 18.4%) | 472,000 | 472,000 | ||||||||||||||||||||||||||||
Warrants (Fully diluted 8.4%) | 160,000 | 250,000 | ||||||||||||||||||||||||||||
Hawthorne Customs & Dispatch Services, LLC | Transportation/ | |||||||||||||||||||||||||||||
3,629,852 | 3,719,852 | |||||||||||||||||||||||||||||
Hawthorne Customs & Dispatch Services , LLC | Transportation/ | |||||||||||||||||||||||||||||
13% Secured Debt (Maturity — January 31, 2011) | Logistics | 1,650,000 | 1,650,000 | 1,650,000 | Logistics | 1,350,000 | 1,304,693 | 1,304,693 | ||||||||||||||||||||||
Member Units(7) (Fully diluted 27.8%) | 375,000 | 950,000 | 375,000 | 435,000 | ||||||||||||||||||||||||||
Warrants (Fully diluted 16.5%) | 37,500 | 500,000 | 37,500 | 230,000 | ||||||||||||||||||||||||||
2,062,500 | 3,100,000 | 1,717,193 | 1,969,693 | |||||||||||||||||||||||||||
Hayden Acquisition, LLC | Manufacturer of | Manufacturer of | ||||||||||||||||||||||||||||
12% Secured Debt (Maturity — March 9, 2009) | Utility Structures | 2,420,000 | 2,420,000 | 2,420,000 | Utility Structures | 1,955,000 | 1,901,040 | 1,901,040 | ||||||||||||||||||||||
Hydratec Holdings, LLC | Agricultural Services | |||||||||||||||||||||||||||||
12.5% Secured Debt (Maturity — October 31, 2012) | 5,700,000 | 5,588,729 | 5,588,729 | |||||||||||||||||||||||||||
Prime plus 1% Secured Debt (Maturity — October 31, 2012) | 1,845,244 | 1,825,911 | 1,825,911 | |||||||||||||||||||||||||||
Member Units (Fully diluted 60%) | 1,800,000 | 1,800,000 | ||||||||||||||||||||||||||||
9,214,640 | 9,214,640 | |||||||||||||||||||||||||||||
Jensen Jewelers of Idaho, LLC | Retail Jewelry | Retail Jewelry | ||||||||||||||||||||||||||||
Prime Plus 2% Secured Debt (Maturity — November 14, 2011) | 1,340,000 | 1,340,000 | 1,340,000 | 1,200,000 | 1,180,509 | 1,180,509 | ||||||||||||||||||||||||
13% current/6% PIK Secured Debt (Maturity — November 14, 2011) | 1,008,000 | 1,008,000 | 1,008,000 | |||||||||||||||||||||||||||
13% current / 6% PIK Secured Debt (Maturity — November 14, 2011) | 1,069,457 | 1,044,190 | 1,044,190 | |||||||||||||||||||||||||||
Member Units(7) (Fully diluted 25.1%) | 376,000 | 376,000 | 376,000 | 815,000 | ||||||||||||||||||||||||||
2,724,000 | 2,724,000 | 2,600,699 | 3,039,699 | |||||||||||||||||||||||||||
KBK Industries, LLC | Specialty Manufacturer | |||||||||||||||||||||||||||||
14% Secured Debt (Maturity — January 23, 2011) | of Oilfield and | 3,937,500 | 3,937,500 | 3,937,500 | ||||||||||||||||||||||||||
Member Units(7) (Fully diluted 11.9%) | Industrial Products | 187,500 | 625,000 | |||||||||||||||||||||||||||
Warrants (Fully diluted 25.7%) | 150,000 | 1,372,500 | ||||||||||||||||||||||||||||
4,275,000 | 5,935,000 | |||||||||||||||||||||||||||||
Magna Card, Inc. | Wholesale/Consumer | Wholesale/Consumer | ||||||||||||||||||||||||||||
12% Secured Debt (Maturity — September 30, 2010) | Magnetic Products | 1,900,000 | 1,900,000 | 1,900,000 | ||||||||||||||||||||||||||
12% current / 0.4% PIK Secured Debt (Maturity — September 30, 2010) | Magnetic Products | 2,021,079 | 1,958,775 | — | ||||||||||||||||||||||||||
Warrants (Fully diluted 35.8%) | 100,000 | — | 100,000 | — | ||||||||||||||||||||||||||
2,000,000 | 1,900,000 | 2,058,775 | — | |||||||||||||||||||||||||||
Quest Design & Production, LLC | Design and Fabrication | Design and Fabrication | ||||||||||||||||||||||||||||
12% Secured Debt (Maturity — May 1, 2008) | of Custom Display | 3,900,000 | 3,900,000 | 3,900,000 | ||||||||||||||||||||||||||
Warrants (Fully diluted 20.0%) | Systems | 40,000 | 40,000 | |||||||||||||||||||||||||||
8% current / 5% PIK Secured Debt (Maturity — December 31, 2010) | of Custom Display Systems | 3,991,542 | 3,964,853 | 3,964,853 | ||||||||||||||||||||||||||
Warrants (Fully diluted 26.0%) | 40,000 | 40,000 | ||||||||||||||||||||||||||||
3,940,000 | 3,940,000 | |||||||||||||||||||||||||||||
4,004,853 | 4,004,853 | |||||||||||||||||||||||||||||
TA Acquisition Group, LP | Processor of | Processor of | ||||||||||||||||||||||||||||
12% Secured Debt (Maturity — July 29, 2010) | Construction | 2,860,000 | 2,860,000 | 2,860,000 | Construction | 1,870,000 | 1,813,789 | 1,813,789 | ||||||||||||||||||||||
Partnership Interest(7) (Fully diluted 18.3%) | Aggregates | 357,500 | 2,630,000 | Aggregates | 357,500 | 3,435,000 | ||||||||||||||||||||||||
Warrants (Fully diluted 18.3%) | 82,500 | 2,650,000 | 82,500 | 3,450,000 | ||||||||||||||||||||||||||
3,300,000 | 8,140,000 | 2,253,789 | 8,698,789 | |||||||||||||||||||||||||||
Technical Innovations, LLC | Manufacturer of | |||||||||||||||||||||||||||||
Technical Innovations , LLC | Manufacturer of | |||||||||||||||||||||||||||||
12% Secured Debt (Maturity — October 31, 2009) | Specialty Cutting | 1,850,000 | 1,387,500 | 1,387,500 | Specialty Cutting | 787,500 | 748,716 | 748,716 | ||||||||||||||||||||||
Prime Secured Debt (Maturity — October 31, 2009) | Tools and Punches | 462,500 | 462,500 | Tools and Punches | 262,500 | 249,572 | 249,572 | |||||||||||||||||||||||
Member Units(7) (Fully diluted 1.6%) | 15,000 | 35,000 | ||||||||||||||||||||||||||||
Warrants (Fully diluted 57.0%) | 400,000 | 1,285,000 | ||||||||||||||||||||||||||||
2,265,000 | 3,170,000 | 998,288 | 998,288 | |||||||||||||||||||||||||||
Wicks N’ More LLC | Manufacturer of | |||||||||||||||||||||||||||||
12% Secured Debt (Maturity — April 26, 2011) | High-end Candles | 3,720,000 | 3,720,000 | 3,720,000 | ||||||||||||||||||||||||||
Member Units (Fully diluted 6.2%) | 180,000 | — | ||||||||||||||||||||||||||||
Warrants (Fully diluted 24.0%) | 210,000 | — | ||||||||||||||||||||||||||||
4,110,000 | 3,720,000 | |||||||||||||||||||||||||||||
Subtotal Control Investments | 33,312,337 | 42,429,000 | ||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
54
68
Portfolio Company/Type of Investment (1) (2) | Industry | Principal(6) | Cost(6) | Fair Value | ||||||||||||
Affiliate Investments(4) | ||||||||||||||||
All Hose & Specialty, LLC | Distributor of | |||||||||||||||
11% Secured Debt (Maturity — August 4, 2010) | Commercial/Industrial | 2,600,000 | 2,600,000 | 2,600,000 | ||||||||||||
Member Units(7) (Fully diluted 15.0%) | Hoses | 80,357 | 1,600,000 | |||||||||||||
11% Note Receivable (Maturity — August 4, 2010) | 34,821 | 441,000 | ||||||||||||||
2,715,178 | 4,641,000 | |||||||||||||||
American Sensor Technologies, Inc. | Manufacturer of | |||||||||||||||
9% Secured Debt (Maturity — May 31, 2010) | Commercial/ | 200,000 | 200,000 | 200,000 | ||||||||||||
13% Secured Debt (Maturity — May 31, 2010) | Industrial Sensors | 3,000,000 | 3,000,000 | 3,000,000 | ||||||||||||
Warrants (Fully diluted 20.0%) | 50,000 | 575,000 | ||||||||||||||
3,250,000 | 3,775,000 | |||||||||||||||
Carlton Global Resources, LLC | Processor of | |||||||||||||||
13% Secured Debt (Maturity — November 15, 2011) | Industrial Minerals | 3,600,000 | 3,600,000 | 3,600,000 | ||||||||||||
Member Units (Fully diluted 8.5%) | 400,000 | 400,000 | ||||||||||||||
4,000,000 | 4,000,000 | |||||||||||||||
Houston Plating & Coatings, LLC | Plating & Industrial | |||||||||||||||
Prime plus 2% Secured Debt (Maturity — July 19, 2011) | Coating Services | 100,000 | 100,000 | 100,000 | ||||||||||||
Member Units(7) (Fully diluted 11.8%) | 210,000 | 1,710,000 | ||||||||||||||
310,000 | 1,810,000 | |||||||||||||||
Laurus Healthcare, LP | Healthcare Facilities | |||||||||||||||
13% Secured Debt (Maturity — May 7, 2009) | 3,010,000 | 3,010,000 | 3,010,000 | |||||||||||||
Warrants (Fully diluted 18.2%) | 105,000 | 105,000 | ||||||||||||||
3,115,000 | 3,115,000 | |||||||||||||||
National Trench Safety, LLC | Trench & Traffic | |||||||||||||||
Member Units (Fully diluted 15.8%) | Safety Equipment | 1,792,308 | 1,792,308 | |||||||||||||
Pulse Systems, LLC | Manufacturer of | |||||||||||||||
14% Secured Debt (Maturity — June 1, 2009) | Components for | 2,747,271 | 2,747,271 | 2,747,271 | ||||||||||||
Warrants (Fully diluted 6.6%) | Medical Devices | 118,000 | 400,000 | |||||||||||||
2,865,271 | 3,147,271 | |||||||||||||||
Transportation General, Inc. | Taxi Cab/Transportation | |||||||||||||||
13% Secured Debt (Maturity — May 31, 2010) | Services | 3,900,000 | 3,900,000 | 3,900,000 | ||||||||||||
Warrants (Fully diluted 24.0%) | 70,000 | 395,000 | ||||||||||||||
3,970,000 | 4,295,000 | |||||||||||||||
Turbine Air Systems, Ltd. | Commercial/ | |||||||||||||||
12% Secured Debt (Maturity — October 11, 2011) | Industrial Chilling | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||||||
Warrants (Fully diluted 5.0%) | Systems | 96,666 | 96,666 | |||||||||||||
1,096,666 | 1,096,666 | |||||||||||||||
WorldCall, Inc. | Telecommunication/ | |||||||||||||||
13% Secured Debt (Maturity — October 22, 2009) | Information Services | 820,000 | 820,000 | 820,000 | ||||||||||||
Common stock (Fully diluted 6.2%) | 169,173 | 180,000 | ||||||||||||||
Warrants (Fully diluted 13.4%) | 75,000 | 150,000 | ||||||||||||||
1,064,173 | 1,150,000 | |||||||||||||||
Barton Springs Grill LP | Restaurant | |||||||||||||||
15% Partnership Interest | 150,000 | — | ||||||||||||||
Subtotal Affiliate Investments | 24,328,596 | 28,822,245 | ||||||||||||||
Non-Control/Non-Affiliate Investments(5): | ||||||||||||||||
East Teak Fine Hardwoods, Inc. | Hardwood Products | |||||||||||||||
13% Current/5.5% PIK Secured Debt (Maturity — April 13, 2011) | 4,394,763 | 4,394,763 | 4,394,763 | |||||||||||||
Common Stock (Fully diluted 3.3%) | 130,000 | 335,000 | ||||||||||||||
4,524,763 | 4,729,763 | |||||||||||||||
Digital Music Group, Inc. | Distribution of Music | |||||||||||||||
Common stock | and Video Content | 458,252 | 228,420 | |||||||||||||
Subtotal Non-Control/Non-Affiliate Investments | 4,983,015 | 4,958,183 | ||||||||||||||
Total Portfolio Investments, December 31, 2006 | $ | 62,623,948 | $ | 76,209,428 | ||||||||||||
Accumulated unearned income | $ | (2,498,427 | ) | |||||||||||||
Total Portfolio Investments net of accumulated unearned income | $ | 73,711,001 | ||||||||||||||
Portfolio Company/Type of Investment(1)(2) | Industry | Principal(6) | Cost(6) | Fair Value | ||||||||||
Universal Scaffolding & Equipment, LLC | Manufacturer of Scaffolding | |||||||||||||
Prime plus 1% Secured Debt (Maturity — August 16, 2012) | and Shoring Equipment | 1,122,333 | 1,111,741 | 1,111,741 | ||||||||||
13% current / 5% PIK Secured Debt (Maturity — August 16, 2012) | 3,196,376 | 3,136,274 | 3,136,274 | |||||||||||
Member Units (Fully diluted 18.4%) | 992,063 | 1,025,000 | ||||||||||||
5,240,078 | 5,273,015 | |||||||||||||
Wicks N’ More, LLC | Manufacturer of | |||||||||||||
12% Secured Debt (Maturity — April 26, 2011) | High-end Candles | 3,720,000 | 3,455,444 | 1,685,444 | ||||||||||
Member Units (Fully diluted 11.5%) | 360,000 | — | ||||||||||||
Warrants (Fully diluted 21.3%) | 210,000 | — | ||||||||||||
4,025,444 | 1,685,444 | |||||||||||||
Subtotal Control Investments | 43,053,372 | 48,108,197 | ||||||||||||
69
Portfolio Company/Type of Investment(1)(2) | Industry | Principal(6) | Cost(6) | Fair Value | ||||||||||
Affiliate Investments(4) | ||||||||||||||
Advantage Millwork Company, Inc. | Manufacturer/Distributor | |||||||||||||
12% Secured Debt (Maturity — February 5, 2012) | of Wood Doors | 2,666,667 | 2,547,510 | 2,547,510 | ||||||||||
Warrants (Fully diluted 10.9%) | 87,120 | 87,120 | ||||||||||||
2,634,630 | 2,634,630 | |||||||||||||
American Sensor Technologies, Inc. | Manufacturer of Commercial/ | |||||||||||||
Prime plus 0.5% Secured Debt (Maturity — May 31, 2010) | Industrial Sensors | 3,500,000 | 3,404,755 | 3,404,755 | ||||||||||
Warrants (Fully diluted 20.0%) | 50,000 | 750,000 | ||||||||||||
3,454,755 | 4,154,755 | |||||||||||||
Carlton Global Resources, LLC | Processor of | |||||||||||||
13% PIK Secured Debt (Maturity — November 15, 2011) | Industrial Minerals | 4,687,777 | 4,555,835 | 2,618,421 | ||||||||||
Member Units (Fully diluted 8.5%) | 400,000 | — | ||||||||||||
4,955,835 | 2,618,421 | |||||||||||||
Houston Plating & Coatings, LLC | Plating & Industrial | |||||||||||||
Prime plus 2% Secured Debt (Maturity — July 19, 2011) | Coating Services | 100,000 | 100,000 | 100,000 | ||||||||||
Member Units(7) (Fully diluted 11.8%) | 210,000 | 2,450,000 | ||||||||||||
310,000 | 2,550,000 | |||||||||||||
KBK Industries, LLC | Specialty Manufacturer of | |||||||||||||
14% Secured Debt (Maturity — January 23, 2011) | Oilfield and Industrial | 3,937,500 | 3,730,881 | 3,730,881 | ||||||||||
8% Secured Debt (Maturity — July 1, 2009) | Products | 623,063 | 623,063 | 623,063 | ||||||||||
Prime Plus 2% Secured Debt (Maturity — January 31, 2008) | 75,000 | 686,250 | ||||||||||||
Member Units(7) (Fully diluted 14.5%) | 187,500 | 700,000 | ||||||||||||
4,616,444 | 5,740,194 | |||||||||||||
Laurus Healthcare, LP | Healthcare Facilities | |||||||||||||
13% Secured Debt (Maturity — May 7, 2009) | 3,010,000 | 2,934,625 | 2,934,625 | |||||||||||
Warrants (Fully diluted 18.2%) | 105,000 | 715,000 | ||||||||||||
3,039,625 | 3,649,625 | |||||||||||||
National Trench Safety, LLC | Trench & Traffic | |||||||||||||
10% PIK Debt (Maturity — April 16, 2014) | Safety Equipment | 365,334 | 314,805 | 314,805 | ||||||||||
Member Units (Fully diluted 10.9%) | 1,792,308 | 1,792,308 | ||||||||||||
2,107,113 | 2,107,113 | |||||||||||||
Pulse Systems, LLC | Manufacturer of | |||||||||||||
14% Secured Debt (Maturity — June 1, 2009) | Components for | 2,307,498 | 2,260,420 | 2,260,420 | ||||||||||
Warrants (Fully diluted 6.6%) | Medical Devices | 118,000 | 350,000 | |||||||||||
2,378,420 | 2,610,420 | |||||||||||||
Transportation General, Inc. | Taxi Cab/Transportation | |||||||||||||
13% Secured Debt (Maturity — May 31, 2010) | Services | 3,600,000 | 3,501,966 | 3,501,966 | ||||||||||
Warrants (Fully diluted 24.0%) | 70,000 | 340,000 | ||||||||||||
3,571,966 | 3,841,966 | |||||||||||||
Turbine Air Systems, Ltd. | Commercial and | |||||||||||||
12% Secured Debt (Maturity — October 11, 2011) | Industrial Chilling Systems | 1,000,000 | 905,213 | 905,213 | ||||||||||
Vision Interests, Inc. | Manufacturer/ | |||||||||||||
13% Secured Debt (Maturity — June 5, 2012) | Installer of Commercial | 3,760,000 | 3,541,662 | 3,541,662 | ||||||||||
Common Stock (Fully diluted 8.9%) | Signage | 372,000 | 372,000 | |||||||||||
Warrants (Fully diluted 11.2%) | 160,000 | 375,000 | ||||||||||||
4,073,662 | 4,288,662 | |||||||||||||
WorldCall, Inc. | Telecommunication/ | |||||||||||||
13% Secured Debt (Maturity — October 22, 2009) | Information Services | 782,500 | 745,217 | 745,217 | ||||||||||
Common Stock (Fully diluted 6.2%) | 169,173 | 180,000 | ||||||||||||
Warrants (Fully diluted 13.4%) | 75,000 | 150,000 | ||||||||||||
989,390 | 1,075,217 | |||||||||||||
Subtotal Affiliate Investments | 33,037,053 | 36,176,216 | ||||||||||||
70
Portfolio Company/Type of Investment(1)(2) | Industry | Principal(6) | Cost(6) | Fair Value | ||||||||||
Non-Control/Non-Affiliate Investments(5): | ||||||||||||||
East Teak Fine Hardwoods, Inc. | ||||||||||||||
13% Current/5.5% PIK Secured Debt (Maturity — April 13, 2011) | Hardwood Products | 1,651,028 | 1,586,391 | 1,586,391 | ||||||||||
Common Stock (Fully diluted 3.3%) | 130,000 | 490,000 | ||||||||||||
1,716,391 | 2,076,391 | |||||||||||||
Support Systems Homes, Inc. | Manages Substance | |||||||||||||
14% Current/4% PIK Secured Debt | Abuse Treatment | |||||||||||||
(Maturity — June 5, 2012) | Centers | 1,525,674 | 1,507,596 | 1,507,596 | ||||||||||
8% Secured Debt (Maturity — June 5, 2012) | 158,888 | 157,014 | 157,014 | |||||||||||
1,664,610 | 1,664,610 | |||||||||||||
Subtotal Non-Control/Non-Affiliate Investments | 3,381,001 | 3,741,001 | ||||||||||||
Main Street Capital Partners, LLC (Investment Manager) | ||||||||||||||
100% of Membership Interests | Asset Management | 18,000,000 | 17,625,000 | |||||||||||
Total Portfolio Investments, December 31, 2007 | $ | 97,471,426 | $ | 105,650,414 | ||||||||||
Idle Funds Investments | ||||||||||||||
4.691% Federal Home Loan Bank Discount Note | Investments in U.S. | |||||||||||||
(Maturity — April 11, 2008) | Agency Securities | 3,500,000 | $ | 3,421,791 | $ | 3,421,791 | ||||||||
4.691% Federal National Mortgage Association Discount (Maturity — April 2, 2008) | 3,500,000 | 3,425,490 | 3,425,490 | |||||||||||
4.675% Federal Home Loan Bank Discount Note (Maturity — March 20, 2008) | 3,500,000 | 3,431,089 | 3,431,089 | |||||||||||
4.668% Federal Home Loan Bank Discount Note (Maturity — March 5, 2008) | 3,500,000 | 3,437,408 | 3,437,408 | |||||||||||
4.673% Federal Home Loan Bank Discount Note (Maturity — February 20, 2008) | 3,500,000 | 3,443,197 | 3,443,197 | |||||||||||
4.77% Federal Home Loan Mortgage Corp Discount Note (Maturity — February 7, 2008) | 3,500,000 | 3,448,948 | 3,448,948 | |||||||||||
4.64% Federal National Mortgage Association Discount (Maturity — January 23, 2008) | 3,500,000 | 3,455,338 | 3,455,338 | |||||||||||
Total Idle Funds Investments, December 31, 2007 | $ | 24,063,261 | $ | 24,063,261 | ||||||||||
(1) | All debt investments are generally income producing. Equity and warrants are non-income producing, unless otherwise noted. | |
(2) | See companies. | |
(3) | ||
(4) | Affiliate investments are defined by the 1940 Act as | |
(5) | Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control Investments Investments. | |
(6) | ||
(7) | Income producing through payment of dividends or distributions. | |
(8) | Subject to contractual minimum rates. |
See accompanying notes to consolidated financial statements.
55
71
NOTE A — | ORGANIZATION AND BASIS OF PRESENTATION |
1. | Organization |
• | MSCC acquired 100% of the limited partnership interests in the Fund, which became a wholly-owned consolidated subsidiary of MSCC; the Fund retained its Small Business Investment Company (“SBIC”) license, continued to hold its existing investments, and will make new investments with available funds; | ||
• | MSCC acquired 100% of the equity interests in the General Partner of the Fund, which became a wholly-owned consolidated subsidiary of MSCC; and | ||
• | MSCC acquired 100% of the equity interests in the Investment Manager. The Investment Manager became a wholly-owned portfolio company of MSCC under the 1940 Act, as the Investment Manager is not an investment company and does not conduct substantially all of its investment management activities for Main Street and its subsidiaries. See Note D for further information regarding this classification and accounting treatment. |
2. | Basis of Presentation |
56
72
NOTE B — | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
1. | Valuation of Portfolio Investments |
73
74
57
2. | Use of Estimates |
3. | Cash and Cash Equivalents |
4. | Idle Funds Investments |
58
75
5. | Interest and Dividend Income |
6. | Deferred Financing Costs |
7. | Fee Income — Structuring and Advisory Services |
8. | Unearned Income — Debt Origination Fees and Original Issue Discount |
76
9. | Share-Based Compensation |
Year Ended December 31, | ||||||||
2007 | 2006 | |||||||
Beginning accumulated unearned income | $ | 2,498,427 | $ | 2,602,632 | ||||
Debt origination fees received | 467,558 | 709,980 | ||||||
Value of warrants received | 407,119 | 566,166 | ||||||
Unearned income recognized | (998,069 | ) | (1,380,351 | ) | ||||
Ending accumulated unearned income | $ | 2,375,035 | $ | 2,498,427 | ||||
59
10. | Income Taxes |
11. | Net Realized Gains or Losses from Investments and Net Change in Unrealized Appreciation or Depreciation from Investments |
77
12. | Concentration of Credit Risks |
13. | Fair Value of Financial Instruments |
60
14. | Initial Public Offering Costs |
15. | Earnings per Share |
78
16. | Recently Issued Accounting Standards |
• | 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); |
61
79
• | 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, 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; |
80
• | Qualitative assessment of key management; | |
• | Contractual rights, obligations or restrictions associated with the investment; and | |
• | Other factors deemed relevant. |
Net | Net | |||||||||||||||||||||||||||
Redemptions/ | Changes from | Unrealized | ||||||||||||||||||||||||||
Type of | December 31, 2007 | Accretion of | Repayments/ | New | Unrealized | Appreciation | December 31, 2008 | |||||||||||||||||||||
Investment | Fair Value | Unearned Income | Realized Losses | Investments | to Realized | (Depreciation) | Fair Value | |||||||||||||||||||||
Debt | $ | 64,581,986 | $ | 1,062,452 | $ | (23,595,109 | ) | $ | 40,586,637 | $ | 4,568,891 | $ | (5,453,814 | ) | $ | 81,751,043 | ||||||||||||
Equity | 16,361,308 | — | (590,041 | ) | 5,995,743 | (2,717,500 | ) | 3,685,636 | 22,735,146 | |||||||||||||||||||
Equity warrants | 7,082,120 | — | 1,069,046 | 959,856 | (3,636,654 | ) | 370,632 | 5,845,000 | ||||||||||||||||||||
Investment Manager | 17,625,000 | — | — | — | — | (949,374 | ) | 16,675,626 | ||||||||||||||||||||
$ | 105,650,414 | $ | 1,062,452 | $ | (23,116,104 | ) | $ | 47,542,236 | $ | (1,785,263 | ) | $ | (2,346,920 | ) | $ | 127,006,815 | ||||||||||||
81
December 31, | ||||||||||||||||
Cost: | 2007 | 2006 | December 31, 2008 | December 31, 2007 | ||||||||||||
First lien debt | 81.71 | % | 77.08 | % | 76.2 | % | 81.5 | % | ||||||||
Equity | 11.0 | % | 10.7 | % | ||||||||||||
Second lien debt | 6.28 | % | 11.81 | % | 7.4 | % | 6.1 | % | ||||||||
Equity | 10.34 | % | 7.62 | % | ||||||||||||
Equity warrants | 1.67 | % | 3.49 | % | 5.4 | % | 1.7 | % | ||||||||
100.00 | % | 100.00 | % | 100.0 | % | 100.0 | % | |||||||||
December 31, | ||||||||
Fair Value: | 2007 | 2006 | ||||||
First lien debt | 70.62 | % | 63.88 | % | ||||
Second lien debt | 3.45 | % | 9.70 | % | ||||
Equity | 18.10 | % | 12.65 | % | ||||
Equity warrants | 7.83 | % | 13.77 | % | ||||
100.00 | % | 100.00 | % | |||||
62
Fair Value: | December 31, 2008 | December 31, 2007 | ||||||
First lien debt | 67.0 | % | 70.1 | % | ||||
Equity | 15.7 | % | 18.6 | % | ||||
Equity warrants | 10.2 | % | 8.0 | % | ||||
Second lien debt | 7.1 | % | 3.3 | % | ||||
100.0 | % | 100.0 | % | |||||
December 31, | ||||||||||||||||
Cost: | 2007 | 2006 | December 31, 2008 | December 31, 2007 | ||||||||||||
Southwest | 31.94 | % | 39.92 | % | 50.2 | % | 31.9 | % | ||||||||
West | 36.85 | % | 24.74 | % | 36.3 | % | 37.1 | % | ||||||||
Northeast | 11.41 | % | 14.72 | % | ||||||||||||
Southeast | 13.91 | % | 13.79 | % | 5.1 | % | 11.4 | % | ||||||||
Midwest | 5.89 | % | 6.83 | % | 4.7 | % | 5.8 | % | ||||||||
Northeast | 3.7 | % | 13.8 | % | ||||||||||||
100.00 | % | 100.00 | % | 100.0 | % | 100.0 | % | |||||||||
December 31, | ||||||||||||||||
Fair Value: | 2007 | 2006 | December 31, 2008 | December 31, 2007 | ||||||||||||
Southwest | 41.01 | % | 47.24 | % | 56.0 | % | 41.2 | % | ||||||||
West | 32.91 | % | 20.80 | % | 31.1 | % | 32.9 | % | ||||||||
Midwest | 5.1 | % | 6.5 | % | ||||||||||||
Southeast | 4.1 | % | 10.3 | % | ||||||||||||
Northeast | 9.06 | % | 11.09 | % | 3.7 | % | 9.1 | % | ||||||||
Southeast | 10.44 | % | 13.08 | % | ||||||||||||
Midwest | 6.58 | % | 7.79 | % | ||||||||||||
100.00 | % | 100.00 | % | 100.0 | % | 100.0 | % | |||||||||
82
Cost: | December 31, 2008 | December 31, 2007 | ||||||||||||||
Industrial equipment | 12.0 | % | 6.6 | % | ||||||||||||
Precast concrete manufacturing | 11.3 | % | — | |||||||||||||
Custom wood products | 9.3 | % | 8.4 | % | ||||||||||||
Agricultural services | 8.3 | % | 11.6 | % | ||||||||||||
Electronics manufacturing | 7.6 | % | 9.5 | % | ||||||||||||
Transportation/Logistics | 6.6 | % | 6.7 | % | ||||||||||||
Retail | 6.5 | % | 3.3 | % | ||||||||||||
Restaurant | 6.1 | % | 3.4 | % | ||||||||||||
Health care products | 5.8 | % | 4.2 | % | ||||||||||||
Mining and minerals | 4.8 | % | 9.1 | % | ||||||||||||
Manufacturing | 4.7 | % | 12.0 | % | ||||||||||||
Health care services | 4.2 | % | 5.9 | % | ||||||||||||
Professional services | 4.1 | % | 3.3 | % | ||||||||||||
Metal fabrication | 3.4 | % | 4.6 | % | ||||||||||||
Equipment rental | 2.1 | % | 2.6 | % | ||||||||||||
Infrastructure products | 1.7 | % | 2.4 | % | ||||||||||||
Information services | 0.9 | % | 1.2 | % | ||||||||||||
Industrial services | 0.5 | % | 0.4 | % | ||||||||||||
Distribution | 0.1 | % | 2.2 | % | ||||||||||||
Consumer products | — | 2.6 | % | |||||||||||||
December 31, | 100.0 | % | 100.0 | % | ||||||||||||
Cost: | 2007 | 2006 | ||||||||||||||
Manufacturing | 12.35 | % | 15.14 | % | ||||||||||||
Agricultural services | 11.42 | % | — | |||||||||||||
Electronics manufacturing | 9.58 | % | 5.19 | % | ||||||||||||
Construction/industrial minerals | 9.04 | % | 11.66 | % | ||||||||||||
Custom wood products | 8.29 | % | 6.29 | % | ||||||||||||
Transportation/logistics | 6.64 | % | 9.64 | % | ||||||||||||
Industrial Equipment | 6.49 | % | — | |||||||||||||
Health care services | 5.86 | % | 4.97 | % | ||||||||||||
Metal Fabrication | 4.68 | % | — | |||||||||||||
Health care products | 4.25 | % | 8.19 | % | ||||||||||||
Restaurant | 3.41 | % | 5.34 | % | ||||||||||||
Professional services | 3.33 | % | 4.83 | % | ||||||||||||
Retail | 3.23 | % | 4.35 | % | ||||||||||||
Equipment rental | 2.64 | % | 2.86 | % | ||||||||||||
Consumer products | 2.59 | % | 3.19 | % | ||||||||||||
Building products | 2.39 | % | 3.86 | % | ||||||||||||
Distribution | 2.18 | % | 11.56 | % | ||||||||||||
Information services | 1.25 | % | 2.43 | % | ||||||||||||
Industrial services | 0.38 | % | 0.50 | % | ||||||||||||
Total | 100.00 | % | 100.00 | % | ||||||||||||
63
83
December 31, | ||||||||
Fair Value: | 2007 | 2006 | ||||||
Construction/industrial minerals | 12.80 | % | 15.93 | % | ||||
Agricultural services | 10.34 | % | — | |||||
Manufacturing | 9.84 | % | 14.11 | % | ||||
Electronics manufacturing | 9.69 | % | 4.95 | % | ||||
Custom wood products | 7.51 | % | 5.17 | % | ||||
Transportation/logistics | 6.59 | % | 9.70 | % | ||||
Health care services | 5.98 | % | 4.09 | % | ||||
Industrial Equipment | 5.91 | % | — | |||||
Restaurant | 4.42 | % | 5.31 | % | ||||
Metal Fabrication | 4.34 | % | — | |||||
Health care products | 4.10 | % | 8.29 | % | ||||
Professional services | 4.10 | % | 4.37 | % | ||||
Retail | 3.41 | % | 3.57 | % | ||||
Industrial services | 2.82 | % | 2.38 | % | ||||
Equipment rental | 2.39 | % | 2.35 | % | ||||
Distribution | 2.37 | % | 12.30 | % | ||||
Building products | 2.16 | % | 3.18 | % | ||||
Information services | 1.23 | % | 1.81 | % | ||||
Consumer products | — | 2.49 | % | |||||
Total | 100.00 | % | 100.00 | % | ||||
Fair Value: | December 31, 2008 | December 31, 2007 | ||||||
Precast concrete manufacturing | 13.7 | % | — | |||||
Industrial equipment | 10.2 | % | 6.0 | % | ||||
Agricultural services | 8.1 | % | 10.5 | % | ||||
Electronics manufacturing | 7.7 | % | 9.6 | % | ||||
Retail | 7.0 | % | 3.4 | % | ||||
Custom wood products | 6.8 | % | 7.5 | % | ||||
Restaurant | 6.7 | % | 4.5 | % | ||||
Transportation/Logistics | 6.5 | % | 6.6 | % | ||||
Health care services | 6.1 | % | 6.0 | % | ||||
Health care products | 5.8 | % | 4.1 | % | ||||
Professional services | 5.4 | % | 4.1 | % | ||||
Manufacturing | 5.1 | % | 9.5 | % | ||||
Metal fabrication | 4.3 | % | 4.2 | % | ||||
Industrial services | 2.8 | % | 2.9 | % | ||||
Equipment rental | 2.0 | % | 2.4 | % | ||||
Information services | 0.9 | % | 1.2 | % | ||||
Infrastructure products | 0.5 | % | 2.2 | % | ||||
Distribution | 0.4 | % | 2.4 | % | ||||
Mining and minerals | — | 12.9 | % | |||||
100.0 | % | 100.0 | % | |||||
NOTE D — | WHOLLY OWNED INVESTMENT MANAGER |
84
64
85
As of December 31, | ||||||||||||
2008 | 2007 | |||||||||||
As of | (Unaudited) | |||||||||||
December 31, 2007 | ||||||||||||
ASSETS | ASSETS | |||||||||||
Current assets | $ | 129,675 | ||||||||||
Cash | $ | 20,772 | $ | 86,439 | ||||||||
Accounts receivable | 17,990 | 14,142 | ||||||||||
Accounts receivable — MSCC | 302,633 | — | ||||||||||
Intangible asset (net of accumulated amortization of $1,174,207 as of December 31, 2008) | 16,825,793 | 18,000,000 | ||||||||||
Deposits and other | 103,392 | 29,094 | ||||||||||
Total assets | $ | 129,675 | $ | 17,270,580 | $ | 18,129,675 | ||||||
LIABILITIES | LIABILITIES | |||||||||||
Current liabilities** | $ | 274,247 | ||||||||||
Accounts payable — MSCC | $ | — | $ | 207,898 | ||||||||
Accrued liabilities | 589,360 | 66,349 | ||||||||||
Total liabilities | $ | 274,247 | 589,360 | 274,247 | ||||||||
Equity | 16,681,220 | 17,855,428 | ||||||||||
Total liabilities and equity | $ | 17,270,580 | $ | 18,129,675 | ||||||||
For the Period | ||||
October 2, 2007 | ||||
through | ||||
December 31, 2007 | ||||
Management fee income from Main Street Capital II | $ | 831,300 | ||
Compensation and other administrative expenses | (831,300 | ) | ||
Net income | $ | — | ||
For the Period | ||||||||
October 2, | ||||||||
2007 | ||||||||
Year Ended | through | |||||||
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
(Unaudited) | ||||||||
Management fee income from Main Street Capital II | $ | 3,325,200 | $ | 831,300 | ||||
Other management advisory fees | 47,750 | — | ||||||
Total income | 3,372,950 | 831,300 | ||||||
EXPENSES | ||||||||
Salaries, benefits and other personnel costs | (3,483,336 | ) | (612,377 | ) | ||||
Occupancy expense | (184,285 | ) | (45,343 | ) | ||||
Professional expenses | (81,208 | ) | (57,703 | ) | ||||
Amortization expense — intangible asset | (1,174,207 | ) | — | |||||
Other | (630,956 | ) | (115,877 | ) | ||||
Expense reimbursement from MSCC | 1,006,835 | — | ||||||
Total net expenses | (4,547,157 | ) | (831,300 | ) | ||||
Net income (loss) | $ | (1,174,207 | ) | $ | — | |||
86
NOTE E — | DEFERRED FINANCING COSTS |
December 31, | ||||||||||||||||
December 31, | 2008 | 2007 | ||||||||||||||
2007 | 2006 | |||||||||||||||
SBIC debenture commitment fees | $ | 550,000 | $ | 550,000 | $ | 550,000 | $ | 550,000 | ||||||||
SBIC debenture leverage fees | 1,367,575 | 1,127,500 | 1,367,575 | 1,367,575 | ||||||||||||
Other | 282,512 | — | 673,700 | 282,512 | ||||||||||||
Subtotal | 2,200,087 | 1,677,500 | 2,591,275 | 2,200,087 | ||||||||||||
Accumulated amortization | (529,952 | ) | (343,846 | ) | (956,037 | ) | (529,952 | ) | ||||||||
Ending deferred financing costs balance | $ | 1,670,135 | $ | 1,333,654 | $ | 1,635,238 | $ | 1,670,135 | ||||||||
Year Ending | Estimated | |||
December 31, | Amortization | |||
2008 | $ | 333,013 | ||
2009 | 333,013 | |||
2010 | 191,757 | |||
2011 | 191,757 | |||
2012 | 191,757 | |||
2013 and thereafter | $ | 428,838 |
65
Estimated | ||||
Years Ending December 31, | Amortization | |||
2009 | $ | 402,091 | ||
2010 | $ | 316,689 | ||
2011 | $ | 295,867 | ||
2012 | $ | 191,758 | ||
2013 | $ | 182,424 | ||
2014 and thereafter | $ | 246,409 |
NOTE F — | SBIC DEBENTURES |
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Maturity | Fixed | |||||||||||
Pooling Date | Date | Interest Rate | Amount | |||||||||
09/24/2003 | 09/01/2013 | 5.762 | % | $ | 4,000,000 | |||||||
03/24/2004 | 03/01/2014 | 5.007 | % | 3,000,000 | ||||||||
09/22/2004 | 09/01/2014 | 5.571 | % | 9,000,000 | ||||||||
09/22/2004 | 09/01/2014 | 5.539 | % | 6,000,000 | ||||||||
03/23/2005 | 03/01/2015 | 5.925 | % | 2,000,000 | ||||||||
03/23/2005 | 03/01/2015 | 5.893 | % | 2,000,000 | ||||||||
09/28/2005 | 09/01/2015 | 5.796 | % | 19,100,000 | ||||||||
Balance as of December 31, 2006 | 45,100,000 | |||||||||||
3/28/2007 | 03/01/2017 | 6.231 | % | 3,900,000 | ||||||||
3/28/2007 | 03/01/2017 | 6.263 | % | 1,000,000 | ||||||||
3/28/2007 | 03/01/2017 | 6.317 | % | 5,000,000 | ||||||||
Balance as of December 31, 2007 | $ | 55,000,000 | ||||||||||
Fixed | ||||||||||||
Maturity | Interest | |||||||||||
Pooling Date | Date | Rate | Amount | |||||||||
9/24/2003 | 9/1/2013 | 5.76 | % | $ | 4,000,000 | |||||||
3/24/2004 | 3/1/2014 | 5.01 | % | 3,000,000 | ||||||||
9/22/2004 | 9/1/2014 | 5.57 | % | 9,000,000 | ||||||||
9/22/2004 | 9/1/2014 | 5.54 | % | 6,000,000 | ||||||||
3/23/2005 | 3/1/2015 | 5.93 | % | 2,000,000 | ||||||||
3/23/2005 | 3/1/2015 | 5.89 | % | 2,000,000 | ||||||||
9/28/2005 | 9/1/2015 | 5.80 | % | 19,100,000 | ||||||||
3/28/2007 | 3/1/2017 | 6.23 | % | 3,900,000 | ||||||||
3/28/2007 | 3/1/2017 | 6.26 | % | 1,000,000 | ||||||||
3/28/2007 | 3/1/2017 | 6.32 | % | 5,000,000 | ||||||||
Balances as of December 31, 2008 and 2007 | $ | 55,000,000 | ||||||||||
NOTE G — | INVESTMENT AND TREASURY CREDIT FACILITIES |
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66
NOTE H — | FINANCIAL HIGHLIGHTS |
Year Ended | ||||
December 31, | ||||
Per Share Data: | 2007 | |||
Net asset value at beginning of year | $ | 4.90 | ||
Net investment income (1) | 0.76 | |||
Net realized gains (1), (2) | 0.55 | |||
Net change in unrealized depreciation on investments (1), (2) | (0.63 | ) | ||
Income taxes (1) | (0.38 | ) | ||
Net increase in net assets resulting from operations (1) | 0.30 | |||
Net increase in net assets associated with the Formation Transactions and the Offering | 8.66 | |||
Net decrease in net assets from net distributions to partners (prior to Formation Transactions) (1), (3) | (0.72 | ) | ||
Net decrease in net assets from dividends paid to stockholders (subsequent to the Offering) | (0.33 | ) | ||
Shares issued pursuant to the dividend reinvestment plan | 0.22 | |||
Other (4) | (0.18 | ) | ||
Net asset value at end of year | $ | 12.85 | ||
Market value at end of year | $ | 14.01 | ||
Shares outstanding at end of year | 8,959,718 |
Years Ended December 31, | ||||||||
Per Share Data: | 2008 | 2007 | ||||||
Net asset value at beginning of period | $ | 12.85 | $ | 4.90 | ||||
Net investment income(1) | 1.15 | 0.76 | ||||||
Net realized gains(1)(2) | 0.16 | 0.55 | ||||||
Net change in unrealized depreciation on investments(1)(2) | (0.44 | ) | (0.63 | ) | ||||
Income tax benefit (provision)(1) | 0.35 | (0.38 | ) | |||||
Net increase in net assets resulting from operations(1) | 1.22 | 0.30 | ||||||
Net increase in net assets associated with the Formation Transactions and the Offering | — | 8.66 | ||||||
Net decrease in net assets from dividends paid to stockholders | (1.43 | ) | (0.33 | ) | ||||
Net decrease in net assets from dividends declared as of December 31, 2008 for the January 15, 2009 monthly dividend | (0.13 | ) | — | |||||
Net decrease in net assets from distributions to partners, net of contributions(3) | — | (0.72 | ) | |||||
Increase due to shares issued pursuant to the dividend reinvestment plan | 0.02 | 0.22 | ||||||
Increase due to share-based compensation | 0.06 | — | ||||||
Accretive effect of share repurchase program (repurchases below net asset value) | 0.01 | — | ||||||
Other(4) | (0.40 | ) | (0.18 | ) | ||||
Net asset value at December 31, 2008 and 2007 | $ | 12.20 | $ | 12.85 | ||||
Market value at December 31, 2008 and 2007 | $ | 9.77 | $ | 14.01 | ||||
Shares outstanding at December 31, 2008 and 2007 | 9,206,483 | 8,959,718 |
(1) | Based on weighted average number of common shares outstanding for the period. | |
(2) | Net realized gains and net change in unrealized appreciation or depreciation can fluctuate significantly from period to period. | |
(3) | Net of partner contributions made during the period. | |
(4) | Represents the impact of the different share amounts used in calculating per share data as a result of calculating certain per share data based on the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date. |
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89
Years Ended December 31, | ||||||||||||
2007 | 2006(1) | 2005(1) | ||||||||||
Net assets at end of period | $ | 115,149,208 | $ | 43,272,531 | $ | 33,268,742 | ||||||
Average net assets | 56,882,526 | 38,621,188 | 23,534,007 | |||||||||
Average outstanding debt | 53,020,000 | 45,100,000 | 34,400,000 | |||||||||
Ratio of total expenses, excluding interest expense, to average net assets(2)(4) | 4.76 | % | 5.54 | % | 9.03 | % | ||||||
Ratio of total expenses to average net assets(2)(4) | 10.47 | % | 12.58 | % | 17.80 | % | ||||||
Ratio of net investment income to average net assets | 11.47 | % | 12.70 | % | 14.32 | % | ||||||
Total return based on change in net asset value(3)(5) | 5.88 | % | 47.56 | % | 45.77 | % |
Years Ended December 31, | ||||||||||||
2008 | 2007 | 2006(1) | ||||||||||
Net assets at end of period | $ | 112,356,056 | $ | 115,149,208 | $ | 43,272,531 | ||||||
Average net assets | $ | 114,977,272 | $ | 56,882,526 | $ | 38,621,188 | ||||||
Average outstanding debt | $ | 55,000,000 | $ | 53,020,000 | $ | 45,100,000 | ||||||
Ratio of total expenses, excluding interest expense, to average net assets(2)(4) | 2.79 | % | 4.76 | % | 5.54 | % | ||||||
Ratio of total expenses to average net assets(2)(4) | 6.07 | % | 10.47 | % | 12.58 | % | ||||||
Ratio of net investment income to average net assets(2)(4) | 8.97 | % | 11.47 | % | 12.70 | % | ||||||
Total return based on change in net asset value(3)(5) | 9.84 | % | 5.88 | % | 47.56 | % |
(1) | The amounts reflected in the financial highlights | |
(2) | The Investment Manager voluntarily waived $48,000 of management fees for the | |
(3) | Total return based on change in net asset value was calculated using the sum of ending net asset value plus distributions to stockholders and/or members and partners during the period less capital contributions during the period, as divided by the beginning net asset value. | |
(4) | The December 31, 2007 ratio includes the impact of professional costs related to the | |
(5) | For the |
NOTE I — | DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME |
90
68
December 31, | Years Ended December 31, | |||||||||||
2007 | 2008 | 2007 | ||||||||||
Current tax expense: | ||||||||||||
Current tax expense (benefit): | ||||||||||||
Federal | $ | 162,274 | $ | 663,767 | $ | 162,274 | ||||||
State | 14,593 | 188,560 | 14,593 | |||||||||
Total current tax expense | 176,867 | |||||||||||
Deferred tax expense: | ||||||||||||
Total current tax expense (benefit) | 852,327 | 176,867 | ||||||||||
Deferred tax expense (benefit): | ||||||||||||
Federal | 2,967,286 | (4,061,969 | ) | 2,967,286 | ||||||||
State | 58,386 | (85,384 | ) | 58,386 | ||||||||
Total deferred tax expense | 3,025,672 | |||||||||||
Total deferred tax expense (benefit) | (4,147,353 | ) | 3,025,672 | |||||||||
Excise tax | 60,000 | 112,625 | 60,000 | |||||||||
Total provision for income taxes | $ | 3,262,539 | ||||||||||
Total income tax provision (benefit) | $ | (3,182,401 | ) | $ | 3,262,539 | |||||||
(Estimated) (1) | ||||
Net increase in net assets resulting from operations | $ | 2,544,876 | ||
Earnings prior to Formation Transactions | (5,819,311 | ) | ||
Net change in unrealized depreciation from investments subsequent to Formation Transactions | 5,420,834 | |||
Net income from taxable subsidiary, MSEI, net of income tax provision (2) | (622,545 | ) | ||
Cumulative deferred tax expense related to MSEI portfolio investments for the period prior to Formation Transactions | 2,864,123 | |||
Nondeductible excise tax | 60,000 | |||
Other realized loss related items | (90,098 | ) | ||
Taxable income | 4,357,879 | |||
Taxable income earned in current year and carried forward for distribution in next year | (1,445,059 | ) | ||
Total distributions to common stockholders | $ | 2,912,820 | ||
91
Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(Estimated) | ||||||||
Net increase in net assets resulting from operations | $ | 10,933,939 | $ | 2,544,876 | ||||
Earnings prior to Formation Transactions | — | (5,819,311 | ) | |||||
Share-based compensation | 511,452 | — | ||||||
Net change in unrealized depreciation on investments | 3,961,092 | 4,597,897 | ||||||
Income tax provision (benefit) | (3,182,401 | ) | 3,262,539 | |||||
Pre-tax loss (income) of taxable subsidiary, MSEI, not consolidated for tax purposes | 2,182,580 | (126,624 | ) | |||||
Book income and tax income differences, including debt origination, structuring fees and realized gains | 1,033,436 | (65,426 | ) | |||||
Taxable income(1) | 15,440,098 | 4,393,951 | ||||||
Taxable income earned in prior year and carried forward for distribution in current year | 1,481,131 | — | ||||||
Taxable income earned in current year and carried forward for distribution | (2,799,963 | ) | (1,481,131 | ) | ||||
Total distributions declared to common stockholders | $ | 14,121,266 | $ | 2,912,820 | ||||
(1) | Main Street’s taxable income for | |
69
92
Year Ended | ||||
December 31, | ||||
2006 | ||||
Net increase in members’ equity and partners’ capital resulting from operations | $ | 15,822,997 | ||
Net change in unrealized depreciation from investments | (8,488,514 | ) | ||
Accrual basis to cash basis adjustments: | ||||
Deferred debt origination fees included in taxable income | 709,980 | |||
Accretion of unearned fee income for book income | (517,649 | ) | ||
Net change in interest receivable | (93,480 | ) | ||
Net change in interest payable | 83,459 | |||
Portfolio company pass through taxable income (loss) | 610,866 | |||
Other | (321,295 | ) | ||
Taxable income | $ | 7,806,364 | ||
NOTE J — | COMMON STOCK AND SHARE REPURCHASE PROGRAM |
2006 | 2005 | |||||||
Net increase in net assets resulting from operations | $ | 15,822,997 | $ | 7,890,063 | ||||
Net change in unrealized (appreciation) from investments | (8,488,514 | ) | (3,032,274 | ) | ||||
Accrual basis to cash basis adjustments: | ||||||||
Deferred debt origination fees included in taxable income | 709,980 | 535,250 | ||||||
Accretion of unearned fee income for book income | (517,649 | ) | (508,406 | ) | ||||
Net change in interest receivable | (93,480 | ) | (182,324 | ) | ||||
Net change in interest payable | 83,459 | 417,325 | ||||||
Portfolio company pass through taxable income (loss) | 610,866 | (815,510 | ) | |||||
Other | (321,295 | ) | (441,231 | ) | ||||
Taxable income | $ | 7,806,364 | $ | 3,862,893 | ||||
NOTE K — | PARTNERS’ CAPITAL CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS |
93
NOTE L — | DIVIDEND REINVESTMENT PLAN (“DRIP”) |
NOTE M — | SHARE-BASED COMPENSATION |
70
94
NOTE N — | EARNINGS PER SHARE |
Years Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(Consolidated) | (Consolidated) | (Combined) | ||||||||||
Numerator: | ||||||||||||
Net increase in net assets resulting from operations | $ | 10,933,939 | $ | 2,544,876 | $ | 15,822,997 | ||||||
Denominator: | ||||||||||||
Basic weighted-average shares outstanding | 8,967,383 | 8,587,701 | N/A | |||||||||
Dilutive effect of restricted stock on which forfeiture provisions have not lapsed | 3,681 | — | N/A | |||||||||
Diluted average shares outstanding | 8,971,064 | 8,587,701 | N/A | |||||||||
Net increase in net assets resulting from operations per share: | ||||||||||||
Basic | $ | 1.22 | $ | 0.30 | N/A | |||||||
Diluted | $ | 1.22 | $ | 0.30 | N/A |
NOTE O — | COMMITMENTS |
NOTE P — | SUPPLEMENTAL CASH FLOW DISCLOSURES |
2008 | 2007 | 2006 | ||||||||||||||||||||||
2007 | 2006 | 2005 | ||||||||||||||||||||||
Interest paid | $ | 2,852,002 | $ | 2,475,926 | $ | 1,481,191 | $ | 3,306,313 | $ | 2,852,002 | $ | 2,475,926 | ||||||||||||
Taxes paid | $ | — | $ | — | $ | — | $ | 355,053 | $ | — | $ | — | ||||||||||||
Non-cash investing and financing activity: | ||||||||||||||||||||||||
Investment in the Investment Manager (Main Street Capital Partners) | $ | 18,000,000 | $ | — | $ | — | ||||||||||||||||||
Shares issued for Investment in the Investment Manager | $ | — | $ | 18,000,000 | $ | — | ||||||||||||||||||
Issuance of shares for dividend reinvestment plan | $ | 1,903,116 | $ | — | $ | — | $ | 213,729 | $ | 1,903,116 | $ | — |
95
2007 | ||||||||||||||||
Qtr. 1 | Qtr. 2 | Qtr. 3 | Qtr. 4 | |||||||||||||
Total investment income | $ | 2,253,468 | $ | 2,927,033 | $ | 2,968,425 | $ | 3,163,187 | ||||||||
Net investment income | $ | 1,170,179 | $ | 970,897 | $ | 1,745,144 | $ | 2,635,479 | ||||||||
Net increase (decrease) in net assets resulting from operations | $ | 1,779,474 | $ | 1,330,897 | $ | 2,708,941 | $ | (3,274,436 | ) | |||||||
Net investment income per common share-basic and diluted | $ | 0.14 | $ | 0.11 | $ | 0.20 | $ | 0.30 | ||||||||
Net increase in net assets resulting from operations per common share-basic and diluted | $ | 0.21 | $ | 0.16 | $ | 0.32 | $ | (0.37 | ) |
NOTE Q — | SELECTED QUARTERLY DATA (UNAUDITED) |
2008 | ||||||||||||||||
Qtr. 1 | Qtr. 2 | Qtr. 3 | Qtr. 4 | |||||||||||||
Total investment income | $ | 4,027,366 | $ | 4,176,911 | $ | 4,457,324 | $ | 4,633,825 | ||||||||
Net investment income | $ | 2,504,062 | $ | 2,586,575 | $ | 2,529,950 | $ | 2,694,549 | ||||||||
Net increase in net assets resulting from operations | $ | 3,202,636 | $ | 4,488,097 | $ | 2,673,703 | $ | 569,503 | ||||||||
Net investment income per share-basic and diluted | $ | 0.28 | $ | 0.29 | $ | 0.28 | $ | 0.30 | ||||||||
Net increase in net assets resulting from operations per share-basic and diluted | $ | 0.36 | $ | 0.50 | $ | 0.30 | $ | 0.06 |
2006 | ||||||||||||||||
Qtr. 1 | Qtr. 2 | Qtr. 3 | Qtr. 4 | |||||||||||||
Total investment income | $ | 2,095,256 | $ | 2,478,398 | $ | 2,255,170 | $ | 2,184,313 | ||||||||
Net investment income | $ | 1,111,225 | $ | 1,410,085 | $ | 1,230,153 | $ | 1,153,097 | ||||||||
Net increase in net assets resulting from operations | $ | 3,714,625 | $ | 2,686,023 | $ | 6,731,463 | $ | 2,690,886 | ||||||||
Net investment income per common share-basic and diluted | N/A | N/A | N/A | N/A | ||||||||||||
Net increase in net assets resulting from operations per common share-basic and diluted | N/A | N/A | N/A | N/A |
2007 | ||||||||||||||||
Qtr. 1 | Qtr. 2 | Qtr. 3 | Qtr. 4 | |||||||||||||
Total investment income | $ | 2,412,577 | $ | 3,142,284 | $ | 3,127,383 | $ | 3,792,734 | ||||||||
Net investment income | $ | 1,170,179 | $ | 970,897 | $ | 1,745,144 | $ | 2,635,479 | ||||||||
Net increase (decrease) in net assets resulting from operations | $ | 1,779,474 | $ | 1,330,897 | $ | 2,708,941 | $ | (3,274,436 | ) | |||||||
Net investment income per share-basic and diluted | $ | 0.14 | $ | 0.11 | $ | 0.20 | $ | 0.30 | ||||||||
Net increase in net assets resulting from operations per share-basic and diluted | $ | 0.21 | $ | 0.16 | $ | 0.32 | $ | (0.37 | ) |
NOTE R — | RELATED PARTY TRANSACTIONS |
71
NOTE S — | SUBSEQUENT EVENTS |
96
72
97
73
98
Amount of | Amount of | |||||||||||||||||||||||||||||||||||||||||||
Interest or | Interest or | |||||||||||||||||||||||||||||||||||||||||||
Dividends | Dividends | |||||||||||||||||||||||||||||||||||||||||||
Credited to | December 31, | Gross | Gross | December 31, | Credited to | December 31, | Gross | Gross | December 31, | |||||||||||||||||||||||||||||||||||
Company | Investments (1) | Income (2) | 2006 Value | Additions (3) | Reductions (4) | 2007 Value | Investments(1) | Income(2) | 2007 Value | Additions(3) | Reductions(4) | 2008 Value | ||||||||||||||||||||||||||||||||
CONTROL INVESTMENTS | ||||||||||||||||||||||||||||||||||||||||||||
Café Brazil, LLC | 12% Secured Debt | $ | 398,180 | $ | 3,150,000 | $ | — | $ | 400,000 | $ | 2,750,000 | 12% Secured Debt | $ | 389,182 | $ | 2,702,931 | $ | 47,069 | $ | — | $ | 2,750,000 | ||||||||||||||||||||||
Member Units | 127,861 | 900,000 | 380,000 | 30,000 | 1,250,000 | Member Units | 30,681 | 1,250,000 | — | 250,000 | 1,000,000 | |||||||||||||||||||||||||||||||||
CBT Nuggets, LLC | Prime plus 2% Secured Debt | 51,591 | 660,000 | — | 300,000 | 360,000 | Prime plus 2% Secured Debt | 12,067 | 354,678 | 5,322 | 360,000 | — | ||||||||||||||||||||||||||||||||
14% Secured Debt | 275,399 | 1,860,000 | — | — | 1,860,000 | 14% Secured Debt | 272,276 | 1,805,275 | 54,725 | 180,000 | 1,680,000 | |||||||||||||||||||||||||||||||||
10% Secured Debt | 2,292 | — | 150,000 | — | 150,000 | |||||||||||||||||||||||||||||||||||||||
Member Units | 225,000 | 1,145,000 | 480,000 | — | 1,625,000 | |||||||||||||||||||||||||||||||||||||||
Warrants | — | 345,000 | 155,000 | — | 500,000 | |||||||||||||||||||||||||||||||||||||||
Ceres Management, LLC | 14% Secured Debt | 271,426 | — | 2,402,492 | 29,891 | 2,372,601 | ||||||||||||||||||||||||||||||||||||||
(Lambs) | Member Units | — | — | 1,300,000 | — | 1,300,000 | ||||||||||||||||||||||||||||||||||||||
Condit Exhibits, LLC | 13% Current/5% PIK Secured Debt | 245,195 | — | 2,310,454 | 37,260 | 2,273,194 | ||||||||||||||||||||||||||||||||||||||
Member Units | 270,000 | 610,000 | 535,000 | — | 1,145,000 | Warrants | — | — | 300,000 | — | 300,000 | |||||||||||||||||||||||||||||||||
Warrants | — | 200,000 | 145,000 | — | 345,000 | |||||||||||||||||||||||||||||||||||||||
Gulf Manufacturing, LLC | Prime plus 1% Secured Debt | 48,519 | — | 1,200,000 | — | 1,200,000 | Prime plus 1% Secured Debt | 77,870 | 1,188,636 | 11,364 | — | 1,200,000 | ||||||||||||||||||||||||||||||||
13% Secured Debt | 162,049 | — | 2,000,000 | — | 2,000,000 | 13% Secured Debt | 298,308 | 1,809,216 | 170,784 | 100,000 | 1,880,000 | |||||||||||||||||||||||||||||||||
Member Units | — | — | 472,000 | — | 472,000 | Member Units | 281,837 | 472,000 | 628,000 | — | 1,100,000 | |||||||||||||||||||||||||||||||||
Warrants | — | — | 250,000 | — | 250,000 | Warrants | — | 250,000 | 300,000 | — | 550,000 | |||||||||||||||||||||||||||||||||
Hawthorne Customs & Dispatch Services, LLC | 13% Secured Debt | 219,640 | 1,650,000 | — | 300,000 | 1,350,000 | ||||||||||||||||||||||||||||||||||||||
Member Units | 31,000 | 950,000 | — | 515,000 | 435,000 | |||||||||||||||||||||||||||||||||||||||
Warrants | — | 500,000 | — | 270,000 | 230,000 | |||||||||||||||||||||||||||||||||||||||
Hayden Acquisition, LLC | 12% Secured Debt | 311,157 | �� | 2,420,000 | — | 465,000 | 1,955,000 | |||||||||||||||||||||||||||||||||||||
Hawthorne Customs & | 13% Secured Debt | 185,862 | 1,304,693 | 17,295 | 150,000 | 1,171,988 | ||||||||||||||||||||||||||||||||||||||
Dispatch Services, LLC | Member Units | 18,200 | 435,000 | — | — | 435,000 | ||||||||||||||||||||||||||||||||||||||
Warrants | — | 230,000 | — | — | 230,000 | |||||||||||||||||||||||||||||||||||||||
Hydratec Holdings, LLC | 12.5% Secured Debt | 194,423 | — | 5,700,000 | — | 5,700,000 | 12.5% Secured Debt | 734,496 | 5,588,729 | 22,600 | 300,000 | 5,311,329 | ||||||||||||||||||||||||||||||||
Prime plus 1% Secured Debt | 39,783 | — | 1,845,244 | — | 1,845,244 | Prime plus 1% Secured Debt | 93,363 | 1,825,911 | 654,000 | 900,000 | 1,579,911 | |||||||||||||||||||||||||||||||||
Member Units | — | — | 1,800,000 | — | 1,800,000 | Member Units | 1,800,000 | 250,000 | — | 2,050,000 | ||||||||||||||||||||||||||||||||||
Jensen Jewelers of Idaho, LLC | Prime plus 2% Secured Debt | 128,904 | 1,340,000 | 80,000 | 220,000 | 1,200,000 | ||||||||||||||||||||||||||||||||||||||
13% Current/6% PIK Secured Debt | 198,736 | 1,008,000 | 61,457 | — | 1,069,457 | |||||||||||||||||||||||||||||||||||||||
Member Units | 136,049 | 376,000 | 439,000 | — | 815,000 | |||||||||||||||||||||||||||||||||||||||
KBK Industries, LLC | 14% Secured Debt | 51,473 | 3,937,500 | — | 3,937,500 | — | ||||||||||||||||||||||||||||||||||||||
Jensen Jewelers of | Prime plus 2% Secured Debt | 90,543 | 1,180,509 | 19,491 | 156,000 | 1,044,000 | ||||||||||||||||||||||||||||||||||||||
Idaho, LLC | 13% Current/6% PIK Secured Debt | 213,914 | 1,044,190 | 90,401 | 130,000 | 1,004,591 | ||||||||||||||||||||||||||||||||||||||
Member Units | — | 625,000 | — | 625,000 | — | Member Units | 63,888 | 815,000 | — | 435,000 | 380,000 | |||||||||||||||||||||||||||||||||
Warrants | — | 1,372,500 | — | 1,372,500 | — | |||||||||||||||||||||||||||||||||||||||
Magna Card, Inc. | 12% Current/0.4% PIK Secured Debt | 267,695 | 1,900,000 | 121,079 | 2,021,079 | — | 12% Secured Debt | — | — | 1,958,776 | 1,958,776 | — | ||||||||||||||||||||||||||||||||
Quest Design & Production LLC | 8% Current/5% PIK Secured Debt | 566,235 | 3,900,000 | 91,542 | — | 3,991,542 | ||||||||||||||||||||||||||||||||||||||
Warrants | — | — | 100,000 | 100,000 | — | |||||||||||||||||||||||||||||||||||||||
NAPCO Precast, LLC | Prime plus 2% Secured Debt | 455,227 | — | 4,040,000 | 347,692 | 3,692,308 | ||||||||||||||||||||||||||||||||||||||
18% Secured Debt | 1,424,035 | — | 7,140,000 | 678,462 | 6,461,538 | |||||||||||||||||||||||||||||||||||||||
Member Units | 1,811,206 | — | 5,100,000 | — | 5,100,000 | |||||||||||||||||||||||||||||||||||||||
OMi Holdings, Inc. | 12% Secured Debt | 898,992 | — | 7,536,600 | 933,200 | 6,603,400 | ||||||||||||||||||||||||||||||||||||||
Common Stock | — | — | 900,000 | 330,000 | 570,000 | |||||||||||||||||||||||||||||||||||||||
Quest Design & | 10% Secured Debt | 178,312 | 3,964,853 | 204,139 | 3,568,992 | 600,000 | ||||||||||||||||||||||||||||||||||||||
Production LLC | 0% Secured Debt | — | — | 2,000,000 | 600,000 | 1,400,000 | ||||||||||||||||||||||||||||||||||||||
Warrants | — | 40,000 | — | 40,000 | — | |||||||||||||||||||||||||||||||||||||||
Warrants | — | — | 1,595,858 | 1,595,858 | — | |||||||||||||||||||||||||||||||||||||||
Warrants | — | 40,000 | — | — | 40,000 | |||||||||||||||||||||||||||||||||||||||
TA Acquisition Group, LP | 12% Secured Debt | 346,519 | 2,860,000 | — | 990,000 | 1,870,000 | 12% Secured Debt | 386,811 | 1,813,789 | 56,211 | 1,870,000 | — | ||||||||||||||||||||||||||||||||
Partnership Interest | 96,211 | 3,435,000 | — | 3,435,000 | — | |||||||||||||||||||||||||||||||||||||||
Partnership Interest | 105,053 | 2,630,000 | 805,000 | — | 3,435,000 | Warrants | — | 3,450,000 | — | 3,450,000 | — | |||||||||||||||||||||||||||||||||
Warrants | — | 2,650,000 | 800,000 | — | 3,450,000 | |||||||||||||||||||||||||||||||||||||||
Technical Innovations, LLC | 12% Secured Debt | 372,981 | 1,387,500 | 600,000 | 787,500 | 12% Secured Debt | — | 748,716 | — | 748,716 | — | |||||||||||||||||||||||||||||||||
Prime Secured Debt | 32,058 | 462,500 | 200,000 | 262,500 | Prime Secured Debt | — | 249,572 | — | 249,572 | — | ||||||||||||||||||||||||||||||||||
Member Units | 3,285 | 35,000 | 5,000 | 40,000 | — | Member Units | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Warrants | — | 1,285,000 | 130,000 | 1,415,000 | — | Warrants | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Universal Scaffolding & Equipment, LLC | Prime plus 1% Secured Debt | 52,273 | — | 1,202,500 | 80,167 | 1,122,333 | ||||||||||||||||||||||||||||||||||||||
13% Current/5% PIK Secured Debt | 281,897 | — | 3,196,376 | — | 3,196,376 | |||||||||||||||||||||||||||||||||||||||
Member Units | — | — | 1,025,000 | — | 1,025,000 | |||||||||||||||||||||||||||||||||||||||
Wicks N’ More, LLC | 12% Secured Debt | 513,369 | 3,720,000 | — | 1,770,000 | 1,950,000 | ||||||||||||||||||||||||||||||||||||||
Member Units | — | — | 180,000 | 180,000 | — | |||||||||||||||||||||||||||||||||||||||
Income from Control Investments disposed of during the year | 15,253 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Total — Control | $ | 5,201,382 | $ | 42,429,000 | $ | 22,464,198 | $ | 15,731,246 | $ | 49,161,952 | ||||||||||||||||||||||||||||||||||
74
99
Amount of | ||||||||||||||||||||||
Interest or | ||||||||||||||||||||||
Dividends | ||||||||||||||||||||||
Credited to | December 31, | Gross | Gross | December 31, | ||||||||||||||||||
Company | Investments(1) | Income(2) | 2007 Value | Additions(3) | Reductions(4) | 2008 Value | ||||||||||||||||
Universal Scaffolding & | Prime plus 1% Secured Debt | 89,538 | 1,111,741 | 3,831 | 240,500 | 875,072 | ||||||||||||||||
Equipment, LLC | 13% Current/5% PIK Secured Debt | 607,672 | 3,136,274 | 175,235 | 151,509 | 3,160,000 | ||||||||||||||||
Member Units | 1,025,000 | — | 1,025,000 | — | ||||||||||||||||||
Uvalco Supply, LLC | Equity | 100,000 | — | 1,575,000 | — | 1,575,000 | ||||||||||||||||
Wicks Acquisition, LLC | 8% Secured Debt | — | — | 78,000 | 78,000 | — | ||||||||||||||||
12% Secured Debt | 300 | 1,685,444 | 1,770,000 | 3,455,444 | — | |||||||||||||||||
8% Secured Debt | — | — | 30,000 | 30,000 | — | |||||||||||||||||
12% Secured Debt | — | — | 30,000 | 30,000 | — | |||||||||||||||||
Member Units | — | — | 360,000 | 360,000 | — | |||||||||||||||||
Warrants | — | — | 210,000 | 210,000 | — | |||||||||||||||||
Ziegler’s NYPD, LLC | Prime plus 2% Secured Debt | 33,838 | — | 600,239 | 6,000 | 594,239 | ||||||||||||||||
13% Current/5% PIK Secured Debt | 164,258 | — | 2,705,579 | 42,142 | 2,663,437 | |||||||||||||||||
Warrants | — | — | 360,000 | — | 360,000 | |||||||||||||||||
Income from Control Investments disposed of during the year | 1,525 | — | — | — | — | |||||||||||||||||
Total-Control | $ | 9,754,325 | $ | 46,207,157 | $ | 47,898,465 | $ | 28,563,014 | $ | 65,542,608 | ||||||||||||
AFFILIATE INVESTMENTS | ||||||||||||||||||||||
Advantage Millwork Company, Inc. | 12% Secured Debt | $ | 394,820 | $ | 2,547,510 | $ | 426,620 | $ | 18,688 | $ | 2,955,442 | |||||||||||
Warrants | — | 87,120 | 10,688 | 97,808 | — | |||||||||||||||||
American Sensor | Prime plus .5% Secured Debt | 363,486 | 3,404,755 | 395,245 | — | 3,800,000 | ||||||||||||||||
Technologies, Inc. | Warrants | — | 750,000 | — | 500,000 | 250,000 | ||||||||||||||||
Carlton Global | 13% PIK Secured Debt | — | 2,618,421 | 104,166 | 2,722,587 | — | ||||||||||||||||
Resources, LLC | Member Units | — | — | — | — | — | ||||||||||||||||
CHMB, Inc. | 12% Secured Debt | 55,140 | — | 1,415,906 | 274,200 | 1,141,706 | ||||||||||||||||
Common Stock | — | — | 390,000 | — | 390,000 | |||||||||||||||||
Warrants | — | — | 240,000 | — | 240,000 | |||||||||||||||||
Houston Plating & Coatings, LLC | Prime Plus 2% | 13,037 | 100,000 | 200,000 | — | 300,000 | ||||||||||||||||
Member Units | 410,550 | 2,450,000 | 300,000 | — | 2,750,000 | |||||||||||||||||
KBK Industries, LLC | 14% Secured Debt | 618,065 | 3,730,881 | 206,619 | — | 3,937,500 | ||||||||||||||||
8% Secured Debt | 50,591 | 623,063 | 126,937 | 281,250 | 468,750 | |||||||||||||||||
8% Secured Debt | 27,617 | — | 712,500 | 262,500 | 450,000 | |||||||||||||||||
Prime plus 2% Secured Debt | 11,013 | 686,250 | — | 686,250 | — | |||||||||||||||||
Member Units | 43,436 | 700,000 | 75,000 | — | 775,000 | |||||||||||||||||
Laurus Healthcare, LP, | 13% Secured Debt | 415,285 | 2,934,625 | 75,375 | 735,000 | 2,275,000 | ||||||||||||||||
Warrants | — | 715,000 | 1,785,000 | — | 2,500,000 | |||||||||||||||||
National Trench Safety, LLC | 10% PIK Debt | 89,451 | 314,805 | 89,451 | — | 404,256 | ||||||||||||||||
Member Units | — | 1,792,308 | — | — | 1,792,308 | |||||||||||||||||
Pulse Systems, LLC | 14% Secured Debt | 331,010 | 2,260,420 | 47,078 | 476,224 | 1,831,274 | ||||||||||||||||
Warrants | — | 350,000 | 100,000 | — | 450,000 | |||||||||||||||||
Schneider Sales Management, LLC | 13% Secured Debt | 97,026 | — | 1,981,656 | 71,684 | 1,909,972 | ||||||||||||||||
Warrants | — | — | 45,000 | — | 45,000 | |||||||||||||||||
Transportation General Inc. | 13% Secured Debt | 1,047,372 | 3,501,966 | 98,034 | 3,600,000 | — | ||||||||||||||||
Warrants | — | 340,000 | — | 340,000 | — | |||||||||||||||||
Turbine Air Systems, Ltd. | 12% Secured Debt | 181,787 | 905,213 | 94,787 | 1,000,000 | — | ||||||||||||||||
Warrants | — | — | — | — | — | |||||||||||||||||
100
Amount of | ||||||||||||||||||||||
Interest or | ||||||||||||||||||||||
Dividends | ||||||||||||||||||||||
Credited to | December 31, | Gross | Gross | December 31, | ||||||||||||||||||
Company | Investments(1) | Income(2) | 2007 Value | Additions(3) | Reductions(4) | 2008 Value | ||||||||||||||||
Vision Interests, Inc. | 13% Secured Debt | 534,401 | 3,541,662 | 37,455 | — | 3,579,117 | ||||||||||||||||
Common Stock | — | 372,000 | 48,000 | — | 420,000 | |||||||||||||||||
Warrants | — | 375,000 | 45,000 | — | 420,000 | |||||||||||||||||
Walden Smokey Point, Inc. | 14% Current / 4% PIK Secured | 50,400 | — | 4,800,533 | 96,000 | 4,704,533 | ||||||||||||||||
Debt Common Stock | — | — | 600,000 | — | 600,000 | |||||||||||||||||
WorldCall, Inc. | 13% Secured Debt | 107,955 | 745,217 | 31,057 | 136,275 | 640,000 | ||||||||||||||||
Common Stock | — | 180,000 | 202,837 | — | 382,837 | |||||||||||||||||
Warrants | — | 150,000 | — | 150,000 | — | |||||||||||||||||
Income from Affiliate Investments disposed of during the year | — | — | — | — | — | |||||||||||||||||
Total-Affiliate Investments | $ | 4,842,442 | $ | 36,176,216 | $ | 14,684,944 | $ | 11,448,465 | $ | 39,412,695 | ||||||||||||
Amount of | ||||||||||||||||||||||
Interest or | ||||||||||||||||||||||
Dividends | ||||||||||||||||||||||
Credited to | December 31, | Gross | Gross | December 31, | ||||||||||||||||||
Company | Investments (1) | Income (2) | 2006 Value | Additions (3) | Reductions (4) | 2007 Value | ||||||||||||||||
AFFILIATE INVESTMENTS | ||||||||||||||||||||||
Advantage Millwork Company, Inc. | 12% Secured Debt | $ | 327,874 | $ | — | $ | 2,666,667 | $ | — | $ | 2,666,667 | |||||||||||
Warrants | — | — | 87,120 | — | 87,120 | |||||||||||||||||
All Hose & Speciality, LLC | 11% Secured Debt | — | 2,600,000 | — | 2,600,000 | — | ||||||||||||||||
Member Units | — | 1,600,000 | — | 1,600,000 | — | |||||||||||||||||
11% Note Receivable | — | 441,000 | — | 441,000 | — | |||||||||||||||||
American Sensor Technologies, Inc. | Prime plus .50% Secured Debt | 425,789 | 3,200,000 | 300,000 | — | 3,500,000 | ||||||||||||||||
Warrants | — | 575,000 | 175,000 | — | 750,000 | |||||||||||||||||
Carlton Global Resources, LLC | 13% Secured Debt | 425,983 | 3,600,000 | 1,087,777 | 1,875,110 | 2,812,667 | ||||||||||||||||
Member Units | — | 400,000 | — | 400,000 | — | |||||||||||||||||
Houston Plating & Coatings, LLC | Prime plus 2% Secured Debt | 10,049 | 100,000 | — | — | 100,000 | ||||||||||||||||
Member Units | 340,477 | 1,710,000 | 740,000 | — | 2,450,000 | |||||||||||||||||
KBK Industries, LLC | 14% Secured Debt | 556,595 | — | 3,937,500 | — | 3,937,500 | ||||||||||||||||
8% Secured Debt | 34,491 | — | 623,063 | — | 623,063 | |||||||||||||||||
Prime plus 2% Secured Debt | 63,861 | — | 686,250 | — | 686,250 | |||||||||||||||||
Member Units | 110,437 | — | 700,000 | — | 700,000 | |||||||||||||||||
Warrants | — | — | 1,372,500 | 1,372,500 | — | |||||||||||||||||
Laurus Healthcare, LP, | 13% Secured Debt | 444,737 | 3,010,000 | — | — | 3,010,000 | ||||||||||||||||
Warrants | — | 105,000 | 610,000 | — | 715,000 | |||||||||||||||||
National Trench Safety, LLC | 10% PIK Debt | 41,205 | — | 365,334 | — | 365,334 | ||||||||||||||||
Member Units | — | 1,792,308 | — | — | 1,792,308 | |||||||||||||||||
Pulse Systems, LLC | 14% Secured Debt | 396,755 | 2,747,271 | — | 439,773 | 2,307,498 | ||||||||||||||||
Warrants | — | 400,000 | 125,000 | 175,000 | 350,000 | |||||||||||||||||
Transportation General Inc. | 13% Secured Debt | 524,976 | 3,900,000 | — | 300,000 | 3,600,000 | ||||||||||||||||
Warrants | — | 395,000 | 85,000 | 140,000 | 340,000 | |||||||||||||||||
Turbine Air Systems, Ltd. | 12% Secured Debt | 139,476 | 1,000,000 | — | — | 1,000,000 | ||||||||||||||||
Warrants | — | 96,666 | — | 96,666 | — | |||||||||||||||||
Vision Interests, Inc. | 13% Secured Debt | 377,196 | — | 3,760,000 | — | 3,760,000 | ||||||||||||||||
Common Stock | — | — | 372,000 | — | 372,000 | |||||||||||||||||
Warrants | — | — | 375,000 | — | 375,000 | |||||||||||||||||
WorldCall, Inc. | 13% Secured Debt | 126,746 | 820,000 | — | 37,500 | 782,500 | ||||||||||||||||
Common Stock | — | 180,000 | — | — | 180,000 | |||||||||||||||||
Warrants | — | 150,000 | — | — | 150,000 | |||||||||||||||||
Barton Springs Grill LP | 15% Partnership Interest | — | — | 150,000 | 150,000 | — | ||||||||||||||||
Income from Affiliate Investments disposed of during the year | 1,044,008 | — | — | — | — | |||||||||||||||||
Total — Affiliate Investments | $ | 5,390,655 | $ | 28,822,245 | $ | 18,218,211 | $ | 9,627,549 | $ | 37,412,907 | ||||||||||||
This schedule should be read in conjunction with Main Street’s Consolidated and Combined Financial Statements, including the Consolidated and Combined Schedule of Investments and Notes to the Consolidated Financial Statements. | ||
(1) | The principal amount, the ownership detail for equity investments and if the investment is income producing is shown in the Consolidated and Combined Schedule of Investments. | |
(2) | Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate during the year, the income related to the time period it was in the category other than the one shown at year end is included in “Income from Investment disposed of during the year”. | |
(3) | Gross additions include increases in the cost basis of investments resulting from new portfolio investment , follow on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross Additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category. | |
(4) | Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category. |
75
Item 9. |
Item 9A. | Controls and Procedures |
101
Item 9B. |
Item 10. |
Item 11. |
76
102
Item 12. |
Number of Securities | ||||||||||||
Remaining Available for | ||||||||||||
Number of Securities to be | Weighted-Average Exercise | Future Issuance Under | ||||||||||
Issued Upon Exercise of | Price of Outstanding | Equity Compensation Plans | ||||||||||
Outstanding Options, | Options, Warrants and | (Excluding Securities | ||||||||||
Plan Category | Warrants and Rights | Rights | Reflected in Column(a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders | — | $ | — | 1,934,355 | (1) | |||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | — | $ | — | 1,934,355 | ||||||||
(1) | All of our equity compensation plans have been approved by our stockholders. As of December 31, 2008, we had issued 265,645 shares of restricted stock pursuant to our equity compensation plans, of which 10,000 shares had vested as of December 31, 2008. Pursuant to each of our equity compensation plans, if any award issued thereunder shall for any reason expire or otherwise terminate or be forfeited, in whole or in part, the shares of stock not acquired under such award shall revert to and again become available for issuance under such plan. |
Item 13. |
Item 14. |
103
Item 15. |
1. | Consolidated Financial Statements |
58 | ||||
Consolidated Balance | 60 | |||
Consolidated Statements of Operations for the Years Ended December 31, 2008 and 2007 and Combined | ||||
61 | ||||
Consolidated Statements of | ||||
62 | ||||
Consolidated | 63 | |||
Consolidated | 64 | |||
Notes to Consolidated Financial Statements | 72 |
2. | Consolidated Financial Statement Schedules |
77
3. | Exhibits |
Exhibit | |||||
Number | Description | ||||
Articles of Amendment and Restatement of Main Street Capital Corporation (previously filed as | |||||
3 | |||||
Amended and Restated Bylaws of Main Street Capital | |||||
4 | |||||
Form of Common Stock Certificate (previously filed as | |||||
4 | .2* | Form of Dividend Reinvestment Plan (previously filed as Exhibit 4.2 to Main Street Capital Corporation’s Annual Report on Form 10-K for the year ended December 31, 2007) | |||
Debentures guaranteed by the SBA (previously filed as | |||||
10 | .1* | Credit Agreement dated October 24, 2008 (previously filed as Exhibit 10.1 to Main Street Capital Corporation’s Current Report on Form 8-K filed October 28, 2008 (File No. 1-33723)) | |||
General Security Agreement dated October 24, 2008 (previously filed as Exhibit 10.2 to Main Street’s Current Report on Form 8-K filed October 28, 2008 (File No. 1-33723)) | |||||
10 | .3* | Custodial Agreement dated October 24, 2008 (previously filed as Exhibit 10.3 to Main Street’s Current Report on Form 8-K filed October 28, 2008 (File No. 1-33723)) | |||
10 | .4* | Equity Pledge Agreement dated October 24, 2008 (previously filed as Exhibit 10.4 to Main Street’s Current Report on Form 8-K filed October 28, 2008 (File No. 1-33723)) | |||
10 | .5* | Treasury Secured Revolving Credit Agreement dated December 31, 2007 (previously filed as | |||
10 | |||||
Security Agreement dated December 31, 2007 (previously filed as | |||||
78
104
Exhibit | ||||
Number | Description | |||
10 | .7* | Control Agreement dated December 31, 2007 (previously filed as Exhibit 10.3 to Main Street Capital Corporation’s Current Report on Form 8-K filed January 3, 2008 (File No. 1-33723)) | ||
10 | .8* | Custody Agreement dated December 31, 2007 (previously filed as Exhibit 10.4 to Main Street Capital Corporation’s Current Report on Form 8-K filed January 3, 2008 (File No. 1-33723)) | ||
10 | .9* | Form of Amended and Restated Advisory Agreement by and between Main Street Capital Partners, LLC and Main Street Mezzanine Fund, LP (previously filed as Exhibit (g)(1) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .10* | Advisory Agreement by and between Main Street Capital Partners, LLC and Main Street Capital II, LP (previously filed as Exhibit (g)(2) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .11*† | Main Street Capital Corporation 2008 Equity Incentive Plan (previously filed as Exhibit 4.4 to Main Street Capital Corporation’s Registration Statement on Form S-8 (Reg. No. 333-151799)) | ||
10 | .12*† | Main Street Capital Corporation 2008 Non-Employee Director Restricted Stock Plan (previously filed as Exhibit 4.5 to Main Street Capital Corporation’s Registration Statement on Form S-8 (Reg. No. 333-151799)) | ||
�� | 10 | .13* | Custodian Agreement (previously filed as Exhibit (j) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | |
10 | .14*† | Form of Employment Agreement by and between Main Street Capital Corporation and Todd A. Reppert (previously filed as Exhibit (k)(1) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .15*† | Form of Employment Agreement by and between Main Street Capital Corporation and Rodger A. Stout (previously filed as Exhibit (k)(2) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .16*† | Form of Employment Agreement by and between Main Street Capital Corporation and Curtis A. Hartman (previously filed as Exhibit (k)(3) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .17*† | Form of Employment Agreement by and between Main Street Capital Corporation and Dwayne L. Hyzak (previously filed as Exhibit (k)(4) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .18*† | Form of Employment Agreement by and between Main Street Capital Corporation and David L. Magdol (previously filed as Exhibit (k)(5) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .19*† | Form of Confidentiality and Non-Compete Agreement by and between Main Street Capital Corporation and Vincent D. Foster (previously filed as Exhibit (k)(12) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .20*† | Form of Indemnification Agreement by and between Main Street Capital Corporation and each executive officer and director (previously filed as Exhibit (k)(13) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .21* | Support Services Agreement effective as of October 2, 2007 by and between Main Street Capital Corporation and Main Street Capital Partners, LLC (previously filed as Exhibit (k)(16) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
14 | .1* | Code of Ethics (previously filed as Exhibit (r) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
23 | Consent of Grant Thornton, LLP, independent registered public accounting firm | |||
31 | .1 | Rule 13a - 14(a)/15d - 14(a) certification of Chief Executive Officer | ||
31 | .2 | Rule 13a - 14(a)/15d - 14(a) certification of Chief Financial Officer | ||
32 | .1 | Section 1350 certification of Chief Executive Officer | ||
32 | .2 | Section 1350 certification of Chief Financial Officer |
* | Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference. | |
† | Management contract or compensatory plan or arrangement |
79105
By: | /s/Vincent D. Foster | |||
Signature | Title | Date | ||||
/s/ Vincent D. Foster | (principal executive officer) | March | ||||
/s/ Todd A. Reppert Todd A. Reppert | President, Chief Financial Officer and Director (principal financial officer) | March 13, 2009 | ||||
/s/Michael S. Galvan Michael S. Galvan | Vice President, Chief Accounting Officer (principal accounting officer) | March | ||||
/s/ Rodger A. Stout Rodger A. Stout | Compliance Officer and Treasurer | March 13, 2009 | ||||
/s/ Michael Appling Jr. | March | |||||
/s/ Joseph E. Canon Joseph E. Canon | March 13, 2009 | |||||
/s/ William D. Gutermuth | Director | March | ||||
/s/ Arthur L. French | Director | March | ||||
13, 2009 |
80
106
Exhibit | |||||
Number | Description | ||||
Articles of Amendment and Restatement of Main Street Capital Corporation (previously filed as | |||||
3 | |||||
Amended and Restated Bylaws of Main Street Capital | |||||
4 | |||||
Form of Common Stock Certificate (previously filed as | |||||
4 | .2* | Form of Dividend Reinvestment Plan (previously filed as Exhibit 4.2 to Main Street Capital Corporation’s Annual Report on Form 10-K for the year ended December 31, 2007) | |||
Debentures guaranteed by the SBA (previously filed as | |||||
10 | .1* | Credit Agreement dated October 24, 2008 (previously filed as Exhibit 10.1 to Main Street Capital Corporation’s Current Report on Form 8-K filed October 28, 2008 (File No. 1-33723)) | |||
General Security Agreement dated October 24, 2008 (previously filed as Exhibit 10.2 to Main Street’s Current Report on Form 8-K filed October 28, 2008 (File No. 1-33723)) | |||||
10 | .3* | Custodial Agreement dated October 24, 2008 (previously filed as Exhibit 10.3 to Main Street’s Current Report on Form 8-K filed October 28, 2008 (File No. 1-33723)) | |||
10 | .4* | Equity Pledge Agreement dated October 24, 2008 (previously filed as Exhibit 10.4 to Main Street’s Current Report on Form 8-K filed October 28, 2008 (File No. 1-33723)) | |||
10 | .5* | Treasury Secured Revolving Credit Agreement dated December 31, 2007 (previously filed as | |||
10 | |||||
Security Agreement dated December 31, 2007 (previously filed as | |||||
10 | |||||
Control Agreement dated December 31, 2007 (previously filed as | |||||
10 | |||||
Custody Agreement dated December 31, 2007 (previously filed as | |||||
10 | |||||
Form of Amended and Restated Advisory Agreement by and between Main Street Capital Partners, LLC and Main Street Mezzanine Fund, LP (previously filed as | |||||
10 | |||||
Advisory Agreement by and between Main Street Capital Partners, LLC and Main Street Capital II, LP (previously filed as | |||||
10 | |||||
Main Street Capital Corporation 2008 Equity Incentive Plan (previously filed as | |||||
10 | .12*† | Main Street Capital Corporation 2008 Non-Employee Director Restricted Stock Plan (previously filed as Exhibit 4.5 to Main Street Capital Corporation’s Registration Statement on Form S-8 (Reg. No. 333-151799)) | |||
Custodian Agreement (previously filed as | |||||
10 | |||||
Form of Employment Agreement by and between | |||||
10 | |||||
Form of Employment Agreement by and between |
10 | ||||
Form of Employment Agreement by and between | ||||
Exhibit | ||||
Number | Description | |||
10 | .17*† | Form of Employment Agreement by and between Main Street Capital Corporation and Dwayne L. Hyzak (previously filed as Exhibit (k)(4) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .18*† | Form of Employment Agreement by and between Main Street Capital Corporation and David L. Magdol (previously filed as Exhibit (k)(5) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .19*† | Form of Confidentiality and Non-Compete Agreement by and between Main Street Capital Corporation and Vincent D. Foster (previously filed as Exhibit (k)(12) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .20*† | Form of Indemnification Agreement by and between Main Street Capital Corporation and each executive officer and director (previously filed as Exhibit (k)(13) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
10 | .21* | Support Services Agreement effective as of October 2, 2007 by and between Main Street Capital Corporation and Main Street Capital Partners, LLC (previously filed as Exhibit (k)(16) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
14 | .1* | Code of Ethics (previously filed as Exhibit (r) to Main Street Capital Corporation’s Registration Statement on Form N-2 (Reg. No. 333-142879)) | ||
23 | Consent of Grant Thornton LLP, independent registered public accounting firm | |||
31 | .1 | Rule 13a - 14(a)/15d - 14(a) certification of Chief Executive Officer | ||
31 | .2 | Rule 13a - 14(a)/15d - 14(a) certification of Chief Financial Officer | ||
32 | .1 | Section 1350 certification of Chief Executive Officer | ||
32 | .2 | Section 1350 certification of Chief Financial Officer |
* | Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference. | |
† | Management contract or compensatory plan or arrangement |