10-Q 1 d388704d10q.htm FORM 10-Q Form 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 814-00733

 

 

Triangle Capital Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   06-1798488
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

3700 Glenwood Avenue, Suite 530

Raleigh, North Carolina

  27612
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (919) 719-4770

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A

 

 

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

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

 

Large accelerated filer   ¨    Accelerated filer   x
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares outstanding of the registrant’s Common Stock on July 31, 2012 was 27,289,134.

 

 

 


Table of Contents

TRIANGLE CAPITAL CORPORATION

TABLE OF CONTENTS

QUARTERLY REPORT ON FORM 10-Q

 

         Page  
PART I – FINANCIAL INFORMATION   
Item 1.   Financial Statements   
 

Unaudited Consolidated Balance Sheet as of June 30, 2012 and Consolidated Balance Sheet as of December 31, 2011

     3   
 

Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2012 and 2011

     4   
 

Unaudited Consolidated Statements of Changes in Net Assets for the Six Months Ended June 30, 2012 and 2011

     5   
 

Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011

     6   
 

Unaudited Consolidated Schedule of Investments as of June 30, 2012

     7   
 

Consolidated Schedule of Investments as of December 31, 2011

     12   
 

Notes to Unaudited Consolidated Financial Statements

     17   
Item 2.  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     28   
Item 3.  

Quantitative and Qualitative Disclosures about Market Risk

     39   
Item 4.  

Controls and Procedures

     40   
PART II – OTHER INFORMATION   
Item 1.   Legal Proceedings      40   
Item 1A.   Risk Factors      40   
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds      41   
Item 3.   Defaults Upon Senior Securities      41   
Item 4.   Mine Safety Disclosures      41   
Item 5.   Other Information      41   
Item 6.   Exhibits      41   
Signatures      43   
Exhibits   

 

2


Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

TRIANGLE CAPITAL CORPORATION

Consolidated Balance Sheets

 

     June 30,      December 31,  
     2012      2011  
     (Unaudited)         

Assets

     

Investments at fair value:

     

Non–Control / Non–Affiliate investments (cost of $464,398,400 and $389,312,451 at June 30, 2012 and December 31, 2011, respectively)

   $ 476,434,438       $ 396,502,490   

Affiliate investments (cost of $115,106,658 and $97,751,264 at June 30, 2012 and December 31, 2011, respectively)

     116,191,443         103,266,298   

Control investments (cost of $11,413,857 and $11,278,339 at June 30, 2012 and December 31, 2011, respectively)

     5,777,993         7,309,787   
  

 

 

    

 

 

 

Total investments at fair value

     598,403,874         507,078,575   

Cash and cash equivalents

     93,727,621         66,868,340   

Interest and fees receivable

     4,447,983         1,883,395   

Prepaid expenses and other current assets

     401,771         623,318   

Deferred financing fees

     8,314,210         6,682,889   

Property and equipment, net

     55,847         58,304   
  

 

 

    

 

 

 

Total assets

   $ 705,351,306       $ 583,194,821   
  

 

 

    

 

 

 

Liabilities

     

Accounts payable and accrued liabilities

   $ 2,719,650       $ 4,116,822   

Interest payable

     3,551,367         3,521,932   

Taxes payable

     203,893         1,402,866   

Deferred income taxes

     802,079         628,742   

Borrowings under credit facility

     —           15,000,000   

Senior notes

     69,000,000         —     

SBA-guaranteed debentures payable

     213,914,760         224,237,504   
  

 

 

    

 

 

 

Total liabilities

     290,191,749         248,907,866   

Net Assets

     

Common stock, $0.001 par value per share (150,000,000 shares authorized, 27,289,134 and 22,774,726 shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively)

     27,289         22,775   

Additional paid-in-capital

     397,340,547         318,297,269   

Investment income in excess of distributions

     6,475,047         6,847,486   

Accumulated realized gains on investments

     4,633,796         1,011,649   

Net unrealized appreciation of investments

     6,682,878         8,107,776   
  

 

 

    

 

 

 

Total net assets

     415,159,557         334,286,955   
  

 

 

    

 

 

 

Total liabilities and net assets

   $ 705,351,306       $ 583,194,821   
  

 

 

    

 

 

 

Net asset value per share

   $ 15.21       $ 14.68   
  

 

 

    

 

 

 

See accompanying notes.

 

3


Table of Contents

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Statements of Operations

 

     Three Months
Ended
    Three Months
Ended
    Six Months
Ended
    Six Months
Ended
 
     June 30,
2012
    June 30,
2011
    June 30,
2012
    June 30,
2011
 

Investment income:

        

Loan interest, fee and dividend income:

        

Non–Control / Non–Affiliate investments

   $ 15,060,897      $ 11,224,891      $ 28,024,499      $ 19,974,340   

Affiliate investments

     2,952,805        1,724,555        5,669,954        3,098,798   

Control investments

     52,218        888,593        111,991        1,146,861   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total loan interest, fee and dividend income

     18,065,920        13,838,039        33,806,444        24,219,999   

Paid–in–kind interest income:

        

Non–Control / Non–Affiliate investments

     2,850,412        1,886,506        5,437,679        3,368,326   

Affiliate investments

     870,085        549,724        1,524,318        944,895   

Control investments

     20,000        53,504        39,971        118,801   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total paid–in–kind interest income

     3,740,497        2,489,734        7,001,968        4,432,022   

Interest income from cash and cash equivalent investments

     156,049        85,973        265,907        187,122   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

     21,962,466        16,413,746        41,074,319        28,839,143   
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

        

Interest and other financing fees

     4,144,623        2,753,751        7,455,360        4,895,908   

General and administrative expenses

     3,767,420        3,436,474        7,374,687        5,833,997   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     7,912,043        6,190,225        14,830,047        10,729,905   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

     14,050,423        10,223,521        26,244,272        18,109,238   

Net realized gain on investments—Non Control / Non–Affiliate

     2,784,108        827,599        2,784,108        827,599   

Net realized gain on investments—Control

     838,039        12,153,170        838,039        12,153,170   

Net unrealized depreciation of investments

     (2,046,369     (8,659,059     (1,424,898     (4,063,304
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net gain on investments

     1,575,778        4,321,710        2,197,249        8,917,465   

Loss on extinguishment of debt

     —          —          (205,043     (157,590

Income tax benefit

     —          —          7,231        27,359   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in net assets resulting from operations

   $ 15,626,201      $ 14,545,231      $ 28,243,709      $ 26,896,472   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income per share—basic and diluted

   $ 0.52      $ 0.55      $ 1.00      $ 1.02   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in net assets resulting from operations per share—basic and diluted

   $ 0.57      $ 0.78      $ 1.08      $ 1.52   
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends declared per common share

   $ 0.50      $ 0.44      $ 0.97      $ 0.86   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares outstanding—basic and diluted

     27,262,646        18,570,929        26,168,973        17,714,507   
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes.

 

4


Table of Contents

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Statements of Changes in Net Assets

 

                       Investment     Accumulated     Net        
                 Income     Realized     Unrealized        
     Common Stock     Additional     in Excess of     Gains     Appreciation     Total  
     Number     Par     Paid In     (Less Than)     (Losses) on     (Depreciation)     Net  
     of Shares     Value     Capital     Distributions     Investments     of Investments     Assets  

Balance, January 1, 2011

     14,928,987      $ 14,929      $ 183,602,755      $ 3,365,548      $ (8,244,376   $ 1,740,303      $ 180,479,159   

Net investment income

     —          —          —          18,109,238        —          —          18,109,238   

Stock-based compensation

     —          —          909,500        —          —          —          909,500   

Net realized gain on investments

     —          —          —          —          12,980,769        (11,137,330     1,843,439   

Net unrealized gains on investments

     —          —          —          —          —          7,074,026        7,074,026   

Loss on extinguishment of debt

     —          —          —          (157,590     —          —          (157,590

Income tax benefit

     —          —          —          27,359        —          —          27,359   

Dividends/distributions declared

     117,142        117        2,109,433        (15,944,136     —          —          (13,834,586

Public offering of common stock

     3,450,000        3,450        62,989,646        —          —          —          62,993,096   

Issuance of restricted stock

     161,174        161        (161     —          —          —          —     

Common stock withheld for payroll taxes upon vesting of restricted stock

     (32,065     (32     (643,276     —          —          —          (643,308
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, June 30, 2011

     18,625,238      $ 18,625      $ 248,967,897      $ 5,400,419      $ 4,736,393      $ (2,323,001   $ 256,800,333   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

                       Investment     Accumulated      Net        
                 Income     Realized      Unrealized        
     Common Stock     Additional     in Excess of     Gains      Appreciation     Total  
     Number     Par     Paid In     (Less Than)     (Losses) on      (Depreciation)     Net  
     of Shares     Value     Capital     Distributions     Investments      of Investments     Assets  

Balance, January 1, 2012

     22,774,726      $ 22,775      $ 318,297,269      $ 6,847,486      $ 1,011,649       $ 8,107,776      $ 334,286,955   

Net investment income

     —          —          —          26,244,272        —           —          26,244,272   

Stock-based compensation

     —          —          1,372,096        —          —           —          1,372,096   

Net realized gain on investments

     —          —          —          —          3,622,147         (3,062,895     559,252   

Net unrealized gains on investments

     —          —          —          —          —           1,637,997        1,637,997   

Loss on extinguishment of debt

     —          —          —          (205,043     —           —          (205,043

Income tax benefit

     —          —          —          7,231        —           —          7,231   

Dividends/distributions declared

     81,861        81        1,664,085        (26,418,899     —           —          (24,754,733

Public offering of common stock

     4,255,000        4,255        77,118,719        —          —           —          77,122,974   

Issuance of restricted stock

     235,086        236        (236     —          —           —          —     

Common stock withheld for payroll taxes upon vesting of restricted stock

     (57,539     (58     (1,111,386     —          —           —          (1,111,444
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Balance, June 30, 2012

     27,289,134      $ 27,289      $ 397,340,547      $ 6,475,047      $ 4,633,796       $ 6,682,878      $ 415,159,557   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

See accompanying notes.

 

5


Table of Contents

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Statements of Cash Flows

 

     Six Months
Ended

June 30,
2012
    Six Months
Ended

June 30,
2011
 

Cash flows from operating activities:

    

Net increase in net assets resulting from operations

   $ 28,243,709      $ 26,896,472   

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

    

Purchases of portfolio investments

     (156,571,355     (136,291,889

Repayments received/sales of portfolio investments

     71,439,853        61,522,270   

Loan origination and other fees received

     2,309,229        2,689,172   

Net realized (gain) loss on investments

     (3,622,147     (12,980,769

Net unrealized depreciation of investments

     1,251,562        3,919,574   

Deferred income taxes

     173,337        143,729   

Payment–in–kind interest accrued, net of payments received

     (3,765,725     (1,037,758

Amortization of deferred financing fees

     504,619        364,555   

Loss on extinguishment of debt

     205,043        157,590   

Accretion of loan origination and other fees

     (1,554,726     (711,355

Accretion of loan discounts

     (811,990     (518,337

Accretion of discount on SBA-guaranteed debentures payable

     87,256        85,068   

Depreciation expense

     15,811        14,477   

Stock-based compensation

     1,372,096        909,500   

Changes in operating assets and liabilities:

    

Interest and fees receivable

     (2,564,588     (712,007

Prepaid expenses

     221,547        (435,754

Accounts payable and accrued liabilities

     (1,397,172     4,700   

Interest payable

     29,435        723,850   

Taxes payable

     (1,198,973     (191,672
  

 

 

   

 

 

 

Net cash used in operating activities

     (65,633,179     (55,448,584
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (13,354     (18,115
  

 

 

   

 

 

 

Net cash used in investing activities

     (13,354     (18,115
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Borrowings under SBA-guaranteed debentures payable

     —          31,100,000   

Repayments of SBA-guaranteed debentures payable

     (10,410,000     (9,500,000

Repayments of credit facility

     (15,000,000     —     

Proceeds from senior notes

     69,000,000        —     

Financing fees paid

     (2,340,983     (1,226,176

Proceeds from public stock offerings, net of expenses

     77,122,974        62,993,096   

Common stock withheld for payroll taxes upon vesting of restricted stock

     (1,111,444     (643,308

Cash dividends paid

     (24,754,733     (13,834,586
  

 

 

   

 

 

 

Net cash provided by financing activities

     92,505,814        68,889,026   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     26,859,281        13,422,327   

Cash and cash equivalents, beginning of period

     66,868,340        54,820,222   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 93,727,621      $ 68,242,549   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

    

Cash paid for interest

   $ 6,671,706      $ 3,722,435   
  

 

 

   

 

 

 

Summary of non-cash financing transactions:

    

Dividends paid through DRIP share issuances

   $ 1,664,166      $ 2,109,550   
  

 

 

   

 

 

 

See accompanying notes.

 

6


Table of Contents

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Schedule of Investments

June 30, 2012

 

Portfolio Company

  

Industry

  

Type of Investment(1)(2)

   Principal
Amount
     Cost      Fair
Value(3)
 

Non–Control / Non–Affiliate Investments:

        

Ambient Air Corporation (“AA”) and Peaden-Hobbs Mechanical, LLC (“PHM”) (1%)*

  

Specialty

Trade

Contractors

   Subordinated Note-AA (15% Cash, 3% PIK, Due 06/13)    $ 4,139,092       $ 4,122,177       $ 4,122,177   
      Subordinated Note-PHM (12% Cash, Due 09/12)      12,857         12,857         12,857   
      Common Stock-PHM (128,571 shares)         128,571         128,571   
      Common Stock Warrants-AA (455 shares)         142,361         752,000   
        

 

 

    

 

 

    

 

 

 
           4,151,949         4,405,966         5,015,605   

Ann’s House of Nuts, Inc. (2%)*

  

Trail Mixes

and Nut

Producers

   Subordinated Note (12% Cash, 1% PIK, Due 11/17)      7,116,686         6,775,285         6,775,285   
      Preferred A Units (22,368 units)         2,124,957         2,258,000   
      Preferred B Units (10,380 units)         986,059         1,286,000   
      Common Units (190,935 units)         150,000         —     
      Common Stock Warrants (14,558 shares)         14,558         —     
        

 

 

    

 

 

    

 

 

 
           7,116,686         10,050,859         10,319,285   

Aramsco, Inc. (0%)

  

Environmental

Emergency

Preparedness

Products

Distributor

   Subordinated Note (12% Cash, 2% PIK, Due 03/14)     
 
 
 
 
    
1,693,311
    
    
    
 
 
 
 
  
    
 
 
 
 
    
1,591,113
    
    
    
 
 
 
 
  
    
 
 
 
 
    
1,591,113
    
    
    
 
 
 
 
  
  

 

 

    

 

 

    

 

 

 
           1,693,311         1,591,113         1,591,113   

Assurance Operations Corporation (0%)*

  

Metal

Fabrication

   Common Stock (517 shares)         516,867         822,000   
           

 

 

    

 

 

 
              516,867         822,000   

BioSan Laboratories, Inc. (1%)*

  

Nutritional

Supplement

Manufacturing

and

Distribution

   Subordinated Note (12% Cash, 3.8% PIK, Due 10/16)     
 
    
5,376,800
 
  
    
 
    
5,287,480
 
  
    
 
    
5,287,480
 
  
        

 

 

    

 

 

    

 

 

 
           5,376,800         5,287,480         5,287,480   

Botanical Laboratories, Inc. (2%)*

  

Nutritional

Supplement

Manufacturing

and

Distribution

   Senior Notes (14% Cash, 1% PIK, Due 02/15)      9,781,152         9,314,304         9,314,304   
      Common Unit Warrants (998,680 units)         474,600         —     
        

 

 

    

 

 

    

 

 

 
           9,781,152         9,788,904         9,314,304   

Capital Contractors, Inc. (2%)*

  

Janitorial and

Facilities

Maintenance

Services

  

Subordinated Notes (12% Cash, 2% PIK, Due

12/15)

    
 
    
9,278,490
 
  
    
 
    
8,768,257
 
  
    
 
    
8,768,257
 
  
      Common Stock Warrants (20 shares)         492,000         463,000   
        

 

 

    

 

 

    

 

 

 
           9,278,490         9,260,257         9,231,257   

Carolina Beverage Group, LLC (4%)*

  

Beverage

Manufacturing

and Packaging

   Subordinated Note (12% Cash, 4% PIK, Due 02/16)      13,394,977         13,210,693         13,210,693   
      Class A Units (11,974 units)         1,077,615         1,300,000   
      Class B Units (11,974 units)         119,735         54,000   
        

 

 

    

 

 

    

 

 

 
           13,394,977         14,408,043         14,564,693   

Chromaflo Technologies, LLC (4%)*

  

Colorant

Manufacturer

and Distributor

   Subordinated Note (12% Cash, 2% PIK, Due 10/17)      16,299,853         15,985,614         15,985,614   
      Preferred A Units (22,561 units)         2,256,098         2,256,098   
        

 

 

    

 

 

    

 

 

 
           16,299,853         18,241,712         18,241,712   

Continental Anesthesia Management, LLC (2%)*

  

Physicians

Management

Services

   Senior Note (13.5% Cash, Due 11/14)      10,200,000         9,940,646         9,940,646   
      Warrant (263 shares)         276,100         28,000   
        

 

 

    

 

 

    

 

 

 
           10,200,000         10,216,746         9,968,646   

CRS Reprocessing, LLC (7%)*

  

Fluid

Reprocessing

Services

   Subordinated Note (10% Cash, 4% PIK, Due 11/15)      11,530,579         11,243,277         11,243,277   
      Subordinated Note (10% Cash, 4% PIK, Due 11/15)      12,716,066         11,315,632         11,315,632   
      Series C Preferred Units (26 units)         288,342         478,000   
      Common Unit Warrant (664 units)         1,759,556         4,569,000   
      Series D Preferred Units (16 units)         107,074         199,000   
        

 

 

    

 

 

    

 

 

 
           24,246,645         24,713,881         27,804,909   

CV Holdings, LLC (4%)*

  

Specialty

Healthcare

Products

Manufacturer

   Subordinated Note (12% Cash, 4% PIK, Due 09/13)      9,468,285         9,149,867         9,149,867   
      Subordinated Note (12% Cash, Due 09/13)      6,000,000         5,935,574         5,935,574   
      Royalty Rights         874,400         663,000   
        

 

 

    

 

 

    

 

 

 
           15,468,285         15,959,841         15,748,441   

DLR Restaurants, LLC (3%)*

   Restaurant    Subordinated Note (12% Cash, 3% PIK, Due 03/16)      10,823,151         10,630,571         10,630,571   
      Subordinated Note (12% Cash, 4% PIK, Due 03/16)      767,420         752,420         752,420   
      Royalty Rights         —           —     
        

 

 

    

 

 

    

 

 

 
           11,590,571         11,382,991         11,382,991   

Electronic Systems Protection, Inc. (1%)*

  

Power

Protection

Systems

Manufacturing

   Subordinated Note (12% Cash, 2% PIK, Due 12/15)     
 
    
4,204,530
 
  
    
 
    
4,173,557
 
  
    
 
    
4,173,557
 
  
      Common Stock (570 shares)         285,000         337,000   
        

 

 

    

 

 

    

 

 

 
           4,204,530         4,458,557         4,510,557   

 

7


Table of Contents

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Schedule of Investments

June 30, 2012

 

Portfolio Company

  

Industry

  

Type of Investment(1)(2)

   Principal
Amount
     Cost      Fair
Value(3)
 

Frozen Specialties, Inc. (2%)*

   Frozen Foods Manufacturer    Subordinated Note (13% Cash, 5% PIK, Due 07/14)    $ 8,695,325       $ 8,623,662       $ 8,623,662   
        

 

 

    

 

 

    

 

 

 
           8,695,325         8,623,662         8,623,662   

Garden Fresh Restaurant Corp. (0%)*

   Restaurant    Membership Units (5,000 units)         500,000         610,000   
           

 

 

    

 

 

 
              500,000         610,000   

Grindmaster-Cecilware Corp. (1%)*

   Food Services Equipment Manufacturer    Subordinated Note (12% Cash, 6% PIK, Due 04/16)     
 
    
6,467,095
 
  
    
 
    
6,401,080
 
  
    
 
    
5,705,000
 
  
        

 

 

    

 

 

    

 

 

 
           6,467,095         6,401,080         5,705,000   

Hatch Chile Co., LLC (1%)*

   Food Products Distributor    Senior Note (19% Cash, Due 07/15)      4,090,909         4,011,469         4,011,469   
      Subordinated Note (14% Cash, Due 07/15)      909,091         790,241         790,241   
      Unit Purchase Warrant (5,265 units)         149,800         304,000   
        

 

 

    

 

 

    

 

 

 
           5,000,000         4,951,510         5,105,710   

Home Physicians, LLC (“HP”) and Home Physicians Holdings, LP (“HPH”) (2%)*

   In-home Primary Care Physician Services    Subordinated Note-HP (12% Cash, 5% PIK, Due 03/16)      10,926,259         10,608,777         7,510,000   
      Subordinated Note-HPH (4% Cash, 6% PIK, Due 03/16)      1,323,229         1,303,361         —     
      Senior Subordinated Note—HP (14% Cash, 2% PIK, Due 3/16)      606,023         595,098         595,098   
      Royalty Rights         —           —     
        

 

 

    

 

 

    

 

 

 
           12,855,511         12,507,236         8,105,098   

Infrastructure Corporation of America, Inc. (3%)*

   Roadway Maintenance, Repair and Engineering Services    Subordinated Note (12% Cash, 1% PIK, Due 10/15)      10,933,930         10,041,278         10,041,278   
      Common Stock Purchase Warrant (199,526 shares)         980,000         1,123,000   
        

 

 

    

 

 

    

 

 

 
           10,933,930         11,021,278         11,164,278   

Inland Pipe Rehabilitation Holding Company LLC
(5%)*

   Cleaning and Repair Services    Subordinated Note (13% Cash, 2.5% PIK, Due 12/16)      20,534,567         20,274,655         20,274,665   
      Membership Interest Purchase Warrant (3.0%)         853,500         2,115,000   
        

 

 

    

 

 

    

 

 

 
           20,534,567         21,128,165         22,389,665   

Library Systems & Services, LLC (1%)*

   Municipal Business Services    Subordinated Note (12.5% Cash, 4.5% PIK, Due 06/15)      5,369,439         5,263,630         5,263,630   
      Common Stock Warrants (112 shares)         58,995         954,000   
        

 

 

    

 

 

    

 

 

 
           5,369,439         5,322,625         6,217,630   

Magpul Industries Corp. (4%)

   Firearm Accessories Manufacturer and Distributor    Subordinated Note (12% Cash, 3% PIK, Due 03/17)      13,300,000         13,060,924         13,060,924   
      Preferred Units (1,470 units)         1,470,000         1,637,000   
      Common Units (30,000 units)         30,000         2,442,000   
        

 

 

    

 

 

    

 

 

 
           13,300,000         14,560,924         17,139,924   

Media Storm, LLC (2%)*

   Marketing Services    Subordinated Note (12% Cash, 2% PIK, Due 10/17)      7,976,696         7,899,327         7,899,327   
      Membership Units (1,216,204 units)         1,120,533         1,187,001   
        

 

 

    

 

 

    

 

 

 
           7,976,696         9,019,860         9,086,328   

Media Temple, Inc. (4%)*

   Web Hosting Services    Subordinated Note (12% Cash, 3% PIK, Due 04/15)      8,800,000         8,676,860         8,676,860   
      Convertible Note (8% Cash, 6% PIK, Due 04/15)      3,200,000         2,836,093         5,446,000   
      Common Stock Purchase Warrant (28,000 shares)         536,000         2,382,000   
        

 

 

    

 

 

    

 

 

 
           12,000,000         12,048,953         16,504,860   

Minco Technology Labs, LLC (1%)*

   Semiconductor Distribution    Subordinated Note (13% Cash, 3.25% PIK, Due 05/16)      5,359,414         5,265,983         5,265,983   
      Class A Units (5,000 units)         500,000         95,000   
        

 

 

    

 

 

    

 

 

 
           5,359,414         5,765,983         5,360,983   

National Investment Managers Inc. (3%)*

   Retirement Plan Administrator    Subordinated Note (12% Cash, 5% PIK, Due 09/16)      12,000,730         11,769,529         11,769,529   
      Preferred A Units (90,000 units)         900,000         679,000   
      Common Units (10,000 units)         100,000         —     
        

 

 

    

 

 

    

 

 

 
           12,000,730         12,769,529         12,448,529   

Pomeroy IT Solutions (2%)*

   Information Technology Outsourcing Services    Subordinated Notes (13% Cash, 2% PIK, Due 02/16)      10,284,402         10,080,704         10,080,704   
        

 

 

    

 

 

    

 

 

 
           10,284,402         10,080,704         10,080,704   
              

PowerDirect Marketing, LLC (2%)*

   Marketing Services    Subordinated Note (13% Cash, 2% PIK, Due 05/16)      7,682,107         7,025,992         7,025,992   
      Common Unit Purchase Warrants         590,200         975,000   
        

 

 

    

 

 

    

 

 

 
           7,682,107         7,616,192         8,000,992   

 

8


Table of Contents

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Schedule of Investments

June 30, 2012

 

Portfolio Company

  

Industry

  

Type of Investment(1)(2)

   Principal
Amount
     Cost      Fair
Value(3)
 

ROM Acquisition Corporation (2%)*

   Military and Industrial Vehicles Equipment Manufacturing   

Subordinated Note (12% Cash, 3% PIK, Due 3/17)

 

       
$
 
8,566,045
 
  
       
$
 
8,484,208
 
  
       
$
 
8,484,208
 
  
        

 

 

    

 

 

    

 

 

 
           8,566,045         8,484,208         8,484,208   

Sheplers, Inc. (3%)*

   Western Apparel Retailer    Subordinated Note (13.15% Cash, Due 12/16)      8,750,000         8,547,341         8,547,341   
      Subordinated Note (10% Cash, 7% PIK, Due 12/17)      3,890,259         3,821,204         3,821,204   
        

 

 

    

 

 

    

 

 

 
           12,640,259         12,368,545         12,368,545   

SRC, Inc. (1%)*

   Specialty Chemical Manufacturer    Subordinated Notes (12% Cash, 2% PIK, Due 09/14)      5,963,832         5,759,375         5,759,375   
      Common Stock Purchase Warrants         123,800         —     
        

 

 

    

 

 

    

 

 

 
           5,963,832         5,883,175         5,759,375   

Stella Environmental Services, LLC (1%)*

   Waste Transfer Stations    Subordinated Notes (12% Cash, 3% PIK, Due 2/17)      6,324,947         6,185,343         6,185,343   
      Common Stock Purchase Warrants         20,000         20,000   
        

 

 

    

 

 

    

 

 

 
           6,324,947         6,205,343         6,205,343   

Syrgis Holdings, Inc. (0%)*

   Specialty Chemical Manufacturer   

Class C Units (2,114 units)

 

        602,016         1,290,000   
        

 

 

    

 

 

    

 

 

 
              602,016         1,290,000   

The Krystal Company (3%)*

   Quick Serve Restaurants    Subordinated Note (12% Cash, 3% PIK, Due 6/17)      12,324,964         12,089,067         12,089,067   
      Class A Units of Limited Partnership (2,000 units)         2,000,000         2,000,000   
        

 

 

    

 

 

    

 

 

 
           12,324,964         14,089,067         14,089,067   

TMR Automotive Service Supply, LLC (1%)*

   Automotive Supplies    Subordinated Note (12% Cash, 1% PIK, Due 03/16)      4,750,000         4,513,287         4,513,287   
      Unit Purchase Warrant (329,518 units)         195,000         337,000   
        

 

 

    

 

 

    

 

 

 
           4,750,000         4,708,287         4,850,287   

Tomich Brothers, LLC (2%)*

   Squid and Wetfish Processor and Distributor    Subordinated Note (12% Cash, 3% PIK, Due 04/16)      7,037,968         6,904,914         6,904,914   
      Royalty Rights         —           —     
        

 

 

    

 

 

    

 

 

 
           7,037,968         6,904,914         6,904,914   

Top Knobs USA, Inc. (3%)*

   Hardware Designer and Distributor    Subordinated Note (12% Cash, 4.5% PIK, Due 05/17)      10,606,238         10,467,794         10,467,794   
      Common Stock (26,593 shares)         750,000         881,000   
        

 

 

    

 

 

    

 

 

 
           10,606,238         11,217,794         11,348,794   

Trinity Consultants Holdings, Inc. (2%)*

   Air Quality Consulting Services    Subordinated Note (12% Cash, 2.5% PIK, Due 11/17)      7,308,190         7,172,681         7,172681   
      Series A Preferred Stock (10,000 units)         950,000         1,075,000   
      Common Stock (55,556 units)         50,000         311,000   
        

 

 

    

 

 

    

 

 

 
           7,308,190         8,172,681         8,558,681   

TrustHouse Services Group, Inc. (6%)*

   Food Management Services    Subordinated Note (12% Cash, 2.25% PIK, Due 06/19)      25,045,312         24,747,440         24,747,440   
      Class A Units (1,557 units)         512,124         1,291,000   
      Class B Units (82 units)         26,954         51,000   
      Class E Units (838 units)         750,406         739,000   
        

 

 

    

 

 

    

 

 

 
           25,045,312         26,036,924         26,828,440   

Tulsa Inspection Resources, Inc. (2%)*

   Pipeline Inspection Services    Subordinated Note (14%-17.5% Cash, Due 03/14)      5,810,588         5,620,603         5,620,603   
      Common Units (2 units)         407,000         518,000   
      Common Stock Warrants (8 shares)         321,000         1,987,000   
        

 

 

    

 

 

    

 

 

 
           5,810,588         6,348,603         8,125,603   

Twin-Star International, Inc. (1%)*

   Consumer Home Furnishings Manufacturer    Subordinated Note (12% Cash, 1% PIK, Due 04/14)      4,500,000         4,483,581         4,483,581   
      Senior Note (4.5%, Due 04/13)      1,023,359         1,023,359         1,023,359   
        

 

 

    

 

 

    

 

 

 
           5,523,359         5,506,940         5,506,940   

United Biologics, LLC (3%)*

   Allergy Immunotherapy    Subordinated Note (12% Cash, 2% PIK, Due 03/17)      10,065,717         9,066,234         9,066,234   
      Class A Common Stock (177,935 shares)         1,999,989         1,999,989   
      Class A & Class B Unit Purchase Warrants         838,117         838,117   
        

 

 

    

 

 

    

 

 

 
           10,065,717         11,904,340         11,904,340   

Wholesale Floors, Inc. (1%)*

   Commercial Services    Subordinated Note (12.5% Cash, 3.5% PIK, Due 06/14)      3,754,094         3,683,972         3,683,972   
      Membership Interest Purchase Warrant (4.0%)         132,800         —     
        

 

 

    

 

 

    

 

 

 
           3,754,094         3,816,772         3,683,972   

 

9


Table of Contents

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Schedule of Investments

June 30, 2012

 

Portfolio Company

  

Industry

  

Type of Investment(1)(2)

   Principal
Amount
     Cost      Fair
Value(3)
 

Workforce Software, LLC (2%)*

   Software Provider    Subordinated Note (11% Cash, 3% PIK, Due 11/16)    $ 7,000,000       $ 6,137,547       $ 6,137,547   
      Class B Preferred Units (1,020,000 units)         1,020,000         1,080,000   
      Common Unit Purchase Warrants (2,224,561 units)         782,300         1,354,000   
        

 

 

    

 

 

    

 

 

 
           7,000,000         7,939,847         8,571,547   

WSO Holdings, LP (5%)*

   Organic/Fair Trade Sugar, Syrup, Nectar and Honey Producer   

Subordinated Note (12% Cash, 2% PIK,

10/17)

  

 

20,095,556

  

  

 

19,805,380

  

  

 

19,805,380

  

              
      Common Points (3,000 points)         3,000,000         3,000,000   
        

 

 

    

 

 

    

 

 

 
           20,095,556         22,805,380         22,805,380   

Xchange Technology Group, LLC (1%)*

   Used and Refurbished IT Asset Supplier    Subordinated (12% Cash, 6% PIK, 06/15)      6,024,000         5,277,000         5,277,000   
      Royalty Rights         627,000         627,000   
        

 

 

    

 

 

    

 

 

 
           6,024,000         5,904,000         5,904,000   

Yellowstone Landscape Group, Inc. (3%)*

   Landscaping Services    Subordinated Note (12% Cash, 3% PIK, Due 04/14)      13,009,187         12,898,646         12,898,646   
        

 

 

    

 

 

    

 

 

 
           13,009,187         12,898,646         12,898,646   
        

 

 

    

 

 

    

 

 

 

Subtotal Non–Control / Non–Affiliate Investments

     443,112,721         464,398,400         476,434,438   

Affiliate Investments:

              

American De-Rosa Lamparts, LLC and Hallmark Lighting (1%)*

   Wholesale and Distribution    Subordinated Note (12% Cash, 6% PIK, Due 10/13)      6,242,854         5,431,468         5,431,468   
      Membership Units (6,516 units)         620,653         —     
        

 

 

    

 

 

    

 

 

 
           6,242,854         6,052,121         5,431,468   

AP Services, Inc. (2%)*

   Fluid Sealing Supplies and Services    Subordinated Note (12% Cash, 2% PIK, Due 09/15)      4,395,730         4,312,809         4,312,809   
      Class A Units (933 units)         933,333         1,749,000   
      Class B Units (496 units)         —           431,000   
        

 

 

    

 

 

    

 

 

 
           4,395,730         5,246,142         6,492,809   

Asset Point, LLC (2%)*

   Asset Management Software Provider    Senior Note (12% Cash, 4% PIK, Due 03/13)      6,178,429         6,159,414         6,159,414   
      Senior Note (12% Cash, 2% PIK, Due 07/15)      623,843         623,843         562,000   
      Subordinated Note (7% Cash, Due 03/13)      941,798         941,798         859,000   
      Membership Units (1,000,000 units)         8,203         389,000   
      Options to Purchase Membership Units (342,407 units)         500,000         176,000   
      Membership Unit Warrants (356,506 units)         —           2,000   
        

 

 

    

 

 

    

 

 

 
           7,744,070         8,233,258         8,147,414   

Axxiom Manufacturing, Inc. (0%)*

  

Industrial Equipment

Manufacturer

   Common Stock (136,400 shares)         200,000         1,435,000   
      Common Stock Warrant (4,000 shares)         —           42,000   
           

 

 

    

 

 

 
              200,000         1,477,000   

Brantley Transportation, LLC (“Brantley Transportation”) and Pine Street Holdings, LLC (“Pine Street”) (4) (1%)*

   Oil and Gas Services    Subordinated Note—Brantley Transportation (14% Cash, 5% PIK, Due 12/12)      4,048,471         4,031,795         4,031,795   
      Common Unit Warrants—Brantley Transportation (4,560 common units)         33,600         699,000   
      Preferred Units—Pine Street (200 units)         200,000         416,000   
      Common Unit Warrants—Pine Street (2,220 units)         —           199,000   
        

 

 

    

 

 

    

 

 

 
           4,048,471         4,265,395         5,345,795   

Captek Softgel International, Inc. (2%)*

   Nutraceutical Manufacturer    Subordinated Note (12% Cash, 4% PIK, Due 08/16)      8,445,914         8,313,732         8,313,732   
      Class A Units (80,000 units)         800,000         1,185,000   
        

 

 

    

 

 

    

 

 

 
           8,445,914         9,113,732         9,498,732   

CIS Secure Computing, Inc. (2%)*

  

Secure

Communications and Computing Solutions Provider

  

Subordinated Note (12% Cash, 3% PIK, Due

06/17)

  

 
 

    
10,007,500

 
  

  

 
 

    
9,807,500

 
  

  

 
 

    
9,807,500

 
  

              
      Common Stock (84 shares)         502,320         502,320   
        

 

 

    

 

 

    

 

 

 
           10,007,500         10,309,820         10,309,820   

Dyson Corporation (1%)*

   Custom Forging and Fastener Supplies    Class A Units (1,000,000 units)         1,000,000         4,182,000   
           

 

 

    

 

 

 
              1,000,000         4,182,000   

Equisales, LLC (0%)*

  

Energy

Products and Services

   Subordinated Note (6.5% Cash, 10% PIK, Due 07/12)      3,277,733         3,157,043         994,000   
      Class A Units (500,000 units)         480,900         —     
        

 

 

    

 

 

    

 

 

 
           3,277,733         3,637,943         994,000   

 

10


Table of Contents

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Schedule of Investments

June 30, 2012

 

Portfolio Company

  

Industry

  

Type of Investment(1)(2)

   Principal
Amount
     Cost      Fair
Value(3)
 

Fischbein Partners, LLC (3%)*

   Packaging and Materials Handling Equipment Manufacturer    Subordinated Note (12% Cash, 2% PIK, Due 10/16)        
$
 
6,825,129
 
  
       
$
 
6,714,986
 
  
       
$
 
6,714,986
 
  
      Class A Units (1,750,000 units)         417,088         3,983,000   
        

 

 

    

 

 

    

 

 

 
           6,825,129         7,132,074         10,697,986   

Main Street Gourmet, LLC (1%)*

   Baked Goods Provider    Subordinated Notes (12% Cash, 4.5% PIK, Due 10/16)      4,230,118         4,164,027         4,164,027   
      Jr. Subordinated Notes (8% Cash, 2% PIK, Due 04/17)      1,025,251         1,008,673         742,000   
      Preferred Units (233 units)         211,867         —     
      Common B Units (3,000 units)         23,140         —     
      Common A Units (1,652 units)         14,993         —     
        

 

 

    

 

 

    

 

 

 
           5,255,369         5,422,700         4,906,027   

Plantation Products, LLC (5%)*

   Seed Manufacturing    Subordinated Notes (10.5% Cash, 7% PIK, Due 11/17)      18,631,525         18,416,826         18,416,826   
      Preferred Units (4,312 units)         4,312,000         4,312,000   
      Common Units (352,000 units)         88,000         88,000   
        

 

 

    

 

 

    

 

 

 
           18,631,525         22,816,826         22,816,826   

QC Holdings, Inc. (0%)*

   Lab Testing Services    Common Stock (5,594 shares)         563,602         35,000   
           

 

 

    

 

 

 
              563,602         35,000   

Technology Crops International (2%)*

   Supply Chain Management Services    Subordinated Note (12% Cash, 5% PIK, Due 03/15)      5,753,669         5,695,610         5,695,610   
      Common Units (50 units)         500,000         571,000   
        

 

 

    

 

 

    

 

 

 
           5,753,669         6,195,610         6,266,610   

Venture Technology Groups, Inc. (1%)*

   Fluid and Gas Handling Products Distributor    Subordinated Note (12.5% Cash, 4% PIK, Due 09/16)      5,555,646         5,460,370         3,347,000   
      Class A Units (1,000,000 units)         1,000,000         —     
        

 

 

    

 

 

    

 

 

 
           5,555,646         6,460,370         3,347,000   

Waste Recyclers Holdings, LLC (1%)*

   Environmental and Facilities Services    Class A Preferred Units (280 units)         2,251,100         —     
      Class B Preferred Units (985,372 units)         3,304,218         3,223,000   
      Class C Preferred Units (1,444,475 units)         246,598         616,000   
      Common Unit Purchase Warrant (1,170,083 units)         748,900         —     
      Common Units (153,219 units)         180,783         —     
           

 

 

    

 

 

 
              6,731,599         3,839,000   

Wythe Will Tzetzo, LLC (3%)*

   Confectionary Goods Distributor    Subordinated Notes (13% Cash, Due 10/16)      10,357,475         9,923,956         9,923,956   
      Series A Preferred Units (74,764 units)         1,500,000         2,029,000   
      Common Unit Purchase Warrants (25,065 units)         301,510         451,000   
        

 

 

    

 

 

    

 

 

 
           10,357,475         11,725,466         12,403,956   
        

 

 

    

 

 

    

 

 

 

Subtotal Affiliate Investments

           96,541,085         115,106,658         116,191,443   

Control Investments:

              

FCL Graphics, Inc. (“FCL”) and FCL Holding SPV, LLC (“SPV”) (1%)*

   Commercial Printing Services    Senior Note—FCL (5.0% Cash, Due 9/16)      1,405,360         1,405,360         1,405,360   
      Senior Note—FCL (8.0% Cash, 2% PIK, Due 9/16)      1,159,491         1,158,004         980,000   
      Senior Note—SPV (2.5% Cash, 6% PIK, Due 9/16)      978,644         978,644         382,000   
      Members Interests—SPV (299,875 units)         —           —     
        

 

 

    

 

 

    

 

 

 
           3,543,495         3,542,008         2,767,360   

Fire Sprinkler Systems, Inc. (0%)*

   Specialty Trade Contractors    Subordinated Notes (2% PIK, Due 04/12)      3,491,422         2,955,028         133,000   
      Common Stock (2,978 shares)         294,624         —     
        

 

 

    

 

 

    

 

 

 
           3,491,422         3,249,652         133,000   

Fischbein, LLC (0%)*

   Packaging and Materials Handling Equipment Manufacturer    Class A-1 Common Units (501,984 units)         29,575         141,512   
      Class A Common Units (3,839,068 units)         226,182         927,121   
           

 

 

    

 

 

 
              255,757         1,068,633   

Gerli & Company (0%)*

   Specialty Woven Fabrics Manufacturer    Subordinated Note (13% Cash, Due 03/15)      250,000         250,000         250,000   
      Subordinated Note (8.5% Cash, Due 03/15)      3,338,880         3,000,000         1,559,000   
      Class A Preferred Shares (1,211 shares)         855,000         —     
      Class C Preferred Shares (744 shares)         —           —     
      Class E Preferred Shares (400 shares)         161,440         —     
      Common Stock (300 shares)         100,000         —     
        

 

 

    

 

 

    

 

 

 
           3,588,880         4,366,440         1,809,000   
        

 

 

    

 

 

    

 

 

 

Subtotal Control Investments

        10,623,797         11,413,857         5,777,993   
        

 

 

    

 

 

    

 

 

 

Total Investments, June 30, 2012 (144%)*

      $ 550,277,603       $ 590,918,915       $ 598,403,874   
        

 

 

    

 

 

    

 

 

 

 

* Value as a percent of net assets
(1) All debt investments are income producing. Common stock, preferred stock and all warrants are non–income producing.
(2) Disclosures of interest rates on notes include cash interest rates and payment–in–kind (“PIK”) interest rates.
(3) All investments are restricted as to resale and were valued at fair value as determined in good faith by the Board of Directors.
(4) Pine Street Holdings, LLC is the majority owner of Brantley Transportation, LLC and its sole business purpose is its ownership of Brantley Transportation, LLC.

See accompanying notes.

 

11


Table of Contents

TRIANGLE CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2011

 

Portfolio Company

  

Industry

  

Type of Investment(1)(2)

   Principal
Amount
     Cost      Fair
Value(3)
 

Non–Control / Non–Affiliate Investments:

        

Ambient Air Corporation (“AA”) and Peaden-Hobbs Mechanical, LLC (“PHM”) (1%)*

   Specialty Trade Contractors    Subordinated Note-AA (15% Cash, 3% PIK, Due 06/13)    $ 4,127,773       $ 4,103,291       $ 4,103,291   
      Subordinated Note-PHM (12% Cash, Due 09/12)      12,857         12,857         12,857   
      Common Stock-PHM (128,571 shares)         128,571         128,571   
      Common Stock Warrants-AA (455 shares)         142,361         760,000   
        

 

 

    

 

 

    

 

 

 
           4,140,630         4,387,080         5,004,719   

Ann’s House of Nuts, Inc. (3%)*

   Trail Mixes and Nut Producers    Subordinated Note (12% Cash, 1% PIK, Due 11/17)      7,080,843         6,716,662         6,716,662   
      Preferred A Units (22,368 units)         2,124,957         2,407,000   
      Preferred B Units (10,380 units)         986,059         1,204,000   
      Common Units (190,935 units)         150,000         —     
      Common Stock Warrants (14,558 shares)         14,558         —     
        

 

 

    

 

 

    

 

 

 
           7,080,843         9,992,236         10,327,662   

Aramsco, Inc. (1%)

   Environmental    Subordinated Note (12% Cash, 2% PIK, Due         
   Emergency Preparedness Products Distributor    03/14)      1,800,997         1,673,278         1,673,278   
        

 

 

    

 

 

    

 

 

 
           1,800,997         1,673,278         1,673,278   
              
              

Assurance Operations Corporation (0%)*

   Metal Fabrication    Common Stock (517 shares)         516,867         773,000   
           

 

 

    

 

 

 
              516,867         773,000   

BioSan Laboratories, Inc. (2%)*

   Nutritional    Subordinated Note (12% Cash, 3.8% PIK, Due         
   Supplement Manufacturing and Distribution    10/16)      5,276,296         5,179,676         5,179,676   
        

 

 

    

 

 

    

 

 

 
           5,276,296         5,179,676         5,179,676   
              
              

Botanical Laboratories, Inc. (3%)*

   Nutritional    Senior Notes (14% Cash, 1% PIK, Due 02/15)      10,114,528         9,580,196         9,122,000   
   Supplement    Common Unit Warrants (998,680 units)         474,600         —     
        

 

 

    

 

 

    

 

 

 
   Manufacturing         10,114,528         10,054,796         9,122,000   
   and Distribution            

Capital Contractors, Inc. (3%)*

   Janitorial and Facilities Maintenance Services    Subordinated Notes (12% Cash, 2% PIK, Due 12/15)      9,185,225         8,617,853         8,617,853   
      Common Stock Warrants (20 shares)         492,000         398,000   
        

 

 

    

 

 

    

 

 

 
           9,185,225         9,109,853         9,015,853   

Carolina Beverage Group, LLC (4%)*

   Beverage Manufacturing and Packaging    Subordinated Note (12% Cash, 4% PIK, Due 02/16)      13,260,895         13,055,973         13,055,973   
      Class A Units (11,974 units)         1,077,615         1,120,000   
      Class B Units (11,974 units)         119,735         —     
        

 

 

    

 

 

    

 

 

 
           13,260,895         14,253,323         14,175,973   

CRS Reprocessing, LLC (8%)*

   Fluid Reprocessing Services    Subordinated Note (12% Cash, 2% PIK, Due 11/15)      11,357,260         11,022,004         11,022,004   
      Subordinated Note (10% Cash, 4% PIK, Due 11/15)      11,016,583         10,020,937         10,020,937   
      Series C Preferred Units (26 units)         288,342         476,000   
      Common Unit Warrant (550 units)         1,253,556         4,040,000   
        

 

 

    

 

 

    

 

 

 
           22,373,843         22,584,839         25,558,941   

CV Holdings, LLC (5%)*

   Specialty Healthcare Products Manufacturer    Subordinated Note (12% Cash, 4% PIK, Due 09/13)      9,279,054         8,845,875         8,845,875   
      Subordinated Note (12% Cash, Due 09/13)      6,000,000         5,912,355         5,912,355   
      Royalty Rights         874,400         920,000   
        

 

 

    

 

 

    

 

 

 
           15,279,054         15,632,630         15,678,230   

DLR Restaurants, LLC (3%)*

   Restaurant    Subordinated Note (12% Cash, 3% PIK, Due 03/16)      10,660,442         10,448,050         10,448,050   
      Subordinated Note (12% Cash, 4% PIK, Due 03/16)      752,083         752,083         752,083   
      Royalty Rights         —           —     
        

 

 

    

 

 

    

 

 

 
           11,412,525         11,200,133         11,200,133   

Electronic Systems Protection, Inc. (2%)*

   Power Protection Systems Manufacturing    Subordinated Note (12% Cash, 2% PIK, Due 12/15)      4,162,798         4,128,357         4,128,357   
      Senior Note (8.3% Cash, Due 01/14)      681,475         681,475         681,475   
      Common Stock (570 shares)         285,000         367,000   
        

 

 

    

 

 

    

 

 

 
           4,844,273         5,094,832         5,176,832   

Frozen Specialties, Inc. (3%)*

   Frozen Foods Manufacturer    Subordinated Note (13% Cash, 5% PIK, Due 07/14)      8,478,731         8,391,839         8,391,839   
        

 

 

    

 

 

    

 

 

 
           8,478,731         8,391,839         8,391,839   

Garden Fresh Restaurant Corp. (0%)*

   Restaurant    Membership Units (5,000 units)         500,000         820,000   
           

 

 

    

 

 

 
              500,000         820,000   

Grindmaster-Cecilware Corp. (2%)*

   Food Services Equipment Manufacturer    Subordinated Note (12% Cash, 4.5% PIK, Due 04/16)      6,274,350         6,198,309         5,104,000   
        

 

 

    

 

 

    

 

 

 
           6,274,350         6,198,309         5,104,000   

 

12


Table of Contents

TRIANGLE CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2011

 

Portfolio Company

  

Industry

  

Type of Investment(1)(2)

   Principal
Amount
     Cost      Fair
Value(3)
 

Hatch Chile Co., LLC (2%)*

   Food Products Distributor    Senior Note (19% Cash, Due 07/15)    $ 4,500,000       $ 4,411,111       $ 4,411,111   
      Subordinated Note (14% Cash, Due 07/15)      1,000,000         865,687         865,687   
      Unit Purchase Warrant (5,265 units)         149,800         216,000   
        

 

 

    

 

 

    

 

 

 
           5,500,000         5,426,598         5,492,798   

Home Physicians, LLC (“HP”) and Home Physicians Holdings, LP (“HPH”) (3%)*

   In-home Primary Care Physician Services    Subordinated Note-HP (12% Cash, 5% PIK, Due 03/16)      10,654,096         10,454,979         8,868,000   
      Subordinated Note-HPH (4% Cash, 6% PIK, Due 03/16)      1,283,791         1,283,791         —     
      Royalty Rights         —           —     
        

 

 

    

 

 

    

 

 

 
           11,937,887         11,738,770         8,868,000   

Infrastructure Corporation of America, Inc. (3%)*

   Roadway Maintenance, Repair and Engineering Services    Subordinated Note (12% Cash, 1% PIK, Due 10/15)      10,878,815         9,876,796         9,876,796   
      Common Stock Purchase Warrant (199,526 shares)         980,000         1,348,000   
        

 

 

    

 

 

    

 

 

 
           10,878,815         10,856,796         11,224,796   

Inland Pipe Rehabilitation Holding Company LLC
(7%)*

   Cleaning and Repair Services    Subordinated Note (13% Cash, 2.5% PIK, Due 12/16)      20,277,473         19,996,881         19,996,881   
      Membership Interest Purchase Warrant (3.0%)         853,500         2,112,000   
        

 

 

    

 

 

    

 

 

 
           20,277,473         20,850,381         22,108,881   

Library Systems & Services, LLC (2%)*

   Municipal Business Services    Subordinated Note (12.5% Cash, 4.5% PIK, Due 06/15)      5,250,001         5,130,053         5,130,053   
      Common Stock Warrants (112 shares)         58,995         723,000   
        

 

 

    

 

 

    

 

 

 
           5,250,001         5,189,048         5,853,053   

Magpul Industries Corp. (4%)

   Firearm Accessories Manufacturer and Distributor    Subordinated Note (12% Cash, 3% PIK, Due 03/17)      13,300,000         13,042,711         13,042,711   
      Preferred Units (1,470 units)         1,470,000         1,470,000   
      Common Units (30,000 units)         30,000         30,000   
        

 

 

    

 

 

    

 

 

 
           13,300,000         14,542,711         14,542,711   

McKenzie Sports Products, LLC (2%)*

   Taxidermy Manufacturer    Subordinated Note (13% Cash, 1% PIK, Due 10/17)      6,071,841         5,966,205         5,966,205   
        

 

 

    

 

 

    

 

 

 
           6,071,841         5,966,205         5,966,205   

Media Storm, LLC (3%)*

   Marketing Services    Subordinated Note (12% Cash, 2% PIK, Due 10/17)      8,532,111         8,449,580         8,449,580   
      Membership Units (1,216,204 units)         1,216,204         1,216,204   
        

 

 

    

 

 

    

 

 

 
           8,532,111         9,665,784         9,665,784   

Media Temple, Inc. (5%)*

   Web Hosting Services    Subordinated Note (12% Cash, 5.5% PIK, Due 04/15)      8,800,000         8,658,463         8,658,463   
      Convertible Note (8% Cash, 6% PIK, Due 04/15)      3,200,000         2,778,030         4,687,000   
      Common Stock Purchase Warrant (28,000 shares)         536,000         2,051,000   
        

 

 

    

 

 

    

 

 

 
           12,000,000         11,972,493         15,396,463   

Minco Technology Labs, LLC (2%)*

   Semiconductor Distribution    Subordinated Note (13% Cash, 3.25% PIK, Due 05/16)      5,272,430         5,170,334         5,170,334   
      Class A Units (5,000 units)         500,000         31,000   
        

 

 

    

 

 

    

 

 

 
           5,272,430         5,670,334         5,201,334   

National Investment Managers Inc. (4%)*

   Retirement Plan Administrator    Subordinated Note (11% Cash, 5% PIK, Due 09/16)      11,703,034         11,450,996         11,450,996   
      Preferred A Units (90,000 units)         900,000         479,000   
      Common Units (10,000 units)         100,000         —     
        

 

 

    

 

 

    

 

 

 
           11,703,034         12,450,996         11,929,996   

Novolyte Technologies, Inc. (4%)*

   Specialty Manufacturing    Subordinated Note (12% Cash, 4% PIK, Due 07/16)      7,264,182         7,143,362         7,143,362   
      Subordinated Note (12% Cash, 4% PIK, Due 07/16)      2,334,916         2,296,081         2,296,081   
      Preferred Units (641 units)         661,227         888,000   
      Common Units (24,522 units)         165,306         1,744,000   
        

 

 

    

 

 

    

 

 

 
           9,599,098         10,265,976         12,071,443   

Pomeroy IT Solutions (3%)*

  

Information

Technology Outsourcing Services

  

Subordinated Notes (13% Cash, 2% PIK, Due

02/16)

        
           10,181,198         9,955,154         9,955,154   
        

 

 

    

 

 

    

 

 

 
           10,181,198         9,955,154         9,955,154   
              

PowerDirect Marketing, LLC (2%)*

   Marketing Services    Subordinated Note (12% Cash, 2% PIK, Due 05/16)      8,100,993         7,580,433         7,580,433   
      Common Unit Purchase Warrants         402,000         548,000   
        

 

 

    

 

 

    

 

 

 
           8,100,993         7,982,433         8,128,433   

Renew Life Formulas, Inc. (4%)*

   Nutritional    Subordinated Notes (12% Cash, 3% PIK, Due         
   Supplement    03/15)      13,401,006         13,155,235         13,155,235   
   Manufacturing            
   and            
   Distribution            
        

 

 

    

 

 

    

 

 

 
           13,401,006         13,155,235         13,155,235   

 

13


Table of Contents

TRIANGLE CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2011

 

Portfolio Company

  

Industry

  

Type of Investment(1)(2)

   Principal
Amount
     Cost      Fair
Value(3)
 

Sheplers, Inc. (4%)*

   Western Apparel Retailer    Subordinated Note (13.15% Cash, Due 12/16)    $ 8,750,000       $ 8,531,250       $ 8,531,250   
      Subordinated Note (10% Cash, 7% PIK, Due 12/17)      3,758,021         3,683,021         3,683,021   
        

 

 

    

 

 

    

 

 

 
           12,508,021         12,214,271         12,214,271   

SRC, Inc. (3%)*

   Specialty Chemical Manufacturer    Subordinated Notes (12% Cash, 2% PIK, Due 09/14)      8,879,665         8,640,013         8,640,013   
      Common Stock Purchase Warrants         123,800         —     
        

 

 

    

 

 

    

 

 

 
           8,879,665         8,763,813         8,640,013   

Syrgis Holdings, Inc. (1%)*

   Specialty Chemical Manufacturer    Senior Notes (7.75%-10.75% Cash, Due 08/12-02/14)      2,444,766         2,437,942         2,437,942   
      Class C Units (2,114 units)         1,000,000         1,597,000   
        

 

 

    

 

 

    

 

 

 
           2,444,766         3,437,942         4,034,942   

TBG Anesthesia Management, LLC (3%)*

   Physician Management Services    Senior Note (13.5% Cash, Due 11/14)      10,750,000         10,445,062         10,445,062   
      Warrant (263 shares)         276,100         239,000   
        

 

 

    

 

 

    

 

 

 
           10,750,000         10,721,162         10,684,062   

TMR Automotive Service Supply, LLC (2%)

   Automotive Supplies    Subordinated Note (12% Cash, 1% PIK, Due 03/16)      5,000,000         4,738,933         4,738,933   
      Unit Purchase Warrant (329,518 units)         195,000         284,000   
        

 

 

    

 

 

    

 

 

 
           5,000,000         4,933,933         5,022,933   

Top Knobs USA, Inc. (3%)

   Hardware Designer and Distributor    Subordinated Note (12% Cash, 4.5% PIK, Due 05/17)      10,369,002         10,209,875         10,209,875   
      Common Stock (26,593 shares)         750,000         733,000   
        

 

 

    

 

 

    

 

 

 
           10,369,002         10,959,875         10,942,875   

Trinity Consultants Holdings, Inc. (2%)*

   Air Quality Consulting Services    Subordinated Note (12% Cash, 2.5% PIK, Due 11/17)      7,216,500         7,072,500         7,072,500   
      Series A Preferred Stock (10,000 units)         950,000         950,000   
      Common Stock (55,556 units)         50,000         50,000   
        

 

 

    

 

 

    

 

 

 
           7,216,500         8,072,500         8,072,500   

TrustHouse Services Group, Inc. (4%)*

   Food Management Services    Subordinated Note (12% Cash, 2% PIK, Due 07/18)      13,362,115         13,136,232         13,136,232   
      Class A Units (1,557 units)         512,124         799,000   
      Class B Units (82 units)         26,954         28,000   
        

 

 

    

 

 

    

 

 

 
           13,362,115         13,675,310         13,963,232   

Tulsa Inspection Resources, Inc. (2%)*

   Pipeline Inspection Services    Subordinated Note (14%-17.5% Cash, Due 03/14)      5,810,588         5,574,292         5,574,292   
      Common Unit (1 unit)         200,000         117,000   
      Common Stock Warrants (8 shares)         321,000         627,000   
        

 

 

    

 

 

    

 

 

 
           5,810,588         6,095,292         6,318,292   

Twin-Star International, Inc. (2%)*

   Consumer Home Furnishings Manufacturer    Subordinated Note (12% Cash, 1% PIK, Due 04/14)      4,500,000         4,476,065         4,476,065   
      Senior Note (4.4%, Due 04/13)      1,052,240         1,052,240         1,052,240   
        

 

 

    

 

 

    

 

 

 
           5,552,240         5,528,305         5,528,305   

Wholesale Floors, Inc. (1%)*

   Commercial Services    Subordinated Note (12.5% Cash, 3.5% PIK, Due 06/14)      3,858,183         3,773,066         3,773,066   
      Membership Interest Purchase Warrant (4.0%)         132,800         —     
        

 

 

    

 

 

    

 

 

 
           3,858,183         3,905,866         3,773,066   

Workforce Software, LLC (2%)*

   Software Provider    Subordinated Note (11% Cash, 3% PIK, Due 11/16)      7,000,000         6,065,200         6,065,200   
      Class B Preferred Units (1,020,000 units)         1,020,000         1,020,000   
      Common Unit Purchase Warrants (2,224,561 units)         782,300         782,300   
        

 

 

    

 

 

    

 

 

 
           7,000,000         7,867,500         7,867,500   

Yellowstone Landscape Group, Inc. (4%)*

   Landscaping Services    Subordinated Note (12% Cash, 3% PIK, Due 04/14)      12,816,222         12,678,077         12,678,077   
        

 

 

    

 

 

    

 

 

 
           12,816,222         12,678,077         12,678,077   
        

 

 

    

 

 

    

 

 

 

Subtotal Non–Control / Non–Affiliate Investments

        377,095,379         389,312,451         396,502,490   

 

14


Table of Contents

TRIANGLE CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2011

 

Portfolio Company

  

Industry

  

Type of Investment(1)(2)

   Principal
Amount
     Cost      Fair
Value(3)
 

Affiliate Investments:

              

American De-Rosa Lamparts, LLC and Hallmark Lighting (2%)*

   Wholesale and Distribution    Subordinated Note (10% PIK, Due 10/13)    $ 6,056,794       $ 5,213,450       $ 5,213,450   
      Membership Units (6,516 units)         350,000         —     
        

 

 

    

 

 

    

 

 

 
           6,056,794         5,563,450         5,213,450   

AP Services, Inc. (2%)*

   Fluid Sealing Supplies and Services    Subordinated Note (12% Cash, 2% PIK, Due 09/15)      4,351,545         4,258,465         4,258,465   
      Class A Units (933 units)         933,333         1,181,000   
      Class B Units (496 units)         —           80,000   
        

 

 

    

 

 

    

 

 

 
           4,351,545         5,191,798         5,519,465   

Asset Point, LLC (2%)*

   Asset Management Software Provider    Senior Note (12% Cash, 5% PIK, Due 03/13)      6,054,948         6,024,163         6,024,163   
      Senior Note (12% Cash, 2% PIK, Due 07/15)      617,572         617,572         518,000   
      Subordinated Note (7% Cash, Due 03/13)      941,798         941,798         786,000   
      Membership Units (1,000,000 units)         8,203         346,000   
      Options to Purchase Membership Units (342,407 units)         500,000         149,000   
      Membership Unit Warrants (356,506 units)         —           2,000   
        

 

 

    

 

 

    

 

 

 
           7,614,318         8,091,736         7,825,163   

Axxiom Manufacturing, Inc. (0%)*

   Industrial Equipment Manufacturer    Common Stock (136,400 shares)         200,000         1,140,000   
      Common Stock Warrant (4,000 shares)         —           33,000   
           

 

 

    

 

 

 
              200,000         1,173,000   

Brantley Transportation, LLC (“Brantley Transportation”) and Pine Street Holdings, LLC (“Pine Street”) (4)
(2%)*

   Oil and Gas Services    Subordinated Note—Brantley Transportation (14% Cash, 5% PIK, Due 12/12)      3,947,627         3,915,231         3,915,231   
      Common Unit Warrants—Brantley Transportation (4,560 common units)         33,600         401,000   
      Preferred Units—Pine Street (200 units)         200,000         757,000   
      Common Unit Warrants—Pine Street (2,220 units)         —           99,000   
        

 

 

    

 

 

    

 

 

 
           3,947,627         4,148,831         5,172,231   

Captek Softgel International, Inc. (3%)*

   Nutraceutical Manufacturer    Subordinated Note (12% Cash, 4% PIK, Due 08/16)      8,277,116         8,133,312         8,133,312   
      Class A Units (80,000 units)         800,000         1,292,000   
        

 

 

    

 

 

    

 

 

 
           8,277,116         8,933,312         9,425,312   

 

Dyson Corporation (1%)*

  

 

Custom Forging and Fastener Supplies

  

 

Class A Units (1,000,000 units)

     

 

 

 

 

1,000,000

 

 

  

 

  

 

 

 

 

3,836,000

 

 

  

 

           

 

 

    

 

 

 
              1,000,000         3,836,000   

Equisales, LLC (1%)*

   Energy Products and Services    Subordinated Note (13% Cash, 4% PIK, Due 04/12)      3,125,336         3,116,853         3,045,000   
      Class A Units (500,000 units)         480,900         535,000   
        

 

 

    

 

 

    

 

 

 
           3,125,336         3,597,753         3,580,000   

Fischbein Partners, LLC (3%)*

   Packaging and Materials Handling Equipment Manufacturer    Subordinated Note (12% Cash, 2% PIK, Due 10/16)      6,756,525         6,636,697         6,636,697   
     

Class A Units (1,750,000 units)

 

        417,088         3,344,000   
        

 

 

    

 

 

    

 

 

 
           6,756,525         7,053,785         9,980,697   

Main Street Gourmet, LLC (1%)*

   Baked Goods Provider    Subordinated Notes (12% Cash, 4.5% PIK, Due 10/16)      4,135,501         4,063,598         4,063,598   
      Jr. Subordinated Notes (8% Cash, 2% PIK, Due 04/17)      1,014,963         996,975         716,000   
      Preferred Units (233 units)         211,867         —     
      Common B Units (3,000 units)         23,140         —     
      Common A Units (1,652 units)         14,993         —     
        

 

 

    

 

 

    

 

 

 
           5,150,464         5,310,573         4,779,598   

Plantation Products, LLC (5%)*

   Seed Manufacturing    Subordinated Notes (13% Cash, 4.5% PIK, Due 06/16)      15,203,916         14,889,867         14,889,867   
      Preferred Units (1,127 units)         1,127,000         1,221,000   
      Common Units (92,000 units)         23,000         142,000   
        

 

 

    

 

 

    

 

 

 
           15,203,916         16,039,867         16,252,867   

QC Holdings, Inc. (0%)*

   Lab Testing Services    Common Stock (5,594 shares)         563,602         393,000   
           

 

 

    

 

 

 
              563,602         393,000   

Technology Crops International (2%)*

   Supply Chain Management Services    Subordinated Note (12% Cash, 5% PIK, Due 03/15)      5,610,350         5,543,617         5,543,617   
      Common Units (50 units)         500,000         589,000   
        

 

 

    

 

 

    

 

 

 
           5,610,350         6,043,617         6,132,617   

 

15


Table of Contents

TRIANGLE CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2011

 

Portfolio Company

  

Industry

  

Type of Investment(1)(2)

   Principal
Amount
     Cost      Fair
Value(3)
 

Venture Technology Groups, Inc. (2%)*

   Fluid and Gas    Subordinated Note (12.5% Cash, 4% PIK,         
   Handling Products Distributor    Due 09/16)    $ 5,444,612       $ 5,341,062       $ 5,341,062   
      Class A Units (1,000,000 units)         1,000,000         530,000   
        

 

 

    

 

 

    

 

 

 
           5,444,612         6,341,062         5,871,062   

Waste Recyclers Holdings, LLC (2%)*

   Environmental and Facilities Services    Class A Preferred Units (280 units)         2,251,100         —     
      Class B Preferred Units (985,372 units)         3,304,218         4,310,000   
      Class C Preferred Units (1,444,475 units)         1,499,531         1,752,000   
      Common Unit Purchase Warrant (1,170,083 units)         748,900         —     
      Common Units (153,219 units)         180,783         —     
           

 

 

    

 

 

 
              7,984,532         6,062,000   

Wythe Will Tzetzo, LLC (4%)*

   Confectionary Goods Distributor    Subordinated Notes (13% Cash, Due 10/16)      10,357,475         9,885,836         9,885,836   
      Series A Preferred Units (74,764 units)         1,500,000         1,784,000   
      Common Unit Purchase Warrants (25,065 units)         301,510         380,000   
        

 

 

    

 

 

    

 

 

 
           10,357,475         11,687,346         12,049,836   
        

 

 

    

 

 

    

 

 

 

Subtotal Affiliate Investments

           81,896,078         97,751,264         103,266,298   

Control Investments:

              

FCL Graphics, Inc. (“FCL”) and FCL Holding SPV, LLC (“SPV”) (1%)*

   Commercial Printing Services    Senior Note—FCL (5.0% Cash, Due 9/16)      1,485,821         1,478,538         1,478,538   
      Senior Note—FCL (8.0% Cash, 2% PIK, Due 9/16)      1,147,836         1,145,436         955,000   
      Senior Note—SPV (2.5% Cash, 6% PIK, Due 9/16)      950,328         950,328         343,000   
      Members Interests—SPV (299,875 units)         —           —     
        

 

 

    

 

 

    

 

 

 
           3,583,985         3,574,302         2,776,538   

Fire Sprinkler Systems, Inc. (0%)*

   Specialty Trade Contractors    Subordinated Notes (2% PIK, Due 04/12)      3,281,284         2,780,028         443,000   
      Common Stock (2,978 shares)         294,624         —     
        

 

 

    

 

 

    

 

 

 
           3,281,284         3,074,652         443,000   

Fischbein, LLC (1%)*

   Packaging and Materials Handling Equipment Manufacturer    Class A-1 Common Units (501,984 units)         59,315         283,816   
      Class A Common Units (3,839,068 units)
    
       
453,630
  
    
1,859,433