Investments

In February 2018, the Company acquired majority control of Lawn Doctor, Inc. (“Lawn Doctor”) from an affiliate of the Sub-Manager through a common equity investment and a debt investment consisting of a second lien secured note. As of December 31, 2019 and 2018, the Company owned approximately 62% and 63%, respectively, of the outstanding equity in Lawn Doctor on an undiluted basis. The cost basis of the Company’s investments in Lawn Doctor was approximately $30.5 million of a common equity investment and $15.0 million of a debt investment as of December 31, 2019 and 2018.

In February 2018, the Company acquired majority control of Polyform Holdings, Inc. (“Polyform”) from an affiliate of the Sub-Manager through a common equity investment and a debt investment consisting of a first lien secured note. As of December 31, 2019 and 2018, the Company owned approximately 87% of the outstanding equity in Polyform on an undiluted basis. The cost basis of the Company’s investments in Polyform was approximately $15.6 million of a common equity investment and $15.7 million of a debt investment as of December 31, 2019 and 2018.

In June 2019, the Company, through its indirect wholly-owned subsidiary, Roundtable Acquisition, LLC (the “Buyer”), entered into a Stock Contribution and Purchase Agreement (the “Purchase Agreement”) with Michael Auriemma, an individual (“Seller”), to acquire a controlling interest in Auriemma U.S. Roundtables (“Roundtables”), a subscription-based information services and data analytics company for the consumer finance industry. In August 2019, the Company completed the acquisition pursuant to the Purchase Agreement. In November 2019, the Company made an additional debt investment in Roundtables in the form of $2.0 million senior bridge notes. As of December 31, 2019, the Company owned approximately 81% of the outstanding equity in Roundtables on an undiluted basis. The cost basis of the Company’s investments in Roundtables was approximately $32.4 million of a common equity investment, $12.1 million of a subordinated debt investment and $2.0 million of a senior secured bridge note as of December 31, 2019. Under the Purchase Agreement, the Seller had the opportunity to earn up to an additional $2.0 million based on the achievement by Roundtables of certain performance metrics. As of December 31, 2019, the criteria for earning the additional purchase price consideration was not met and therefore an earn-out obligation was not accrued as of December 31, 2019.

In November 2019, the Company, through its indirect wholly-owned subsidiaries, Milton Strategic Capital EquityCo, LLC and Milton Strategic Capital DebtCo, LLC, made a co-investment in Milton Industries Inc. (“Milton”) of $10.0 million. The Company co-invested in Milton with LLCP Lower Middle Market Fund, L.P., an institutional fund and affiliate of the Sub-Manager. As of December 31, 2019, the Company owned approximately 13% of the outstanding equity in Milton on an undiluted basis. The cost basis of the Company’s investments in Milton was approximately $6.6 million of a common equity investment and $3.4 million of a debt investment as of December 31, 2019.

In December 2019, the Company, through an indirect wholly-owned subsidiary, committed to funding $10.0 million for a co-investment with an affiliate of the Sub-Manager. As of December 31, 2019, the Company had funded its co-investment commitment of $10.0 million into escrow and in January 2020 the Company completed the co-investment in Resolution Economics, LLC (“Resolution Economics”). See Note 13. “Subsequent Events” for additional information regarding the Company’s investments.

Collectively, the Company’s debt investments accrue interest at a weighted average per annum rate of 15.6% and have weighted average remaining years to maturity of 4.1 years as of December 31, 2019. The note purchase agreements contain customary covenants and events of default. As of December 31, 2019, all of the Company’s portfolio companies were in compliance with the Company’s debt covenants.

As of December 31, 2019 and December 31, 2018, the Company’s investment portfolio is summarized as follows:



	As of December 31, 2019
Asset Category	Cost		Fair Value		Fair Value Percentage of Investment Portfolio		Fair Value Percentage of Net Assets
Senior debt
Senior secured debt - first lien	$	17,700,000	$	17,700,000	12.3	%	10.1	%
Senior secured debt - second lien	30,467,603		30,467,603		21.1		17.5
Total senior debt	48,167,603		48,167,603		33.4		27.6
Equity	85,106,736		96,027,397		66.6		55.1
Total investments	$	133,274,339	$	144,195,000	100.0	%	82.7	%



	As of December 31, 2018
Asset Category	Cost		Fair Value		Fair Value Percentage of Investment Portfolio		Fair Value Percentage of Net Assets
Senior debt
Senior secured debt - first lien	$	15,700,000	$	15,700,000	19.0	%	15.2	%
Senior secured debt - second lien	15,000,000		15,000,000		18.2		14.6
Total senior debt	30,700,000		30,700,000		37.2		29.8
Equity	46,074,339		51,800,000		62.8		50.4
Total investments	$	76,774,339	$	82,500,000	100.0	%	80.2	%

As of December 31, 2019 and December 31, 2018, none of the Company’s debt investments were on non-accrual status.

The industry and geographic dispersion of the Company’s investment portfolio as a percentage of total fair value of the Company’s investments as of December 31, 2019 and December 31, 2018 were as follows:



Industry	December 31, 2019		December 31, 2018
Commercial and Professional Services	39.2	%	62.1	%
Hobby Goods and Supplies	21.7		37.9
Information Services and Advisory Solutions	32.2		—
Manufacturing	6.9		—
Total	100.0	%	100.0	%



Geographic Dispersion⁽¹⁾	December 31, 2019		December 31, 2018
United States	100.0	%	100.0	%
Total	100.0	%	100.0	%

FOOTNOTE:


⁽¹⁾	The geographic dispersion is determined by the portfolio company’s country of domicile or the jurisdiction of the security’s issuer.

All investment positions held at December 31, 2019 and December 31, 2018 were denominated in U.S. dollars.

Summarized Operating Data

The following tables present audited summarized operating data for the Company’s portfolio companies which met at least one of the significance tests under Rule 8-03(b) of Regulation S-X for the year ended December 31, 2019, and the period from February 7, 2018 (commencement of operations) through December 31, 2018, and summarized balance sheet data as of December 31, 2019 and December 31, 2018, as applicable:

Lawn Doctor

Summarized Operating Data



	Year Ended December 31, 2019			For the Period from February 7, 2018 ⁽¹⁾ to December 31, 2018
Revenues	$	24,951,481		$	15,873,639
Expenses	(25,754,966		)	(15,637,114		)
(Loss) income before taxes	(803,485		)	236,525
Income tax benefit (expense)	142,104			(16,913		)
Consolidated net (loss) income	(661,381		)	219,612
Net loss attributable to non-controlling interest	232,270			70,952
Net (loss) income attributable to Lawn Doctor	$	(429,111	)	$	290,564

Summarized Balance Sheet Data



	As of December 31, 2019			As of December 31, 2018
Current assets	$	5,679,790		$	6,347,092
Non-current assets	96,327,351			94,024,715
Current liabilities	5,208,665			4,342,064
Non-current liabilities	52,854,284			50,312,347
Non-controlling interest	(179,125		)	(40,952		)
Stockholders’ equity	44,123,317			45,758,348

Polyform

Summarized Operating Data



	Year Ended December 31, 2019			For the Period from February 7, 2018 ⁽¹⁾ to December 31, 2018
Revenues	$	16,517,512		$	13,953,762
Expenses	(17,016,753		)	(15,051,795		)
Loss before income taxes	(499,241		)	(1,098,033		)
Income tax benefit	140,000			159,000
Net loss	$	(359,241	)	$	(939,033	)

Summarized Balance Sheet Data



	As of December 31, 2019		As of December 31, 2018
Current assets	$	5,917,238	$	5,481,783
Non-current assets	31,474,762		29,977,677
Current liabilities	1,484,148		963,823
Non-current liabilities	21,123,045		18,530,624
Stockholders’ equity	14,784,807		15,965,013

Roundtables

Summarized Operating Data



	For the Period from August 1, 2019 ⁽²⁾ to December 31, 2019
Revenues	$	3,929,101
Expenses	(5,269,538		)
Loss before income taxes	(1,340,437		)
Income tax benefit	335,795
Net loss	$	(1,004,642	)

Summarized Balance Sheet Data



	As of December 31, 2019
Current assets	$	2,495,539
Non-current assets	61,232,699
Current liabilities	3,686,652
Non-current liabilities	20,946,228
Stockholders’ equity	39,095,358

FOOTNOTES:


⁽¹⁾	February 7, 2018 is the date the Company acquired Lawn Doctor and Polyform.


⁽²⁾	August 1, 2019 is the date the Company acquired Roundtables.