Keating Capital Reports Q3 2013 Results

  Keating Capital Reports Q3 2013 Results                    Pre-IPO Investor Provides Financial Update  Business Wire  GREENWOOD VILLAGE, Colo. -- October 28, 2013  Keating Capital, Inc. (“Keating Capital” or the “Company”) (Nasdaq: KIPO) reported financial results for the quarter ended September 30, 2013.  Management Commentary  “Our portfolio continued to perform well during the third quarter, as evidenced by the net increase in unrealized appreciation on our investments of $5.1 million. We also paid a dividend of $0.24 per share in the third quarter, which brings our total 2013 dividends paid to $0.48 per share. Since our first distribution in 2011, we have now distributed a total of $0.64 per share to our stockholders.  We have completed the disposition of four portfolio company positions to date, with only one portfolio company disposition being at a loss ($121,000). The overall weighted-average internal rate of return on our four portfolio company dispositions has been 22%, calculated at the portfolio company level, before giving effect to our operating expenses (including any incentive fees).  In short, we believe that our pre-IPO investment strategy is working according to plan, and that our publicly traded stock provides investors with an opportunity to participate in a unique private-to-public valuation arbitrage strategy that is both diversified and executed with discipline,” stated Timothy J. Keating, CEO of Keating Capital, Inc.  Highlights for the Quarter Ended September 30, 2013    *$3.0 million investment in new portfolio company Deem, Inc. (“Deem”)   *Net increase in unrealized appreciation on investments of $5.1 million   *Increase in NAV of $0.14 per share resulting in an NAV of $7.93 per share     as of September 30, 2013   *$0.24 per share special dividend paid in Q3; total dividends of $0.48 per     share paid in 2013   *Last 12-month dividend yield of 6.9% based on $7.43 stock price as of     September 30, 2013   *136,886 shares of common stock repurchased for $0.9 million, an average     price of $6.52 per share, or a 16% weighted-average discount to NAV   *Weighted-average portfolio company holding period of 1.7 years as of     September 30, 2013  $3.0 Million Investment in New Portfolio Company Deem, Inc.  On September 19, 2013, Keating Capital completed a $3,000,000 investment in the Series AA-1 convertible preferred stock of Deem, Inc. (“Deem”). Deem operates an e-commerce network that connects a large and diverse ecosystem of consumers, businesses, channel partners and merchants.  Portfolio Analysis  As of September 30, 2013, the net unrealized appreciation of Keating Capital’s portfolio was $6,472,018, consisting of: (i) 11 portfolio company investments with aggregate unrealized appreciation of $14,035,343, and (ii) six portfolio company investments with aggregate unrealized depreciation of $7,563,325. The unrealized appreciation (depreciation) of each of Keating Capital’s portfolio companies as of September 30, 2013, is set forth in the table below.                                                                                    As of September 30, 2013                                                                 Unrealized                                                                 Appreciation Portfolio Company             Cost             Value            (Depreciation)                                                                     Xtime, Inc.                $ 3,000,000      $ 6,040,000      $ 3,040,000    SilkRoad, Inc.               6,008,667        8,518,667        2,510,000    Jumptap, Inc.                4,999,995        7,200,000        2,200,005    Zoosk, Inc.                  2,999,999        4,770,000        1,770,001    Tremor Video, Inc.           4,000,001        4,984,192        984,191    Harvest Power, Inc.          2,499,999        3,480,000        980,001    Metabolon, Inc.              4,000,000        4,860,000        860,000    Glam Media, Inc.             4,999,999        5,750,000        750,001    TrueCar, Inc.                2,999,996        3,650,000        650,004    Kabam, Inc.                  1,328,860        1,620,000        291,140    Deem, Inc.                   3,000,000        3,000,000        -    Livescribe, Inc.             606,187          -                (606,187   )    MBA Polymers, Inc.           2,000,000        1,180,000        (820,000   )    Suniva, Inc.                 2,500,007        1,400,000        (1,100,007 )    Agilyx Corporation           4,000,000        2,770,000        (1,230,000 )    BrightSource Energy,         3,046,644        1,809,513        (1,237,131 )    Inc.    Stoke, Inc.                 3,500,000       930,000         (2,570,000 )                                                                  Total                         $ 55,490,354     $ 61,962,372     $ 6,472,018                                                                                  Weighted-Average Holding Period of 1.7 Years  As of September 30, 2013, the weighted-average holding period of Keating Capital’s 17 portfolio companies was 1.7 years.  Stock Repurchase Program  During the third quarter, the Company repurchased 136,886 shares of its common stock for approximately $0.9 million, or an average price of $6.52 per share. The shares repurchased in the third quarter were made at a 16% weighted-average discount to NAV per share.  Since the inception of the stock repurchase program in May 2012, the Company has repurchased 448,441 shares of its common stock for approximately $3.0 million, or an average price of $6.61 per share. The total shares repurchased under the program since inception represented approximately 4.8% of the outstanding shares at the time the Company commenced the stock repurchase program. The weighted-average discount to NAV for all repurchased shares was 17%.  On October 24, 2013, our Board of Directors discontinued the stock repurchase program in order to make additional capital available for potential new investment opportunities. No repurchases were made under the stock repurchase program after September 30, 2013.  Results of Operations and Balance Sheet  Increase in Net Asset Value during the Third Quarter  As of September 30, 2013, the total fair value of Keating Capital’s 17 portfolio company investments was $62.0 million. The Company also had cash and cash equivalents of $10.4 million, or $1.18 per share. The Company’s net assets at September 30, 2013 were $70.0 million.  As of September 30, 2013, the Company’s NAV was $7.93 per share—an increase of $0.14 per share from the second quarter NAV of $7.79. The components that typically drive the changes in NAV each quarter are: (i) net investment losses, effectively the Company’s operating expenses, (ii) realized gains/losses on portfolio company dispositions, (iii) the change in unrealized appreciation/depreciation on portfolio company investments, and (iv) distributions paid to stockholders or capital transactions. During the three months ended September 30, 2013:    *The Company had net investment loss—effectively the Company’s operating     expenses (including base management fees and accrued incentive fees)—of     approximately $1.9 million, or a loss of $0.22 per share. The Company’s     operating expenses, excluding base management fees and accrued incentive     fees, were approximately $582,000 in the third quarter. During the third     quarter, the Company recorded incentive fee expense of approximately $1.0     million resulting from an increase in net unrealized appreciation of     approximately $5.1 million during the third quarter.      As of September 30, 2013, the Company had approximately $2.2 million of     accrued incentive fees related to net unrealized appreciation and     cumulative net realized gain on its investments. However, as of September     30, 2013, the Company’s investment adviser would not be entitled to     payment of an incentive fee until after the Company has achieved     cumulative net realized gains on its investments in excess of     approximately $7.6 million, which represents the sum of each portfolio     company investment with unrealized depreciation as of September 30, 2013.     As of September 30, 2013, the Company had approximately $4.7 million of     cumulative net realized gains, resulting from the sale of its positions in     NeoPhotonics, Solazyme, LifeLock and Corsair.    *The Company had no realized gains or losses during the quarter since it     did not dispose of any portfolio company positions during the quarter.   *The Company had a net increase in unrealized appreciation on its portfolio     company investments of approximately $5.1 million, or an increase of $0.57     per share, as a result of the following:         *Write-ups during the quarter of approximately $6.2 million in 12          portfolio companies.        *Write-downs during the quarter of approximately $1.1 million in three          portfolio companies.    *The Company’s NAV increased by $0.02 per share as a result of its share     repurchases, which was increased by $0.01 per share to a total of $0.03     per share to reconcile the change in net asset value per share to the     other per share information presented. This increase was offset by the     dividend of $0.24 per share paid in September.  The following table details the change in net asset value for the quarter ended September 30, 2013.                                                                 Keating Capital, Inc.   Change in Net Asset Value                                                                                                                     Three Months Ended                                                 September 30, 2013                                                 Amount             Per Share^1                                                                       Net Asset Value, Beginning of Period^2        $ 69,908,801       $  7.79                                                                       Net Investment Loss                             (1,946,234 )        (0.22  )                                                                       Net Change in Unrealized Appreciation   (Depreciation) on Investments:   Jumptap, Inc.                                   1,820,000           0.20   Zoosk, Inc.                                     1,260,000           0.14   Xtime, Inc.                                     940,000             0.11   SilkRoad, Inc.                                  830,000             0.09   Glam Media, Inc.                                320,000             0.04   Agilyx Corporation                              280,000             0.03   Tremor Video, Inc.                              124,208             0.02   TrueCar, Inc.                                   140,000             0.02   Kabam, Inc.                                     200,000             0.02   BrightSource Energy, Inc.                       170,000             0.02   Harvest Power, Inc.                             110,000             0.01   Metabolon, Inc.                                 20,000           *   Livescribe, Inc.                                -                   -   Deem, Inc.                                      -                   -   Suniva, Inc.                                    (10,000    )     *   MBA Polymers, Inc.                              (160,000   )        (0.02  )   Stoke, Inc.                                    (950,000   )       (0.11  )                                                                       Net Change in Unrealized Appreciation          5,094,208         0.57      (Depreciation) on Investments:                                                                       Net Increase in Net Assets Resulting            3,147,974           0.35   from Operations                                                                       Stockholder Distributions:   Stockholder distributions paid from net         (2,131,961 )        (0.24  )   realized gains                                                                       Capital Stock Transactions:   Repurchases of Common Stock^3                  (892,853   )       0.03                                                                          Net Asset Value, End of Period^2              $ 70,031,961      $  7.93                                                                          Weighted Average Common Shares                  8,932,438   Outstanding During Period                                                                       Common Shares Outstanding At End of             8,835,340   Period                                                                      * Per share amounts less than $0.01. ^1Unless otherwise indicated, per share data based on weighted average common shares outstanding during the period. ^2Per share data based on total common shares outstanding at the beginning and end of the corresponding period. ^3The increase in net asset value per share attributable to repurchases of common stock for the three months ended September 30, 2013 was $0.02 per share. However, for purposes of this presentation, the per share amount attributable to purchases of common stock was increased by $0.01 per share to a total of $0.03 per share to reconcile the change in net asset value per share to the other per share information presented.   Dividend Distributions  Since 2011, the Company has made four distributions to stockholders totaling $0.64 per share as follows:    Date                                              Amount      Source of  Declared      Record Date    Payment Date   Per       Distribution                                                     Share   February        February 15,     February 17,     $ 0.13     Return of   11, 2011        2011             2011                         Capital^1   December 6,     December 14,     December 26,     0.03        Capital Gains   2012            2012             2012   May 28,         June 14,         June 26,         0.24        Capital   2013            2013             2013                         Gains^2   May 28,         September        September        0.24        Capital   2013            13, 2013         25, 2013                     Gains^2                                                     $ 0.64    ^1The February 2011 distribution was a special cash distribution based on   the unrealized appreciation we had recorded on our NeoPhotonics investment  at the time of the distribution, following NeoPhotonics’ completion of its   IPO. In the future, we do not expect to pay distributions based on the   unrealized appreciation of our private or public company investments.      ^2The determination of the tax attributes of the June and September 2013   dividends will be made as of the end of 2013 based upon our net realized   gains for the full year and distributions paid for the full year. Therefore,   a determination made on a quarterly basis may not be representative of the   actual tax attributes of our June and September 2013 dividends for a full   year. If we had determined the tax attributes of our June and September 2013   dividends as of September 30, 2013, all of such dividend would be from   long-term capital gains.     As of September 30, 2013, the dividend yield on the Company’s common stock for the 12 months ended September 30, 2013 was 6.9%, which is calculated as the total dividends declared by the Company during such period divided by the $7.43 per share closing stock price as of September 30, 2013.  Capitalization  As of September 30, 2013, the Company had 8,835,340 shares of common stock issued and outstanding. There are no options, warrants, or other classes of securities issued or outstanding. Additionally, the Company had no debt for borrowed money as of September 30, 2013.  Other Information  The following are attached to this press release:    *Keating Capital’s statement of assets and liabilities as of September 30,     2013 and December 31, 2012, and   *Keating Capital’s statement of operations for the three months ended     September 30, 2013 and 2012.  Stockholder Call  Keating Capital invites stockholders, analysts and interested parties to attend our earnings call on October 29, 2013, at 4:00 p.m. Eastern time. You may pre-register at http://info.keatingcapital.com/Q32013EarningsCallRegistration.html, and participate in the call by dialing (800) 954-0598.  A slide presentation will accompany the earnings call and will be available on October 28, 2013 at http://ir.keatingcapital.com/events.cfm. Select the Q3 2013 Earnings Call Slides link to download and print the presentation.  An archived audio replay of the earnings call together with the slide presentation will be available within approximately three hours after completion of the call at http://ir.keatingcapital.com/events.cfm. This archived recording will be available until the Company’s next quarterly conference call which has been tentatively scheduled for February 25, 2014, following the filing of its Q4 2013 results.  About Keating Capital, Inc.  Keating Capital (www.KeatingCapital.com) is a closed-end fund (regulated as a business development company under the Investment Company Act of 1940) that specializes in making pre-IPO investments in emerging growth companies that are committed to and capable of becoming public. We provide investors with the ability to participate in a unique fund that allows our stockholders to share in the potential value accretion that we believe typically occurs once a company transforms from private to public status. Keating Capital’s shares are listed on Nasdaq under the ticker symbol “KIPO.”  Forward-Looking Statements  This press release may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect Keating Capital’s current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release, including the factors set forth in “Risk Factors” set forth in Keating Capital’s Form 10-K and Form 10-Q filed with the Securities and Exchange Commission (“SEC”), and subsequent filings with the SEC. Please refer to Keating Capital’s SEC filings for a more detailed discussion of the risks and uncertainties associated with its business, including but not limited to the risks and uncertainties associated with investing in micro- and small-cap companies. Except as required by the federal securities laws, Keating Capital undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. The reference to Keating Capital’s website has been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release.                                                           Keating Capital, Inc.   Statements of Assets and Liabilities                                                 September 30,                                              2013               December 31,                                              (Unaudited)        2012                                                                    Assets   Investments in portfolio company   securities at fair value:        Non-control/non-affiliate        investments:            Private portfolio companies            (Cost: $47,490,353 and            $ 52,118,180       $ 46,819,998            $47,332,174, respectively)            Publicly-traded portfolio            companies            (Cost: $4,000,001 and               4,984,192          8,073,708            $6,505,162, respectively)        Affiliate investments:            Private portfolio companies            (Cost: $4,000,000 and              4,860,000        10,130,000             $8,000,080, respectively)   Total, investments in portfolio              61,962,372         65,023,706   company securities at fair value   (Cost: $55,490,354 and $61,837,416,   respectively)                                                                    Cash and cash equivalents                    10,433,449         8,934,036   Prepaid expenses and other assets            78,974             104,429   Deferred offering costs                     17,177           322,906                                                                        Total assets                               $ 72,491,972      $ 74,385,077                                                                     Liabilities   Base management fees payable to            $ 116,242          $ 128,746   investment adviser   Accrued incentive fees payable to            2,230,880          693,699   investment adviser   Administrative expenses payable to           52,880             51,396   investment adviser   Accounts payable                             58,709             90,139   Accrued expenses and other                  1,300            8,157         liabilities                                                                    Total liabilities                           2,460,011        972,137                                                                        Net assets   Common stock, $0.001 par value;   200,000,000 authorized; 9,283,781   and   9,283,781 shares issued,                   $ 9,284            $ 9,284   respectively   Additional paid-in capital                   71,675,244         71,675,244   Treasury stock, at cost, 448,441 and         (2,962,594 )       (764,179   )   108,996 shares held, respectively   Accumulated net investment loss              (5,266,063 )       (693,699   )   Accumulated undistributed net                104,072            -   realized gain on investments   Net unrealized appreciation on              6,472,018        3,186,290     investments                                                                    Total net assets                           $ 70,031,961      $ 73,412,940                                                                     Total liabilities and net assets           $ 72,491,972      $ 74,385,077                                                                     Net asset value per share (on   8,835,340 and 9,174,785 shares   outstanding, respectively)                 $ 7.93            $ 8.00                                                                                                                                  Keating Capital, Inc. Statements of Operations (Unaudited)                                          Three Months Ended                                               September 30,    September 30,                                               2013             2012                                                                  Investment income   Interest from portfolio company   investments     Non-control/non-affiliate                 $ 11,613          $ -     investments     Affiliate investments                      -               -                   Total interest income from              11,613            -         portfolio company investments   Interest and dividends from cash and         820             537           cash equivalents                                                                      Total investment income                    12,433          537                                                                          Operating expenses   Base management fees                          358,247           383,061   Incentive fees                                1,018,842         242,117   Administrative expenses allocated             158,400           157,372   from investment adviser   Legal and professional fees                   45,263            72,395   Directors fees                                25,000            40,000   Stock transfer agent fees                     14,498            17,934   Custody fees                                  1,500             250   Public and investor relations                 2,510             31,657   expenses   Marketing and advertising expenses            199,800           4,883   Printing and production expenses              12,297            18,461   Postage and fulfillment expenses              5,555             12,984   Travel expenses                               30,398            19,137   General and administrative expenses          86,357          82,801                                                                           Total operating expenses                   1,958,667       1,083,052                                                                        Net investment loss                        (1,946,234 )     (1,082,515 )                                                                  Net realized gain (loss) on investments   Non-control/non-affiliate investments         -                 (121,428   )   Affiliate investments                        -               -                                                                                Total net realized gain on                 -               (121,428   )     investments                                                                  Net change in unrealized appreciation (depreciation) on investments   Non-control/non-affiliate investments         5,074,208         1,052,013   Affiliate investments                        20,000          280,000                                                                          Total net change in unrealized     appreciation (depreciation)     on investments                             5,094,208       1,332,013                                                                        Net increase (decrease) in net            $ 3,147,974      $ 128,070         assets resulting from operations                                                                      Net investment loss per common     share outstanding (basic and              $ (0.22      )    $ (0.12      )     diluted)                                                                      Net increase (decrease) in net     assets resulting from operations     per     common share outstanding (basic and       $ 0.35           $ 0.01            diluted)                                                                      Weighted average common shares             8,932,438       9,237,502       outstanding (basic and diluted)  Contact:  Keating Capital, Inc. Investor Relations Contact: Margie L. Blackwell, 720-889-0133 Investor Relations Director mb@keatinginvestments.com  
Press spacebar to pause and continue. Press esc to stop.