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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
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