The note is reported net of the OID and the OID is accreted into interest income over the life of the loan. The Corporation recognized $19,271 and $8,395 in OID income for six months ended
June 30, 2018 and 2017, respectively. OID income is estimated to be approximately $20,000 for the remainder of 2018.
Deferred
Debenture Costs
- SBA debenture origination and commitment costs, which are netted against the debenture obligation (See Note 6 SBA Debentures), will be amortized ratably over the terms of the SBA debentures. Amortization expense
was $13,700 for each of the six months ended June 30, 2018 and 2017. Amortization expense on currently outstanding debentures for the next five years is estimated to average approximately $23,000 per year.
SBA Debentures -
The Corporation had $8,000,000 in outstanding SBA debentures at June 30, 2018 and December 31, 2017
with a weighted average interest rate of 3.54%. The debentures are presented net of deferred debenture costs (See Note 6 SBA Debentures). The $8,000,000 in outstanding SBA leverage matures from 2022 through 2025.
In the event of a future default of such SBA obligations, the Corporation has consented to the exercise, by the SBA, of all rights of the SBA
under 13 C.F.R. 107.1810(i) SBA remedies for automatic events of default and has agreed to take all actions that the SBA may so require. These actions may include the Corporations automatic consent to the appointment of the SBA, or
its designee, as receiver under Section 311(c) of the Small Business Investment Act of 1958.
Net Assets per Share
-
Net assets per share are based on the number of shares of common stock outstanding. The Corporation does not have any common stock equivalents outstanding.
Supplemental Cash Flow Information
- Income taxes (refunded) paid during the six months ended June 30, 2018 and 2017 were
($17,051) and $587,840, respectively. Interest paid during each of the six months ended June 30, 2018 and 2017 was $140,275. The Corporation converted $77,154 and $53,294 of interest receivable into investments during the six months ended
June 30, 2018 and 2017, respectively.
Accounting Estimates
- The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
Stockholders Equity (Net
Assets) -
At June 30, 2018 and December 31, 2017, there were 500,000 shares of $10.00 par value preferred stock authorized and unissued.
On October 26, 2017, the Board of Directors extended the repurchase authorization for up to 1,000,000 shares of the Corporations
outstanding common stock on the open market through October 26, 2018 at prices no greater than the then current net asset value. No shares were repurchased during the six months ended June 30, 2018. At June 30, 2018, the total
treasury shares held was 541,046 shares with a total cost of $1,469,105.
Profit Sharing and Stock Option Plan
-
In
2001, the stockholders of the Corporation authorized the establishment of an Employee Stock Option Plan (the Option Plan), that provides for the award of stock options to purchase up to 200,000 common shares to eligible employees. In
2002, the Corporation placed the Option Plan on inactive status as it developed a new profit sharing plan for the Corporations employees in connection with the formation of its SBIC subsidiary. As of June 30, 2018, no stock options had
been awarded under the Option Plan. Because Section 57(n) of the 1940 Act prohibits maintenance of a profit sharing plan for the officers and employees of a BDC where any option, warrant or right is outstanding under an executive compensation
plan, no stock options will be granted under the Option Plan while any profit sharing plan is in effect with respect to the Corporation.
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