What changed in this filing

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Item 1. Business

2018-09-05 compared with 2018-04-12 · 119 added, 121 removed, 167 unchanged (59% of the section changed)

Organizational

Capital Corporation (the “Company”) was incorporated in the Commonwealth of Virginia on July 13, 1993 and was

a closed-end investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment

Corporation (“SBIC”).

The Company previously made equity investments in, and provided loans to, small businesses to

finance their growth, expansion, and development.

Under applicable SBA regulations, the Company was restricted to investing only

in qualified small businesses as contemplated by the Small Business Investment Act of 1958.

As a registered investment company

under the Investment Company Act of 1940, as amended (the “Investment Company Act”), the Company’s investment

objective was to provide its shareholders with a high level of income, with capital appreciation as a secondary objective.

Company made its first investment in a small business in October 1996.

Capital Corporation (the “Company”) was incorporated in the Commonwealth of Virginia on July 13, 1993 and was a closed-end

investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment Corporation

(“SBIC”).

The Company previously made equity investments in, and provided loans to, small businesses to finance their

growth, expansion, and development.

Under applicable SBA regulations, the Company was restricted to investing only in qualified

small businesses as contemplated by the Small Business Investment Act of 1958.

As a registered investment company under the Investment

Company Act of 1940, as amended (the “Investment Company Act”), the Company’s investment objective was to provide

its shareholders with a high level of income, with capital appreciation as a secondary objective.

The Company made its first investment

in a small business in October 1996.

March 30, 2010, the SBA notified the Company that its account had been transferred to liquidation status and that the outstanding

debentures of $16.1 million plus accrued interest (the “

Debentures ”) were due and payable within fifteen

days of the date of the letter.

Debentures ”) were due and payable within fifteen days

of the date of the letter.

The Company did not possess adequate liquid assets to make this payment.

The Company negotiated

terms of a settlement agreement with the SBA effective September 1, 2010, which allowed the Company’s management

to liquidate the portfolio so long as there are no events of default.

The Debentures were repurchased by the SBA in September

2010, represented by a Note Agreement between the SBA and the Company.

The Company negotiated terms

of a settlement agreement with the SBA effective September 1, 2010, which allowed the Company’s management to liquidate

the portfolio so long as there are no events of default.

The Debentures were repurchased by the SBA in September 2010, represented

by a Note Agreement between the SBA and the Company.

The Note Agreement had a maturity of March 31, 2013.

In the event of a default, the SBA had the ability to seek receivership.

May 24, 2012 the SBA delivered to the Company a notice of an event of default for failure to meet the principal repayment

schedule under the Note Agreement (the “

In the event of a default,

the SBA had the ability to seek receivership.

May 24, 2012 the SBA delivered to the Company a notice of an event of default for failure to meet the principal repayment schedule

under the Note Agreement (the “

Notice ”).

Under the terms of the Notice and the Note Agreement the

SBA maintained a continuing right to terminate the Note Agreement and appoint a receiver to manage the Company’s assets.

Under the terms of the Notice and the Note Agreement the SBA maintained

a continuing right to terminate the Note Agreement and appoint a receiver to manage the Company’s assets.

November 20, 2013 the SBA filed a complaint in the United States District Court for the Eastern District of Virginia seeking,

among other things, receivership for the Company and a judgment in the amount outstanding under the Note Agreement plus continuing

The complaint alleged that as of October 31, 2013 there remained an outstanding balance of $11,762,634.58 under

the Note Agreement, including interest, which continued to accrue at the rate of $2,021.93 per day.

The complaint alleged that as of October 31, 2013 there remained an outstanding balance of $11,762,634.58 under the

Note Agreement, including interest, which continued to accrue at the rate of $2,021.93 per day.

The SBA, in filing the complaint,

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29, 2014 the Board of Directors of the Company, as then constituted (the “

Board ”), met to reconsider

the decision to contest the SBA’s legal action.

In light of developments occurring since December of 2013, including projections

of its portfolio companies and discussions with the SBA, the Board determined, after consultation with and advice of its counsel,

that it was not in the best interests of the Company and its shareholders to continue to contest the legal action.

informed of this determination.

Board ”), met to reconsider the decision

to contest the SBA’s legal action.

In light of developments occurring since December of 2013, including projections of its

portfolio companies and discussions with the SBA, the Board determined, after consultation with and advice of its counsel, that

it was not in the best interests of the Company and its shareholders to continue to contest the legal action.

The SBA was informed

of this determination.

The Board also decided to consent to the receivership process.

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to the SBA and for the expenses of the Receivership.

SBIC license granted to the Company by the SBA was revoked by the SBA effective March 20, 2017, in conjunction with the

entry by the court of the Order Approving the Procedures for Winding Up and Terminating the Receivership Estate.

2017 the Receivership was terminated with the entry of a Final Order by the Court (the “

SBIC license granted to the Company by the SBA was revoked by the SBA effective March 20, 2017, in conjunction with the entry

by the court of the Order Approving the Procedures for Winding Up and Terminating the Receivership Estate.

On June 28, 2017 the

Receivership was terminated with the entry of a Final Order by the Court (the “

Final Order ”).

The Final Order specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its

shareholders c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order”.

At that time the

Company had, and continues to have, effectively zero (0) assets, and a liability owed to the SBA in an amount exceeding $10,000,000.

The Final Order

specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its shareholders c/o

Roran Capital, LLC (“Roran”) upon notification of entry of this Order”.

At that time the Company had, and continues

to have, effectively zero (0) assets, and a liability owed to the SBA in an amount exceeding $10,000,000.

of Receivership

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and has continued to expend, its own funds to maintain the viability of the Company.

The termination of the Receivership

also caused a new board of directors to be appointed (the “

The termination of the Receivership also

caused a new board of directors to be appointed (the “

New Board ”).

The New Board considered

a variety of options for the Company, including bankruptcy.

The New Board determined that such action made scant sense as the

Receivership had the same basic result as bankruptcy.

Another option was to merely liquidate and legally dissolve the Company,

which would result in the complete loss of investment by all shareholders.

Roran provided assurances that it would fund reasonable

expenses of the Company so long as progress was being made to reorganize the Company and to identify either (i) a new business

to undertake;

or, (ii) an existing business with which to merge or otherwise acquire.

The New Board has continued to work toward

achieving that goal.

With no assets and no SBIC license from the SBA, no income, and liabilities in excess of $10,000,000,

the New Board concluded that continuing to operate as a registered investment company was impossible.

the entry of the Final Order (June 28, 2017) and the termination of the Receivership the Company has been maintained for

the benefit of its shareholders and pursuant to the Final Order.

The Company has no assets of any value, and the Company no longer

has the SBIC license from the SBA.

The Company is no longer operating as a registered investment company under the Investment

While it would have been easy for the Company to merely dissolve, the Company has instead decided to reconstitute

The New Board considered a variety of options

for the Company, including bankruptcy.

The New Board determined that such action made scant sense as the Receivership had the

same basic result as bankruptcy.

Another option was to merely liquidate and legally dissolve the Company, which would result in

the complete loss of investment by all shareholders.

Roran provided assurances that it would fund reasonable expenses of the Company

so long as progress was being made to reorganize the Company and to identify either (i) a new business to undertake;

an existing business with which to merge or otherwise acquire.

The New Board has continued to work toward achieving that goal.

With no assets and no SBIC license from the SBA, no income, and liabilities in excess of $10,000,000, the New Board concluded

that continuing to operate as a registered investment company was impossible.

the entry of the Final Order (June 28, 2017) and the termination of the Receivership the Company has been maintained for the benefit

of its shareholders and pursuant to the Final Order.

The Company has no assets of any value, and the Company no longer has the

SBIC license from the SBA.

The Company is no longer operating as a registered investment company under the Investment Company

While it would have been easy for the Company to merely dissolve, the Company has instead decided to attempt to reconstitute

itself as a viable business.

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as a registered investment company.

The Company believes that as of June 28, 2017 it ceased to be a registered investment

company under the Investment Company Act so it did not file as a registered investment company for the period ended June 30,

Instead, the Company is filing this Form 10-K for that period.

Prior to the filing of this 10-K, the Company filed with

the SEC an Application pursuant to Section 8(f) of the Investment Company Act for an order declaring that the Company has ceased

to be a registered investment company.

current status of the Company is consistent with the Company’s pronounced intention of converting from a registered investment

company to an operating company.

Although the Company may historically have operated as a registered investment company, the result

of the Receivership is that the Company can no longer operate as a registered investment company.

The only chance for the

shareholders of the Company to recognize any value from their investment in the Company is to allow the Company to change the

nature of its business such that it should no longer be a registered investment company under the Investment Company Act.

The Company believes that as of June 28, 2017 it ceased to be a registered investment company

under the Investment Company Act so it did not file as a registered investment company for the period ended June 30, 2017.

the Company filed Form 10-K for that period, and subsequently has filed all required forms 10-Q and this form 10-K in a timely

Prior to the filing of the 10-K for the year ended June 30, 2017, the Company filed with the SEC an Application pursuant

to Section 8(f) of the Investment Company Act for an order declaring that the Company has ceased to be a registered investment

continued and current status of the Company is consistent with the Company’s pronounced intention of converting from a registered

investment company to an operating company.

Although the Company may historically have operated as a registered investment company,

the result of the Receivership is that the Company can no longer operate as a registered investment company.

The only chance for

the shareholders of the Company to recognize any value from their investment in the Company is to allow the Company to change

the nature of its business such that it should no longer be a registered investment company under the Investment Company Act.

Business Strategy and Operations

Company will now seek to either (i) enter into a new business;

or, (ii) merge with, or otherwise acquire, an active business which

would benefit from operating as a public entity.

The New Board has undertaken a search to identify the best possible candidate(s)

in order to provide value to the shareholders of the Company.

The Company believes that it no longer qualifies as an “investment

company”

within the meaning of the Investment Company Act, and has engaged in a strategy to convert from a registered investment

company to an operating company.

The Company will file to register under the Securities Exchange Act of 1934, as amended (the

“Exchange Act”), thereby becoming a mandatory filer under the Exchange Act.

It will continue to list its common stock

on the Pink OTC Markets for the benefit of its shareholders.

As a result of these efforts, the Company is and holds itself out

as being engaged primarily in the business of seeking either (i) a new business to enter into;

or, (ii) merger or acquisition

candidates which would benefit from being public.

Company continues to explore options to either (i) enter into a new business;

or, (ii) merge with, or otherwise acquire, an active

business which would benefit from operating as a public entity.

The New Board continues to search to identify the best possible

candidate(s) in order to provide value to the shareholders of the Company.

The Company believes that it no longer qualifies as

an “investment company”

within the meaning of the Investment Company Act, and has engaged in a strategy to convert

from a registered investment company to an operating company.

The Company has satisfied its filing obligations under the Securities

Exchange Act of 1934, as amended (the “Exchange Act”) for the last fiscal year, and is a mandatory filer under

the Exchange Act.

It will continue to list its common stock on the Pink OTC Markets for the benefit of its shareholders.

result of these efforts, the Company is and holds itself out as being engaged primarily in the business of seeking either (i)

a new business to enter into;

or, (ii) merger or acquisition candidates which would benefit from being public.

are a shell company as that term is defined under federal securities laws.

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or approval by shareholders.

In the case of a statutory merger or consolidation directly involving our Company, it will

likely be necessary to call a shareholders’

meeting and obtain the approval of the holders of a majority of the outstanding

The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any

proposed transaction and will also give rise to certain appraisal rights to dissenting shareholders.

Most likely, management will

seek to structure any such transaction so as not to require stockholder approval, if possible.

In the case of a statutory merger or consolidation directly involving our Company, it will likely

be necessary to call a shareholders’

meeting and obtain the approval of the holders of a majority of the outstanding shares.

The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed

transaction and will also give rise to certain appraisal rights to dissenting shareholders.

Most likely, management will seek

to structure any such transaction so as not to require stockholder approval, if possible.

is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant

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costs incurred.

the year ended June 30, 2017, and the interim fiscal quarters since that time, we have essentially been dormant.

not currently engage in any business activities that provide us with positive cash flows.

As such, the costs of investigating

and analyzing business combinations for the next 12-months and beyond will be paid with funds raised through other sources, which

may not be available on favorable terms, if at all.

The Company, at this time, does not intend to obtain funds in one or more

private placements to finance the operation of any acquired business opportunity until such time as the Company has successfully

consummated such a merger or acquisition or entered into a new business.

Rather, the Company intends to borrow money from Roran

to finance ongoing operations.

the year ended June 30, 2018 we did not engage in any business activities that provided us with positive cash flows.

the costs of investigating and analyzing business combinations for the next 12-months and beyond will be paid with funds raised

through other sources, which may not be available on favorable terms, if at all.

The Company, at this time, does not intend to

obtain funds in one or more private placements to finance the operation of any acquired business opportunity until such time as

the Company has successfully consummated such a merger or acquisition or entered into a new business.

Rather, the Company intends

to borrow money to finance ongoing operations.

the Company intends to no longer operate as a registered investment company though remain as a public company, it will be subject

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employees at this time.

Company expects to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, proxy

statements and other information with the SEC.

Any materials filed by the Company with the SEC may be read and copied at the SEC’s

Public Reference Room at 100 F Street, NE, Washington, D.C.

Information on the operation of the SEC’s Public Reference

Room is available by calling the SEC at 1-800-SEC-0330.

The SEC maintains a website that contains annual, quarterly and current

reports, proxy statements and other information that issuers (including the Company) file electronically with the SEC.

address of the SEC’s website is http://www.sec.gov .

At some point in the near future we intend to make

our reports, amendments thereto, and other information available, free of charge, on a website for the Company.

At this time,

the Company does not maintain a website and there is no estimate for when such a website will be maintained by the Company.

corporate offices are located at 140 West 31 st Street, Second Floor, New York, New York, 10001.

Company expects to continue to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K,

proxy statements and other information with the SEC.

Any materials filed by the Company with the SEC may be read and copied at

the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C.

Information on the operation of the SEC’s

Public Reference Room is available by calling the SEC at 1-800-SEC-0330.

The SEC maintains a website that contains annual, quarterly

and current reports, proxy statements and other information that issuers (including the Company) file electronically with the

The Internet address of the SEC’s website is http://www.sec.gov .

At some point in the near future

we intend to make our reports, amendments thereto, and other information available, free of charge, on a website for the Company.

At this time, the Company does not maintain a website and there is no estimate for when such a website will be maintained by the

Our corporate offices are located at 140 West 31 st Street, Second Floor, New York, New York, 10001.

Our telephone

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business