Princeton Capital's Net Assets Plummet Amidst Investment Losses

TL;DR

**PIAC is a value trap; declining income and asset values mean this BDC is bleeding cash and has no clear path to recovery.**

AI Summary

PRINCETON CAPITAL CORP (PIAC) reported a significant decline in financial performance for the nine months ended September 30, 2025. The company experienced a net investment loss after taxes of $993,901, a substantial increase from the $192,385 loss in the prior year period. Total investment income plummeted to $125,213 from $963,124, primarily due to a drastic reduction in interest income from non-control/non-affiliate investments, which fell from $514,917 to $6,602. Operating expenses decreased slightly to $1,109,128 from $1,152,153. The net decrease in net assets resulting from operations was $3,577,383, compared to $8,779,158 in the previous year, largely influenced by a net change in unrealized loss on investments of $2,583,482. Total investments at fair value decreased to $16,654,297 as of September 30, 2025, from $19,217,779 at December 31, 2024. Cash and cash equivalents also saw a sharp decline, from $1,290,864 to $535,349. The company did not meet the requirements to qualify as a Regulated Investment Company (RIC) for the 2024 tax year and does not expect to qualify until strategic alternatives are achieved, indicating ongoing operational challenges.

Why It Matters

Princeton Capital's continued underperformance, marked by a significant net investment loss and declining asset values, signals deep trouble for investors. The company's failure to qualify as a Regulated Investment Company (RIC) for the 2024 tax year, and its expectation not to qualify until 'strategic alternatives are achieved,' suggests fundamental issues with its business model and investment strategy. This could lead to further erosion of shareholder value and raises questions about the long-term viability of its current operations, especially given its focus on illiquid, non-income producing investments. Competitors in the BDC space that maintain RIC status and generate consistent income will likely gain an advantage as PIAC struggles.

Risk Assessment

Risk Level: high — The company reported a net investment loss after taxes of $993,901 for the nine months ended September 30, 2025, a significant increase from $192,385 in the prior year. Furthermore, total investments at fair value decreased by $2,563,482 from December 31, 2024, to September 30, 2025, with 100% of portfolio investments being illiquid and a substantial portion non-income producing, indicating severe liquidity and valuation risks.

Analyst Insight

Investors should avoid PIAC given its consistent net investment losses, declining asset base, and inability to qualify as a RIC. Current shareholders should consider divesting to mitigate further capital erosion, as the company's strategy of 'conserving cash' and relying on 'strategic alternatives' offers little immediate upside.

Financial Highlights

debt To Equity

N/A

revenue

$125,213

operating Margin

N/A

total Assets

$17,896,941

total Debt

N/A

net Income

-$993,901

eps

$0.145

gross Margin

N/A

cash Position

$535,349

revenue Growth

-87.0%

Revenue Breakdown

Key Numbers

• $125,213 — Total investment income (for the nine months ended September 30, 2025, down from $963,124 in 2024)
• $993,901 — Net investment loss after taxes (for the nine months ended September 30, 2025, up from $192,385 in 2024)
• $3,577,383 — Net decrease in net assets from operations (for the nine months ended September 30, 2025)
• $16,654,297 — Total investments at fair value (as of September 30, 2025, down from $19,217,779 at December 31, 2024)
• $535,349 — Cash and cash equivalents (as of September 30, 2025, down from $1,290,864 at December 31, 2024)
• 100% — Illiquid investments (of total fair value of portfolio investments as of September 30, 2025)
• $0.145 — Net asset value per share (as of September 30, 2025, down from $0.175 at December 31, 2024)

Key Players & Entities

• PRINCETON CAPITAL CORPORATION (company) — Registrant and BDC
• House Hanover, LLC (company) — Investment Advisor
• Advantis Certified Staffing Solutions, Inc. (company) — Control investment, Staffing industry
• PCC SBH Sub, Inc. (company) — Control investment, Energy Services industry
• Rockfish Seafood Grill, Inc. (company) — Control investment, Casual Dining industry
• Performance Alloys, LLC (company) — Non-control/non-affiliate investment, Nickel Pipe, Fittings & Flanges industry
• SEC (regulator) — Securities and Exchange Commission
• Maryland (person) — State of incorporation

FAQ

Risk Factors

• Failure to Qualify as a RIC [high — financial]: The company did not meet the requirements to qualify as a Regulated Investment Company (RIC) for the 2024 tax year and does not expect to qualify until strategic alternatives are achieved. This means it will be taxed as a corporation under Subchapter C, potentially impacting its ability to distribute income and its overall financial structure.
• Significant Decline in Investment Income [high — market]: Total investment income fell by 87.0% to $125,213 for the nine months ended September 30, 2025, from $963,124 in the prior year. This was driven by a 98.7% decrease in interest income from non-control/non-affiliate investments, from $514,917 to $6,602.
• Deteriorating Net Asset Value and Cash Position [high — financial]: Total investments at fair value decreased by 13.3% to $16,654,297 from $19,217,779. Cash and cash equivalents saw a sharp decline of 58.5% to $535,349 from $1,290,864. Net asset value per share dropped from $0.175 to $0.145.
• Illiquid Investment Portfolio [medium — operational]: As of September 30, 2025, 100% of the company's portfolio investments are illiquid. This lack of liquidity can hinder the company's ability to generate cash or adapt to changing market conditions.
• Increased Net Investment Loss [high — financial]: The company reported a net investment loss after taxes of $993,901 for the nine months ended September 30, 2025, a substantial increase from the $192,385 loss in the prior year period.
• Strategic Alternatives Process [medium — operational]: The company is currently undergoing a strategic alternatives process and has limited resources, leading to a focus on investing only in current investments and conserving cash. This indicates a period of uncertainty and potential restructuring.

Industry Context

Princeton Capital Corp operates as a non-diversified, closed-end investment company and a Business Development Company (BDC). The BDC sector typically focuses on providing capital to small and medium-sized businesses, often through debt and equity investments. However, PIAC is facing significant headwinds, including a failure to qualify as a RIC and a strategic alternatives process, which are limiting its investment activities and impacting its financial performance.

Regulatory Implications

The company's failure to qualify as a RIC for the 2024 tax year means it will be taxed as a C-corporation, potentially reducing distributable income and impacting its investment strategy. As a BDC, it is subject to the Investment Company Act of 1940, requiring adherence to specific regulations regarding its investment activities and reporting.

What Investors Should Do

1. Monitor the progress of the strategic alternatives process.
2. Assess the sustainability of the current investment portfolio.
3. Analyze the impact of C-corporation taxation.
4. Evaluate the company's cash burn rate and liquidity.

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 financial reporting — Reported a significant net investment loss of $993,901 and a drastic decline in total investment income to $125,213, highlighting severe performance deterioration.
• 2024-12-31: Year-end 2024 financial reporting — Total investments were $19,217,779 and cash was $1,290,864, providing a baseline for the subsequent decline.
• 2024-01-01: Start of fiscal year 2024 — The company failed to meet RIC qualification requirements for this tax year, leading to corporate taxation and ongoing strategic challenges.

Glossary

Regulated Investment Company (RIC)

A company that meets specific IRS requirements to be treated as a mutual fund or other regulated investment company, allowing it to pass through income and capital gains to shareholders without being taxed at the corporate level. (Princeton Capital Corp failed to qualify as a RIC for 2024 and does not expect to until strategic alternatives are achieved, meaning it will be taxed as a regular corporation.)

Business Development Company (BDC)

A type of closed-end investment company created by Congress to invest in small and medium-sized businesses, providing capital and management expertise. (Princeton Capital Corp is registered as a BDC under the 1940 Act, with a goal of qualifying as a RIC annually.)

Control Investments

Investments in companies where the investor owns more than 25% of the voting securities or maintains greater than 50% of the board representation. (These represent a significant portion of the company's assets, valued at $12,162,667 as of September 30, 2025.)

Non-control/non-affiliate investments

Investments in companies where the investor owns less than 5% of the voting securities and does not have control. (Income from these investments plummeted by 98.7% to $6,602, severely impacting the company's overall investment income.)

Net asset value per share

The value of a company's assets minus its liabilities, divided by the number of outstanding shares. (Decreased to $0.145 as of September 30, 2025, from $0.175 at the end of 2024, indicating a decline in shareholder value.)

Year-Over-Year Comparison

Princeton Capital Corp has experienced a severe downturn in financial performance compared to the prior year. Total investment income has plummeted by 87.0% to $125,213 for the nine months ended September 30, 2025, from $963,124 in the same period of 2024. This is primarily driven by a drastic 98.7% reduction in interest income from non-control/non-affiliate investments. Consequently, the net investment loss after taxes has widened significantly to $993,901 from $192,385. The company's total investments have decreased by 13.3% to $16,654,297, and its cash position has shrunk by 58.5% to $535,349. New risks have emerged, notably the failure to qualify as a RIC, leading to corporate taxation and an ongoing strategic alternatives process.

Key Financial Figures

• $0.001 — of shares of the issuer's Common Stock, $0.001 par value, outstanding as of November 1

Filing Documents

• ea0264617-10q_prince.htm (10-Q) — 1227KB
• ea026461701ex31-1_prince.htm (EX-31.1) — 10KB
• ea026461701ex31-2_prince.htm (EX-31.2) — 10KB
• ea026461701ex32_prince.htm (EX-32) — 4KB
• 0001213900-25-110066.txt ( ) — 6770KB
• piac-20250930.xsd (EX-101.SCH) — 49KB
• piac-20250930_cal.xml (EX-101.CAL) — 26KB
• piac-20250930_def.xml (EX-101.DEF) — 173KB
• piac-20250930_lab.xml (EX-101.LAB) — 329KB
• piac-20250930_pre.xml (EX-101.PRE) — 195KB
• ea0264617-10q_prince_htm.xml (XML) — 1451KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 1 Item 1.

Financial Statements

Financial Statements 1 (unaudited) and December 31, 2024 1 months ended September 30, 2025 and September 30, 2024 2 and nine months ended September 30, 2025 and September 30, 2024 3 September 30, 2025 and September 30, 2024 4 Schedule of Investments as of September 30, 2025 (unaudited) 5 Schedule of Investments as of December 31, 2024 8

Notes to Financial Statements (unaudited) as of September 30,

Notes to Financial Statements (unaudited) as of September 30, 2025 11 Item 2.

Management's Discussion and Analysis of Financial Condition

Management's Discussion and Analysis of Financial Condition and Results of Operations 32 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 43 Item 4.

Controls and Procedures

Controls and Procedures 43

OTHER INFORMATION

PART II. OTHER INFORMATION 44 Item 1.

Legal Proceedings

Legal Proceedings 44 Item 1A.

Risk Factors

Risk Factors 44 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 44 Item 3. Defaults Upon Senior Securities 44 Item 4. Mine Safety Disclosures 44 Item 5. Other Information 44 Item 6. Exhibits 44

SIGNATURES

SIGNATURES 45 -i-

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements PRINCETON CAPITAL CORPORATION September 30, 2025 (unaudited) December 31, 2024 ASSETS Control investments at fair value (cost of $ 21,710,606 and $ 21,690,606 , respectively) $ 12,162,667 $ 15,066,529 Non-control/non-affiliate investments at fair value (cost of $ 12,365,846 and $ 12,365,846 , respectively) 4,491,630 4,151,250 Total investments at fair value (cost of $ 34,076,452 and $ 34,056,452 , respectively) 16,654,297 19,217,779 Cash and cash equivalents 535,349 1,290,864 Restricted cash 5,000 5,000 Due from portfolio companies 33,574 33,049 Interest receivable, net of allowance for bad debt of $ 0 and $ 0 , respectively 568,329 584,769 Prepaid expenses 100,392 76,418 Total assets 17,896,941 21,207,879 LIABILITIES Accrued management fees 91,645 55,286 Accounts payable 149,804 16,545 Due to affiliates (1 ) 129,750 64,875 Taxes payable 342 - Accrued expenses and other liabilities 59,517 27,907 Total liabilities 431,058 164,613 Net assets $ 17,465,883 $ 21,043,266 NET ASSETS Common Stock, par value $ 0.001 per share ( 250,000,000 shares authorized; 120,486,061 shares issued and outstanding at September 30, 2025 and December 31, 2024) $ 120,486 $ 120,486 Paid-in capital 64,868,884 64,868,884 Accumulated deficit ( 47,523,487 ) ( 43,946,104 ) Total net assets $ 17,465,883 $ 21,043,266 Net asset value per share $ 0.145 $ 0.175 (1) Amounts under Due to Affiliates are for accrued amounts payable to the Company's investment advisor, House Hanover, LLC for the reimbursement of administration fees that it incurs on the Company's behalf. See Note 6 of the Notes to Financial Statements. The accompanying notes are an integral part of these unaudited financial statements. -1- PRINCETON CAPITAL CORPORATION (Unaudited) Three Months Ended September 30, Nine Months Ended Septem

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS September 30, 2025 (Unaudited) NOTE 1 – NATURE OF OPERATIONS References herein to "we", "us" or "our" refer to Princeton Capital Corporation (the "Company" or "Princeton Capital"), unless the context specifically requires otherwise. Princeton Capital Corporation, a Maryland corporation, was incorporated under the general laws of the State of Maryland on July 25, 2013. We are a non-diversified, closed-end investment company that has filed an election to be regulated as a business development company ("BDC"), under the Investment Company Act of 1940, as amended (the "1940 Act"). A goal of a BDC is to annually qualify and elect to be treated as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Company, however, did not meet the requirements to qualify as a RIC for the 2024 tax year and will be taxed as a corporation under Subchapter C of the Code and does not expect to meet the qualifications of a RIC until such time as certain strategic alternatives are achieved. While we have sought to invest primarily in private small and lower middle-market companies in various industries through first lien loans, second lien loans, unsecured loans, unitranche and mezzanine debt financing, often times with a corresponding equity investment, we are now (with a strategic alternatives process underway and limited resources) investing only in current investments and otherwise conserving cash. Our investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through debt and related equity investments. Prior to March 13, 2015, Princeton Capital's predecessor operated under the name Regal One Corporation ("Regal One"). Regal One had been located in Scottsdale, Arizona, and was a Florida corporation initially incorporated in 1959 as Electro-Mechanical Services Inc. Since inception, Regal One had been involved

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS September 30, 2025 (Unaudited) NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, ("U.S. GAAP"). In accordance with Regulation S-X under the Securities Act of 1933 and Securities Exchange Act of 1934, the Company does not consolidate portfolio company investments. The accounting records of the Company are maintained in U.S. dollars. As an investment company, as defined by the 1940 Act, the Company follows investment company accounting and reporting guidance of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946 – "Financial Services - Investment Companies", which is U.S. GAAP. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation are reflected in the interim financial statements. The reported amounts for the three and nine months ended September 30, 2025 may not be indicative of the results ultimately achieved for the year ended December 31, 2025 which will be presented in the Company's annual report on form 10-K. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Changes in the economic environment, financial markets, creditworthiness of our portfolio companies and any other parameters used in determining these estimates could cause actual results to differ. It is likely that changes in these estimates will occur in the near term. The Company's estimates are inherently subjective in nature and actual results could differ materially from such estimates. Portfolio Investment Classification

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