HARVEST CAPITAL CREDIT : ANNOUNCES DECEMBER 31, 2020 FINANCIAL RESULTS

HARVEST CAPITAL CREDIT CORPORATION ANNOUNCES FINANCIAL RESULTS FOR

FISCAL YEAR AND QUARTER ENDED DECEMBER 31, 2020

NEW YORK, March 12, 2021 - Harvest Capital Credit Corporation (the "Company," "we," or "our") (NASDAQ: HCAP) announced financial results for its fiscal year and fourth quarter ended December 31, 2020.

FINANCIAL HIGHLIGHTS

Q4-20

Q4-19

FY-20

FY-19

AmountPer shareAmountPer shareAmountPer shareAmountPer share

Net investment income (loss)

($382,537) ($0.06)

Core net investment income (loss) (1)

(382,537) (0.06)

$1,153,280 1,153,280

• $0.19 $1,664,179

• 0.19 1,664,179

  $0.28 $3,828,786 $0.630.28 3,828,786 0.63

  Net realized losses on investments

  (2,908,762) (0.49)

  (2,333,549)

• (0.39) (4,923,171)

  (0.83)

  • (2,363,853) (0.38)

    Net change in unrealized appreciation (depreciation) on investments

    7,012,964 1.18

    869,874

• 0.15 2,160,547

0.36

• (2,671,388) (0.44)

Provision for taxes on unrealized gains on investments

(1,236,329) (0.21)

Net income (loss)

Weighted average shares outstanding (basic and diluted)

$2,485,336 $0.42 5,958,799

- -	(1,236,329) (0.21)	- -
($310,395) ($0.05)	($2,334,774) ($0.39)	($1,206,455) ($0.20)
5,944,914	5,956,339	6,114,474

(1) Core net investment income and core net investment income per share are non-GAAP financial measures. For each of the fiscal years and quarters ended December 31, 2020 and 2019, there were no adjustments to GAAP net investment income and GAAP net investment income per share to arrive at core net investment income and core net investment income per share.

PORTFOLIO ACTIVITY

December 31, 2020

December 31, 2019

Portfolio investments at fair value

• $ 140,059,736

• Total assets Net assets

  $ $ $

  89,554,573 129,944,513 62,216,521

• $ 116,809,390

• $ 66,781,482

Shares outstanding

5,968,296 5,945,854

Net asset value per share

$

10.42

$

11.23

Q4-20

Q4-19

FY-20

FY-19

Portfolio activity during the period:

New debt investments New equity investments Exits of debt investments Exits of equity investments Principal repayments

$

- 193,367 (8,285,151)

$

- (602,315)

4,426,801 10,637 - - (1,890,347)

$

2,219,812

$ 55,322,156

425,099 3,747,775

(25,338,310)

(21,438,058)

(289,391) (4,263,595)

(206,435) (8,073,409)

Net activity

$

(8,694,099)

$

2,547,091

$

(27,246,385)

$

29,352,029

December 31, 2020

December 31, 2019

Number of portfolio company investments	21	25
Number of debt investments	14	20
Weighted average yield of debt and other income producing investments (1):
Cash	9.0	%	12.0	%
PIK	2.6	%	1.1	%
Fee amortization	0.3	%	0.9	%
Total	11.9	%	14.0	%
Weighted average yield on total investments (2):
Cash	6.9	%	9.7	%
PIK	2.0	%	0.9	%
Fee amortization	0.2	%	0.7	%
Total	9.1	%	11.3	%

• (1) The dollar-weighted average annualized effective yield is computed using the effective interest rates for our debt investments and other income producing investments, including cash and PIK interest as well as the accretion of deferred fees. The individual investment yields are then weighted by the respective fair values of the investments (as of the date presented) in calculating the weighted average effective yield of the portfolio as a percentage of our debt and other income producing investments. The dollar-weighted average annualized yield on the Company's investments for a given period will generally be higher than what investors in our common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expenses or any sales load that may be paid by investors. GK Holdings, Inc. and ProAir Holdings Corporation were excluded from the calculation as of December 31, 2020 and Infinite Care, LLC and CP Holding Co., Inc. were excluded from the calculation as of December 31, 2019 because they were on non-accrual status on such dates.

• (2) The dollar-weighted average yield on total investments takes the same yields but weights them to determine the weighted average effective yield as a percentage of the Company's total investments. The dollar-weighted average annualized yield on the Company's investments for a given period will generally be higher than what investors in our common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expenses or any sales load that may be paid by investors.

FOURTH QUARTER AND YEAR TO DATE 2020 OPERATING RESULTS

For the three months ended December 31, 2020, the Company recorded net income of $2.5 million, as compared to a net loss of $0.3 million in the quarter ended December 31, 2019. The increase in net income principally resulted from the Company recording a higher net change in unrealized appreciation on investments offset by a lower investment income as a result of a lower weighted-average effective yield on the Company's investment portfolio, lower prepayment and other non-recurring fees, the addition of GK Holdings, Inc. and ProAir Holdings Corporation to non-accrual status during 2020 and an increase in realized losses. During the fourth quarter of 2020, Infinite Care, LLC was removed from non-accrual status. Per share earnings (loss) were $0.42 and ($0.05) per share for the three months ended December 31, 2020 and 2019, respectively.

Net investment loss and core net investment loss was $0.4 million, or $0.06 per share, for the quarter ended December 31, 2020, compared to net investment income and core net investment income of $1.2 million, or $0.19 per share, for the quarter ended December 31, 2019, a decrease of $1.6 million in the fourth quarter of 2020 compared to 2019. The decrease in net investment income during the 2020 fourth quarter as compared to the 2019 fourth quarter primarily resulted from an increase in operating expenses between periods. The Company incurred approximately $1.0 million in expenses relating to the previously announced proposed merger with Portman Ridge Finance Corporation. In addition, investment income decreased by approximately $0.5 million between periods due to a lower weighted-average effective yield on the Company's income-earning portfolio and the reduced size of the income-earning portfolio between periods.

For the year ended December 31, 2020, the Company recorded a net loss of $2.3 million, an increase in loss of $1.1 million from a net loss of $1.2 million during the year ended December 31, 2019. The $1.1 million loss increase was primarily attributable to a $1.1 million decrease in investment income, a $1.1 million increase in operating expenses, and an increase of $2.6 million in realized losses, partially offset by a $3.6 million change between periods in net unrealized appreciation/depreciation on investments, net of provision for taxes. Per share losses were $0.39 and $0.20 per share for the years ended December 31, 2020 and 2019, respectively.

Net investment income was $1.7 million, or $0.28 per share, for the year ended December 31, 2020, compared to net investment income of $3.8 million, or $0.63 per share, for the year ended December 31, 2019, a decrease of $2.1 million in the 2020 fiscal year as compared to 2019. The decrease in net investment income during the 2020 year as compared to 2019, was primarily the result of a decrease in investment income and an increase in operating expenses, primarily relating to the previously announced proposed merger with Portman Ridge Finance Corporation.

As of December 31, 2020, our total portfolio investments at fair value and total assets were $89.6 million and $129.9 million, respectively, compared to $116.8 million and $140.0 million at December 31, 2019. Net asset value per share was $10.42 at December 31, 2020, compared to $11.23 at December 31, 2019.

During the fourth quarter of 2020, the Company made two additional equity investments in existing portfolio companies. The Company had one payoff during the three months ended December 31, 2020. The significant investment activity for the quarter ended December 31, 2020 was as follows:

New and Incremental Investments

On October 28, 2020, the Company increased its equity investment in Slappey Communications, LLC with a $0.1 million add-on funding to purchase preferred equity units.

On December 24, 2020, the Company increased its equity investment in Surge Hippodrome Partners LP with a $0.1 million add-on funding to purchase common equity units.

Investment Sales and Payoffs

On October 30, 2020, the Company received a $7.8 million repayment, at par plus a 2.0% prepayment premium, on its senior secured debt investment in Slappey Communications, LLC. The original par value of the debt investment was $7.9 million. The Company generated an internal rate of return (IRR*) of 17.81% on its investment.

* IRR is the rate of return that makes the net present value of all cash flows into or from the investment equal to zero, and is calculated based on the amount of each cash flow received or invested by the Company and the day it was received or invested.

"We made good progress in migrating away from assets rated lower on our internal investment rating scale and increasing our liquidity in the fourth quarter of 2020. At year end, non-accrual loans had been reduced to $5.6 million (at fair value), including $1.6 million that was under contract for sale to close in the second quarter of 2021. Recently, one large credit in our portfolio paid off its loan as a result of a sale transaction, and we utilized a portion of the proceeds to pay down our bank line of credit and currently have $18.8 million in cash." said Joseph Jolson, Chairman and CEO. "Despite absorbing $0.17 per share in merger-related costs in the fourth quarter of 2020, our NAV rose 9.9% on an annualized basis to $10.42 per share, as a result of improving fundamentals at our portfolio companies, the expected exit of selected credits at higher valuations than their September 2020 fair values, and tightening credit spreads overall in the lower middle market. Our merger with Portman Ridge Finance Corporation is expected to close in the second quarter of 2021 and our shareholders will have an opportunity to elect to receive cash or stock consideration prior to closing, subject to a maximum amount of approximately 15 million shares of Portman Ridge's common stock being issued," concluded Mr. Jolson.

CREDIT QUALITY

The Company employs various risk management and monitoring tools to categorize and assess its investments. No less frequently than quarterly, the Company applies an investment risk rating system which uses a five-level numeric scale. In determining an investment rating, Company management takes into account various aspects of a company's performance during the measurement period and assigns an investment rating to each aspect, which are then averaged. Such averages may inform, but do not necessarily determine, the investment rating assigned to a company. The following is a description of the conditions associated with each investment rating:

• • Investment Rating 1 is used for investments that are performing above expectations, and whose risks remain favorable compared to the expected risk at the time of the original investment.

• • Investment Rating 2 is used for investments that are performing within expectations and whose risks remain neutral compared to the expected risk at the time of the original investment. All new loans are initially rated 2.