Exhibit 21.7

MVC AUTOMOTIVE GROUP GMBH

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and December 31, 2016

(in thousands of Euro)

(Draft 21.08.2018)

Index

To the management of

MVC Automotive Group GmbH

Brünner Straße 66

1210 Vienna

Report of independent Auditors

We have audited the accompanying consolidated financial statements of MVC Automotive Group GmbH and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2017 and December 31, 2016, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flow for the years ended December 31, 2017, December 31, 2016 and December 31, 2015.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MVC Automotive Group GmbH and its subsidiaries as of December 31, 2017, December 31, 2016 and December 31, 2015 and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matters

As discussed in Note 2 to the consolidated financial statements, the Company and its subsidiaries are subject to risks and uncertainties that could affect amounts reported in the Company’s financial statements in future periods. Adverse business and economic conditions have resulted in incurred losses through the year ended December 31, 2016, which has reduced the Company’s liquidity required. Management’s evaluation of the events and conditions and management’s plans to mitigate these matters are also described in Note 2. Our opinion is not modified with the respect to this matter.

As disclosed in Note 12 to the consolidated financial statements, the Company is potentially subject to legal claims relating to the bankruptcy proceedings of the Belgian subsidiary, Cegeac S.A. The Company has not recorded a reserve and is not able to estimate the reasonably likely outcome of these proceedings. Our opinion is not modified with respect to this matter.

Vienna, August 30, 2018

Alexandra Rester

PwC Wirtschaftsprüfung GmbH

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I.          CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

The notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

* net of tax effects of EUR 1 thsd. (2016: EUR 52 thsd. and 2015: EUR 44 thsd.)

The notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOW

The notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

The notes are an integral part of these consolidated financial statements.

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II.                         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE          1                                        BACKGROUND AND COMPANIES INCLUDED

These Consolidated Financial Statements (together “MVC Automotive Group”) include the accounts of:

·                  MVC  Automotive Group GmbH (Vienna), holding company

·                  MVC Automotive Austria GmbH (Vienna)

·                  MVC Immobilien GmbH (Vienna)

·                  MVC Motors GmbH (Vienna)

·                  Somotra N.V. (Brussels), liquidated in December 2016

·                  Bromalease N.V. (Brussels), sold in April 2016

·                  Auto Motol Beni A.S. (Prague), and

·                  BE & NI Group A.S. (Prague), merged into Auto Motol Beni A. S. in July 2016

MVC Automotive Group GmbH is 100% owned by MVC Capital Inc., USA. All subsidiaries included in “MVC Automotive Group” are 100% owned by MVC Automotive Group GmbH, Vienna.

As of December 31, 2015, consolidated financial statements including MVC Automotive Group GmbH, Austria, and all subsidiaries of MVC Automotive Group GmbH have been prepared for the first time.

MVC Automotive Group was established in September 2007. Today, MVC Automotive Group represents the following brands: Ford, Mazda, Volvo, Land Rover (till 2016), Jaguar, Fiat and Alfa Romeo. Since the beginning of 2018 MVC Automotive Group also represents Jeep and Nissan.

In 2016 MVC Automotive Group has left the Belgian market. On December 22, 2015, Somotra N.V. entered into an agreement with Coventry Motors S.A. to sell the majority of its assets, including 100% of the share in Bromalease, and certain liabilities. The sales contract has been closed due to the notary deed being received on April 6, 2016 and therefore the real estate assets have been transferred to Coventry Motors S.A.

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After the proceeds from the liquidation of Somotra’s assets were realized and all third party liabilities were settled or transferred, the company ceased its activities and was closed in December 2016 (refer to Note 2 “Going Concern”).

The deconsolidation of Bromalease in April 2016 does not lead to significant income from disposal of investments on group level beside the income from the disposal of the premises in Drogenbos, which is included in the income from disposal of property plant and equipment.

Regarding the disposal of the premises in Waterloo, Drogenbos (refer to Note 5).

NOTE          2                                        BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). MVC Automotive Group has elected to use the EURO as its reporting currency. Management believes the assumptions underlying the consolidated financial statements are reasonable. However, the consolidated financial statements may not necessarily reflect MVC Automotive Group’s results of operations, financial position and cash flows in the future or what its results on operations, financial position and cash flows would have been, had each of the entities included in MVC Automotive Group been a stand-alone entity during the periods presented.

The assets and liabilities of the companies are stated at historical costs and are included in the consolidated financial statements of MVC Automotive Group from the beginning of the earliest period presented as if they had always been part of the Consolidated Group.

GOING CONCERN

The consolidated financial statements are prepared under the assumption that the Consolidated Group continues its operations for the foreseeable future.

After net losses of EUR 1.0 million in 2016 and EUR 4.4 million in 2015 the Austrian Subgroup recorded a small profit of EUR 76 thsd. in 2017.

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After a period of sustained losses in 2015 the Board took several measures and actions. Restrictive cost cutting measures were set in the whole Group.

The going concern issues of Somotra N.V., Belgium, have been solved by the sale of the business to Coventry Motors S.A. in 2016. With this transaction, MVC Automotive Group has left the Belgian market.

On December 22, 2015, Somotra N.V. has entered into an agreement with Coventry Motors S.A. to sell the majority of its assets and certain liabilities.

The sales contract has been closed due to the notary deed being received on April 6, 2016 and therefore the assets have been transferred to Coventry Motors S.A.

The total purchase price of EUR 5.8 million, was primarily used to repay remaining third party liabilities and the bridge loan of MVC Capital Inc.

In the course of the transaction, all assets have been sold, all third party liabilities have been repaid and all intercompany loans have been forgiven. The transaction has been completed in 2016.

Intercompany loans of MVC Automotive Group GmbH to Somotra N. V., amounting to EUR 5.3 million, that remain unpaid, were covered by a debt waiver in the course of the liquidation process.

Management prepared the consolidated financial statements under the going concern principle as management confirms that future financing a repayment of debts is secured, as sufficient funding and credit lines exists. To improve the capital structure and preserve liquidity of its Austrian operations MVC Automotive Group GmbH received another USD 4.9 million short-term loan from MVC Capital Inc, USA whereof USD 3.8 million were paid in 2016 and USD 1.1 million (EUR 1.0 million) in May 2017. Additionally a capital contribution of EUR 1.0 million was granted in May 2017 from MVC Capital Inc, USA. The maturity date of the total bridge loan of USD 4.9 million is June 30, 2019.

In March 2018 MVC Automotive Group GmbH received another EUR 1.85 million recapitalization from MVC Capital Inc, USA.

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of MVC Automotive Group GmbH (Vienna) and its subsidiaries.

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Intercompany transactions and balances have been eliminated. Equity investments through which we exercise significant influence over but do not control the investee and are not the primary beneficiary of the investee’s activities are accounted for using the equity method. Investments through which we are not able to exercise significant influence over the investee and which do not have readily determinable fair values are accounted for under the cost method.

Subsidiaries are all entities over which MVC Automotive Group GmbH has the power to govern the financial and operating policies. Subsidiaries are fully consolidated from the date on which control is transferred to MVC Automotive Group and are deconsolidated from the date on which MVC’s control ceases.

BUSINESS COMBINATIONS

ASC Topic 805 (“Business Combinations”) requires that companies record acquisitions under the purchase method of accounting. Accordingly, the purchase price is allocated to the tangible assets and liabilities and intangible assets acquired, based on their estimated fair values. The excess purchase price over the fair value is recorded as goodwill. Purchased intangibles with definite lives are amortized over their respective useful lives. When a bargain purchase incurs, which is the case when the fair value of the acquired business exceeds the purchase price, this surplus in fair value is recognized as a gain from bargain purchase.

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include, but are not limited to long-lived asset and indefinite-lived intangible asset impairment analyses, asset retirement obligations, warranty obligations, restructuring accruals, valuation of deferred taxes, obligations related to income taxes, obligations related to employee benefits and the useful lives of property and equipment.

Actual results could differ from those estimates. Future changes in economic conditions may have a significant effect on such estimates made by management. Management believes the following significant accounting policies affect its more significant estimates, judgments and assumptions used in the preparation of our consolidated financial statements.

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RECENT ACCOUNTING PRONOUNCEMENTS

In September 2017 the FASB issued an amendment regarding the transition date related to Accounting Standards Updates for Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842). According to this amendment the SEC would not object to a public business entity that otherwise would not meet the definition of a public business entity except for a requirement to the inclusion of its financial statements in another entity’s filing with the SEC adopting (1) ASC Topic 606 for annual reporting periods beginning after December 15, 2018, and (2) ASC Topic 842 for fiscal years beginning after December 15, 2019. The new transition dates are relevant for the implementation of the new standards in our consolidated financial statements.

In March 2017 the FASB issued an update to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments in this Update require that an employer disaggregate the service cost component from the other components of net benefit cost. The amendment will be effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted. We anticipate this standard could have an impact on our consolidated financial statements, and we are currently evaluating its impact.

In January 2017 the FASB issued an Update to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The new standard will be effective for annual reporting periods beginning after December 15, 2017. We anticipate this standard could have an impact on our consolidated financial statements, and we are currently evaluating its impact. The new standard does not have an impact on the current financial statements, as a change in evaluation is only prospective.

In June 2016 the FASB issued an update on the measurement of credit losses on financial instruments. The amendments replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to credit loss estimates. The amendments are effective for fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018. We anticipate this standard will have an impact on our consolidated financial statements, and we are currently evaluating its impact.

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In May 2016 the FASB issued an update related to revenue from contracts with customers to clarify the guidance on assessing the collectability criteria, presenting sales taxes and other similar taxes collected from customers, considering noncash, contract modifications at transition, completed contracts at transition and technical correction. The amendments in this update affect the guidance in Accounting Standard “revenue from contracts with customers”, which is not yet effective. The new standard will be effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted, but only for periods beginning after December 15, 2016. We evaluated the impact of this standard on our consolidated financial statements. We anticipate this standard will have no material impact on our consolidated financial statements, except additional disclosure requirements.

In April 2016 the FASB issued an update on the recognition of revenue from contracts with customers to identify performance obligations and to clarify the accounting for licenses of intellectual property. The amendments in this update affect the guidance in the Accounting Standard “revenue from contracts with customers”, which is not yet effective. The new standard will be effective for annual reporting periods beginning after December 15, 2018 and early adoption is permitted, but only for periods beginning after December 15, 2016. We evaluated the impact of this standard on our consolidated financial statements. We anticipate this standard will have no material impact on our consolidated financial statements, except additional disclosure requirements.

In March 2016 the FASB issued a standard related to the recognition of revenue from contracts with customers to clarify the principal versus agent considerations in its new revenue recognition standard. The amendments in this update affect the guidance in Accounting Standard “revenue from contracts with customers”, which is not yet effective. The new standard will be effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted, but only for periods beginning after December 15, 2016. We evaluated the impact of this standard on our consolidated financial statements. We anticipate this standard will have no material impact on our consolidated financial statements, except additional disclosure requirements.

In February 2016 the FASB issued an update to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The amendments are effective for fiscal years beginning after December 15, 2019. We

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anticipate this standard will have an impact on our consolidated financial statements, and we are currently evaluating its impact.

In November 2015 the FASB issued an update to simplify the presentation of deferred income taxes. The amendments in this update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments are effective for fiscal years beginning after December 15, 2017. This standard had an impact on our consolidated financial statements and we changed the presentation of deferred tax assets and liabilities on the face of the balance sheet to comply with the amendments. The new standard has been adopted on January 1, 2017 on a retrospective method.

In July 2015 the FASB issued an amendment to the accounting standards to align the measurement of inventory according to US GAAP more closely to the measurement of inventory in IFRS. The amendment was effective for fiscal years beginning after December 15, 2016 and there was no material impact on the consolidated financial statements.

In May 2014, the FASB issued a new comprehensive set of revenue recognition principles (ASU No. 2014-09, Revenue from Contracts with Customers) that supersedes most existing U.S. GAAP revenue recognition guidance (including ASC 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts). The new standard will become effective for annual reporting periods beginning after December 15, 2017. We will adopt the standard on January 1, 2018, will apply it retrospectively to all periods presented and will elect the practical expedient for contract modifications.

The new Standard will lead to a change in timing and presentation, but will have no impact to cash or economics.

The new standard requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time based on when control of goods and services transfer to a customer. The effect of applying the new guidance to our existing book of contracts will not have a significant impact on earnings since the majority of revenues is generated by the sale of cars or spare parts. Revenues generated for services rendered are usually completed within a short period (e.g. a few days) leading to no work in progress as of the end of the financial year.

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SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Revenue for sales of vehicles and service parts is recognized when persuasive evidence of an agreement exists, the risks and rewards of ownership have transferred to the customer, delivery has occurred or services have been rendered, the price of the transaction is fixed and determinable and collectability is reasonably assured. For vehicles, this is generally when the vehicle is released to the customer. Revenues are recognized net of discounts, including but not limited to, cash sales incentives, customer bonuses and rebates granted. Shipping and handling costs are recorded as cost of sales in the period incurred. Advertising costs are expensed when incurred.

We use price discounts to adjust vehicle pricing in response to a number of market and product factors, including: pricing actions and incentives offered by competitors, economic conditions, sales incentive programs received, the intensity of market competition, consumer demand for the product.

We offer customers the opportunity to purchase separately-priced extended warranty and service contracts. In addition, from time to time we sell certain vehicles with a service contract included in the sales price of the vehicle. The service contract and vehicle qualified as separate units of accounting in accordance with the accounting guidance for multiple-element arrangements. The revenue from these contracts, as well as our separately-priced extended warranty and service contracts, is recorded as a component of Deferred Revenue in the accompanying consolidated financial statements at the inception of the contract and is recognized as revenue over the contract period in proportion to the costs expected to be incurred based on historical information. A loss on these contracts is recognized if the sum of the expected costs for services under the contract exceeds unearned revenue.

We evaluated the impact of the new revenue recognition standard (ASU No. 2014-09, Revenue from Contracts with Customers) on our consolidated financial statements. We anticipate this standard will have no material impact on our consolidated financial statements, except additional disclosure requirements. (refer to page 13)

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COST OF SALES AND SELLING, ADMINISTRATIVE AND OTHER EXPENSES

Our income statement classifies our Automotive total costs and expenses into two categories: (i) cost of sales, and (ii) selling, administrative, and other expenses. We include within cost of sales those costs related to the purchase and distribution of our vehicles, parts, and services. Specifically, we include in cost of sales each of the following: purchase costs of new and used vehicles; service parts; freight costs; warranty; labor and other costs related to the purchase of our products and services rendered; depreciation and amortization and other associated costs. We include within selling, administrative, and other expenses labor and other costs not directly related to the purchase of our products and services rendered, including such expenses as advertising and sales promotion costs. Advertising, sales promotion and other product-related costs are also expensed as incurred.

We record the revenues of incentive programs offered by the manufacturer as a reduction to cost of sales at the time of the purchase from the manufacturer.

We establish reserves for product warranty obligations, including the estimated cost of these services, when the related sale is recognized. The estimated future costs of these actions are principally based on assumptions, as well as historical claims experience for our vehicles.

Costs associated with these actions are recorded in Cost of Sales.

RESTRUCTURING ACTIONS —EXIT AND DISPOSAL ACTIVITIES

We account for employee separation, exit and disposal activities in accordance with the relevant accounting guidance on these topics. Actions associated with restructuring plans include, but are not limited to, workforce reductions, capacity adjustments.

Costs associated with these actions may include, but are not limited to, employee severance, accelerated post-employment benefits, relocations, contract terminations, and legal claims.

Post-employment benefits accrued for workforce reductions related to restructuring activities are recorded in the period when it is probable that employees will be terminated.

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Other associated costs such as relocations, contract terminations are recorded when the costs are incurred. Costs associated with actions that will exceed one year are reflected on a discounted basis.

INCOME TAXES

MVC Automotive Austria GmbH, Vienna, is a group parent for corporate income tax purposes for MVC Immobilien GmbH, Vienna, and MVC Motors GmbH, Vienna. Under group taxation provisions in Austria, the profits and losses of group members are offset, reducing the basis for calculating corporate income tax. Therefore MVC Automotive Austria GmbH is the only entity recognized for corporate income tax purposes for group taxation.

The holding company MVC Automotive Group GmbH, Vienna, and the subsidiary Auto Motol Beni A.S. (Prague), are classified as separate entities for income tax purposes. Their income or loss is included in the income tax returns of their respective countries.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for net operating loss and tax credit carryforwards and the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the rates is recognized in income in the period that includes the enactment date. Valuation allowances on deferred tax assets are recognized if it is more likely than not that the benefit from the deferred tax asset will not be realized. In addition, current income taxes include adjustments to accruals or uncertain tax positions and related interest expense or income.

CASH AND CASH EQUIVALENTS

Highly liquid investments with original maturities of three months or less at the date of purchase are classified as cash equivalents.

ACCOUNTS RECEIVABLE

Accounts receivable are stated at nominal value less an allowance for doubtful accounts.

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A significant percentage of our accounts receivable is derived from sales of new and used vehicles to customers. In order to monitor potential credit losses, we perform ongoing credit evaluations of our customers’ financial conditions.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

We maintain an allowance for doubtful accounts as a contra asset to our accounts receivable balances. A provision for probable losses is charged against selling, administrative and other expenses to maintain the allowance for doubtful accounts at an amount management believes represents the best estimate of potential losses related to specifically identified receivables, as well as probable losses inherent in all other receivables as of the balance sheet date. Management periodically and systematically evaluates the adequacy of the allowance for doubtful accounts by reviewing historical loss experience, delinquency statistics and other factors in the economy that are expected to have an impact on the losses incurred, in addition to specifically identified probable losses. As of December 31, 2017 the allowance for doubtful debts amounts of EUR 47 thsd., as of December 31, 2016 of EUR 49 thsd.). As of December 31, 2017 and 2016 the amount of past due receivables without allowance recorded is immaterial.

INVENTORIES

Inventories are stated at acquisition cost, subject to the lower of cost or net realizable value. Cost includes net prices paid for vehicles and spare parts purchased, charges for freight and overhead related to the purchase of inventories. MVC regularly reviews inventory quantities on hand, stock turn ratios, future purchase commitments with our suppliers, and the estimated utility of our inventory. These reviews include analysis of demand forecasts, current sales levels, pricing strategy, and cost trends. Used cars shall be reviewed monthly based on Eurotax-valuation. If our review indicates a reduction in utility below carrying value, we reduce our inventory to a new cost basis through a charge to cost of sales. The determination of market value and the estimated volume of demand used in the lower of cost or market analysis require significant judgment. The costing methodology for the cost of inventory within the MVC Automotive Group is at average cost.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is generally provided using the straight-line method over the estimated useful lives of the assets.

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Capital leased assets are recorded at the present value of future lease obligations. Depreciation is calculated using the straight-line method over the estimated useful lives. Leasehold improvements are depreciated over the lesser of the estimated useful life of the leasehold improvement or the term of the underlying lease. Maintenance is expensed during the financial period in which they incurred.

Estimated useful lives of the assets are as follows:

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets held and used (such as property, plant and equipment) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of an asset or asset group to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or group of assets. If the carrying amount of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset or group of assets exceeds the fair value of the asset or group of assets.

OTHER INTANGIBLE ASSETS

Intangible assets that have a definite useful life are generally amortized over their respective estimated useful lives, on a straight-line basis. The estimated useful lives of the intangible assets are reviewed by management each reporting period and whenever changes in circumstances indicate that the carrying value of the assets may not be recoverable.

FOREIGN CURRENCY

The functional currency of the companies included in these consolidated financial statements is the respective entity’s local currency. The assets and liabilities of our foreign operations, where the functional currency is the respective entity’s local currency, are translated into EUR using the exchange rate in effect as of the balance sheet date. Income statement amounts are translated at the average exchange rate prevailing during the

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period. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income (AOCI).

Foreign currency exchange gains and losses arising from fluctuations in currency exchange rates on transactions and the effects of remeasurement of monetary balances denominated in currencies other than the functional currency are recorded in earnings as incurred and are included in other income.

FAIR VALUE MEASUREMENTS

The measurement of fair value is based on a three-tier hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the balance sheet date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 — Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the balance sheet date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument and can be derived from observable data.

Level 3 — Pricing inputs include significant inputs that are generally not observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy.

At each balance sheet date, we perform an analysis of all instruments potentially subject to fair value measurement and include in Level 3 all of those whose fair value is based on significant unobservable inputs.

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As of December 31, 2017 and 2016 MVC Automotive Group’s financial instruments measured at fair value primarily consist of Level 1 financial instruments such as cash and cash equivalents.

We measure debt at fair value for purposes of disclosure (see Note 10) using quoted prices from similar public debt with approximately the same remaining maturities, where possible. Where quoted prices are not available, we estimate fair value using discounted cash flows and market-based expectations for interest rates, credit risk, and the contractual terms of the debt instruments. For short-term debt with an original maturity date of one year or less, we assume that book value is a reasonable approximation of the debt’s fair value. The fair value of debt is categorized within Level 2 of the hierarchy.

NOTE          3                                        ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of AOCI as of December 31, 2017, 2016 and 2015 were as follows (in EUR thsd):

Actuarial losses reclassified from other comprehensive loss to operating loss were EUR 44 thsd. in the year ended December 31, 2017,  EUR 29 thsd. in the year ended December 31, 2016 and EUR 40 thsd. in the year ended December 31, 2015.

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NOTE          4                                        INVENTORIES

The components of inventories as of December 31, 2017 and 2016 were as follows (in EUR thsd):

As of December 31, 2017 an inventory write-downs amounting to EUR 475 thsd. were recorded (December 31, 2016: EUR 586 thsd.).

NOTE          5                                        PROPERTY, PLANT AND EQUIPMENT, NET

The components of property, plant and equipment as of December 31, 2017 and 2016 were as follows (in EUR thsd):

In 2017 display cars of the Czech subsidiary amounting to a book value of EUR 807 thsd. as of December 31, 2017, were reclassified to inventories according to the group accounting principles.

At the beginning of 2017 an exit scenario was agreed between MVC Motors GmbH and the owner of Triester Strasse 207-209, Vienna, Austria. The operative business was merged in September 2016 into the location Brunn am Gebirge, Austria. This fact led to an impairment of tangible assets of EUR 658 thsd. 2016 and a contract penalty of EUR

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1.1 million. These expenses were covered by an additional financing of MVC Capital Inc. (refer to Note 2).

On December 22, 2015 Somotra N.V. entered into an agreement with Coventry Motors S.A. to sell the majority of its assets, including the premises in Waterloo, Drogenbos.  The closing of the deal took place in April 2016. The proceeds from the disposal of these assets amount to EUR 7.0 million. The related book value amounts to EUR 4.7 million as of the transaction date, resulting in income from the disposal of property, plant and equipment of EUR 2.2 million (refer to Note 2).

In January 2016 the Czech subsidiary sold the premises in Strakonicka with a book value of EUR 330 thsd. and proceeds from the disposal of assets of EUR 630 thsd., resulting in income from the disposal of property, plant and equipment of EUR 300 thsd.

Depreciation of property, plant and equipment was EUR 1,379 thsd. in the year ended December 31, 2017 (2016: EUR 2,270 thsd. and 2015: EUR 1,586 thsd.).

NOTE          6                                        OTHER INTANGIBLE ASSETS, NET

The components of other intangible assets, net as of December 31, 2017 and 2016 were as follows (in EUR thsd):

Amortization for intangible assets was EUR 46 thsd. in the year ended December 31, 2017 (2016: EUR 42 thsd. and 2015: EUR 205 thsd.).

The expected amortization for intangible assets for the next five years is immaterial.

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NOTE          7                                        TRADE ACCOUNTS RECEIVABLE, NET

The components of trade accounts receivable, net as of December 31, 2017 and 2016 were as follows (in EUR thsd):

NOTE          8                                        PREPAID EXPENSES AND OTHER ASSETS

The components of prepaid expenses and other assets as of December 31, 2017 and 2016 were as follows (in EUR thsd):

NOTE          9                                        ACCRUED EXPENSES AND OTHER SHORT-TERM LIABILITIES

The components of accrued expenses and other short-term liabilities as of December 31, 2017 and 2016 were as follows (in EUR thsd):

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NOTE   10           FINANCIAL LIABILITIES

The components of financial liabilities as of December 31, 2017 and 2016 were as follows (in EUR thsd):

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MVC Automotive Group and its subsidiaries borrow under separate short-term lines of credit with banks in the countries where they are located. The lines contain general provisions concerning renewal and continuance at the option of the banks.

Short-term lines of credit including lines for car financing amount to EUR 12.7 million as of December 31, 2017 (December 31, 2016: EUR 11.2 million). The outstanding (drawn)

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amount as of December 31, 2017 was EUR 7.9 million (December 31, 2016: EUR 6.8 million). The undrawn amount of credit facilities amounts to EUR 4.8 million as of December 31, 2017 (December 31, 2016: EUR 4.4 million).

For a credit facility of EUR 6.5 million (December 31, 2016: EUR 6.5 million) due in July 2018 with Erste Bank der oesterreichischen Sparkassen AG, Vienna, Austria, of which a net amount of EUR 4.5 million  was drawn as of December 31, 2017 (December 31, 2016: EUR 4.7 million), the financing bank obtained a letter of comfort from MVC Capital Inc.

As of December 31, 2017 long-term loans of EUR 9.5 million (December 31, 2016: EUR 10.0 million) are secured by a mortgage on real estate.

Thereof EUR 7.2 million (December 31, 2016: EUR 7.6 million) are related to a loan of MVC Immobilien GmbH, Vienna, with Bawag PSK AG, Vienna, Austria, secured by mortgage of real estate valid until September 30, 2019.