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Firsthand Technology(SVVC) - 2023 Q3 - Quarterly Report
SVVCFirsthand Technology(SVVC)2023-11-14 18:15

Financial Performance - As of September 30, 2023, total assets decreased to 8,138,811from8,138,811 from 40,203,857 as of December 31, 2022, representing a decline of approximately 79.8%[9] - Total liabilities decreased to 7,458,115from7,458,115 from 9,594,266, a reduction of about 22.2%[9] - Net assets significantly decreased to 680,696from680,696 from 30,609,591, indicating a drop of approximately 97.8%[9] - For the three months ended September 30, 2023, net investment income was 1,865,387comparedtoalossof1,865,387 compared to a loss of 8,843,969 for the same period in 2022[12] - The net decrease in net assets resulting from operations for the nine months ended September 30, 2023, was 29,928,895,comparedto29,928,895, compared to 56,319,999 for the same period in 2022[12] - Total investment income for the three months ended September 30, 2023, was (234,126),asignificantdeclinefrom(234,126), a significant decline from (8,300,245) in the same period last year[12] - The net realized and unrealized loss on investments for the nine months ended September 30, 2023, was (31,289,090),comparedto(31,289,090), compared to (44,186,398) for the same period in 2022[12] - The net asset value per share dropped to 0.10from0.10 from 4.44, reflecting a decrease of approximately 97.8%[9] - The company reported a net cash used in operating activities of (94)forthethreemonthsendedSeptember30,2023,comparedtoanetcashprovidedof(94) for the three months ended September 30, 2023, compared to a net cash provided of 3,198 for the same period in 2022[15] - Net asset value at the beginning of the period was 4.44,downfrom4.44, down from 13.75 in the previous year, representing a decline of 67.7%[18] - Total return based on net asset value for the nine months ended September 30, 2023, was (97.75)%, significantly lower than (67.71)% in the previous year[18] Investment Strategy and Portfolio - The company has made significant investments in companies like Hera Systems, Inc., with a convertible note valued at 5,359,791,indicatingafocusonaerospaceandmedicaldevicessectors[22]−ThecompanyholdsconvertiblenotesfromIntraopMedicalCorp.maturinginDecember2023withaninterestrateof155,359,791, indicating a focus on aerospace and medical devices sectors[22] - The company holds convertible notes from Intraop Medical Corp. maturing in December 2023 with an interest rate of 15%, totaling 15,000,000 across multiple issuances[24] - The total value of investments in Intraop Medical Corp. is reported at 168,647,withacostbasisof168,647, with a cost basis of 168,647[25] - The company has a significant investment in Revasum, Inc., with a value of 39,774,889andacostbasisof39,774,889 and a cost basis of 9,268,219, reflecting a substantial gain[26] - The investment in Kyma, Inc. represents 14.7% of the portfolio, with a convertible note maturing in March 2024 valued at 100,000[25]−ThecompanyhasinvestedinUCTCoatings,Inc.withacommonstockvalueof100,000[25] - The company has invested in UCT Coatings, Inc. with a common stock value of 1,500,000 and a cost basis of 662,235,indicatingapotentialforgrowth[26]−ThepreferredstockinvestmentinLynceanTechnologies,Inc.showsacostbasisof662,235, indicating a potential for growth[26] - The preferred stock investment in Lyncean Technologies, Inc. shows a cost basis of 1,000,000 but currently holds no value[26] - The company has a term note investment maturing in December 2023 with an interest rate of 8%, totaling 5,000,000acrosstwoissuances[25]−ThetotalvalueoftheportfolioasofSeptember30,2023,isnotexplicitlystatedbutincludesmultipleinvestmentsacrossvarioussectors[24][25][26]−Thecompanyisfocusedonadvancedmaterialsandsemiconductorequipmentsectors,indicatingastrategicemphasisonhigh−growthindustries[26]FinancialPositionandLiabilities−Totalinvestmentsamountto5,000,000 across two issuances[25] - The total value of the portfolio as of September 30, 2023, is not explicitly stated but includes multiple investments across various sectors[24][25][26] - The company is focused on advanced materials and semiconductor equipment sectors, indicating a strategic emphasis on high-growth industries[26] Financial Position and Liabilities - Total investments amount to 134,199,707, representing 1191.1% of net assets[29] - Net assets stand at 680,696,withliabilitiesexceedingotherassetsby1091.1680,696, with liabilities exceeding other assets by 1091.1%[29] - The company holds 4,569,453 in restricted securities, accounting for 671.3% of net assets[30] - The company’s total liabilities are reported at (7,427,021)[29]−Thecompany’sliabilitiesexceededotherassetsby31.1(7,427,021)[29] - The company’s liabilities exceeded other assets by 31.1%, resulting in net assets of 30,609,591[44] Management and Fees - The base management fee is set at an annual rate of 2.00% of gross assets, payable quarterly[76] - A fee waiver agreement has been established, waiving 2.5millionofaccruedbutunpaidbasemanagementfeespriortoSeptember30,2023[78]−Theincentivefeeis202.5 million of accrued but unpaid base management fees prior to September 30, 2023[78] - The incentive fee is 20% of realized capital gains, with no adjustments for the three months ended September 30, 2023[77] - A waiver of management fees of 2,500,000 was approved by the Board for the quarter ended September 30, 2023[168] Market and Economic Conditions - The company faces significant risks from market disruptions and geopolitical events, including the ongoing impacts of COVID-19 and the Russia-Ukraine conflict[134] - The overall performance of the fund's investments reflects a challenging market environment, with several positions showing significant unrealized losses[37] Valuation and Fair Value - The company relies primarily on the market approach for fair value measurement, considering income and asset-based approaches as necessary[87] - The valuation of privately-held companies is subject to significant estimates and judgments, which may lead to volatility in reported values[72] - The total fair value of the Company's investments as of September 30, 2023, includes 305,539inLevel1assets,305,539 in Level 1 assets, 3,132,725 in Level 2 assets, and 4,669,453inLevel3assets[93]−Thecompanyhasestablishedafullvaluationallowanceonitsnetdeferredtaxassets,indicatingalowlikelihoodofrealizingtheseassets[111]ShareholderActionsandCorporateGovernance−ThecompanyplanstoseekstockholderapprovaltowithdrawitsBDCelectionandpursueliquidation,asannouncedonOctober13,2023[137]−Thecompany’sshareswerelistedontheNASDAQGlobalMarketunderthesymbol"SVVC"butintendedtovoluntarilydelistonOctober6,2023[47]−AsofSeptember30,2023,eligibledirectorshavedeferred504,669,453 in Level 3 assets[93] - The company has established a full valuation allowance on its net deferred tax assets, indicating a low likelihood of realizing these assets[111] Shareholder Actions and Corporate Governance - The company plans to seek stockholder approval to withdraw its BDC election and pursue liquidation, as announced on October 13, 2023[137] - The company’s shares were listed on the NASDAQ Global Market under the symbol "SVVC" but intended to voluntarily delist on October 6, 2023[47] - As of September 30, 2023, eligible directors have deferred 50% of their compensation, with payments due at the earlier of January 1, 2025, or their separation from the Fund[68] Investment Performance and Losses - The company recognized net realized losses of approximately (7,864,982) from the sale of investments during the nine months ended September 30, 2023[176] - For the nine months ended September 30, 2023, the net unrealized depreciation on total investments increased by 23,424,108,primarilyduetodecreasesinvaluationsofWrightspeed,HeraSystems,andIntraOpMedicalholdings[177]−Thecompanyreportedagrossunrealizeddepreciationof23,424,108, primarily due to decreases in valuations of Wrightspeed, Hera Systems, and IntraOp Medical holdings [177] - The company reported a gross unrealized depreciation of (126,091,990) as of September 30, 2023[106]