Firsthand Technology(SVVC) - 2025 Q3 - Quarterly Report

Investment Income - Investment income for the three months ended September 30, 2025, was $2,314, a significant decrease from $35,792 for the same period in 2024, primarily due to the liquidation of Hera Systems convertible notes in 2024 [141][142]. - For the nine months ended September 30, 2025, investment income rose to $179,140 from $97,793 in the same period of 2024, attributed to increased accrued interest on current notes [153][154]. Operating Expenses - Operating expenses increased to approximately $432,943 for the three months ended September 30, 2025, compared to $391,753 for the same period in 2024, mainly driven by higher professional fees [143][144]. - Operating expenses for the nine months ended September 30, 2025, totaled approximately $786,161, a decrease from $(2,182,907) in the same period of 2024, primarily due to a management fee waiver in 2024 [155][156]. Net Investment Loss - The net investment loss before taxes for the three months ended September 30, 2025, was $(430,629), compared to $(355,961) for the same period in 2024, reflecting increased professional fees and the prior year's management fee waiver [145][146]. - The net investment loss before taxes for the nine months ended September 30, 2025, was $(607,021), contrasting with a net investment income of $2,280,700 for the same period in 2024, largely due to the management fee waiver [157]. Net Realized and Unrealized Losses - For the nine months ended September 30, 2025, net realized losses amounted to $(24,169,015), while the net change in unrealized depreciation on investments was $24,011,904 [159][160]. - The company recognized net realized losses of approximately $(11,686,668) from the sale of investments during the nine months ended September 30, 2024 [161]. Fair Value and Portfolio Composition - As of September 30, 2025, the fair value of the investment portfolio was approximately $0.3 million, down from $1.0 million at December 31, 2024 [138]. - The portfolio composition as of September 30, 2025, included 57.8% in Advanced Materials and 19.9% in Exchange-Traded/Money Market Funds, compared to 24.5% and 70.3% respectively at December 31, 2024 [139]. Changes in Net Assets - The net decrease in net assets resulting from operations for the three months ended September 30, 2025, was $450,712, with a basic and fully diluted net change in net assets per share of $(0.07) [151][152]. - For the nine months ended September 30, 2024, the net increase in net assets resulting from operations was $283,776, with a basic and fully diluted net change in net assets per share of $0.04 [163]. - For the nine months ended September 30, 2025, the net decrease in net assets resulting from operations totaled $764,132, resulting in a basic and fully diluted net change in net assets per share of $(0.11) [162]. Distributions and Obligations - The board of directors will determine the timing and amount of distributions, with no minimum level of distributions required [165]. - The company is required to distribute substantially all net realized gains to stockholders on an annual basis, holding proceeds of liquidated investments in cash pending distribution [186]. - The company does not have any contractual obligations or off-balance sheet arrangements that require disclosure [166][167]. Valuation and Market Conditions - The valuation of portfolio investments is based on market prices or fair value determined in good faith by the board of directors, with significant reliance on independent valuation firms for private securities [169][179]. - Inflation has not significantly affected the company's results of operations, although portfolio companies may experience its impacts [175]. Investment Risks - Investments in small privately-held companies are considered speculative and may be subject to legal or contractual restrictions on resale, affecting liquidity and marketability [183]. - As of September 30, 2025, a portion of the company's assets was invested in cash and/or cash equivalents, which are expected to earn low yields [184].