[X]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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|
For the fiscal year ended December 31, 2011
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or
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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MARYLAND
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77-6100553
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(State or Other Jurisdiction
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(I.R.S. Employer
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of Incorporation or Organization)
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Identification No.)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $.001 par value
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Nasdaq Global Market
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer [X]
(Do not check if a smaller reporting company)
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Smaller reporting company
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PART I.
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||
Item 1.
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Business
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4
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Item 1A.
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Risk Factors
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18
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Item 2.
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Properties
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25
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Item 3.
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Legal Proceedings
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25
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Item 4
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Mine Safety Disclosures
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25
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PART II.
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||
Item 5.
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Market for Registrant’s Common Equity, Related Matters, and Issuer Purchases of Equity Securities
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25
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Item 6.
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Selected Financial Data
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27
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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29
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Item 8
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Financial Statements and Supplemental Data
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35
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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50
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Item 9A.
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Controls and Procedures
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50
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Item 9B.
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Other Information
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51
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PART III.
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||
Item 10.
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Directors, Executive Officers, and Corporate Governance
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51
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Item 11.
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Executive Compensation
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51
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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51
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Item 13.
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Certain Relationships and Related Transactions and Director Independence
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51
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Item 14.
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Principal Accountant Fees and Services
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51
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PART IV.
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||
Item 15.
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Exhibits and Financial Statements Schedules
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52
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•
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our future operating results,
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•
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our business prospects and the prospects of our prospective portfolio companies,
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•
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the impact of investments that we expect to make,
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•
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our contractual arrangements and relationships with third parties,
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•
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the dependence of our future success on the general economy and its impact on the industries in which we invest,
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•
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the ability of our prospective portfolio companies to achieve their objectives,
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•
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our expected financings and investments,
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•
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the adequacy of our cash resources and working capital, and
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•
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the timing of cash flows, if any, from the operations of our prospective portfolio companies.
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•
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Venture capital investments, whether in corporate, partnership, or other form, including development-stage or start-up entities;
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•
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Equity, equity-related securities (including warrants), and debt with equity features from either private or public issuers;
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•
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Debt obligations of all types having varying terms with respect to security or credit support, subordination, purchase price, interest payments, and maturity;
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•
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Foreign securities;
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•
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Intellectual property or patents or research and development in technology or product development that may lead to patents or other marketable technology; and
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•
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Miscellaneous investments.
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INVESTMENT
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BUSINESS DESCRIPTION
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FAIR VALUE
1
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Facebook, Inc.
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Social Networking
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$1,550,000
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INNOViON
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Ion Implant Foundry
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$173,396
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Intevac, Inc.
2
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Manufacturing Equipment
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$4,034,154
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IP Unity
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Mobile Communications Software
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$298
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Silicon Genesis Corp.
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Intellectual Property
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$2,837,121
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Skyline Solar, Inc.
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Concentrated Photovoltaic Systems
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$868,016
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SoloPower, Inc.
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Solar Photovoltaic Modules
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$3,094,519
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UCT Coatings, Inc.
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Advanced Materials
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$0
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Yelp, Inc.
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Social Networking
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$2,925,000
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1
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Fair value for our private company holdings was determined in good faith by our board of directors on December 31, 2011. For public companies, the figure represents the market value of our securities on December 31, 2011.
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2
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Public company
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•
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Recruiting management,
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•
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Formulating operating strategies,
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•
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Formulating intellectual property strategies,
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•
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Assisting in financial planning,
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•
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Providing management in the initial start-up stages, and
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•
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Establishing corporate goals.
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•
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Funding research and development in the development of a technology,
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•
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Obtaining licensing rights to intellectual property or patents,
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•
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Acquiring intellectual property or patents, or
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•
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Forming and funding companies or joint ventures to commercialize further intellectual property.
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•
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outstanding technology,
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•
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barriers to entry (
i.e.
, patents and other intellectual property rights),
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•
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experienced management team,
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•
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established financial sponsors that have a history of creating value with portfolio companies,
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•
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strong and competitive industry position, and
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•
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viable exit strategy.
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•
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Computer Hardware
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•
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Computer Software
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•
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Social Networking
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•
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Computer Peripherals
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•
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Solar Photovoltaics
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•
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Energy Efficiency
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•
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Solid-state Lighting
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•
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Water Purification
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•
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Wind-Generated Electricity
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•
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Fuel Cells
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•
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Biofuels
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•
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Electronic Components
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•
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Semiconductors
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•
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Telecommunications
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•
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Advanced Materials
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•
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review of historical and prospective financial information;
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•
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review of technology, product, and business plan;
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•
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on-site visits;
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•
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interviews with management, employees, customers, and vendors of the potential portfolio company;
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•
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background checks; and
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•
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research relating to the company’s management, industry, markets, products and services, and competitors.
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|
•
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Assessment of success in adhering to portfolio company’s technology development, business plan and compliance with covenants;
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•
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Periodic and regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor, to discuss financial position, requirements, and accomplishments;
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•
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Comparisons to other portfolio companies in the industry, if any;
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•
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Attendance at and participation in board meetings; and
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•
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Review of monthly and quarterly financial statements and financial projections for portfolio companies.
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•
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determine the composition of our portfolio, the nature and timing of the changes to our portfolio, and the manner of implementing such changes;
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•
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identify, evaluate and negotiate the structure of the investments we make (including performing due diligence on our prospective portfolio companies); and
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•
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close and monitor the investments we make.
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Incentive fee
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=
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20%
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x
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(
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Cumulative
realized
gains
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-
|
Cumulative
realized
losses
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-
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Unrealized depreciation
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)
|
-
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Previously paid incentive fees
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Year 1 incentive fee
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= 20% x (0)
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= 0
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= no incentive fee
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Year 2 incentive fee
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= 20% x ($50,000 - $20,000)
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= 20% x $30,000
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= $6,000
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•
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increase or maintain in whole or in part our equity ownership percentage; or
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•
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exercise warrants, options, or convertible securities that were acquired in the original or subsequent financing.
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2011 Quarter Ending
(1)
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Low
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High
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June 30
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$12.50
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$27.99
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September 30
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$14.30
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$19.00
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December 31
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$14.25
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$16.60
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(1)
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We began operations on April 18, 2011.
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SVVC
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$10,000
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$7,364
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$6,294
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$5,628
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$5,787
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$5,740
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$5,424
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$5,561
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$5,302
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$5,305
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S&P 500
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$10,000
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$10,336
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$10,219
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$10,049
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$9,844
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$9,310
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$8,655
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$9,601
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$9,580
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$9,678
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NASDAQ
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$10,000
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$10,396
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$10,271
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$10,054
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$9,996
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$9,368
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$8,777
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$9,760
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$9,547
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$9,498
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ASSETS
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||||
Investment securities:
|
||||
Unaffiliated issuers at acquisition cost
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$ | 17,041,575 | ||
Affiliated issuers at acquisition cost
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6,544,002 | |||
Total acquisition cost
|
$ | 23,585,577 | ||
Unaffiliated issuers at market value
|
$ | 12,645,383 | ||
Affiliated issuers at market value
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2,837,121 | |||
Total market value (Note 2 and 6)
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15,482,504 | |||
Cash*
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63,792,414 | |||
Segregated cash
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4,640,000 | |||
Receivable from interest
|
346,085 | |||
Other assets**
|
55,356 | |||
Total Assets
|
84,316,359 | |||
LIABILITIES
|
||||
Payable to affiliates (Note 4)
|
432,906 | |||
Consulting fee payable
|
140,441 | |||
Accrued expenses and other payables
|
115,537 | |||
Total liabilities
|
688,884 | |||
NET ASSETS
|
$ | 83,627,475 | ||
Net assets consist of:
|
||||
Common Stock, par value $0.001 per share, 100,000,000 shares authorized
|
$ | 3,496 | ||
Paid-in-capital
|
92,983,421 | |||
Accumulated net realized losses from security transactions and purchased options
|
(1,256,369 | ) | ||
Net unrealized depreciation on investments and warrants transactions
|
(8,103,073 | ) | ||
NET ASSETS
|
$ | 83,627,475 | ||
Shares of Common Sock outstanding
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3,496,480 | |||
Net asset value per share (Note 2)
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$ | 23.92 |
*
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Cash composed primarily of the Fidelity Institutional Money Market Treasury Portfolio which invests primarily in U.S. Treasury securities.
|
**
|
Other assets consist of $15,125 prepaid insurance payable; and $40,231 of contingent receivable from the sale of Solaicx to MEMC for an initial cash payment plus possible future cash payments if certain criteria are met.
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INVESTMENT INCOME
|
||||
Unaffiliated interest
|
27,860 | |||
Affiliated interest
|
278,687 | |||
TOTAL INVESTMENT INCOME
|
306,547 | |||
EXPENSES
|
||||
Investment advisory fees (Note 4)
|
1,280,623 | |||
Administration and accounting fees
|
62,340 | |||
Custody fees
|
8,793 | |||
Transfer agent fees
|
24,414 | |||
Registration and filing fees
|
11,250 | |||
Professional fees
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240,371 | |||
Printing fees
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90,221 | |||
Trustees fees
|
23,700 | |||
Other fees
|
12,525 | |||
TOTAL EXPENSES
|
1,754,237 | |||
NET INVESTMENT LOSS
|
(1,447,690 | ) | ||
Net Realized and Unrealized Loss on Investments:
|
||||
Net realized gains from security transactions
|
||||
Unaffiliated
|
240,026 | |||
Net realized losses from purchased option transactions(2)
|
(1,496,395 | ) | ||
Net change in unrealized depreciation on investments
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(7,467,027 | ) | ||
Net change in unrealized depreciation on warrants transactions(2)
|
(636,046 | ) | ||
Net Realized and Unrealized Loss on Investments
|
(9,359,442 | ) | ||
Net Decrease In Net Assets Resulting From Operations
|
$ | (10,807,132 | ) | |
Net Decrease In Net Assets Per Share Resulting from Operations
|
$ | (3.09 | ) |
(1)
|
For the period April 18, 2011 (inception) through December 31, 2011.
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(2)
|
Primary risk exposure is equity contracts.
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Year Ended December 31, 2011
|
|
Gross unrealized appreciation on portfolio investments
|
$258,267
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Gross unrealized depreciation on portfolio investments
|
$(8,361,340)
|
Net increase in unrealized depreciation on portfolio investments
|
$(8,103,073)
|
Federal income tax cost, investments
|
$23,585,577
|
•
|
On May 6, 2011, we invested $500,000 in SoloPower, Inc. in the form of an additional equity interest;
|
•
|
On October 13, 2011, we invested $500,000 in Silicon Genesis Corporation in the form of a convertible note. The note has an annual interest rate of 20% and a maturity date of October 13, 2012, and came with a warrant to purchase 5,000,000 shares of common stock;
|
•
|
On October 13, 2011 we invested $1,597,500 in Facebook, Inc. in the form of equity interest;
|
•
|
On November 3, 2011, we invested $1,000,000 in Skyline Solar, Inc. in the form of equity interest; and
|
•
|
On December 6, 2011, we invested $2,745,000 in Yelp, Inc. in the form of equity interest.
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ASSETS
|
||||
Investment securities:
|
||||
Unaffiliated issuers at acquisition cost
|
$ | 17,041,575 | ||
Affiliated issuers at acquisition cost
|
6,544,002 | |||
Total acquisition cost
|
$ | 23,585,577 | ||
Unaffiliated issuers at market value
|
$ | 12,645,383 | ||
Affiliated issuers at market value
|
2,837,121 | |||
Total market value (Note 2 and 6)
|
15,482,504 | |||
Cash*
|
63,792,414 | |||
Segregated cash
|
4,640,000 | |||
Receivable from interest
|
346,085 | |||
Other assets**
|
55,356 | |||
Total Assets
|
84,316,359 | |||
LIABILITIES
|
||||
Payable to affiliates (Note 4)
|
432,906 | |||
Consulting fee payable
|
140,441 | |||
Accrued expenses and other payables
|
115,537 | |||
Total liabilities
|
688,884 | |||
NET ASSETS
|
$ | 83,627,475 | ||
Net assets consist of:
|
||||
Common Stock, par value $0.001 per share, 100,000,000 shares authorized
|
$ | 3,496 | ||
Paid-in-capital
|
92,983,421 | |||
Accumulated net realized losses from security transactions and purchased options
|
(1,256,369 | ) | ||
Net unrealized depreciation on investments and warrants transactions
|
(8,103,073 | ) | ||
NET ASSETS
|
$ | 83,627,475 | ||
Shares of Common Sock outstanding
|
3,496,480 | |||
Net asset value per share (Note 2)
|
$ | 23.92 |
*
|
Cash composed primarily of the Fidelity Institutional Money Market Treasury Portfolio which invests primarily in U.S. Treasury securities.
|
**
|
Other assets consist of $15,125 prepaid insurance payable; and $40,231 of contingent receivable from the sale of Solaicx to MEMC for an initial cash payment plus possible future cash payments if certain criteria is met.
|
PORTFOLIO COMPANY
(% OF NET ASSETS)
|
INDUSTRY
|
TYPE OF INVESTMENT
|
SHARES/PAR VALUE ($)
|
VALUE
|
||||||
FACEBOOK (1.9%)
|
Social Networking
|
Common Stock, Class B *(1)
|
50,000 | $ | 1,550,000 | |||||
INNOVION CORP. (0.2%)
|
Services
|
Preferred Stock - Series A-1 *(1)
|
324,948 | 171,995 | ||||||
Preferred Stock - Series A-2 *(1)
|
168,804 | 1,401 | ||||||||
Common Stock *(1)
|
1 | 0 | ||||||||
173,396 | ||||||||||
INTEVAC, INC. (4.8%)
|
Other Electronics
|
Common Stock *
|
545,156 | 4,034,154 | ||||||
IP UNITY (0.0%)
|
Networking
|
Preferred Stock - Series C *(1)
|
1,932,222 | 271 | ||||||
Preferred Stock - Series E *(1)
|
193,042 | 27 | ||||||||
298 | ||||||||||
SILICON GENESIS CORPORATION (3.4%)
|
Intellectual Property
|
Preferred Stock -Series 1-C *(1)(2)
|
82,914 | 1,368 | ||||||
Preferred Stock -Series 1-D *(1)(2)
|
850,830 | 3,573 | ||||||||
Preferred Stock -Series 1-E *(1)(2)
|
5,704,480 | 645,747 | ||||||||
Preferred Stock -Series 1-F *(1)(2)
|
912,453 | 142,799 | ||||||||
Common Stock *(1)(2)
|
901,892 | 180 | ||||||||
Preferred Stock Warrants - Series 1-E *(1)(2)
|
94,339 | 0 | ||||||||
Preferred Stock Warrants - Series 1-E *(1)(2)
|
1,257,859 | 0 | ||||||||
Common Stock Warrants *(1)(2)
|
37,982 | 4 | ||||||||
Convertible Note (1)(2)
|
1,250,000 | 1,492,750 | ||||||||
Matures February 2012
|
||||||||||
Interest Rate 20%
|
||||||||||
Convertible Note (1)(2)
|
500,000 | 550,700 | ||||||||
Matures October 2012
|
||||||||||
Interest Rate 20%
|
||||||||||
Common Stock Warrant *(1)(2)
|
5,000,000 | 0 | ||||||||
2,837,121 | ||||||||||
SKYLINE SOLAR (1.0%)
|
Renewable Energy
|
Preferred Stock - Series C *(1)
|
793,651 | 868,016 |
PORTFOLIO COMPANY
(% OF NET ASSETS)
|
INDUSTRY
|
TYPE OF INVESTMENT
|
SHARES
|
VALUE
|
||||||
SOLOPOWER, INC. (3.7%)
|
Renewable Energy
|
Preferred Stock - Series A *(1)
|
400,000 | $ | 570,800 | |||||
Preferred Stock - Series B *(1)
|
100,205 | 151,510 | ||||||||
Preferred Stock - Series D *(1)
|
100,000 | 471,200 | ||||||||
Preferred Stock - Series E-1 *(1)
|
190,476 | 1,383,809 | ||||||||
Common Stock Warrants *(1)
|
400,000 | 517,200 | ||||||||
3,094,519 | ||||||||||
UCT COATINGS (0.0%)
|
Advanced Materials
|
Common Stock *(1)
|
1,500,000 | 0 | ||||||
Common Stock Warrants *(1)
|
136,986 | 0 | ||||||||
Common Stock Warrants *(1)
|
2,283 | 0 | ||||||||
Common Stock Warrants *(1)
|
33,001 | 0 | ||||||||
0 | ||||||||||
YELP, INC. (3.5%)
|
Social Networking
|
Common Stock *(1)
|
500,000 | 2,925,000 | ||||||
TOTAL INVESTMENTS
|
||||||||||
(Cost $23,585,577)
|
||||||||||
— 18.5%
|
15,482,504 | |||||||||
OTHER ASSETS IN EXCESS OF LIABILITIES — 81.5%
|
68,144,971 | |||||||||
NET ASSETS — 100.0%
|
$ | 83,627,475 |
*
|
Non-income producing security.
|
(1)
|
Restricted security. Fair Value is determined by or under the direction of the Company’s Board of Directors (See note 3).
|
(2)
|
Affiliated issuer.
|
INVESTMENT INCOME
|
||||
Unaffiliated interest
|
27,860 | |||
Affiliated interest
|
278,687 | |||
TOTAL INVESTMENT INCOME
|
306,547 | |||
EXPENSES
|
||||
Investment advisory fees (Note 4)
|
1,280,623 | |||
Administration and accounting fees
|
62,340 | |||
Custody fees
|
8,793 | |||
Transfer agent fees
|
24,414 | |||
Registration and filing fees
|
11,250 | |||
Professional fees
|
240,371 | |||
Printing fees
|
90,221 | |||
Trustees fees
|
23,700 | |||
Other fees
|
12,525 | |||
TOTAL EXPENSES
|
1,754,237 | |||
NET INVESTMENT LOSS
|
(1,447,690 | ) | ||
Net Realized and Unrealized Loss on Investments:
|
||||
Net realized gains from security transactions
|
||||
Unaffiliated
|
240,026 | |||
Net realized losses from purchased option transactions(2)
|
(1,496,395 | ) | ||
Net change in unrealized depreciation on investments
|
(7,467,027 | ) | ||
Net change in unrealized depreciation on warrants transactions(2)
|
(636,046 | ) | ||
Net Realized and Unrealized Loss on Investments
|
(9,359,442 | ) | ||
Net Decrease In Net Assets Resulting From Operations
|
$ | (10,807,132 | ) | |
Net Decrease In Net Assets Per Share Resulting from Operations
|
$ | (3.09 | ) |
(1)
|
For the period April 18, 2011 (inception) through December 31, 2011.
|
(2)
|
Primary risk exposure is equity contracts.
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||
Net decrease in Net Assets resulting from operations
|
$ | (10,807,132 | ) | |
Adjustments to reconcile net decrease in Net Assets derived from operations to net cash provided by operating activities:
|
||||
Purchases of investments
|
(9,149,780 | ) | ||
Proceeds from disposition of investments
|
3,517,093 | |||
Proceeds from litigation settlements
|
80,516 | |||
Increase in dividends, interest, and reclaims receivable
|
(346,085 | ) | ||
Increase in segregated cash
|
(4,640,000 | ) | ||
Increase in payable to affiliates
|
432,906 | |||
Net realized loss from investments
|
1,256,369 | |||
Increase in other assets
|
(55,356 | ) | ||
Increase in accrued expenses and other payables
|
255,978 | |||
Net unrealized appreciation/depreciation from investments
|
8,103,073 | |||
Net cash used in operating activities
|
(11,352,418 | ) | ||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||
Proceeds from shares sold (2)
|
75,144,832 | |||
Proceeds from shares redeemed
|
— | |||
Net cash provided by financing activities
|
75,144,832 | |||
Net change in cash
|
63,792,414 | |||
Cash - beginning of period
|
— | |||
Cash - end of period
|
$ | 63,792,414 |
(1)
|
For the period April 18, 2011 (inception) through December 31, 2011.
|
FROM OPERATIONS
|
||||
Net asset value at beginning of period
|
$ | 27.01 | ||
Income from investment operations:
|
||||
Net investment loss
|
(0.41 | ) | ||
Net realized and unrealized gains (losses) on investments
|
(2.68 | ) | ||
Total from investment operations
|
(3.09 | ) | ||
Net asset value at end of period
|
$ | 23.92 | ||
Market value at end of period
|
$ | 14.33 | ||
Total return
|
||||
Based on Net Asset Value
|
(11.44 | %)(A) | ||
Based on Stock Price
|
(46.95 | %)(A) | ||
Net assets at end of period (millions)
|
$ | 83.63 | ||
Ratio of total expenses to average net assets
|
2.76 | %(B) | ||
Ratio of net investment loss to average net assets
|
(2.28 | %)(B) | ||
Portfolio turnover rate
|
18 | %(A) |
(1)
|
For the period April 18, 2011 (inception) through December 31, 2011.
|
(A)
|
Not annualized
|
(B)
|
Annualized
|
•
|
Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the portfolio investment;
|
•
|
Preliminary valuation conclusions are then documented and discussed with the management of the Investment Adviser;
|
•
|
If the board of directors determines it is appropriate, an independent valuation firm engaged by our board of directors conducts independent appraisals and reviews management’s preliminary valuations and their own independent assessment;
|
•
|
The valuation committee of our board of directors reviews the preliminary valuation of the Investment Adviser and that of the independent valuation firm and responds and supplements the valuation recommendation of the independent valuation firm to reflect any comments; and
|
•
|
The board of directors discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of the Investment Adviser, the independent valuation firm, and the valuation committee.
|
|
-
|
Market Approach (M): The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. For example, the market approach often uses market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range each appropriate multiple falls requires the use of judgment in considering factors specific to the measurement (qualitative and quantitative).
|
|
|
-
|
Income Approach (I): The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present value amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. Those valuation techniques include present value techniques; option-pricing models, such as the Black-Scholes-Merton formula (a closed-form model) and a binomial model (a lattice model), which incorporate present value techniques; and the multi-period excess earnings method, which is used to measure the fair value of certain assets.
|
|
-
|
Asset-Based Approach (A): The asset-based approach examines the value of a company’s assets net of its liabilities to derive a value for the equity holders.
|
Level 1
-
|
Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the date of measurement.
|
|
Level 2
-
|
Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument in an inactive market, prices for similar instruments in an active or inactive market, interest rates, prepayment speeds, credit risks, yield curves, default rates, and similar data.
|
|
Level 3
-
|
Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Company’s own assumptions about the assumptions a market participant would use in valuing the asset or liability based on the best information available.
|
LEVEL 1
QUOTED PRICES
|
LEVEL 2
OTHER SIGNIFICANT
|
LEVEL 3
SIGNIFICANT
|
||||||||||
Common Stocks
|
||||||||||||
Intellectual Property
|
$ | — | $ | — | $ | 180 | ||||||
Other Electronics
|
4,034,154 | — | — | |||||||||
Social Networking
|
— | — | 4,475,000 | |||||||||
Total Common Stocks
|
4,034,154 | 4,475,180 | ||||||||||
Preferred Stocks
|
||||||||||||
Intellectual Property
|
$ | — | $ | — | $ | 793,487 | ||||||
Networking
|
— | — | 298 | |||||||||
Renewable Energy
|
— | — | 3,445,335 | |||||||||
Services
|
— | — | 173,396 | |||||||||
Total Preferred Stocks
|
— | — | 4,412,516 | |||||||||
Asset Derivatives *
|
||||||||||||
Equity Contracts
|
$ | — | $ | — | $ | 517,204 | ||||||
Total Asset Derivatives
|
— | — | 517,204 | |||||||||
Convertible Notes
|
||||||||||||
Intellectual Property
|
$ | — | $ | — | $ | 2,043,450 | ||||||
Total
|
$ | 4,034,154 | $ | — | $ | 11,448,350 |
*
|
Asset derivatives include warrants.
|
INVESTMENTS AT
FAIR VALUE USING
SIGNIFICANT
UNOBSERVABLE
INPUTS (LEVEL 3)
|
BALANCE
AS OF
4/18/11
(1)
|
NET
PURCHASES
(2)
|
NET
REALIZED
GAINS
(LOSSES)
(2)
|
NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
(3)
|
TRANSFERS
IN (OUT) OF
LEVEL 3
|
BALANCE
AS OF
12/31/11
|
||||||||||||||||||
Common Stocks
|
||||||||||||||||||||||||
Advanced Materials
|
$ | — | $ | 662,235 | $ | — | $ | (662,235 | ) | $ | — | $ | — | |||||||||||
Social Networking
|
— | 4,342,500 | — | 132,500 | — | 4,475,000 | ||||||||||||||||||
Intellectual Property
|
— | 169,045 | — | (168,865 | ) | — | 180 | |||||||||||||||||
Preferred Stocks
|
||||||||||||||||||||||||
Intellectual Property
|
— | 4,071,014 | — | (3,277,527 | ) | — | 793,487 | |||||||||||||||||
Networking
|
— | 298 | — | — | — | 298 | ||||||||||||||||||
Renewable Energy
|
— | 4,846,714 | — | (1,401,379 | ) | — | 3,445,335 | |||||||||||||||||
Services
|
— | 145,829 | — | 27,567 | — | 173,396 | ||||||||||||||||||
Asset Derivatives
|
||||||||||||||||||||||||
Equity Contracts
|
— | 1,153,259 | (10 | ) | (636,045 | ) | — | 517,204 | ||||||||||||||||
Convertible Bonds
|
||||||||||||||||||||||||
Intellectual Property
|
— | 2,110,753 | — | (67,303 | ) | — | 2,043,450 | |||||||||||||||||
Total
|
$ | — | $ | 17,501,647 | $ | (10 | ) | $ | (6,053,287 | ) | $ | — | $ | 11,448,350 |
(1)
|
Commencement of operations.
|
(2)
|
There was an expiration of an IP Unity Series E-1 Warrant. It expired on August 4, 2011, resulting in a $10 realized capital loss.
|
(3)
|
The net change in unrealized depreciation from Level 3 instruments held as of December 31, 2011 was $(6,053,287).
|
Reclassification of Capital Accounts
|
||||||||||||
INCREASE (DECREASE)
|
||||||||||||
Paid-in-Capital
|
Accumulated
Net Investment
Income (Loss)
|
Accumulated Net
Realized Gain
(Loss)
|
||||||||||
Firsthand Technology Value Fund
|
$ | (1,447,690 | ) | $ | 1,447,690 | $ | — |
*
|
On December 22, 2010, President Obama signed into law the Regulated Investment Company Modernization Act of 2010 (the “Act”). The Act updates certain tax rules applicable to regulated investment companies (“RICs”). The various provisions of the Act will generally be effective for RICs with taxable years beginning after December 22, 2010. Under the Modernization Act, new capital losses may now be carried forward indefinitely, and retain the character of the original loss as compared with pre-enactment law where capital losses could be carried forward for eight years, and carried forward as short-term capital losses, irrespective of the character of the original loss.
|
FIRSTHAND TECHNOLOGY VALUE FUND
|
||||
Net Unrealized Appreciation Depreciation)*
|
$ | (8,103,073 | ) | |
Late Year Short-Term Capital Losses Deferred
|
(51,191 | ) | ||
Accumulated Capital Loss Carryforward
|
(1,205,178 | ) | ||
Total Distributable Earnings
|
$ | (9,359,442 | ) |
SHARES/PAR ACTIVITY
|
||||||||||||||||||||||||||||||||
AFFILIATE
|
BALANCE
AT
4/18/11*
|
PURCHASES/
MERGER
|
SALES
MATURITY/
EXPIRATION
|
BALANCE
AT
12/31/11
|
REALIZED
GAIN (LOSS)
|
DIVIDENDS/
INTEREST
|
VALUE
12/31/11
|
ACQUISITION
COST
|
||||||||||||||||||||||||
Silicon Genesis Corp., Common
|
— | 901,892 | — | 901,892 | $ | — | $ | — | $ | 180 | $ | 169,045 | ||||||||||||||||||||
Silicon Genesis Corp., Convertible Note
|
— | 1,250,000 | — | 1,250,000 | — | 256,514 | 1,492,750 | 1,610,753 | ||||||||||||||||||||||||
Silicon Genesis Corp., Convertible Note
|
— | 500,000 | — | 500,000 | — | 22,173 | 550,700 | 500,000 | ||||||||||||||||||||||||
Silicon Genesis Corp., Common Warrant
|
— | 37,982 | — | 37,982 | — | — | 4 | 6,678 | ||||||||||||||||||||||||
Silicon Genesis Corp., Series 1-C
|
— | 82,914 | — | 82,914 | — | — | 1,368 | 109,518 | ||||||||||||||||||||||||
Silicon Genesis Corp., Series 1-D
|
— | 850,830 | — | 850,830 | — | — | 3,573 | 431,901 | ||||||||||||||||||||||||
Silicon Genesis Corp., Series 1-E
|
— | 5,704,480 | — | 5,704,480 | — | — | 645,747 | 2,946,535 | ||||||||||||||||||||||||
Silicon Genesis Corp., Series 1-E Warrant
|
— | 94,339 | — | 94,339 | — | — | — | 13,012 | ||||||||||||||||||||||||
Silicon Genesis Corp., Series 1-E Warrant
|
— | 1,257,859 | — | 1,257,859 | — | — | — | 173,500 | ||||||||||||||||||||||||
Silicon Genesis Corp., Series 1-F
|
— | 912,453 | — | 912,453 | — | — | 142,799 | 583,060 | ||||||||||||||||||||||||
Silicon Genesis Corp., Common Stock Warrant
|
— | 5,000,000 | — | 5,000,000 | — | — | — | — | ||||||||||||||||||||||||
$ | 2,837,121 | $ | 6,544,002 |
* Commencement of operations.
|
Number
|
Description
|
3.1
|
Registrant’s Articles of Amendment and Restatement are incorporated by reference to Exhibit (a)(2) of Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 (File No. 333-168195) as filed with the Securities and Exchange Commission on September 24, 2010.
|
3.2
|
Certificate of Correction to Registrant’s Articles of Amendment and Restatement is incorporated by reference to Exhibit (a)(2) of Registration statement for closed-end investment companies on Form N-2 (File No. 333-179606) as filed with the Securities and Exchange Commission on February 21, 2012.
|
3.3
|
Registrant’s Amended and Restated Bylaws are incorporated by reference to Exhibit (b)(2) of Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 (File No. 333-168195) as filed with the Securities and Exchange Commission on September 24, 2010.
|
10.1
|
Registrant’s Dividend Reinvestment Plan is incorporated by reference to Exhibit (e) of Pre-Effective Amendment to the Registrant’s Registration Statement on Form N-2 (File No. 333-168195) as filed with the Securities and Exchange Commission on September 24, 2010.
|
10.2
|
Form of Investment Management Agreement between Registrant and SiVest Group, Inc. (now known as Firsthand Capital Management, Inc.) is incorporated by reference to Exhibit (g) of Pre-Effective Amendment to the Registrant’s Registration Statement on Form N-2 (File No. 333-168195) as filed with the Securities and Exchange Commission on September 24, 2010.
|
10.3
|
Form of Custodian Services Agreement between Registrant and PFPC Trust Company is incorporated by reference to Exhibit (j) of Pre-Effective Amendment to the Registrant’s Registration Statement on Form N-2 (File No. 333-168195) as filed with the Securities and Exchange Commission on September 24, 2010.
|
10.4
|
Form of Administration and Accounting Agreement between Registrant and BNY Mellon Investment Servicing (US), Inc. is incorporated by reference to Exhibit (k)(1) of Pre-Effective Amendment to the Registrant’s Registration Statement on Form N-2 (File No. 333-168195) as filed with the Securities and Exchange Commission on September 24, 2010.
|
10.5
|
Notice of Assignment dated February 9, 2011 by PFPC Trust Company assigning Custodian Services Agreement is filed herewith.
|
10.6
|
Form of Transfer Agency Services Agreement between Registrant and BNY Mellon Investment Servicing (US), Inc. is incorporated by reference to Exhibit (k)(2) of Pre-Effective Amendment to the Registrant’s Registration Statement on Form N-2 (File No. 333-168195) as filed with the Securities and Exchange Commission on September 24, 2010.
|
14.1
|
Registrant’s Code of Ethics for Principal Executives and Senior Financial Officers
|
24.1
|
Power of Attorney—filed herewith
|
31.1
|
Certification by Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002— filed herewith.
|
32.1
|
Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 —filed herewith.
|
FIRSTHAND TECHNOLOGY VALUE FUND, INC. | ||
Date: March 21, 2012
|
By:
|
|
|
|
Kevin Landis
|
|
|
President
|
Signatures
|
Title
|
Date
|
|
/s/ Kevin Landis
|
Chairman of the Board and Chief Executive Officer
|
March 21, 2012
|
|
Kevin Landis
|
and Chief Financial Officer
|
||
*
|
Director
|
March 21, 2012
|
|
Greg Burglin
|
|||
*
|
Director
|
March 21, 2012
|
|
Rodney Yee
|
|||
*
|
Director
|
March 21, 2012
|
|
Kimun Lee
|
Exhibit
|
|
Number
|
Descriptions
|
14.1
|
Registrant’s Code of Ethics for Principal Executives and Senior Financial Officers
|
24.1
|
Power of Attorney
|
31.1
|
Certification by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Revision 0
|
Code of Ethics for Principal Executive and Senior Financial Officers
|
I.
|
Covered Officers/Purpose of the Code
|
II.
|
Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest
|
III.
|
Disclosure and Compliance
|
IV.
|
Reporting and Accountability
|
V.
|
Other Policies and Procedures
|
VI.
|
Amendments
|
VII.
|
Confidentiality
|
VIII.
|
Internal Use
|
Exhibit A
|
Persons Covered by this Code of Ethics
|
Exhibit B
|
Initial Certification Form
|
Exhibit C
|
Annual Certification Form
|
|
Revision 0
|
Code of Ethics for Principal Executive and Senior Financial Officers
|
I.
|
Covered Officers/Purpose of the Code
|
|
·
|
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
|
|
·
|
full, fair, accurate, timely and understandable disclosure in reports and documents that the Fund files with, or submits to, the Securities and Exchange Commission (the “SEC”) and in other public communications made by the Fund;
|
|
·
|
compliance with applicable laws and governmental rules and regulations;
|
|
·
|
the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and
|
|
·
|
accountability for adherence to the Code.
|
II.
|
Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest
|
|
Revision 0
|
Code of Ethics for Principal Executive and Senior Financial Officers
|
|
·
|
use his or her personal influence or personal relationship improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund;
|
|
·
|
cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Fund; or
|
|
·
|
retaliate against any other Covered Officer or any employee of the Fund or their affiliated persons for reports of potential violations by the Fund of applicable rules and regulations that are made in good faith.
|
|
·
|
service as a director, trustee, general partner, or officer of any unaffiliated business organization. This rule does not apply to charitable, civic, religious, public, political, or social organizations, the activities of which do not conflict with the interests of the Fund;
|
|
·
|
the receipt of any non-nominal gifts;
|
|
·
|
the receipt of any entertainment from any company with which the Fund has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as raise any question of impropriety;
|
|
·
|
any ownership interest in, or any consulting or employment relationship with, any of the Fund’s service providers, other than its investment adviser, principal underwriter, administrator, transfer agent, custodian or any affiliated person thereof; and
|
|
·
|
a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.
|
III.
|
Disclosure and Compliance
|
|
·
|
Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Fund.
|
|
·
|
Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund’s Board, the Fund’s Audit Committee and the Fund’s independent auditors, and to governmental regulators and self-regulators and self-regulatory organizations.
|
|
·
|
Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Fund and its service providers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund.
|
|
·
|
It is the responsibility of each Covered Officer to promote and encourage professional integrity in all aspects of the Fund’s operations.
|
IV.
|
Reporting and Accountability
|
|
·
|
upon adoption of this Code (or thereafter as applicable, upon becoming a Covered Officer), sign and return a report in the form of Exhibit B to the Fund’s compliance officer affirming that he or she has received, read, and understands the Code;
|
|
·
|
annually sign and return a report in the form of Exhibit C to the Fund’s compliance officer as an affirmation that he or she has complied with the requirements of the Code; and
|
|
·
|
notify the Fund’s Audit Committee promptly if he or she knows of any violation of this Code. Failure to do so is itself a violation of this Code.
|
|
·
|
The Audit Committee will take all appropriate actions to investigate any potential violations reported to the Committee.
|
|
·
|
If, after such investigation, the Audit Committee believes that no violation has occurred, the Audit Committee is not required to take any further action.
|
|
·
|
Any matter that the Audit Committee believes is a violation of this Code will be reported to the full Board.
|
|
·
|
If the Board concurs that a violation has occurred, it will notify the appropriate personnel of the applicable service provider and may dismiss the Covered Officer as an officer of the Fund.
|
|
·
|
The Audit Committee will be responsible for granting waivers of provisions of this Code, as appropriate.
|
|
·
|
Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.
|
V.
|
Other Policies and Procedures
|
VI.
|
Amendments
|
VII.
|
Confidentiality
|
VIII.
|
Internal Use
|
|
Revision 0
|
Code of Ethics for Principal Executive and Senior Financial Officers
|
|
Revision 0
|
Code of Ethics for Principal Executive and Senior Financial Officers
|
Please sign your name here:
|
|
Please print your name here:
|
|
|
Please date here:
|
|
|
Revision 0
|
Code of Ethics for Principal Executive and Senior Financial Officers
|
Please sign your name here:
|
|
Please print your name here:
|
|
|
Please date here:
|
|
Date: March 21, 2012
|
By:
|
/s/ Kevin Landis
|
||
Kevin Landis
Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer
|
Date: March 21, 2012
|
By:
|
/s/ Kevin Landis
|
|
Kevin Landis
Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer)
|