Firsthand Technology Value Fund Announces First Quarter Financial Results, NAV of $0.02 Per Share

Rhea-AI Summary

Firsthand Technology Value Fund (OTCQB: SVVC) announced its Q1 2024 financial results. The net asset value (NAV) per share fell to $0.02 from $0.18 at the end of 2023. Total net assets decreased to $0.2 million from $1.3 million, significantly impacted by a $3 million write-down in Revasum, Inc. (ASX: RVS) shares, which were suspended from trading. The fund's portfolio, including public and private securities, was valued at $4.7 million. Investment income totaled $32 thousand, with net investment income of $2.8 million after expenses and a fee waiver agreement with Firsthand Capital Management, which waived $3 million in fees. However, net realized and unrealized losses on investments amounted to $3.9 million. The fund continues to work with portfolio companies to enhance performance and find exit opportunities.

Positive

• Firsthand Technology Value Fund reported net investment income of $2.8 million after fees and expenses.
• A $3 million fee waiver agreement with Firsthand Capital Management helped reduce expenses.
• The fund's portfolio, including public and private securities, was valued at $4.7 million.
• Continued efforts to enhance portfolio company performance and uncover exit opportunities.

Negative

• Net asset value per share fell to $0.02 from $0.18 at the end of 2023.
• Total net assets decreased to $0.2 million from $1.3 million.
• A $3 million write-down in Revasum, Inc. shares significantly impacted NAV.
• Net realized and unrealized losses on investments amounted to $3.9 million.
• Investment income for the quarter was only $32 thousand.

Insights

Financial Analyst

The net asset value (NAV) of the Firsthand Technology Value Fund has seen a significant decrease from $0.18 per share at the end of 2023 to $0.02 per share by the end of Q1 2024. This sharp decline in NAV reflects substantial losses in the Fund's portfolio, with a notable $3 million write-down in Revasum, Inc. holdings. The valuation adjustments and loss realizations point towards the challenges faced by the Fund in maintaining asset values. The fee waivers granted by Firsthand Capital Management, totaling $3 million this quarter and an additional $2.5 million previously, appear to be measures aimed at stabilizing the Fund's financials. However, these waivers also indicate underlying distress as these are significant amounts being waived.

While the Fund reported a net investment income of $2.8 million for the quarter, the total investment income was a mere $32 thousand, suggesting the majority of the net income was driven by fee waivers rather than operational success. The overall net realized and unrealized losses of $3.9 million further underline the Fund's struggle in the current market conditions. Investors should be cautious as the large disparity between asset valuation and liabilities raises concerns about the Fund's solvency and future performance.

Market Research Analyst

Examining the broader market context, the suspension of Revasum, Inc. shares from the Australian Securities Exchange has evidently had a severe impact on Firsthand Technology Value Fund's portfolio. This highlights the risk associated with investing in smaller, less liquid stocks, which can lead to substantial write-downs when such events occur. The Fund’s efforts to uncover potential exit opportunities indicate a reactive strategy, a scenario where they are potentially looking to liquidate underperforming assets to shore up cash reserves.

The Fund’s portfolio valuation at $4.7 million against total liabilities of $4.58 million means that the Fund has very limited cushion to absorb any further losses. Given the current asset base, any further significant write-downs could lead to negative net assets, which poses a substantial risk to investors. The prudent management of the portfolio and the active engagement with portfolio companies are positive, but the current market environment and past performance suggest a challenging road ahead.

Legal Expert

The fee waiver agreement entered into with Firsthand Capital Management, Inc. is a noteworthy element from a legal perspective. This agreement effectively reduces the financial burden on the Fund by waiving $3 million in accrued but unpaid management fees. However, it is important to consider that these fee waivers are subject to recoupment under certain conditions. Investors should be aware of the specifics of these conditions, as any recoupment could potentially offset future gains or further strain the Fund's financial position.

Additionally, the Fund's valuation procedures, as guided by ASC 820, which involve external valuation firms, speak to a rigorous approach in determining fair value. However, the significant adjustments and reliance on such procedures can also be indicative of volatility and uncertainty in the Fund's asset valuations. Investors should closely monitor the ongoing legal and financial arrangements to understand their potential impact on the Fund’s long-term viability.

SAN JOSE, Calif., May 14, 2024 (GLOBE NEWSWIRE) -- Firsthand Technology Value Fund, Inc. (OTCQB: SVVC) (the “Fund”), a publicly traded venture capital fund that invests in technology and cleantech companies, announced today its financial results for the quarter ended March 31, 2024.

As of March 31, 2024, the Fund’s net assets were approximately $0.2 million, or $0.02 per share, compared with net assets of approximately $1.3 million, or $0.18 per share as of December 31, 2023. As of March 31, 2024, the Fund’s portfolio included public and private securities valued at approximately $4.7 million, or $0.68 per share, which includes approximately $0.01 per share in cash and cash equivalents.

Portfolio Summary (as of 3/31/24)

Investment	Fair Value1		Fair Value per Share1,2
Equity/Debt Investments	$4.65 million		$0.67
Cash/Cash Equivalents	$0.04 million		$0.01
Other Assets	$0.05 million		$0.01
Total Assets	$4.75 million		$0.69
Total Liabilities	$4.58 million		$0.66
Net Assets	$0.17 million		$0.02
1 Numbers may not sum due to rounding. 2 Total shares outstanding: 6,893,056.

During the first quarter of 2024, the Valuation Committee, which was composed of two directors, adjusted the fair values of the private companies in our portfolio. In arriving at these determinations and consistent with the Fund’s valuation procedures, and ASC 820, the Valuation Committee took into account information from an independent valuation firm and considered many factors, including the performance of the portfolio companies, recent transactions in the companies’ securities, as well as the impact of changes in market multiples within certain sectors.

During the quarter, shares of Revasum, Inc. (ASX: RVS) were suspended from trading on the Australian Securities Exchange (ASX). As a result, the fair value of the Fund’s Revasum holdings determined at the end of the quarter represented a write down of nearly $3 million, which had a significant impact on the Fund’s quarter-end NAV.

Effective March 31, 2024, the Fund has entered into a fee waiver agreement with its investment adviser, Firsthand Capital Management, Inc. (“FCM”). Pursuant to the terms of this agreement, FCM has agreed to waive $3.0 million of base management fees that has been accrued but unpaid as of March 31, 2024, subject to recoupment to the extent permitted under the fee waiver agreement. This fee waiver is in addition to the $2.5 million fee waiver that was entered into on September 30, 2023.

For the quarter ended March 31, 2024, the Fund reported total investment income of approximately $32 thousand. After fees and expenses, including the aforementioned fee waiver, the Fund reported net investment income of approximately $2.8 million. The Fund reported net realized and unrealized losses on investments of approximately $3.9 million for the quarter.

Throughout the quarter, the Fund continued its efforts to manage its portfolio prudently, including working with its portfolio companies and their management teams to seek to enhance performance and uncover potential exit opportunities.

About Firsthand Technology Value Fund
Firsthand Technology Value Fund, Inc. is a publicly traded venture capital fund that invests in technology and cleantech companies. More information about the Fund and its holdings can be found online at www.firsthandtvf.com.

The Fund is a non-diversified, closed-end investment company that elected to be treated as a business development company under the Investment Company Act of 1940. The Fund’s investment objective is to seek long-term growth of capital. Under normal circumstances, the Fund will invest at least 80% of its total assets for investment purposes in technology and cleantech companies. An investment in the Fund involves substantial risks, some of which are highlighted below. Please see the Fund’s public filings for more information about fees, expenses and risk. Past investment results do not provide any assurances about future results.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains "forward-looking statements" as defined under the U.S. federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will," and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to materially differ from the Fund’s historical experience and its present expectations or projections indicated in any forward-looking statement. These risks include, but are not limited to, changes in economic and political conditions, regulatory and legal changes, technology and cleantech industry risk, valuation risk, non-diversification risk, interest rate risk, tax risk, and other risks discussed in the Fund’s filings with the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Fund undertakes no obligation to publicly update or revise any forward-looking statements made herein. There is no assurance that the Fund’s investment objectives will be attained. We acknowledge that, notwithstanding the foregoing, the safe harbor for forward-looking statements under the Private Securities Litigation Reform Act of 1995 does not apply to investment companies such as us.

Contact:

Phil Mosakowski
Firsthand Capital Management, Inc.
(408) 624-9526
vc@firsthandtvf.com

FAQ

What is the net asset value (NAV) per share for SVVC?

As of March 31, 2024, the NAV per share for SVVC is $0.02.

What were Firsthand Technology Value Fund's total net assets for Q1 2024?

Total net assets for Q1 2024 were approximately $0.2 million.

How much did Firsthand Technology Value Fund's net assets decrease?

Net assets decreased from $1.3 million to $0.2 million.

What impact did the Revasum, Inc. holding have on SVVC's NAV?

Revasum, Inc. share suspension led to a $3 million write-down, significantly impacting NAV.

How much did Firsthand Technology Value Fund report in net realized and unrealized losses?

Firsthand Technology Value Fund reported net realized and unrealized losses of approximately $3.9 million.

What was the total investment income for SVVC for Q1 2024?

The total investment income for SVVC for Q1 2024 was approximately $32 thousand.

What is the value of Firsthand Technology Value Fund's portfolio?

As of March 31, 2024, the portfolio was valued at approximately $4.7 million.

What is the fee waiver agreement SVVC entered into?

SVVC entered into a fee waiver agreement with Firsthand Capital Management, waiving $3 million in base management fees.