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EX-32.1 - EXHIBIT 32.1 - CROSSROADS LIQUIDATING TRUSTbdcaventure-exhibit321x201.htm
EX-32.2 - EXHIBIT 32.2 - CROSSROADS LIQUIDATING TRUSTbdcaventure-exhibit322x201.htm
EX-31.2 - EXHIBIT 31.2 - CROSSROADS LIQUIDATING TRUSTbdcaventure-exhibit312x201.htm
EX-31.1 - EXHIBIT 31.1 - CROSSROADS LIQUIDATING TRUSTbdcaventure-exhibit311x201.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-53504
BDCA Venture, Inc.
(Exact Name of Registrant as Specified in its Charter)

Maryland
 
26-2582882
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
405 Park Avenue
New York, NY
 
10022
(Address of Principal Executive Office)
 
(Zip Code)

(720) 889-0139
(Registrant’s Telephone Number, Including Area Code)

Not applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes o
No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of the registrant's common stock, $0.001 par value, outstanding as of November 11, 2015 was 9,676,484.



1


TABLE OF CONTENTS

 
Page
PART I
 
 
PART II
 


2


PART I
Item 1. Financial Statements.

BDCA Venture, Inc.
Statements of Assets and Liabilities
 
As of
 
September 30, 2015
 
December 31, 2014
 
(Unaudited)
 
 
Assets
 
 
 
Investments in portfolio company securities at fair value:
 
 
 
Unaffiliated investments:
 
 
 
Privately held portfolio companies (Cost: $35,403,128 and $35,373,785, respectively)
$
31,218,488

 
$
36,329,202

Publicly-traded portfolio companies (Cost: $1,999,997 and $4,000,001, respectively)
557,998

 
1,721,997

Non-controlled affiliated investments:
 
 
 
Privately held portfolio companies (Cost: $4,000,000 and $4,000,000, respectively)
7,180,000

 
7,790,000

Total, investments in portfolio company securities at fair value (Cost: $41,403,125 and $43,373,786, respectively)
38,956,486

 
45,841,199

 
 
 
 
Cash and cash equivalents
16,156,000

 
27,437,568

Funds held in escrow from sale of investment at fair value (Cost: $704,101 and $809,311, respectively)
621,498

 
709,568

Due from investment adviser
35,822

 

Prepaid expenses and other assets
102,686

 
84,901

Total assets
$
55,872,492

 
$
74,073,236

 
 
 
 
Liabilities
 
 
 
Accrued incentive fees
$
918,635

 
$
2,130,443

Earned incentive fees payable

 
635,241

Base management fees payable
321,813

 
354,633

Dividends payable

 
3,878,014

Administrative expenses payable
110,265

 
113,596

Due to related parties
4,583

 
66,065

Accounts payable
66,746

 
41,100

Accrued expenses and other liabilities

 
20,607

Total liabilities
$
1,422,042

 
$
7,239,699

 
 
 
 
Commitments and contingencies (see Note 8 - Commitments and Contingencies)
 
 
 
 
 
 
 
Net Assets
 
 
 
Common stock, $0.001 par value, 200,000,000 shares authorized; 9,676,484 and 9,793,994 issued and outstanding, respectively
$
9,676

 
$
9,794

Additional paid-in capital
66,004,166

 
66,586,516

Accumulated net investment loss
(3,486,618
)
 
(2,130,443
)
Accumulated net realized loss
(1,162,132
)
 

Distributions in excess of net investment loss and net realized loss
(4,385,400
)
 

Net unrealized appreciation (depreciation) on investments and funds held in escrow from sale of investment
(2,529,242
)
 
2,367,670

Total net assets
$
54,450,450

 
$
66,833,537

Total liabilities and net assets
$
55,872,492

 
$
74,073,236

Net asset value per share
$
5.63

 
$
6.82

The accompanying notes are an integral part of these statements.

3


BDCA Venture, Inc.
Statements of Operations
(Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30, 2015
 
September 30, 2014
 
September 30, 2015
 
September 30, 2014
Investment income:
 
 
 
 
 
 
 
Interest from portfolio company investments:
 
 
 
 
 
 
 
Unaffiliated investments
$
10,139

 
$
6,426

 
$
29,344

 
$
58,651

Interest and dividends from cash and cash equivalents
482

 
529

 
2,681

 
1,843

Total investment income
10,621

 
6,955

 
32,025

 
60,494

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Base management fees
321,813

 
375,088

 
1,027,442

 
1,116,534

Incentive fees
(1,067,236
)
 
(557,175
)
 
(1,211,809
)
 
(385,589
)
Administrative expenses allocated from investment adviser
110,713

 
181,048

 
354,236

 
509,352

Professional fees
91,384

 
100,168

 
727,134

 
289,317

Directors fees
48,750

 
31,250

 
105,000

 
81,250

Stock transfer agent fees
11,761

 
14,358

 
39,636

 
40,266

Public and investor relations expenses
21,731

 
4,114

 
135,733

 
59,913

Travel expenses
1,013

 
14,828

 
17,118

 
62,882

Marketing and advertising expenses
4,950

 
8,450

 
14,850

 
40,797

Postage and fulfillment expenses
16,447

 
6,637

 
33,713

 
28,710

Printing and production expenses
39

 
13,962

 
20,517

 
41,644

Interest expense on borrowings

 
6,736

 

 
6,736

Custody fees
1,500

 
1,500

 
4,500

 
4,500

General and administrative expenses
43,543

 
75,355

 
155,952

 
204,109

Total operating expenses
(393,592
)
 
276,319

 
1,424,022

 
2,100,421

Waived or reimbursed expenses from investment adviser (see Note 4 - Related Party Agreements and Transactions)
68,221

 

 
(35,822
)
 

Net operating expenses
(325,371
)
 
276,319

 
1,388,200

 
2,100,421

Net investment income (loss)
335,992

 
(269,364
)
 
(1,356,175
)
 
(2,039,927
)
 
 
 
 
 
 
 
 
Net realized (loss) gain:
 
 
 
 
 
 
 
Unaffiliated investments

 
(626,946
)
 
(1,162,132
)
 
658,900

Total net realized (loss) gain

 
(626,946
)
 
(1,162,132
)
 
658,900

 
 
 
 
 
 
 
 
Net change in unrealized appreciation (depreciation):
 
 
 
 
 
 
 
Unaffiliated investments
(4,932,009
)
 
(2,158,926
)
 
(4,304,052
)
 
(2,586,848
)
Non-controlled affiliated investments
(410,000
)
 

 
(610,000
)
 

Funds held in escrow from sale of investment
5,830

 

 
17,140

 

Total net change in unrealized appreciation (depreciation)
(5,336,179
)
 
(2,158,926
)
 
(4,896,912
)
 
(2,586,848
)
 
 
 
 
 
 
 
 
Net decrease in net assets resulting from operations
$
(5,000,187
)
 
$
(3,055,236
)
 
$
(7,415,219
)
 
$
(3,967,875
)
 
 
 
 
 
 
 
 
Net investment income (loss) per common share outstanding (basic and diluted)
$
0.03

 
$
(0.03
)
 
$
(0.14
)
 
$
(0.21
)
Net decrease in net assets resulting from operations per common share outstanding (basic and diluted)
$
(0.51
)
 
$
(0.31
)
 
$
(0.76
)
 
$
(0.41
)
Weighted average common shares outstanding (basic and diluted)
9,709,456

 
9,805,871

 
9,760,384

 
9,675,623


The accompanying notes are an integral part of these statements.


4


BDCA Venture, Inc.
Statements of Changes in Net Assets
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares (1)
 
Par Value
 
Additional Paid-In Capital
 
Treasury Stock At Cost
 
Accumulated Net Investment Loss
 
Accumulated Net Realized Loss
 
Distributions In Excess of Net Investment Loss and Net Realized Loss
 
Unrealized Appreciation (Depreciation)
 
Net Assets
Balance, December 31, 2013 (2)
9,997,343

 
$
9,997

 
$
71,806,893

 
$
(2,962,594
)
 
$
(2,216,888
)
 
$

 
$

 
$
6,402,062

 
$
73,039,470

Net (decrease) increase in net assets from operations

 

 

 

 
(3,680,811
)
 
6,778,371

 

 
(4,034,392
)
 
(936,832
)
Distributions to stockholders from net realized gain (3)
374,069

 
374

 
2,174,894

 

 

 
(6,778,371
)
 

 

 
(4,603,103
)
Repurchase of common stock (128,977 shares)

 

 

 
(665,998
)
 

 

 

 

 
(665,998
)
Retirement of treasury stock at cost
(577,418
)
 
(577
)
 
(3,628,015
)
 
3,628,592

 

 

 

 

 

Reclassification of permanent book to tax differences

 

 
(3,767,256
)
 

 
3,767,256

 

 

 

 

Balance, December 31, 2014 (2)
9,793,994

 
$
9,794

 
$
66,586,516

 
$

 
$
(2,130,443
)
 
$

 
$

 
$
2,367,670

 
$
66,833,537

Net decrease in net assets from operations

 

 

 

 
(1,356,175
)
 
(1,162,132
)
 

 
(4,896,912
)
 
(7,415,219
)
Distributions to stockholders

 

 

 

 

 

 
(4,385,400
)
 

 
(4,385,400
)
Repurchase and retirement of common stock at cost
(117,510
)
 
(118
)
 
(582,350
)
 

 

 

 

 

 
(582,468
)
Balance, September 30, 2015 (Unaudited)
9,676,484

 
$
9,676

 
$
66,004,166

 
$

 
$
(3,486,618
)
 
$
(1,162,132
)
 
$
(4,385,400
)
 
$
(2,529,242
)
 
$
54,450,450

(1) Common shares issued.
(2) Net assets as of September 30, 2015 and December 31, 2014 and 2013 include no accumulated undistributed net investment income.
(3) Includes distribution payable to stockholders of record on December 31, 2014 (with ex-dividend date of December 29, 2014) of $3,878,014 that was paid on January 13, 2015. For income and excise tax purposes, the distribution was treated as paid and taxable to stockholders in 2014.

The accompanying notes are an integral part of these statements.


5


BDCA Venture, Inc.
Statements of Cash Flows
(Unaudited)
 
Nine Months Ended
 
September 30, 2015
 
September 30, 2014
Cash flows from operating activities:
 
 
 
Net decrease in net assets resulting from operations
$
(7,415,219
)
 
$
(3,967,875
)
Adjustments to reconcile net decrease in net assets resulting from operations to net cash used in operating activities:
 
 
 
Investments in portfolio companies

 
(4,655,486
)
Net proceeds from sales of portfolio company investments
837,873

 
6,446,066

Net realized loss (gain) on investments
1,162,132

 
(658,900
)
Net change in unrealized (appreciation) depreciation on investments
4,914,052

 
2,586,848

Net change in unrealized (appreciation) depreciation on funds held in escrow from sale of investment
(17,140
)
 

Increase in investment balance cost basis due to payment-in-kind interest
(29,344
)
 
(58,253
)
Changes in operating assets and liabilities:
 
 
 
Decrease in receivable from funds held in escrow from sale of investment
105,210

 

Increase in prepaid expenses and other assets
(17,785
)
 
(5,393
)
Increase in amounts due from investment adviser
(35,822
)
 

Decrease in base management fees payable
(32,820
)
 
(3,851
)
Decrease in earned incentive fees payable
(635,241
)
 

Decrease in accrued incentive fees
(1,211,808
)
 
(385,589
)
Increase (decrease) in administrative expenses payable
(3,331
)
 
75,897

Increase (decrease) in amounts due to related parties
(61,482
)
 
55,429

Increase (decrease) in accounts payable
25,646

 
(25,917
)
Decrease in accrued expenses and other liabilities
(20,607
)
 
(18,402
)
Net cash used in operating activities
(2,435,686
)
 
(615,426
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from short-term borrowings

 
19,400,000

Repurchase of common stock
(582,468
)
 

Cash distributions to stockholders
(8,263,414
)
 
(829,161
)
Net cash provided by (used in) financing activities
(8,845,882
)
 
18,570,839

 
 
 
 
Net increase (decrease) in cash and cash equivalents
(11,281,568
)
 
17,955,413

Cash and cash equivalents, beginning of period
27,437,568

 
13,537,328

Cash and cash equivalents, end of period
$
16,156,000

 
$
31,492,741

 
 
 
 
Supplemental disclosure of non-cash operating activities
 
 
 
Conversion of payment-in-kind interest income into preferred stock
$

 
$
68,932

Supplemental disclosure of non-cash financing activities
 
 
 
Stock distributions to stockholders
$

 
$
2,175,268


The accompanying notes are an integral part of these statements.


6

BDCA Venture, Inc.
Schedule of Investments
September 30, 2015
(Unaudited)

Portfolio Company
Headquarters / Industry (1)
 
Type of Investment
 
Shares / Warrants / Principal
 
Cost
 
Value (2)
 
Value as % of Net Assets
Unaffiliated Investments (3)
 
 
 
 
 
 
 
 
 
 
 
Privately Held Portfolio Companies:
 
 
 
 
 
 
 
 
 
 
 
MBA Polymers, Inc.
Worksop, Nottinghamshire, UK
 
Series G Convertible Preferred Stock
 
2,000,000

 
$
2,000,000

 
$
360,000

 
0.66
%
 
Plastics Recycling
 
 
 
 
 
 
 
 
 
 
BrightSource Energy, Inc.
Oakland, CA
 
Common Stock
 
132,972

 
1,756,202

 
170,000

 
0.31
%
 
Solar Thermal Energy
 
Series 1A Preferred Stock
 
2,186,880

 
650,642

 
290,000

 
0.53
%
 
 
 
Series 1 Convertible Preferred Stock
 
55,779

 
490,287

 
440,000

 
0.81
%
 
 
 
Subordinated Convertible Bridge Notes (4) (5)Original principal $205,193; PIK interest 11.5%, compounded annually; mature 3/30/2015
(See Note 3)
 
$
258,558

 
258,558

 
580,000

 
1.07
%
 
 
 
Subordinated Secured Notes (4) (5)Original principal $107,977; PIK interest 11.5%, compounded annually; mature 3/30/2015
(See Note 3)
 
$
118,488

 
118,488

 
118,488

 
0.22
%
Harvest Power, Inc.
Waltham, MA
 
Series A-2 Preferred Stock
 
1,249,999

 
1,249,433

 
1,060,000

 
1.95
%
 
Waste Management
 
Series B Convertible Preferred Stock
 
404,527

 
1,655,093

 
2,060,000

 
3.78
%
Suniva, Inc.
Norcross, GA
 
Series D Convertible Preferred Stock (See Note 13)
 
198

 
2,500,007

 
160,000

 
0.29
%
 
Solar Photovoltaic Cells
 
Series F Convertible Preferred Stock (See Note 13)
 
10

 
54,280

 
170,000

 
0.31
%
Agilyx Corporation
Beaverton, OR
 
Common Stock
 
16,200,046

 
4,332,356

 

 
%
 
Renewable Oils
 

 

 

 

 

Zoosk, Inc.
San Francisco, CA
 
Series E Convertible Preferred Stock
 
715,171

 
2,999,999

 
3,630,000

 
6.67
%
 
Online Dating
 
 
 
 
 
 
 
 
 
 
SilkRoad, Inc.
Chicago, IL
 
Series D-1 Convertible Preferred Stock
 
6,361,938

 
1,337,785

 
3,060,000

 
5.62
%
 
Software as a Service
 
Series D-2 Convertible Preferred Stock
 
19,132,283

 
5,000,000

 
5,290,000

 
9.72
%
 
 
 
Series D-1 Convertible Preferred Stock Warrants
Exercise price $0.2823 per share; expire 6/30/2018 (subject to adjustment)
 
1,683,460

 

 
400,000

 
0.73
%
Mode Media Corporation
Brisbane, CA
 
Series F Convertible Preferred Stock
 
1,196,315

 
4,999,999

 
6,710,000

 
12.32
%
 
Social Media
 
 
 
 
 
 
 
 
 
 
Deem, Inc.
San Francisco, CA
 
Series AA-1 Convertible Preferred Stock
 
929,212

 
3,000,000

 
3,400,000

 
6.24
%
 
E-commerce Network
 
 
 
 
 
 
 
 
 
 
Centrify Corporation
Santa Clara, CA
 
Series E Convertible Preferred Stock
 
1,084,873

 
2,999,999

 
3,320,000

 
6.10
%
 
Enterprise Software
 
 
 
 
 
 
 
 
 
 
Subtotal - Unaffiliated Investments, Privately Held Portfolio Companies
 
 
 
 
 
 
$
35,403,128

 
$
31,218,488

 
57.33
%

7

BDCA Venture, Inc.
Schedule of Investments
September 30, 2015
(Unaudited)

Portfolio Company
Headquarters / Industry (1)
 
Type of Investment
 
Shares / Warrants / Principal
 
Cost
 
Value (2)
 
Value as % of Net Assets
Publicly Traded Portfolio Companies:
 
 
 
 
 
 
 
 
 
 
 
Tremor Video, Inc. (6)
New York, NY
 
Common Stock
 
299,999

 
$
1,999,997

 
$
557,998

 
1.02
 %
 
Online Video Advertising
 
 
 
 
 
 
 
 
 
 
Subtotal - Unaffiliated Investments, Publicly Traded Portfolio Companies
 
 
 
 
 
 
$
1,999,997

 
$
557,998

 
1.02
 %
 
 
 
 
 
 
 
 
 
 
 
 
Non-Controlled, Affiliated Investments (3)
 
 
 
 
 
 
 
 
 
 
 
Privately Held Portfolio Companies:
 
 
 
 
 
 
 
 
 
 
 
Metabolon, Inc.
Durham, NC
 
Series D Convertible Preferred Stock
 
2,229,021

 
$
4,000,000

 
$
7,180,000

 
13.19
 %
 
Molecular Diagnostics and Services
 
 
 
 
 
 
 
 
 
 
Subtotal - Non-controlled, Affiliated Investments, Privately Held Portfolio Companies
 
 
 
 
 
 
$
4,000,000

 
$
7,180,000

 
13.19
 %
 
 
 
 
 
 
 
 
 
 
 
 
Total - Investments in Portfolio Company Securities (7)
 
 
 
 
 
 
$
41,403,125

 
$
38,956,486

 
71.54
 %
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Net Assets
 
 
 
 
 
 
 
 
Amount
 
% of Net Assets
Investments in portfolio company securities at fair value
 
$
38,956,486

 
71.54
 %
Cash and cash equivalents
 
 
 
 
 
 
 
 
 
 
 
Money market funds consisting of 15,983,529 Class A shares in the SEI Daily Income Trust Government Fund (SEOXX) with a value of $1 per share (4)
 
15,983,529

 
29.35
 %
Other cash and cash equivalents
 
 
 
 
 
 
 
 
172,471

 
0.32
 %
Funds held in escrow from sale of investment at fair value
 
621,498

 
1.14
 %
Due from investment adviser
 
 
 
 
 
 
 
 
35,822

 
0.07
 %
Prepaid expenses and other assets
 
 
 
 
 
 
 
 
102,686

 
0.19
 %
Less: Total liabilities
 
 
 
 
 
 
 
 
(1,422,042
)
 
(2.61
)%
Net Assets
 
 
 
 
 
 
 
 
$
54,450,450

 
100.00
 %
(1) The corporate headquarters of the portfolio company may not be indicative of the primary source of the portfolio company’s business. The industry description generally identifies the types of products or services provided by each portfolio company.
(2) Except for the shares of common stock of Tremor Video, all investments were valued at fair value as determined in good faith by the Board of Directors and are restricted securities under the Securities Act of 1933, as amended (the "Securities Act") or are subject to legal restrictions on transfer (including lockup and other contractual restrictions) as of September 30, 2015. As of September 30, 2015, restricted securities held by BDCA Venture, Inc. (the "Company") comprised approximately 71% of the Company's net assets.
(3) Controlled investments are defined by the Investment Company Act of 1940, as amended (the "1940 Act"), as investments in which the Company owns more than 25% of the voting securities or where the Company has the ability to nominate greater than 50% of the board representation. Non-controlled, affiliated investments are defined by the 1940 Act as investments in which the Company owns between 5% and 25% of the voting securities. Unaffiliated investments are defined by the 1940 Act as investments that are neither controlled investments nor non-controlled, affiliated investments.
(4) Investment is income producing.
(5) Investment is a payment-in-kind ("PIK") note. Principal and cost includes accumulated PIK interest, which is fixed for the term of the notes. The PIK interest is computed at the contractual rate specified in each note and is added to the principal balance of the note and recorded as interest income as earned. As of September 30, 2015, the Company was accruing PIK interest on each of its PIK notes and none of such notes were on non-accrual status.
(6) As of September 30, 2015, the Company valued its shares of common stock in Tremor Video based on the closing price on that date.
(7) As of September 30, 2015, approximately 99% of the Company's total assets constituted qualifying investments under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of the Company's total assets at the time of acquisition of any additional non-qualifying assets.

8

BDCA Venture, Inc.
Schedule of Investments
December 31, 2014

Portfolio Company
Headquarters / Industry (1)
 
Type of Investment
 
Shares / Warrants / Principal
 
Cost
 
Value (2)
 
Value as % of Net Assets
Unaffiliated Investments (3)
 
 
 
 
 
 
 
 
 
 
 
Privately Held Portfolio Companies:
 
 
 
 
 
 
 
 
 
 
 
MBA Polymers, Inc.
Worksop, Nottinghamshire, UK
 
Series G Convertible Preferred Stock
 
2,000,000

 
$
2,000,000

 
$
2,100,000

 
3.14
%
 
Plastics Recycling
 
 
 
 
 
 
 
 
 
 
BrightSource Energy, Inc.
Oakland, CA
 
Common Stock
 
132,972

 
1,756,202

 
160,000

 
0.24
%
 
Solar Thermal Energy
 
Series 1A Preferred Stock
 
2,186,880

 
650,642

 
280,000

 
0.42
%
 
 
 
Series 1 Convertible Preferred Stock
 
55,779

 
490,287

 
390,000

 
0.58
%
 
 
 
Subordinated Convertible Bridge Notes (4) (5)Original principal $205,193; PIK interest 11.5%, compounded annually; mature 2/15/2015
 
$
238,501

 
238,501

 
450,000

 
0.67
%
 
 
 
Subordinated Secured Notes (4) (5)Original principal $107,977; PIK interest 11.5%, compounded annually; mature 1/29/2015
 
$
109,202

 
109,202

 
109,202

 
0.16
%
Harvest Power, Inc.
Waltham, MA
 
Series A-2 Preferred Stock
 
1,249,999

 
1,249,433

 
920,000

 
1.38
%
 
Waste Management
 
Series B Convertible Preferred Stock
 
404,527

 
1,655,093

 
1,700,000

 
2.55
%
Suniva, Inc.
Norcross, GA
 
Series D Convertible Preferred Stock
 
198

 
2,500,007

 
1,570,000

 
2.35
%
 
Solar Photovoltaic Cells
 
Series F Convertible Preferred Stock
 
10

 
54,280

 
170,000

 
0.25
%
Agilyx Corporation
Beaverton, OR
 
Series C Convertible Preferred Stock
 
1,092,956

 
4,000,000

 
950,000

 
1.42
%
 
Renewable Oils
 
Series E-2 Convertible Preferred Stock
 
15,107,090

 
332,356

 
430,000

 
0.64
%
Zoosk, Inc.
San Francisco, CA
 
Series E Convertible Preferred Stock
 
715,171

 
2,999,999

 
3,790,000

 
5.67
%
 
Online Dating
 
 
 
 
 
 
 
 
 
 
SilkRoad, Inc.
Chicago, IL
 
Series D-1 Convertible Preferred Stock
 
6,361,938

 
1,337,785

 
2,820,000

 
4.22
%
 
Software as a Service
 
Series D-2 Convertible Preferred Stock
 
19,132,283

 
5,000,000

 
5,700,000

 
8.53
%
 
 
 
Series D-1 Convertible Preferred Stock Warrants
Exercise price $0.2823 per share; expire 6/30/2018 (subject to adjustment)
 
1,683,460

 

 
340,000

 
0.51
%
Mode Media Corporation
Brisbane, CA
 
Series F Convertible Preferred Stock
 
1,196,315

 
4,999,999

 
6,850,000

 
10.25
%
 
Social Media
 
 
 
 
 
 
 
 
 
 
Deem, Inc.
San Francisco, CA
 
Series AA-1 Convertible Preferred Stock
 
929,212

 
3,000,000

 
4,290,000

 
6.42
%
 
E-commerce Network
 
 
 
 
 
 
 
 
 
 
Centrify Corporation
Santa Clara, CA
 
Series E Convertible Preferred Stock
 
1,084,873

 
2,999,999

 
3,310,000

 
4.95
%
 
Enterprise Software
 
 
 
 
 
 
 
 
 
 
Subtotal - Unaffiliated Investments, Privately Held Portfolio Companies
 
 
 
 
 
 
$
35,373,785

 
$
36,329,202

 
54.35
%

9

BDCA Venture, Inc.
Schedule of Investments
December 31, 2014

Portfolio Company
Headquarters / Industry (1)
 
Type of Investment
 
Shares / Warrants / Principal
 
Cost
 
Value (2)
 
Value as % of Net Assets
Publicly Traded Portfolio Companies:
 
 
 
 
 
 
 
 
 
 
 
Tremor Video, Inc. (6)
New York, NY
 
Common Stock
 
599,999

 
$
4,000,001

 
$
1,721,997

 
2.58
 %
 
Online Video Advertising
 
 
 
 
 
 
 
 
 
 
Subtotal - Unaffiliated Investments, Publicly Traded Portfolio Companies
 
 
 
 
 
 
$
4,000,001

 
$
1,721,997

 
2.58
 %
 
 
 
 
 
 
 
 
 
 
 
 
Non-Controlled, Affiliated Investments (3)
 
 
 
 
 
 
 
 
 
 
 
Privately Held Portfolio Companies:
 
 
 
 
 
 
 
 
 
 
 
Metabolon, Inc.
Durham, NC
 
Series D Convertible Preferred Stock
 
2,229,021

 
$
4,000,000

 
$
7,790,000

 
11.66
 %
 
Molecular Diagnostics and Services
 
 
 
 
 
 
 
 
 
 
Subtotal - Non-controlled, Affiliated Investments, Privately Held Portfolio Companies
 
 
 
 
 
 
$
4,000,000

 
$
7,790,000

 
11.66
 %
 
 
 
 
 
 
 
 
 
 
 
 
Total - Investments in Portfolio Company Securities (7)
 
 
 
 
 
 
$
43,373,786

 
$
45,841,199

 
68.59
 %
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Net Assets
 
 
 
 
 
 
 
 
Amount
 
% of Net Assets
Investments in portfolio company securities at fair value
 
$
45,841,199

 
68.59
 %
Cash and cash equivalents
 
 
 
 
 
 
 
 
 
 
 
Money market funds consisting of 27,190,896 Class A shares in the SEI Daily Income Trust Government Fund (SEOXX) with a value of $1 per share (4)
 
27,190,896

 
40.68
 %
Other cash and cash equivalents
 
 
 
 
 
 
 
 
246,672

 
0.37
 %
Funds held in escrow from sale of investment at fair value
 
709,568

 
1.06
 %
Prepaid expenses and other assets
 
 
 
 
 
 
 
 
84,901

 
0.13
 %
Less: Total liabilities
 
 
 
 
 
 
 
 
(7,239,699
)
 
(10.83
)%
Net Assets
 
 
 
 
 
 
 
 
$
66,833,537

 
100.00
 %
(1) The corporate headquarters of the portfolio company may not be indicative of the primary source of the portfolio company’s business. The industry description generally identifies the types of products or services provided by each portfolio company.
(2) Except for the shares of common stock of Tremor Video, all investments were valued at fair value as determined in good faith by the Board of Directors and are restricted securities under the Securities Act of 1933, as amended (the "Securities Act") or are subject to legal restrictions on transfer (including lockup and other contractual restrictions) as of December 31, 2014. As of December 31, 2014, restricted securities held by the Company comprised approximately 66% of the Company's net assets.
(3) Controlled investments are defined by the Investment Company Act of 1940, as amended (the "1940 Act"), as investments in which the Company owns more than 25% of the voting securities or where the Company has the ability to nominate greater than 50% of the board representation. Non-controlled, affiliated investments are defined by the 1940 Act as investments in which the Company owns between 5% and 25% of the voting securities. Unaffiliated investments are defined by the 1940 Act as investments that are neither controlled investments nor non-controlled, affiliated investments.
(4) Investment is income producing.
(5) Investment is a payment-in-kind ("PIK") note. Principal and cost includes accumulated PIK interest, which is fixed for the term of the notes. The PIK interest is computed at the contractual rate specified in each note and is added to the principal balance of the note and recorded as interest income as earned. As of December 31, 2014, the Company was accruing PIK interest on each of its payment-in-kind notes, and none of such notes were on non-accrual status.
(6) On June 26, 2013, Tremor Video priced its initial public offering 7,500,000 shares of common stock at a price to the public of $10.00 per share. Tremor Video's common stock trades on the New York Stock Exchange under the ticker symbol "TRMR." The Company's shares in Tremor Video were subject to a lockup agreement which expired on December 24, 2013. As of December 31, 2014, the Company valued its shares of common stock in Tremor Video based on the December 31, 2014 closing price.
(7) As of December 31, 2014, approximately 97% of the Company's total assets constituted qualifying investments under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of the Company's total assets at the time of acquisition of any additional non-qualifying assets.

10

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)


Note 1 - Description of Business
BDCA Venture, Inc. (the "Company"), formerly known as Keating Capital, Inc., was incorporated on May 9, 2008 under the laws of the State of Maryland and is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"), as of November 20, 2008. Effective July 1, 2014, the Company changed its name from Keating Capital, Inc. to BDCA Venture, Inc. Effective January 1, 2010, the Company elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Company commenced its portfolio company investment activities in January 2010. The shares of the Company's common stock have been listed on the Nasdaq Capital Market since December 12, 2011.
On September 22, 2014, the Board of Directors approved a change to the Company’s investment objective to maximize total return by generating current income from debt investments and, to a lesser extent, capital appreciation from equity and equity-related investments (the "Investment Objective"). Previously, the Company's investment objective was to maximize capital appreciation by making investments in the equity and equity-linked securities of later stage, typically venture capital-backed, pre-initial public offering companies.
At the 2015 Annual Meeting of Stockholders held on July 9, 2015, the Company's stockholders elected Richard Cohen, Andrew Dakos, Gerald Hellerman and Timothy Keating to serve as directors of the Company until the 2016 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified. Additionally, at the 2015 Annual Meeting, the Company's stockholders approved a proposal to have the Board of Directors consider adopting a plan to “maximize shareholder value within a reasonable period of time.”
On July 28, 2015, Mr. Keating notified the Board of Directors of his resignation from the Board and as the Chief Executive Officer and President of the Company. The Board of Directors appointed Frederic M. Schweiger to serve as the Company's Chief Executive Officer and President effective July 29, 2015.
On October 5, 2015, the Board of Directors approved the termination of the Investment Advisory and Administrative Services Agreement dated July 1, 2014 (the "Investment Advisory Agreement") between the Company and its investment adviser, BDCA Venture Adviser, LLC (the "Adviser"). The effective date of termination of the Investment Advisory Agreement will be December 6, 2015, unless shortened or extended by mutual written agreement of the Company and the Adviser (the "Termination Date"). Also on October 5, 2015, the Board of Directors determined that the Company will no longer make investments in new venture capital-backed or high growth companies and will now shift its focus to the orderly monetization of the Company’s current holdings. However, the Company may consider making opportunistic follow-on investments in its existing portfolio companies. See Note 13 - Subsequent Events.
On November 10, 2015, the Board of Directors approved the Company’s engagement of US Bancorp Fund Services, LLC ("US Bancorp") to provide administration and accounting services to the Company pursuant to an Administration Servicing Agreement and a Fund Accounting Servicing Agreement, respectively. The Board of Directors is also negotiating with another third party to provide administrative consulting services to the Company, including the provision of personnel to act as certain executive officers of the Company, including the Chief Executive Officer and Chief Financial Officer, following the Termination Date. See Note 13 - Subsequent Events.
The Board of Directors is continuing to assess the Company's Investment Objective and strategy, use of available cash resources and its business operations going forward. Pursuant to a directive from the Board of Directors, the Adviser has agreed that no investment-related decisions or actions by the Adviser with respect to the Company's portfolio will be made without the prior approval of the Board of Directors. The Company has entered into a custody agreement with and has appointed MidFirst Bank, formerly known as Steele Street Bank & Trust, as custodian of its securities.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, ("U.S. GAAP") for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments, all of which were of a normal recurring nature, considered necessary for the fair presentation of financial statements for the interim period, have been included. The results of operations for the current period are not necessarily indicative of results that ultimately may be achieved for any other interim period or for the year ending December 31, 2015. The interim unaudited financial statements and notes hereto should

11

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period.
Valuation of Investments
The Company’s investments consist of securities issued by private and publicly traded companies consisting of preferred stock, common stock, subordinated convertible bridge notes, subordinated secured notes and warrants to purchase common and preferred stock which are included on the Company's Schedule of Investments.
Investments are stated at value as defined under the 1940 Act, in accordance with the applicable regulations of the U.S. Securities and Exchange Commission (the "SEC"), and in accordance with Financial Accounting Standards Board ("FASB"), Accounting Standards Codification Topic 820, "Fair Value Measurement and Disclosures," ("ASC 820"). Value, as defined in Section 2(a)(41) of the 1940 Act, is: (i) the market price for those securities for which a market quotation is readily available, and (ii) the fair value as determined in good faith by, or under the direction of, the Board of Directors for all other assets. See Note 3 - Portfolio Investments and Fair Value. The 1940 Act requires periodic valuation of each investment in the Company’s portfolio to determine the Company’s net asset value. Under the 1940 Act, unrestricted securities with readily available market quotations are to be valued at the closing market price on the valuation date; all other assets must be valued at fair value as determined in good faith by or under the direction of the Board of Directors.
Given the nature of investing in the securities of private companies, the Company’s investments are generally considered Level 3 assets under ASC 820 until these portfolio companies become public and begin trading on a stock exchange and the securities are no longer subject to any post-initial public offering lockup restrictions. As such, the Company values all of its investments, other than unrestricted securities in publicly traded portfolio companies, at fair value as determined in good faith by the Company’s Board of Directors, pursuant to a consistent valuation policy in accordance with the provisions of ASC 820 and the 1940 Act.
Determination of fair values involves subjective judgments and estimates. Due to the inherent uncertainty in determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments determined in good faith by its Board of Directors may differ significantly from the value that would have been used had a ready market existed for such investments and the differences could be material. Changes in fair value of these investments are recorded in the Company’s Statement of Operations as "Net change in unrealized appreciation (depreciation)."
The Company has a lead valuation director, who is a non-interested member of the Board of the Directors and acts as the liaison between the Board of Directors, the Company’s management and the Adviser for valuing the Company's investments. With respect to investments for which market quotations are not readily available, the Company’s Board of Directors undertakes a multi-step valuation process each quarter, as described below:
Each portfolio company investment will be valued by the Adviser, potentially with information received from one or more independent valuation firms engaged by the Adviser;
An independent valuation firm, if engaged by the Adviser, will conduct independent appraisals and make an independent assessment of the fair value of each investment, which will be used by the Adviser in deriving a preliminary valuation;
The Company's lead valuation director will review and discuss the preliminary valuations with the Adviser and the assistance of the independent valuation firm, if engaged by the Adviser; and
The Board of Directors will discuss the valuations and determine, in good faith, the fair value of each investment in the portfolio for which market quotations are not readily available based on the input of the Adviser, the independent valuation firm, if engaged by the Adviser, and the lead valuation director.
For the September 30, 2015 valuation of the Company's portfolio investments that are not publicly traded, an independent valuation firm was used to assist the Adviser in deriving the valuation of investments in 10 of the Company's portfolio companies.
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). In accordance with ASC 820, the Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as unadjusted quoted prices in active markets;

12

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

Level 2: Includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities where there is little or no activity in the market; and
Level 3: Unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.
The Company applies the framework for determining fair value as described above to the valuation of investments in each of the following categories:
Equity Investments
Equity investments for which market quotations are readily available in an active market are generally valued at the most recently available closing market prices and are classified as Level 1 assets. However, equity investments for which market quotations are readily available, but which are subject to lockup provisions restricting the resale of such investments for a specified period of time, are valued at a discount to the most recently available closing market prices and, accordingly, are classified as Level 3 assets.
The fair values of the Company’s equity investments for which market quotations are not readily available are determined based on various factors and are classified as Level 3 assets. To determine the fair value of a portfolio company for which market quotations are not readily available, the Company may analyze the portfolio company’s most recently available historical and projected financial results, public market comparables and other factors. The Company may also consider other events, including the transaction in which the Company acquired its securities, subsequent equity sales by the portfolio company, mergers or acquisitions affecting the portfolio company or the completion of an initial public offering ("IPO") by the portfolio company. In addition, the Company may consider the trends of the portfolio company’s basic financial metrics from the time of its original investment until the measurement date, with material improvement of these metrics indicating a possible increase in fair value, while material deterioration of these metrics may indicate a possible reduction in fair value. The fair values of the Company’s portfolio company securities are generally discounted for a lack of marketability or when the securities are illiquid. See Note 3 - Portfolio Investments and Fair Value.
In cases where a portfolio company completes a subsequent financing with different rights and preferences than the equity or equity-linked (including warrants to purchase common or preferred stock) securities the Company holds, or where the Company owns common stock in a portfolio company with preferred stock outstanding or where a merger or acquisition event involving a portfolio company has been completed or is pending, the Company may consider the aforementioned transaction to estimate the portfolio company's equity value.
In determining the value of equity or equity-linked securities (including warrants to purchase common or preferred stock) in a portfolio company, the Company considers the rights, preferences and limitations of such securities. In cases where a portfolio company's capital structure includes multiple classes of preferred and common stock and equity-linked securities with different rights and preferences, the Company generally uses an option pricing model to allocate value to each equity and equity-linked security, unless it believes a liquidity event such as an acquisition or a dissolution is imminent or the portfolio company is unlikely to continue as a going concern.
The Monte Carlo method may also be used to derive an expected value of a security based on results obtained from a large number of simulations and assumptions used in application of the method.
Debt Investments
Given the nature of the Company’s current debt investments, principally convertible bridge notes issued by venture capital-backed portfolio companies, these investments are Level 3 assets under ASC 820 because there is no known or accessible market for these investment securities to be traded or exchanged. Since the Company invested in convertible bridge notes for the primary purpose of potential conversion into equity at a future date, the fair value of the Company’s convertible debt investments for which market quotations are not available may be determined on an as-converted to equity basis using the same factors and methodologies the Company uses to value its equity investments. In making a good faith determination of the value of its convertible debt investments, the Company generally starts with the cost basis of the investment, which includes the value attributed to the original issue discount, if any, and payment-in-kind ("PIK") interest which has been accreted to principal as earned.
If the Company determines that there is a low likelihood that its convertible debt investments will be converted into equity or repaid, or in the case of non-convertible debt investments to be made under the Company's Investment Objective, the Company

13

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

applies a procedure that assumes a sale of the investment in a hypothetical market to a hypothetical market participant where buyers and sellers are willing participants. The hypothetical market does not include scenarios where the underlying security was simply repaid or extinguished, but includes an exit concept. As part of this process, the Company will evaluate the creditworthiness of the portfolio company, its ability to meet its current debt obligations, the collateral (if any) for recoverability of the debt investment in the event of default and whether the security lien, if any, is subordinated to senior lenders. The Company will also use pricing of recently issued comparable debt securities, if any, to determine the baseline hypothetical market yield as of the measurement date. The Company considers each portfolio company’s credit rating, if any, security liens and other characteristics of the investment to adjust the baseline yield to derive a hypothetical yield for each debt investment as of the measurement date. The anticipated future cash flows from each debt investment are then discounted at the hypothetical yield to estimate each debt investment’s fair value as of the measurement date.
When acquiring a debt instrument, the Company may receive warrants or other equity-related securities from the borrower in connection with the debt investment. The Company determines the cost basis of the warrants or other equity-related securities received based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and warrants or other equity-related securities received. Any resulting discount on the loan from recordation of the warrant or other equity-related instruments is accreted into interest income over the life of the loan.
Funds Held in Escrow from Sale of Investments
Funds held in escrow from the sale of investments ("Escrowed Funds") are valued at fair value by the Company's Board of Directors using certain indemnity risk and deferred payment discounts applied to the amounts withheld. In connection with the closing of the sale of Xtime, Inc. in an all-cash merger transaction on November 18, 2014, the Company was required to set aside $809,311 in escrow as partial security for potential stockholder indemnification obligations under the merger agreement. The $809,311 represents additional proceeds that may be released to the Company at a later date subject to potential indemnity claims. On January 13, 2015, Escrowed Funds totaling $105,210 were released to the Company from the Xtime escrow without any offset for indemnity claims. The remaining Escrowed Funds are anticipated to be released in phases with anticipated distributions occurring in January 2016 and November 2017, net of settlement of any indemnity claims. As of September 30, 2015 and December 31, 2014, Escrowed Funds were fair valued at $621,498 and $709,568, respectively. See Note 8 - Commitments and Contingencies.
Interest and Dividend Income
Interest income from certificates of deposit and other short-term investments is recorded on an accrual basis to the extent such amounts are expected to be collected and accrued interest income is evaluated periodically for collectability. PIK interest represents contractually deferred interest computed at a contractual rate specified in the loan agreement. PIK interest may be prepaid by either contract or the portfolio company’s election, but generally is paid at the end of the loan term. PIK interest is added to the principal balance of the loan and is generally recorded as interest income on an accrual basis to the extent such PIK interest is expected to be collected. The Company recorded PIK interest income of $10,139, $29,344, $6,426 and $58,651 during the three and nine months ended September 30, 2015 and 2014, respectively.
When one of the Company’s loans becomes more than 90 days past due, or if the Company otherwise does not expect the portfolio company to be able to service its debt and other obligations, the Company will, as a general matter, place the loan on non-accrual status and generally will cease recognizing interest income on that loan until all principal and interest has been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. However, the Company may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. If the fair value of a loan is below cost, the Company may cease recognizing PIK interest on the debt investment until such time that the fair value equals or exceeds cost.
Net Realized Gain or Loss and Unrealized Appreciation or Depreciation
Net realized gain or loss is recognized when a portfolio company investment or other financial asset is disposed of and is computed as the difference between the Company's cost basis in such investment or asset at the disposition date and the net proceeds received from such disposition (after reduction for commissions and other selling expenses). Net realized gains and losses on transactions involving portfolio company investments and other financial assets are determined by specific identification. Unrealized appreciation or depreciation is computed as the difference between the fair value of the portfolio company investment or other financial asset and the cost basis of such investment or asset.
Income Taxes
Effective January 1, 2010, the Company elected to be treated for tax purposes as a RIC under the Code. The Company intends to operate so as to qualify as a RIC. To maintain RIC tax treatment, the Company must meet specified source-of-income and asset

14

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

diversification requirements and distribute annually at least 90% of its "investment company taxable income" as defined in the Code.
Due to the Company's limited number of investments, it closely monitors its asset composition in order to continue to satisfy the asset diversification test and maintain its status as a RIC. To maintain its status as a RIC, in addition to other requirements, as of the close of each quarter end, the Company must meet the asset diversification test, which requires that at least 50% of the value of its assets consist of cash, cash items, U.S. government securities or certain other qualified securities (the "50% Threshold"). However, the failure to meet the 50% Threshold alone will not result in the Company's loss of RIC status. In circumstances where the failure to meet the 50% Threshold is the result of fluctuations in the value of the Company's assets, including as a result of the sale of assets, the Company will still be deemed to have satisfied the 50% Threshold and, therefore, maintain its RIC status, provided that the Company has not made any new investments in non-qualifying securities, including additional investments in non-qualifying securities of existing portfolio companies, since the time that the Company fell below the 50% Threshold.
To maintain its status as a RIC for tax purposes for the quarter ended September 30, 2014, the Company purchased $20 million of short-term U.S. Treasury bills ("T-Bills") on September 24, 2014. The Company financed the purchase of these T-Bills using $600,000 in cash and the proceeds from a $19.4 million short-term borrowing financed through a margin account agreement with National Financial Services, LLC. The $20 million of T-Bills were pledged as collateral for the short-term borrowing. On October 3, 2014, the Company sold the T-Bills for a realized loss of $94 and repaid the short-term borrowing in full together with accrued interest.
As a RIC, the Company generally will not have to pay corporate-level federal income taxes on any investment company taxable income or any realized net capital gains that the Company distributes to its stockholders as dividends. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. In addition, taxable income generally excludes any unrealized appreciation or depreciation.
The Company is not required to distribute its realized net capital gains, if any, to stockholders to maintain RIC tax treatment. However, the Company generally will have to pay corporate-level federal income taxes on any realized net capital gains that the Company does not distribute to its stockholders. In the event the Company retains any of its realized net capital gains, the Company may designate the retained amount as a deemed distribution to stockholders and will be required to pay corporate-level tax on the retained amount.
The Company would also be subject to certain nondeductible federal excise taxes imposed on RICs if it fails to distribute during each calendar year an amount at least equal to the sum of: (i) 98% of its ordinary income for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the calendar year, if any, and (iii) any recognized and undistributed income from prior years for which it paid no federal income taxes. The Company will not be subject to this excise tax on amounts on which the Company is required to pay corporate income tax.
Dividends and Distributions
Dividends and distributions to common stockholders must be approved by the Company’s Board of Directors and any dividend payable is recorded on the ex-dividend date.
The Company may fund cash dividends and distributions to stockholders from any sources of funds available to the Company. The Company has not established limits on the amount of funds it may use from available sources to make dividends or distributions. See Note 7 - Dividends and Distributions.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by FASB or other standards setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial statements upon adoption.
Note 3 - Portfolio Investments and Fair Value
The following table summarizes the composition of the Company’s portfolio company investments by type of security and Escrowed Funds at cost and fair value as of September 30, 2015 and December 31, 2014:

15

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

 
 
September 30, 2015
 
December 31, 2014
Security Type
 
Cost
 
Fair Value
 
Percentage of Portfolio
 
Cost
 
Fair Value
 
Percentage of Portfolio
Privately Held Portfolio Companies:
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock
 
$
32,937,524

 
$
37,130,000

 
93.81
%
 
$
37,269,880

 
$
43,060,000

 
92.50
%
Preferred Stock Warrants
 

 
400,000

 
1.01
%
 

 
340,000

 
0.73
%
Common Stock
 
6,088,558

 
170,000

 
0.43
%
 
1,756,202

 
160,000

 
0.34
%
Subordinated Convertible Bridge Notes
 
258,558

 
580,000

 
1.47
%
 
238,501

 
450,000

 
0.97
%
Subordinated Secured Notes
 
118,488

 
118,488

 
0.30
%
 
109,202

 
109,202

 
0.23
%
Subtotal - Privately Held Portfolio Companies
 
39,403,128

 
38,398,488

 
97.02
%
 
39,373,785

 
44,119,202

 
94.77
%
Publicly Traded Portfolio Companies:
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
1,999,997

 
557,998

 
1.41
%
 
4,000,001

 
1,721,997

 
3.70
%
Total Portfolio Company Investments
 
41,403,125

 
38,956,486

 
98.43
%
 
43,373,786

 
45,841,199

 
98.47
%
Funds Held in Escrow from Sale of Investment
 
704,101

 
621,498

 
1.57
%
 
809,311

 
709,568

 
1.53
%
Total Portfolio Company Financial Assets
 
$
42,107,226

 
$
39,577,984

 
100.00
%
 
$
44,183,097

 
$
46,550,767

 
100.00
%

Fair Value of Investments
The following table categorizes the Company’s portfolio company investments, money market funds and Escrowed Funds measured at fair value based upon the lowest level of significant input used in the valuation of such assets as of September 30, 2015 and December 31, 2014:
Description
 
Level 1
 
Level 2
 
Level 3
 
Total Fair Value
As of September 30, 2015
 
 
 
 
 
 
 
 
Privately Held Portfolio Company Securities:
 
 
 
 
 
 
 
 
Preferred Stock
 
$

 
$

 
$
37,130,000

 
$
37,130,000

Preferred Stock Warrants
 

 

 
400,000

 
400,000

Common Stock
 

 

 
170,000

 
170,000

Subordinated Convertible Bridge Notes
 

 

 
580,000

 
580,000

Subordinated Secured Notes
 

 

 
118,488

 
118,488

Publicly Traded Portfolio Company Securities:
 
 
 
 
 
 
 
 
Common Stock
 
557,998

 

 

 
557,998

Cash Equivalents:
 
 
 
 
 
 
 
 
Money Market Funds
 
15,983,529

 

 

 
15,983,529

Funds Held in Escrow From Sale of Investment
 

 

 
621,498

 
621,498

Total
 
$
16,541,527

 
$

 
$
39,019,986

 
$
55,561,513

 
 
 
 
 
 
 
 
 
As of December 31, 2014
 
 
 
 
 
 
 
 
Privately Held Portfolio Company Securities:
 
 
 
 
 
 
 
 
Preferred Stock
 
$

 
$

 
$
43,060,000

 
$
43,060,000

Preferred Stock Warrants
 

 

 
340,000

 
340,000

Common Stock
 

 

 
160,000

 
160,000

Subordinated Convertible Bridge Notes
 

 

 
450,000

 
450,000

Subordinated Secured Notes
 

 

 
109,202

 
109,202

Publicly Traded Portfolio Company Securities:
 
 
 
 
 
 
 
 
Common Stock
 
1,721,997

 

 

 
1,721,997

Cash Equivalents:
 
 
 
 
 
 
 
 
Money Market Funds
 
27,190,896

 

 

 
27,190,896

Funds Held in Escrow From Sale of Investment
 

 

 
709,568

 
709,568

Total
 
$
28,912,893

 
$

 
$
44,828,770

 
$
73,741,663


16

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

The following table provides a reconciliation of the changes in fair value for the Company’s portfolio company investments and Escrowed Funds measured at fair value using significant unobservable inputs (Level 3) for the nine months ended September 30, 2015:
 
Level 3 Preferred Stock
 
Level 3 Preferred Stock Warrants
 
Level 3 Common Stock
 
Level 3 Subordinated Convertible Bridge Notes
 
Level 3
Subordinated Secured Notes
 
Level 3
Funds Held in Escrow
 
Total
Fair Value as of December 31, 2014
$
43,060,000

 
$
340,000

 
$
160,000

 
$
450,000

 
$
109,202

 
$
709,568

 
$
44,828,770

Purchases and other adjustments to cost of Level 3 portfolio company securities (1)

 

 

 
20,057

 
9,286

 
(105,210
)
 
(75,867
)
Sale, exchange or conversion of Level 3 portfolio company securities (2)
(1,380,000
)
 

 
1,380,000

 

 

 

 

Total net realized gain (loss) and net change in unrealized appreciation (depreciation)
(4,550,000
)
 
60,000

 
(1,370,000
)
 
109,943

 

 
17,140

 
(5,732,917
)
Fair Value as of September 30, 2015
$
37,130,000

 
$
400,000

 
$
170,000

 
$
580,000

 
$
118,488

 
$
621,498

 
$
39,019,986

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total net change in unrealized appreciation (depreciation) on Level 3 portfolio company investments held as of June 30, 2015
$
(4,550,000
)
 
$
60,000

 
$
(1,370,000
)
 
$
109,943

 
$

 
$
17,140

 
$
(5,732,917
)
(1) Purchases and other adjustments to cost of Level 3 portfolio company investments include PIK interest accreted to principal.
(2) Exchanges, conversions and transfers out of Level 3 portfolio company investments and Escrowed Funds are reflected at cost if originally acquired during the period or at the fair value as of the beginning of the period if originally acquired before the beginning of the period. Sales of Level 3 portfolio company investments and settlement of Escrowed Funds are reflected at the net proceeds from such sale or settlement.
The following table provides a reconciliation of the changes in fair value for the Company’s portfolio company investments measured at fair value using significant unobservable inputs (Level 3) for the year ended December 31, 2014:

Level 3 Preferred Stock
 
Level 3 Preferred Stock Warrants
 
Level 3 Common Stock
 
Level 3 Common Stock Warrants
 
Level 3 Subordinated Convertible Bridge Notes
 
Level 3
Subordinated Secured Notes
 
Level 3
Funds Held in Escrow
 
Total
Fair Value as of December 31, 2013
$
42,210,000

 
$
230,000

 
$
13,444,242

 
$
1,370,000

 
$
1,242,569

 
$

 
$

 
$
58,496,811

Purchases and other adjustments to cost of Level 3 portfolio company investments (1)
4,397,011

 
330,645

 

 

 
397,617

 
109,202

 

 
5,234,475

Sale, exchange or conversion of Level 3 portfolio company investments (2)
(10,731,353
)
 
136,053

 
(940,000
)
 
(106,072
)
 
(1,401,686
)
 

 
809,311

 
(12,233,747
)
Gross transfers out of Level 3 to Level 1 (2)

 

 
(11,683,302
)
 

 

 

 

 
(11,683,302
)
Total net realized gain (loss) and net change in unrealized appreciation (depreciation)
7,184,342

 
(356,698
)
 
(660,940
)
 
(1,263,928
)
 
211,500

 

 
(99,743
)
 
5,014,533

Fair Value as of December 31, 2014
$
43,060,000

 
$
340,000

 
$
160,000

 
$

 
$
450,000

 
$
109,202

 
$
709,568

 
$
44,828,770

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total net change in unrealized appreciation (depreciation) on Level 3 portfolio company investments held as of December 31, 2014
$
1,801,053

 
$
110,000

 
$
(550,000
)
 
$

 
$
211,500

 
$

 
$

 
$
1,572,553

(1) Purchases and other adjustments to cost of Level 3 portfolio company investments include purchases of new investments at cost and PIK interest accreted to principal.
(2) Exchanges, conversions and transfers out of Level 3 portfolio company investments are reflected at cost if originally acquired during the period or at the fair value as of the beginning of the period if originally acquired before the beginning of the period. Sales of Level 3 portfolio company investments are reflected at the net proceeds from the sale.
During the year ended December 31, 2014, the transfers out of Level 3 to Level 1 were the result of the expiration of lock-up restrictions on the shares of common stock held in Millennial Media and TrueCar.
Portfolio Company Investment Activity

17

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

The Company did not make any portfolio company investments during the nine months ended September 30, 2015.
On January 6, 2015, 3,986 shares of Millennial Media common stock were released from the indemnity escrow. During December 2014, the Company wrote-off these released shares based on pending indemnity claims made against such shares. On February 26, 2015, the Company sold these released shares resulting in a net realized gain of $6,178. See Note 8 - Commitments and Contingencies.
On March 12, 2015, the Company received $13,930 in additional proceeds related to the sale of its investment in Xtime based on a post-closing working capital adjustment to the merger consideration. The receipt of these additional proceeds resulted in a net realized gain of $13,930.
On January 15, 2015, the maturity date of the July 2014 and August 2014 promissory notes issued by BrightSource in the initial principal amount of $107,977 (the "Notes") was extended from January 15, 2015 to January 29, 2015. On January 29, 2015, the maturity date of the Notes was further extended to February, 15 2015. On March 17, 2015, the maturity date of the Notes was further extended to March 30, 2015. On September 23, 2015, BrightSource advised the Company that it was negotiating a further extension of the maturity date with its senior lenders.
On March 17, 2015, the maturity date of the BrightSource convertible bridge notes in the initial principal amount of $205,193 was extended from February 15, 2015 to March 30, 2015. On September 23, 2015, BrightSource advised the Company that it was negotiating a further extension of the maturity date with its senior lenders.
During February and March 2015, Agilyx issued non-convertible promissory notes to certain investors in the principal amount of $2.0 million, which triggered the right for certain shareholders to force the conversion of all of Agilyx's outstanding shares of convertible preferred stock (including those held by the Company) into shares of common stock on a 1-for-1 basis. On April 3, 2015, Agilyx shareholders approved the conversion of all outstanding shares of convertible preferred stock to common stock on a 1-for-1 basis. Accordingly, the Company's 1,092,956 shares of Series C convertible preferred stock and 15,107,090 shares of Series E-2 convertible preferred stock were converted into a total of 16,200,046 shares of common stock on April 3, 2015. Since April 2015, Agilyx has issued convertible notes in exchange for cash and the cancellation of the $2.0 million of previously-issued non-convertible notes. The Company did not participate in the convertible notes financing. The convertible notes may be converted into Agilyx's common stock at a conversion price of $0.0001 per share.
During April and May 2015, the Company sold 300,000 shares of Tremor Video common stock with an aggregate cost basis of $2,000,004 for total net proceeds of $817,764, resulting in a net realized loss of $1,182,240.
On October 15, 2015, Suniva, Inc., a private portfolio company, completed a stock-for-stock merger transaction with Shunfeng International Clean Energy Limited, a Hong Kong Stock Exchange-listed company ("SFCE"), and a global integrated energy provider. In the merger, all outstanding shares of preferred stock and common stock of Suniva were cancelled in exchange for the right of certain Suniva stockholders (including the Company) to receive their allocable share of the merger consideration, which will be distributed in shares of SFCE common stock and Class A common stock of the private surviving company of the transaction. See Note 13 - Subsequent Events.
Significant Unobservable Inputs for Level 3 Portfolio Company Securities
In accordance with ASC 820, the table set forth below provides quantitative information about the Level 3 fair value measurements of the Company’s portfolio company investments and Escrowed Funds as of September 30, 2015. In addition to the techniques and inputs noted in the table below, according to the Company’s valuation policy, the Company may also use other valuation techniques and methodologies when determining the Company’s fair value measurements. The below table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements. To the extent an unobservable input is not reflected in the table below, such input is deemed insignificant or is not applicable with respect to the Company’s Level 3 fair value measurements as of September 30, 2015. Significant changes in the inputs in isolation could result in a significant change in the fair value measurement, depending on the input and the materiality of the investment:

18

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

 
 
As of September 30, 2015
Investment Type
 
Fair Value
 
Valuation Techniques / Methodologies
 
Unobservable Input (1)
 
Range
 
Weighted Average (2)
Level 3 Portfolio Company Investments: Preferred Stock
 
$
37,130,000

 
Option pricing model
 
Comparable public company equity volatility
 
30%
to
70%
 
51%
 
 
Comparable public companies
 
Revenue multiple
 
0.9
to
7.0
 
3.0
 
 
 
EBITDA multiple
 
6.0
to
6.0
 
6.0
 
 
 
Discount for lack of marketability
 
10%
to
30%
 
13%
 
 
Discounted cash flow
 
Discount rate
 
20%
to
35%
 
26%
 
 
 
Terminal revenue multiple
 
2.0
to
4.5
 
3.1
 
 
 
Terminal EBITDA multiple
 
6.0
to
6.0
 
6.0
 
 
 
Discount for lack of marketability
 
10%
to
30%
 
13%
Level 3 Portfolio Company Investments: Preferred Stock Warrants
 
$
400,000

 
Option pricing model
 
Comparable public company equity volatility
 
45%
to
45%
 
45%
 
 
Comparable public companies
 
Revenue multiple
 
2.3
to
2.8
 
2.5
 
 
 
Discount for lack of marketability
 
8%
to
9%
 
8%
 
 
Discounted cash flow
 
Discount rate
 
25%
to
25%
 
25%
 
 
 
Terminal revenue multiple
 
4.0
to
4.0
 
4.0
 
 
 
Discount for lack of marketability
 
8%
to
9%
 
8%
Level 3 Portfolio Company Investments: Common Stock
 
$
170,000

 
Option pricing model
 
Comparable public company equity volatility
 
55%
to
55%
 
55%
 
 
Comparable public companies
 
Revenue multiple
 
0.8
to
1.8
 
1.4
 
 
 
EBITDA multiple
 
6.0
to
6.0
 
6.0
 
 
 
Discount for lack of marketability
 
17%
to
32%
 
24%
 
 
Discounted cash flow
 
Discount rate
 
35%
to
40%
 
35%
 
 
 
Terminal revenue multiple
 
2.5
to
2.5
 
 n/a
 
 
 
Terminal EBITDA multiple
 
6.0
to
6.0
 
6.0
 
 
 
Discount for lack of marketability
 
17%
to
32%
 
24%
Level 3 Portfolio Company Investments: Subordinated Convertible Bridge Notes and Subordinated Secured Notes
 
$
698,488

 
Option pricing model
 
Comparable public company equity volatility
 
55%
to
55%
 
55%
 
 
Comparable public companies
 
Revenue multiple
 
0.9
to
1.8
 
1.4
 
 
 
EBITDA multiple
 
6.0
to
6.0
 
6.0
 
 
 
Discount for lack of marketability
 
11%
to
11%
 
11%
 
 
Discounted cash flow
 
Discount rate
 
35%
to
35%
 
35%
 
 
 
Terminal EBITDA multiple
 
6.0
to
6.0
 
6.0
 
 
 
Discount for lack of marketability
 
11%
to
11%
 
11%
Level 3 Funds Held in Escrow From Sale of Investment
 
$
621,498

 
Escrow Discounts
 
Indemnity risk discount
 
4%
to
4%
 
4%
 
 
 
 
Deferred payment discount
 
10%
to
10%
 
10%
(1) The significant unobservable inputs that may be used in the fair value measurement of the Company’s portfolio company investments in convertible preferred stock, common stock and warrants to purchase common or preferred stock for which market quotations are not readily available include: (i) revenue multiples for comparable transactions, (ii) revenue, earnings before interest, taxes, depreciation and amortization, and price to earnings multiples (collectively, "Multiples") for comparable public companies, (iii) discount rates and terminal year Multiples for comparable public companies applied in a discounted cash flow analysis of the portfolio company; and (iv) a discount for lack of marketability ("DLOM"). For some portfolio company investments, additional consideration may be given to data from a prior or contemporaneous financing transaction, the last round of financing or a merger or acquisition event near the measurement date (collectively, a "Precedent Transaction"). Inputs used in deriving an appropriate DLOM include the time frame in which the portfolio company expects to pursue or complete an IPO or sale/merger and, where put option models are used to estimate the price of a plain-vanilla, at-the-money put option and the price of an average-strike put option, inputs may include a range of term and volatility assumptions. A change in the assumptions used for Precedent Transactions and Multiples may indicate a directionally similar change in the fair value of the Company’s portfolio company investments in convertible preferred stock or common stock, while a change in the assumptions used for discount rate and DLOM may indicate a directionally opposite change in the fair value of the portfolio company investment.
Additional inputs used in the option pricing model include the volatility of equity in comparable public companies, the risk free interest rate and the estimated time to exit. The significant unobservable input used in the option pricing model for valuing certain of the Company’s portfolio company investments in convertible preferred stock, common stock and preferred and common stock warrants for which market quotations are not readily available is the volatility of equity in comparable public companies. A change in the assumption used for equity volatility may indicate a directionally similar change in the fair value of the convertible preferred stock, common stock and preferred and common stock warrant investments.

19

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

Since the Company has invested in convertible debt investments, principally convertible bridge notes, for the primary purpose of potential conversion into equity at a future date, the significant unobservable inputs that may be used in the fair value measurement of its convertible debt investments on an as-converted to equity basis are the same inputs used by the Company to value its equity securities (including convertible preferred stock). An option pricing model valuation technique may also be used to derive the fair value of the conversion feature of convertible notes. If the Company determines that there is a low likelihood that its convertible debt investments will be converted into equity or repaid the significant unobservable inputs that may be used in the fair value measurement of the Company’s convertible debt investments are hypothetical market yields and premiums/(discounts). For non-convertible debt investments, which the Company generally holds for cash payment at maturity, the significant unobservable inputs that may be used in the fair value measurement of the Company’s non-convertible debt are hypothetical market yields and premiums/(discounts). The hypothetical market yield is defined as the exit price of an investment in a hypothetical market to hypothetical market participants where buyers and sellers are willing participants. The premiums (discounts) relate to company specific characteristics such as underlying investment performance, collateral, and other characteristics of the investment. In certain investments, the Company may value its convertible and non-convertible debt investments using a liquidation approach in which case the realizable value of the collateral would be a significant unobservable input.
Funds held in escrow from the sale of investments are valued using certain indemnity risk and deferred payment discounts applied to the amounts withheld.
(2) Weighted average based on fair value as of September 30, 2015.
The table set forth below provides quantitative information about the Level 3 fair value measurements of the Company’s portfolio company investments and Escrowed Funds as of December 31, 2014:
 
 
As of December 31, 2014
Investment Type
 
Fair Value
 
Valuation Techniques / Methodologies
 
Unobservable Input (1)
 
Range
 
Weighted Average (2)
Level 3 Portfolio Company Investments: Preferred Stock
 
$
43,060,000

 
Option pricing model
 
Comparable public company equity volatility
 
15%
to
55%
 
41%
 
 
Comparable public companies
 
Revenue multiple
 
0.7
to
7.0
 
2.7
 
 
 
EBITDA multiple
 
6.5
to
6.5
 
6.5
 
 
 
Discount for lack of marketability
 
10%
to
30%
 
20%
 
 
Discounted cash flow
 
Discount rate
 
20%
to
40%
 
31%
 
 
 
Terminal revenue multiple
 
1.3
to
6.0
 
3.3
 
 
 
Terminal EBITDA multiple
 
8.0
to
8.0
 
8.0
 
 
 
Discount for lack of marketability
 
10%
to
30%
 
20%
Level 3 Portfolio Company Investments: Preferred Stock Warrants
 
$
340,000

 
Option pricing model
 
Comparable public company equity volatility
 
45%
to
45%
 
45%
 
 
Comparable public companies
 
Revenue multiple
 
2.3
to
2.8
 
2.5
 
 
 
Discount for lack of marketability
 
20%
to
20%
 
20%
 
 
Discounted cash flow
 
Discount rate
 
35%
to
35%
 
35%
 
 
 
Terminal revenue multiple
 
4.5
to
4.5
 
4.5
 
 
 
Discount for lack of marketability
 
20%
to
20%
 
20%
Level 3 Portfolio Company Investments: Common Stock
 
$
160,000

 
Option pricing model
 
Comparable public company equity volatility
 
50%
to
50%
 
50%
 
 
Comparable public companies
 
Revenue multiple
 
1.0
to
1.5
 
1.3
 
 
 
EBITDA multiple
 
6.5
to
6.5
 
6.5
 
 
 
Discount for lack of marketability
 
20%
to
20%
 
20%
 
 
Discounted cash flow
 
Discount rate
 
35%
to
35%
 
35%
 
 
 
Terminal EBITDA multiple
 
8.0
to
8.0
 
8.0
 
 
 
Discount for lack of marketability
 
20%
to
20%
 
20%
Level 3 Portfolio Company Investments: Subordinated Convertible Bridge Notes and Subordinated Secured Notes
 
$
559,202

 
Option pricing model
 
Comparable public company equity volatility
 
50%
to
50%
 
50%
 
 
Comparable public companies
 
Revenue multiple
 
1.0
to
1.5
 
1.3
 
 
 
EBITDA multiple
 
6.5
to
6.5
 
6.5
 
 
 
Discount for lack of marketability
 
20%
to
20%
 
20%
 
 
Discounted cash flow
 
Discount rate
 
35%
to
35%
 
35%
 
 
 
Terminal EBITDA multiple
 
8.0
to
8.0
 
8.0
 
 
 
Discount for lack of marketability
 
20%
to
20%
 
20%
Level 3 Funds Held in Escrow From Sale of Investment
 
$
709,568

 
Escrow Discounts
 
Indemnity risk discount
 
4%
to
4%
 
4%
 
 
 
 
Deferred payment discount
 
—%
to
10%
 
5%
(1) The significant unobservable inputs that may be used in the fair value measurement of the Company’s portfolio company investments in convertible preferred stock, common stock and warrants to purchase common or preferred stock for which market quotations are not readily available include: (i)

20

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

revenue multiples for comparable transactions, (ii) Multiples for comparable public companies, (iii) discount rates and terminal year Multiples for comparable public companies applied in a discounted cash flow analysis of the portfolio company; and (iv) a DLOM. For some portfolio company investments, additional consideration may be given to data from a Precedent Transaction. Inputs used in deriving an appropriate DLOM include the time frame in which the portfolio company expects to pursue or complete an IPO or sale/merger and, where put option models are used to estimate the price of a plain-vanilla, at-the-money put option and the price of an average-strike put option, inputs may include a range of term and volatility assumptions. A change in the assumptions used for Precedent Transactions and Multiples may indicate a directionally similar change in the fair value of the Company’s portfolio company investments in convertible preferred stock or common stock, while a change in the assumptions used for discount rate and DLOM may indicate a directionally opposite change in the fair value of the portfolio company investment.
Additional inputs used in the option pricing model include the volatility of equity in comparable public companies, the risk free interest rate and the estimated time to exit. The significant unobservable input used in the option pricing model for valuing certain of the Company’s portfolio company investments in convertible preferred stock, common stock and preferred and common stock warrants for which market quotations are not readily available is the volatility of equity in comparable public companies. A change in the assumption used for equity volatility may indicate a directionally similar change in the fair value of the convertible preferred stock, common stock and preferred and common stock warrant investments.
Since the Company has invested in convertible debt investments, principally convertible bridge notes, for the primary purpose of potential conversion into equity at a future date, the significant unobservable inputs that may be used in the fair value measurement of its convertible debt investments on an as-converted to equity basis are the same inputs used by the Company to value its equity securities (including convertible preferred stock). An option pricing model valuation technique may also be used to derive the fair value of the conversion feature of convertible notes. If the Company determines that there is a low likelihood that its convertible debt investments will be converted into equity or repaid the significant unobservable inputs that may be used in the fair value measurement of the Company’s convertible debt investments are hypothetical market yields and premiums/(discounts). For non-convertible debt investments, which the Company generally holds for cash payment at maturity, the significant unobservable inputs that may be used in the fair value measurement of the Company’s non-convertible debt are hypothetical market yields and premiums/(discounts). The hypothetical market yield is defined as the exit price of an investment in a hypothetical market to hypothetical market participants where buyers and sellers are willing participants. The premiums (discounts) relate to company specific characteristics such as underlying investment performance, collateral, and other characteristics of the investment. In certain investments, the Company may value its convertible and non-convertible debt investments using a liquidation approach in which case the realizable value of the collateral would be a significant unobservable input.
Funds held in escrow from the sale of investments are valued using certain indemnity risk and deferred payment discounts applied to the amounts withheld.
(2) Weighted average based on fair value as of December 31, 2014.
As of September 30, 2015 and December 31, 2014, 69.8% and 60.5%, respectively, of the Company's gross assets represented portfolio company investments and Escrowed Funds valued at fair value by the Company's Board of Directors.
Net Realized Gain (Loss) and Net Change in Unrealized Appreciation (Depreciation)
The following table summarizes the net realized gain (loss) and net change in unrealized appreciation (depreciation) for the three and nine months ended September 30, 2015 and 2014 for: (i) the Company’s portfolio company investments sold during the three and nine months ended September 30, 2015 and 2014 and (ii) the Company’s portfolio company investments and Escrowed Funds held as of September 30, 2015 and 2014:
 
Three Months Ended
 
Nine Months Ended
 
September 30, 2015
 
September 30, 2014
 
September 30, 2015
 
September 30, 2014
 
Net Realized Gain (Loss)
 
Net Change in Unrealized Appreciation (Depreciation)
 
Net Realized Gain (Loss)
 
Net Change in Unrealized Appreciation (Depreciation)
 
Net Realized Gain (Loss)
 
Net Change in Unrealized Appreciation (Depreciation)
 
Net Realized Gain (Loss)
 
Net Change in Unrealized Appreciation (Depreciation)
Portfolio Company Investments Sold During Period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Millennial Media, Inc.
$

 
$

 
$
(1,298,086
)
 
$
(685,065
)
 
$
6,178

 
$

 
$
(12,240
)
 
$
(2,741,189
)
Kabam, Inc.

 

 
671,140

 
(601,140
)
 

 

 
671,140

 
(291,140
)
Tremor Video, Inc.

 

 

 

 
(1,182,240
)
 
1,139,004

 

 

Xtime, Inc.

 

 

 

 
13,930

 

 

 

Subtotal - Portfolio Company Investments Sold During Period

 

 
(626,946
)
 
(1,286,205
)
 
(1,162,132
)
 
1,139,004

 
658,900

 
(3,032,329
)
Portfolio Company Investments Held at End of Period

 
(5,342,009
)
 

 
(872,721
)
 

 
(6,053,056
)
 

 
445,481

Total Portfolio Company Investments

 
(5,342,009
)
 
(626,946
)
 
(2,158,926
)
 
(1,162,132
)
 
(4,914,052
)
 
658,900

 
(2,586,848
)
Funds Held in Escrow from Sale of Investment

 
5,830

 

 

 

 
17,140

 

 

Total Portfolio Company Financial Assets
$

 
$
(5,336,179
)
 
$
(626,946
)
 
$
(2,158,926
)
 
$
(1,162,132
)
 
$
(4,896,912
)
 
$
658,900

 
$
(2,586,848
)

21

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

See the accompanying Schedule of Investments for the fair value of the Company’s portfolio company investments. The methodology for the determination of the fair value of the Company’s portfolio company investments is discussed in Note 2 - Summary of Significant Accounting Policies.
Note 4 - Related Party Agreements and Transactions
Investment Advisory and Administrative Services Agreement
On October 5, 2015, the Board of Directors approved the termination of the Investment Advisory Agreement between the Company and the Adviser effective as of the Termination Date. See Note 13 - Subsequent Events.
Pursuant to the Investment Advisory Agreement, subject to the overall supervision of the Board of Directors, the Adviser manages the Company’s day-to-day operations and provides the Company with investment advisory services. Under the terms of the Investment Advisory Agreement between the Adviser and the Company, the Adviser: (i) determines the composition of the Company’s investment portfolio, the nature and timing of the changes to the investment portfolio and the manner of implementing such changes; (ii) determines which securities the Company will purchase, retain or sell; (iii) identifies, evaluates and negotiates the structure of investments the Company makes, including performing due diligence on prospective portfolio companies; and (iv) closes, monitors and services the investments the Company makes. Pursuant to the Investment Advisory Agreement, the Adviser also performs, or facilitates the performance of, certain administrative services. The Company pays the Adviser a fee for its investment advisory services under the Investment Advisory Agreement consisting of two components: (i) a base management fee and (ii) an incentive fee. The Company reimburses the Adviser for the allocable portion of overhead and other expenses incurred by the Adviser in performing its administrative obligations under the Investment Advisory Agreement.
The Company’s officers do not receive any compensation directly from the Company. However, employees of the Adviser or its affiliates who also serve as the Company’s officers receive compensation from the Adviser or an affiliate, which may be funded by or economically related to the investment advisory or administrative fees paid by the Company to the Adviser under to the Investment Advisory Agreement.
Base Management Fee
The base management fee (the "Base Fee") is calculated at an annual rate of 2% of the Company’s gross assets, where gross assets include any borrowings for investment purposes. The Base Fee is calculated based on the value of the Company’s gross assets at the end of the most recently completed calendar quarter and is adjusted for any equity capital raises or repurchases during the current calendar quarter. As of September 30, 2015 and December 31, 2014, the Company had Base Fees payable to the Adviser of $321,813 and $354,633, respectively. During the three and nine months ended September 30, 2015 and 2014, the Company incurred Base Fees of $321,813, $1,027,442, $375,088 and $1,116,534, respectively.
Beginning October 1, 2014 and continuing through September 30, 2016 (the "Term"), the Adviser has agreed to defer the payment of Base Fees to the Adviser unless and until the Company realizes net capital gains equal to two times the Base Fees due (the "Program"). When determining the deferral amount, the Base Fees and net realized capital gains will be calculated on a cumulative basis over the Term. At the end of the Term of the Program, the Adviser agrees to waive, without recourse against or reimbursement by the Company, any Base Fees previously deferred and not paid during the Program. Prior to September 30, 2016, the Adviser may, in its sole discretion, extend the Term of the Program by written notice to the Company. As of September 30, 2015, no Base Fees had been deferred under the Program.
The Company will continue to pay the Base Fee through the Termination Date at which time the Adviser's obligation to provide services to the Company will end. See Note 13 - Subsequent Events.
Incentive Fee
The incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 20% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fees, with respect to each of the investments in the Company’s portfolio. For purposes of calculating the incentive fee, realized capital gains and losses include both short-term and long-term capital gains and losses. The Adviser is not entitled to an incentive fee on investment income generated from interest or dividends on the Company's portfolio company investments.
The Adviser earned an incentive fee of $635,241 during the year ended December 31, 2014. This earned incentive fee for the 2014 year was due and payable to the Adviser as of December 31, 2014 and was paid by the Company in March 2015. For the three and nine months ended September 30, 2015, the Adviser did not earn any incentive fees with respect to the 2015 year. The

22

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

incentive fee actually payable to the Adviser is consistent with the Investment Advisers Act of 1940, as amended, and formula reflected in the Investment Advisory Agreement.
For accounting purposes only, the Company is required under U.S. GAAP to accrue a theoretical incentive fee based upon unrealized appreciation at the end of each period. The accrual of this theoretical incentive fee assumes all unrealized balances are realized in order to reflect an incentive fee that would theoretically be payable to the Adviser. As of September 30, 2015 and December 31, 2014, the Company recorded a theoretical incentive fee payable of $918,635 and $2,130,443, respectively. During the three and nine months ended September 30, 2015 and 2014, the Company recorded a reduction of theoretical incentive fees of $1,067,236, $1,211,809, $557,175 and $385,589, respectively.
Following the termination of the Investment Advisory Agreement, the Company and the Adviser will agree on the final amount of incentive fees due and payable to the Adviser, if any, as of the Termination Date. However, based on the Company’s financial results through September 30, 2015, no incentive fee would be due and payable to the Adviser. In the event no incentive fee is due and payable to the Adviser as of the Termination Date, the accrued theoretical incentive fee payable to the Adviser as of September 30, 2015 would be reversed as of the Termination Date.
Administrative Services
Pursuant to the Investment Advisory Agreement, the Adviser furnishes the Company with office facilities, equipment and clerical, bookkeeping and record-keeping services. The Adviser also performs, or facilitates the performance of, certain administrative services, which includes being responsible for the financial records which the Company is required to maintain, and preparing reports to the Company’s stockholders and reports filed with the SEC.
In addition, the Adviser assists the Company with its portfolio accounting and bookkeeping, managing portfolio collections and reporting, performing stockholder and investor relations services, determining and publishing its net asset value, overseeing the preparation and filing of its tax returns, printing and disseminating reports to its stockholders, providing support for its risk management efforts and generally overseeing the payment of its expenses and performance of administrative and professional services rendered to the Company by others.
The Company reimburses the Adviser for the allocable portion of overhead and other expenses incurred by the Adviser in performing its administrative obligations under the Investment Advisory Agreement, including the allocable portion of compensation of the Company’s Chief Financial Officer and Chief Compliance Officer, and their respective staff. The allocation ratio with respect to compensation of the Company’s Chief Financial Officer and Chief Compliance Officer, and their respective staff, is dependent upon the amount of time each devotes to matters on behalf of the Company and the Adviser. Allocated administrative expenses are payable to the Adviser periodically but no less than quarterly.
As of September 30, 2015 and December 31, 2014, the Company recorded a payable to the Adviser for administrative services of $110,265 and $113,596, respectively. During the three and nine months ended September 30, 2015 and 2014 the Company incurred administrative expenses allocated from the Adviser of $110,713, $354,236, $181,048 and $509,352, respectively.
The Company will continue to reimburse the Adviser for its allocable share of administrative expenses through the Termination Date.
Waiver of Reimbursable Expenses or Payment of Certain Operating Expenses by the Adviser
The Adviser has agreed that, to the extent that the Company's Adjusted Operating Expenses (as defined below) in 2015 exceed $1,500,000 (the “Excess Amount”), the Adviser will, without recourse against or reimbursement by the Company, waive Reimbursable Expenses (as defined below) due and owing by the Company and/or pay on behalf of the Company certain Adjusted Operating Expenses, in such amounts so that the total of the waived Reimbursable Expenses and expenses paid by the Adviser on behalf of the Company equals the Excess Amount. "Adjusted Operating Expenses" means the Company's total operating expenses (as reported on the Company's audited financial statements for 2015 included in the Company's annual report on Form 10-K for the year ended December 31, 2015) less Base Fees, incentive fees, any stock issuance costs, any costs related to borrowings by the Company (including any interest and fees), any litigation costs, expenses or fees and any extraordinary expenses. For purposes of clarity, any operating expenses incurred by the Adviser and reimbursable by the Company with respect to 2015 (“Reimbursable Expenses”) shall be included in Adjusted Operating Expenses.
For accounting purposes, as of September 30, 2015, the Company had an amount due from the Adviser of $35,822, representing the amount by which the Company's Adjusted Operating Expenses exceeded $1,125,000, the prorated amount of the annualized $1,500,000 Adjusted Operating Expense threshold for the period. During the three months ended September 30, 2015, the Company recorded a reduction in expenses waived or reimbursed from the Adviser of $68,221. During the nine months ended September 30, 2015, the Company recorded expenses waived or reimbursed from the Adviser of $35,822. During the three and nine months ended

23

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

September 30, 2015, the Company incurred $45,052 and $447,567, respectively, of expenses not subject to the annualized $1,500,000 Adjusted Operating Expense threshold.
The table set forth below provides a summary of the calculation of Adjusted Operating Expenses and waived or reimbursed expenses from the Adviser for the three and nine months ended September 30, 2015.
 
 
Incurred for the
 
 
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2015
Total operating expenses
 
$
(393,592
)
 
$
1,424,022

Less: Base management fees
 
321,813

 
1,027,442

Less: Incentive fees
 
(1,067,236
)
 
(1,211,809
)
Less: Expenses not subject to annualized $1,500,000 adjusted operating expense threshold (1)
 
45,052

 
447,567

Adjusted operating expenses (2)
 
306,779

 
1,160,822

Adjusted operating expense threshold (3)
 
375,000

 
1,125,000

Increase (decrease) in waived or reimbursed expenses from investment adviser
 
$
(68,221
)
 
$
35,822

(1) During the three months ended September 30, 2015, the Company incurred $45,052 of expenses not subject to the annualized $1,500,000 Adjusted Operating Expense threshold, which consisted of $12,857 in legal and litigation expenses, $22,402 in proxy administrative and solicitation services and $9,793 in other expenses related to the contested proxy campaign in connection with the Company's 2015 Annual Meeting of Stockholders (the "Annual Meeting"). During the nine months ended September 30, 2015, the Company incurred $447,567 of expenses not subject to the annualized $1,500,000 Adjusted Operating Expense threshold, which consisted of $305,961 in legal and litigation expenses, $107,861 in proxy administrative and solicitation services and $33,745 in other expenses related to the contested proxy campaign in connection with the Company's Annual Meeting. Costs incurred in relation to the proxy contest are considered extraordinary in nature.
(2) Adjusted operating expenses is defined as the Company's total operating expenses (as reported on the Company's audited financial statements for 2015 included in the Company's annual report on Form 10-K for the year ended December 31, 2015) less Base Fees, incentive fees, any stock issuance costs, any costs related to borrowings by the Company (including any interest and fees), any litigation costs, expenses or fees and any extraordinary expenses.
(3) Represents the prorated amount of the annualized $1,500,000 Adjusted Operating Expense threshold for the period.
To the extent that the Excess Amount calculated for the 2015 fiscal year exceeds the amount of Reimbursable Expenses due and owing by the Company as of December 31, 2015, the Adviser will either pay certain Adjusted Operating Expenses on behalf of the Company or make a payment of such amount to the Company. See Note 13 - Subsequent Events. No such arrangement between the Adviser and the Company existed in 2014.
License Agreement
The Company entered into a sublicense agreement (the "Sublicense Agreement") with the Adviser pursuant to which the Adviser granted the Company a non-exclusive license to use the name "BDCA." Under the Sublicense Agreement, the Company will have a right to use the BDCA name and logo, for so long as the Adviser remains the Company’s investment adviser. Other than with respect to this limited license, the Company will have no legal right to the "BDCA" name or logo. The Sublicense Agreement will remain in effect for so long as the Investment Advisory Agreement with the Adviser is in effect. As a result of the termination of the Investment Advisory Agreement, the Company intends to change its corporate name on or before the Termination Date. See Note 13 - Subsequent Events.
Services Provided by Related Parties
RCS Advisory Services, LLC ("RCS Advisory"), an affiliated entity of the Adviser, provides the Company with legal services, website design and maintenance and investor relations services.
The following table reflects the related party fees incurred by the Company for the three and nine months ended September 30, 2015 and 2014, and payable to RCS Advisory as of September 30, 2015 and December 31, 2014.

24

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

 
Incurred for the
 
 
 
Three Months Ended
 
Nine Months Ended
 
Payable as of
 
September 30, 2015
 
September 30, 2014
 
September 30, 2015
 
September 30, 2014
 
September 30, 2015
 
December 31, 2014
Legal services

 
52,116

 
1,755

 
52,116

 

 
23,002

Website design and maintenance
578

 
3,312

 
1,733

 
3,312

 
578

 
23,063

Investor relations services
4,005

 

 
17,955

 

 
4,005

 
20,000

Total related party fees
4,583

 
55,428

 
21,443

 
55,428

 
4,583

 
66,065

Joint Liability Insurance Agreement
On August 28, 2014, the Company entered into a joint liability insurance agreement with the Adviser which allocates the premium cost of the Company's directors and officers liability insurance policy (the "D&O Policy") and the Company's excess coverage policy (the "Excess Policy") between the Company and the Adviser. The D&O Policy covers the Company's directors and officers, insures the Company against loss that it may be required or permitted to pay as indemnities of the Company's directors and officers, and insures the Company for certain securities claims. The Company also maintains an Excess Policy which provides for excess coverage to the Company's officers and directors in the case of non-indemnifiable claims. The coverages under the D&O Policy and the Excess Policy in certain cases extend to the officers, managers and employees of the Adviser, and to the members of the Adviser’s investment committee. For the policy year ending August 28, 2015, 10% of the total D&O Policy premium and 10% of the total Excess Policy premium has been allocated to and paid by the Adviser.
Note 5 - Equity Offerings
The Company has not issued any shares of its common stock during the nine months ended September 30, 2015. During the year ended December 31, 2014, the Company issued 374,069 shares of its common stock to its stockholders as part of its quarterly distributions declared for the first, second and third quarters of 2014.
Note 6 - Stock Repurchases
On September 22, 2014, the Company's Board of Directors authorized a stock repurchase program of up to $5 million. This stock repurchase program expired on September 22, 2015, without being extended by the Board of Directors.
During the nine months ended September 30, 2015, the Company repurchased 117,510 shares of its common stock at an average price of $4.96 per share, including commissions, for a total cost of $582,468. The Company retired all 117,510 shares of its repurchased common stock during the nine months ended September 30, 2015, with $118 of the total cost of the retired shares charged to common stock and $582,350 charged to additional paid-in capital. The Company's net asset value per share increased by $0.02 per share as a result of the shares repurchased during the nine months ended September 30, 2015. The weighted average discount to net asset value per share of the shares repurchased during the nine months ended September 30, 2015 was 24%.
During the year ended December 31, 2014, the Company repurchased 128,977 shares of its common stock at an average price of $5.16 per share, including commissions, for a total cost of $665,998. The Company’s net asset value per share increased by $0.03 per share as a result of the share repurchases during the year ended December 31, 2014. The weighted average discount to net asset value per share of the shares repurchased during the year ended December 31, 2014 was 25%.
Effective as of December 31, 2014, the Company retired all 577,418 shares of its common stock that were held in treasury at its transfer agent prior to being retired. The cumulative cost of the treasury shares retired, $3,628,592, was charged to common stock, $577, and additional paid-in capital, $3,628,015, as of December 31, 2014.
The Company accounted for the repurchases of its common stock under the cost method based on the actual cost of the repurchases.
On November 10, 2015, the Board of Directors authorized a stock repurchase program of up to $1 million. See Note 13 - Subsequent Events.
Note 7 - Dividends and Distributions
Distributions to the Company’s stockholders are payable only when and as declared by the Company’s Board of Directors and are paid out of assets legally available for distribution. The Board of Directors is currently assessing the Company's distribution policy going forward.

25

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

The following table summarizes the Company’s dividends declared for the nine months ended September 30, 2015 and for the year ended December 31, 2014:
Date Declared
 
Record Date
 
Payment Date
 
Dividend
Per Share
 
Source of Distribution
 
2015 Dividends:
 
 
 
 
 
 
 
 
 
 
March 26, 2015
 
April 15, 2015
 
April 29, 2015
 
$
0.15

 
 
Return of Capital
(1) 
March 26, 2015
 
June 11, 2015
 
June 25, 2015
 
0.15

 
 
Return of Capital
(1) 
March 26, 2015
 
September 11, 2015
 
September 25, 2015
 
0.15

 
 
Return of Capital
(1) 
Total - 2015 Dividends
 
 
 
 
 
$
0.45

 
 
 
 
2014 Dividends:
 
 
 
 
 
 
 
 
 
 
February 20, 2014
 
March 6, 2014
 
April 14, 2014
 
$
0.10

(2) 
 
Capital Gains
 
February 20, 2014
 
May 8, 2014
 
June 17, 2014
 
0.10

(2) 
 
Capital Gains
 
February 20, 2014
 
August 11, 2014
 
September 18, 2014
 
0.10

(2) 
 
Capital Gains
 
December 12, 2014
 
December 31, 2014
 
January 13, 2015
 
0.40

 
 
Capital Gains
(3) 
Total - 2014 Dividends
 
 
 
 
 
$
0.70

 
 
 
 
(1) The determination of the tax attributes of the 2015 distributions will be made as of the end of 2015 based upon the Company's net realized gain for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of the 2015 distributions for a full year. If the Company had determined the tax attributes of the first, second and third quarter 2015 distributions as of September 30, 2015, 100% of such distributions would be a return of capital.
(2) This dividend was paid in cash and shares of the Company's common stock.
(3) Although the dividend of $0.40 per share was paid on January 13, 2015, this dividend was taxable to stockholders as if paid in 2014. For income and excise tax purposes, this dividend was eligible for the dividends paid deduction by the Company in 2014.
On March 26, 2015, the Company’s Board of Directors declared cash dividends of $0.15 per share, which were paid on April 29, 2015, June 25, 2015 and September 25, 2015, to common stockholders of record on April 15, 2015, June 11, 2015 and September 11, 2015, respectively. A total of approximately $4.4 million was paid to the Company's stockholders in connection with the April 29, 2015, June 25, 2015 and September 25, 2015 distributions. The determination of the tax attributes of the 2015 distributions will be made as of the end of 2015 based upon the Company's net realized gain for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of the 2015 distributions for a full year. If the Company had determined the tax attributes of the first, second and third quarter 2015 distributions as of September 30, 2015, 100% of such distributions would be a return of capital.
On February 20, 2014, the Company’s Board of Directors declared a dividend of $0.10 per share payable on April 14, 2014, June 17, 2014 and September 18, 2014, to common stockholders of record on March 6, 2014, May 8, 2014 and August 11, 2014, respectively. Stockholders had the option to receive payment of these dividends in cash or in shares of the Company’s common stock, provided that the aggregate cash payable to all stockholders for each dividend was limited to 25% of the aggregate dividend amount. Based on stockholder elections, the April 14, 2014 dividend consisted of $238,722 in cash and 119,157 shares of common stock, the June 17, 2014 dividend consisted of $241,701 in cash and 118,542 shares of common stock, and the September 18, 2014 dividend consisted of $244,665 in cash and 136,370 shares of common stock.
On December 12, 2014, the Company's Board of Directors declared a special fourth quarter dividend of $0.396 per share payable to stockholders of record on December 31, 2014 which was paid 100% in cash on January 13, 2015. With this special fourth quarter dividend, the Company distributed 100% of its $6.8 million in net gains realized in 2014.
The Company generally pays quarterly distributions to its stockholders out of assets legally available for distribution, as determined by the Board of Directors, with the intention of distributing 100% of the Company's net realized capital gains annually. 
Under the Company's distribution policy, the Company intends to pay quarterly regular distributions (the "Regular Distributions") to its stockholders in an amount determined and declared by the Board of Directors in the first quarter of each year. The Regular Distributions are intended to provide a minimum level of distributions to the Company's stockholders each year notwithstanding that the Company is generating net investment losses. Since the Company's current portfolio company investments do not generate current income (i.e., dividends or interest income), the Company does not expect its Regular Distributions to be sourced from net investment income. To the extent the Company's net realized capital gains exceed the aggregate amount of the Regular Distributions for a year, the Board of Directors also intends to declare a special distribution (the "Special Distribution") in December of each year so that the total distributions for the year represent at least 100% of the Company's net realized capital gains. However, the Board of Directors may eliminate or adjust the amount of the Regular and Special Distributions it pays each year based on factors that it deems relevant from time to time including, without limitation, the Company's financial condition,

26

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

cash availability, maintenance of RIC status, corporate-level income and excise tax planning and compliance with applicable BDC regulations.  Further, the Company intends to pay any distributions entirely in cash.
Because of the unpredictable and inconsistent nature of the net realized capital gains the Company may earn over the next several years, the Regular Distributions are intended to provide a more consistent and predictable return to the Company's stockholders. If the Regular Distributions for the year exceed the Company's net investment income and net realized capital gains, the difference will be distributed from the Company's capital and will constitute a return of capital to its stockholders.   
Consistent with the Company's distribution policy, on March 26, 2015, the Board of Directors declared quarterly Regular Distributions for 2015, including a fourth quarter distribution in the amount of $0.15 per share. The record and payment dates for the fourth quarter distribution are as follows:
Regular Distributions
 
Amount Per Share
 
Record Date
 
Payment Date
Fourth Quarter
 
$
0.15

 
December 4, 2015
 
December 18, 2015
The Board of Directors has confirmed that the previously declared fourth quarter distribution will be paid based on the record and payment dates set forth above. The Board of Directors is currently assessing the Company's distribution policy. However, the Board of Directors does not currently intend to pay Regular Distributions for 2016.
In the event the Company retains some or all of its realized net capital gains, the Company may designate the retained amount as a deemed distribution to stockholders. In such case, among other consequences, the Company will pay corporate-level tax on the retained amount, each U.S. stockholder will be required to include its share of the deemed distribution in income as if it had been actually distributed to the U.S. stockholder and the U.S. stockholder will be entitled to claim a credit or refund equal to its allocable share of the corporate-level tax the Company pays on the retained realized net capital gain.
For income tax purposes, distributions paid to stockholders are reported as ordinary income, return of capital, long-term capital gains or a combination thereof.
The Company maintains a dividend reinvestment plan ("DRIP") that provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if the Company declares a dividend, stockholders who have not "opted out" of the DRIP by the dividend record date will have their dividend automatically reinvested into additional shares of common stock. Although the Company has a number of options to satisfy the share requirements of the DRIP, it currently expects that the shares required to be purchased under the DRIP will be acquired through open market purchases of common stock by the DRIP administrator. The shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP administrator.
Note 8 - Commitments and Contingencies
In the normal course of business, the Company may enter into investment agreements under which it commits to make an investment in a portfolio company at some future date or over a specified period of time. As of September 30, 2015, the Company had not entered into any investment agreements that required it to make a future investment in a portfolio company.
On October 15, 2015, Suniva completed a stock-for-stock merger transaction with SFCE. Pursuant to the merger agreement, the Company is required to indemnify SFCE for certain breaches of warranties and representations made to SFCE, subject to a cap of approximately 12.5% of the merger consideration received by the Company. Any damages payable by the Company would be settled through an adjustment to the number of shares of common stock in the surviving company held by the Company and/or SFCE. See Note 13 - Subsequent Events.
On November 18, 2014, Xtime, Inc., a private portfolio company, completed an all-cash merger transaction with Cox Automotive, Inc. At the closing of the merger, the Company was required to set aside $809,311 in escrow as partial security for potential stockholder indemnification obligations under the merger agreement. The $809,311 represents additional cash proceeds that may be released to the Company at a later date subject to potential indemnity claims. On January 13, 2015, Escrowed Funds totaling $105,210 were released to the Company from the Xtime escrow without any offset for indemnity claims. The remaining Escrowed Funds are anticipated to be released in phases with anticipated distributions occurring in January 2016 and November 2017, net of settlement of any indemnity claims. As of September 30, 2015, the Escrowed Funds were fair valued at $621,498. Although recovery under the stockholder indemnity obligation is generally limited to the escrow fund, the Company may be liable for its pro rata amount of any damages for certain types of indemnity claims not to exceed the cash consideration received by the

27

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

Company, provided, however, in the case of the Company's fraud or intentional misrepresentation, there is no limitation on liability. Except as discussed above, the Company has not been notified of any stockholder indemnity claims.
On November 18, 2014, Stoke, Inc. was acquired in an all-cash merger. Under the merger agreement, the preferred stockholders entitled to receive cash consideration under the merger, including the Company, are obligated to indemnify the buyer for their pro rata amount of any damages for certain indemnity claims. Although recovery under the stockholder indemnity obligation is generally limited to the cash consideration received by the Company, the Company's potential liability for indemnity claims could exceed the cash consideration it received at the closing in the event of the Company's or Stoke's fraud, willful misconduct or intentional misrepresentation. The Company has not been notified of any stockholder indemnity claims.
On November 6, 2013, the Company exchanged its preferred stock interests in Jumptap, Inc. for shares of common stock in Millennial Media, Inc., a publicly traded company, pursuant to a merger transaction. As part of the merger agreement, the Company, together with other participating stockholders of Jumptap, agreed to indemnify Millennial Media for inaccuracies in any representations or warranties made by Jumptap, any breach by Jumptap of any covenants or agreements, and certain other claims. Participating stockholders, including the Company, were required to set aside in escrow shares of Millennial Media for the one-year period following the closing as partial security for potential stockholder indemnification obligations. The Company set aside 135,194 shares of Millennial Media as part of this escrow fund. In November 2014, 118,048 shares were released from the indemnity escrow and sold by the Company. As of December 31, 2014, the Company wrote off its remaining 17,146 shares of Millennial Media common stock that continued to be held in escrow based on indemnity claims made against such escrowed shares. On January 6, 2015, 12,629 shares of the Company's Millennial Media common stock were used for the payment of stockholder indemnity claims and 3,986 shares of Millennial Media common stock were released to the Company from the indemnity escrow. On February 26, 2015, the Company sold these released shares resulting in a net realized gain of $6,178. On June 12, 2015, 156 shares of the Company's Millennial Media common stock were released from escrow to pay stockholder indemnity claims. As of September 30, 2015, a total of 375 shares of Millennial Media common stock continued to be held in escrow. Although recovery under the stockholder indemnity obligation is generally limited to the escrow fund, the Company may be liable for its pro rata amount of any damages for certain types of indemnity claims not to exceed the consideration received by the Company, provided, however, in the case of the Company's fraud or intentional misrepresentation, there is no limitation on liability. Except as discussed above, the Company has not been notified of any stockholder indemnity claims.
The Company maintains a D&O Policy and an Excess Policy, which provide liability insurance coverage for its officers and directors. The Company has also agreed to indemnify its directors and officers to the maximum extent permitted by Maryland law subject to the restrictions in the 1940 Act.
Absent the willful misfeasance, bad faith or gross negligence of the Adviser or the Adviser’s reckless disregard of its duties and obligations, the Company has agreed to indemnify the Adviser (including its officers, managers, agents, employees and members) for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising out of the Adviser’s performance of its duties and obligations under both the Prior Advisory Agreement and the Investment Advisory Agreement, except to the extent specified in the 1940 Act.
As of September 30, 2015, the Company was not a party to any material legal proceedings. However, from time to time, the Company may be party to certain legal proceedings incidental to the normal course of its business including the enforcement of its rights under contracts with its portfolio companies.
Note 9 - Changes in Net Assets Per Share
The following table sets forth the computation of the basic and diluted per share net decrease in net assets resulting from operations for the three and nine months ended September 30, 2015 and 2014:
 
Three Months Ended
 
Nine Months Ended
 
September 30, 2015
 
September 30, 2014
 
September 30, 2015
 
September 30, 2014
Net decrease in net assets resulting from operations
$
(5,000,187
)
 
$
(3,055,236
)
 
$
(7,415,219
)
 
$
(3,967,875
)
Basic and diluted weighted-average shares outstanding
9,709,456

 
9,805,871

 
9,760,384

 
9,675,623

Basic and diluted net (decrease) increase in net assets per share resulting from operations
$
(0.51
)
 
$
(0.31
)
 
$
(0.76
)
 
$
(0.41
)
During the three and nine months ended September 30, 2015 and 2014, the Company had no dilutive securities outstanding.


28

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

Note 10 - Financial Highlights
The following is a schedule of financial highlights for the nine months ended September 30, 2015 and 2014:
 
Nine Months Ended
 
September 30, 2015
 
September 30, 2014
Per common share data
 
 
 
Net asset value, beginning of period
$
6.82

 
$
7.65

 
 
 
 
Net investment loss (1)(2)
(0.14
)
 
(0.21
)
Net realized gain (loss) on investments (1)
(0.12
)
 
0.07

Net increase (decrease) in unrealized appreciation on investments and funds held in escrow from sale of investment (1)
(0.50
)
 
(0.27
)
Net decrease in net assets resulting from operations
(0.76
)
 
(0.41
)
 
 
 
 
Stockholder distributions:
 
 
 
Stockholder distributions paid from net realized gain

 
(0.07
)
Stockholder distributions as a return of capital
(0.45
)
 
(0.23
)
Net decrease in net assets resulting from stockholder distributions
(0.45
)
 
(0.30
)
 
 
 
 
Capital stock transactions:
 
 
 
Issuance of common stock (3)

 
(0.05
)
Repurchases of common stock (4)
0.02

 

Net increase (decrease) in net assets from capital stock transactions
0.02

 
(0.05
)
 
 
 
 
Net asset value, end of period
$
5.63

 
$
6.89

 
 
 
 
Ratios and supplemental data:
 
 
 
Per share market price, end of period
$
4.69

 
$
5.25

Total return based on change in net asset value (5)
(11.66
)%
 
(6.25
)%
Total return based on stock price (6)
4.96
 %
 
(10.00
)%
Common shares outstanding, end of period
9,676,484

 
9,922,971

Weighted average common shares outstanding during period
9,760,384

 
9,675,623

Net assets, end of period
$
54,450,450

 
$
68,346,506

Ratio of operating expenses to average net assets (7)
3.71
 %
 
4.14
 %
Ratio of net investment loss to average net assets (7)
(2.92
)%
 
(3.84
)%
Weighted average debt per common share (8)
$

 
$
0.04

Portfolio turnover (9)
1.35
 %
 
9.11
 %
(1) Based on weighted average shares outstanding during the period.
(2) For the nine months ended September 30, 2015, net investment loss per share excluding expenses waived or reimbursed from the Adviser was $0.14. There were no expenses waived or reimbursed from the Adviser for the nine months ended September 30, 2014.
(3) Represents the dilutive effect of issuing common stock below net asset value per share during the period in connection with the payment of the Company's stock dividend distributions during the period. However, for purposes of this presentation, the per share amount attributable to the dilutive effect of issuing common stock below net asset value per share was reduced from $(0.07) to $(0.05) per share to reconcile the change in net asset value per share to the other per share information presented. See Note 7 - Dividends and Distributions.
(4) Represents the increase in net asset value per share attributable to repurchases of common stock during the period.
(5) Total return based on change in net asset value equals the change in the end of the period net asset value over the beginning of the period net asset value plus distributions during the period, divided by the beginning of the period net asset value. The total return has not been annualized.
(6) Total return based on stock price is calculated based on the change in the market price of the Company's shares taking into account distributions reinvested in accordance with the Company's dividend reinvestment plan, or lacking such plan, at the lesser of net asset value or market price per share on the dividend distribution date. The total return has not been annualized.
(7) Operating expenses and net investment loss for periods of less than one year are annualized, and the ratios of operating expenses to average net assets and net investment loss to average net assets are adjusted accordingly. However, incentive fees payable to the Company's investment adviser are not annualized for purposes of calculating the operating expense ratios. The ratio of non-annualized incentive fees to average net assets was (1.95%) and (0.54%) for the nine months ended September 30, 2015 and 2014, respectively. For the nine months ended September 30, 2015, the ratios of operating expenses and net investment loss to average net assets excluding expenses waived or reimbursed from the Adviser were 3.79% and (2.99%), respectively. There were

29

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

no expenses waived or reimbursed from the Adviser for the nine months ended September 30, 2014. Because the ratios are calculated for the Company’s common stock taken as a whole, an individual investor’s ratios may vary from these ratios.
(8) Weighted average debt per common share is calculated as the weighted average debt during the period divided by the weighted average shares outstanding during the period. During the nine months ended September 30, 2015, the Company did not have any debt.
(9) Portfolio turnover is calculated as net proceeds from the sale of portfolio company investments during the period divided by average net assets during the period.
Note 11 - Income Taxes
Because the Company distributed 100% of its net realized capital gains for the year ended December 31, 2014, no corporate-level federal income or excise taxes were due on such net realized capital gains and, as such, the Company did not make any provision for federal income or excise taxes as of December 31, 2014.
As of December 31, 2014, the Company's net investment loss (before incentive fees) of $3,767,256, representing the Company’s 2014 ordinary loss for tax purposes which may not be carried forward to future years by a RIC, was reclassified to additional paid-in-capital. The portion of the Company’s net investment loss attributable to incentive fee expense has not been reclassified to additional paid-in-capital as of December 31, 2014 since incentive fee expense represents a temporary, rather than permanent, book-to-tax difference.
The net unrealized appreciation and the aggregate cost of the Company’s portfolio company investments and Escrowed Funds for federal income tax purposes as of September 30, 2015 and December 31, 2014 were as follows:
 
September 30, 2015
 
December 31, 2014
Aggregate cost for federal income tax purposes: (1)
 
 
 
Portfolio company investments
$
41,403,125

 
$
43,373,786

Funds held in escrow from sale of investment
704,101

 
809,311

Total aggregate cost for federal income tax purposes of portfolio company financial assets
$
42,107,226

 
$
44,183,097

 
 
 
 
Gross unrealized appreciation on portfolio company investments
$
8,867,692

 
$
10,652,218

Gross unrealized depreciation on portfolio company investments
(11,314,331
)
 
(8,184,805
)
Gross unrealized depreciation on funds held in escrow from sale of investment
(82,603
)
 
(99,743
)
Net unrealized appreciation of portfolio company financial assets
$
(2,529,242
)
 
$
2,367,670

(1) Includes cumulative PIK interest accreted to principal.
As of September 30, 2015 and December 31, 2014, the Company had no undistributed ordinary income or undistributed long-term capital gains for federal income tax purposes. As of September 30, 2015 and December 31, 2014, the Company had capital loss carryforwards of $1,162,132 and $0, respectively, for federal income tax purposes. The Company evaluates tax positions taken or expected to be taken in the course of preparing its tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions deemed to meet a "more-likely-than-not" threshold would be recorded as a tax benefit or expense in the applicable period. Although the Company files federal and state tax returns, its major tax jurisdiction is federal. The 2012, 2013 and 2014 federal tax years for the Company remain subject to examination by the Internal Revenue Service. The 2012, 2013 and 2014 state tax years for the Company remain subject to examination by the Colorado Department of Revenue. As of September 30, 2015 and December 31, 2014, the Company had not recorded a liability for any unrecognized tax positions. Management’s evaluation of uncertain tax positions may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. The Company’s policy is to include interest and penalties related to income taxes, if applicable, in general and administrative expenses. There were no such expenses for the nine months ended September 30, 2015 and the year ended December 31, 2014.
Note 12 - Investments in and Advances to Affiliates
As of September 30, 2015, the Company had one portfolio company investment, Metabolon, which was a Non-controlled, Affiliated Investment since the Company owned between 5% and 25% of Metabolon's voting securities. The Company had no Controlled Investments. During the nine months ended September 30, 2015, the Company made no advances to Metabolon. The following is a schedule of the Company’s investments in Metabolon for the nine months ended September 30, 2015:

30

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

 
 
 
 
 
 
Nine Months Ended September 30, 2015
 
 
 
 
 
 
 
 
Portfolio Company
 
Investment Description
 
Number of Shares / Warrants
 
Amount of Interest and Dividends Credited to Income (1)
 
December 31, 2014 Fair Value
 
Gross Additions (2)
 
Gross Reductions (3)
 
September 30, 2015 Fair Value
Non-controlled, Affiliated Investments
 
 
 
 
 
 
 
 
 
 
Metabolon, Inc.
 
Series D Convertible Preferred Stock
 
2,229,021

 
$

 
$
7,790,000

 
$

 
$
(610,000
)
 
$
7,180,000

Total - Non-controlled, Affiliated Investments
 
$

 
$
7,790,000

 
$

 
$
(610,000
)
 
$
7,180,000

(1) Non-controlled, Affiliated investments consist of convertible preferred stock that is generally non-income producing and restricted. The convertible preferred stock investment carries a non-cumulative, preferred dividend payable when and if declared by the portfolio company's board of directors. Since no dividends have been declared or paid, or are expected to be declared or paid, with respect to this convertible preferred stock investment, this investment is considered to be non-income producing.
(2) Gross additions include increases in investments resulting from new portfolio company investments, paid-in-kind interest or dividends, and exchange of one or more existing securities for one or more new securities. Gross additions also include net decreases in unrealized depreciation or net increases in unrealized appreciation.
(3) Gross reductions include decreases in investments resulting from sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.
Note 13 - Subsequent Events
In preparing these financial statements, the Company has evaluated events after September 30, 2015. Except as set forth below, there were no subsequent events since September 30, 2015 that would require adjustment to or additional disclosure in these financial statements.
Termination of Investment Advisory and Administrative Services Agreement
On October 5, 2015, the Board of Directors approved the termination of the Investment Advisory Agreement between the Company and the Adviser effective as of the Termination Date. Following the Termination Date, the Adviser will no longer be obligated to perform investment advisory and administrative services or provide personnel to serve as officers of the Company. Also on October 5, 2015, the Board of Directors determined that the Company will no longer make investments in new venture capital-backed or high growth companies and will now shift its focus to the orderly monetization of the Company’s current holdings. However, the Company may consider making opportunistic follow-on investments in its existing portfolio companies.
The Company will continue to accrue the Base Fee and incentive fees through the Termination Date at which time the Adviser's obligation to provide services to the Company will end. Additionally, the Company will continue to reimburse the Adviser for its allocable share of administrative expenses through the Termination Date. 
Following the termination of the Investment Advisory Agreement, the Company and the Adviser will agree on the final amounts due for Base Fees, incentive fees and administrative expense reimbursement as of the Termination Date.  This will include agreement on any waiver of Base Fees and any obligations under the Adjusted Operating Expense threshold program.
As a result of the termination of the Investment Advisory Agreement, the Company intends to change its corporate name on or before the Termination Date.
Portfolio Company Activity
On October 15, 2015, Suniva completed a stock-for-stock merger transaction with SFCE, a Hong Kong Stock Exchange company and a global integrated energy provider. The transaction was effected through the merger of an indirect, wholly owned subsidiary of SFCE with and into Suniva, with Suniva being the surviving company (“Surviving Company”).
As part of the merger, the Surviving Company received US$20 million of equity financing from existing Suniva shareholders and SFCE to support the Surviving Company’s operations and manufacturing expansion plans in the United States. The Company did not participate in the equity financing. Following the merger and the equity financing, the Surviving Company became a majority-owned subsidiary of SFCE.
In the merger, all outstanding shares of preferred stock and common stock of Suniva were cancelled in exchange for the right of certain Suniva stockholders (including the Company) to receive their allocable share of the merger consideration, which will be distributed in shares of SFCE common stock and Surviving Company Class A common stock. The shares of SFCE common stock received by the Company in the merger will be subject to lockup for a period of 90 days following the October 15, 2015 closing date.

31

BDCA Venture, Inc.
Notes to Financial Statements
September 30, 2015
(Unaudited)

Based on a floor for price protection on SFCE common stock, the final merger consideration and number of shares of SFCE common stock and Surviving Company Class A common stock to be distributed to the Company will be reduced if the aggregate volume weighted average closing price per share of SFCE common stock for the 60 consecutive trading days beginning on the closing date (the “60-day VWAP”) is less than HK$2.88.
As of September 30, 2015, based on the expectation that the merger would be completed and other assumptions, the Company determined the fair value of its interests in Suniva's Series D and F preferred stock based on the estimated value of the SFCE common stock and the Surviving Company Class A common stock that the Company expects to receive for its Suniva securities.
Because the calculation of the final merger consideration and number of shares of SFCE common stock and Surviving Company Class A common stock shares to be distributed to the Company will not be available until on or about January 12, 2016 (i.e., after the 60-day VWAP period), the final value of the SFCE common stock and the Surviving Company Class A common stock may be higher or lower than the estimated value.
Pursuant to the merger agreement, the Company is required to indemnify SFCE for certain breaches of warranties and representations made to SFCE, subject to a cap of approximately 12.5% of the merger consideration received by the Company. Any damages payable by the Company would be settled through an adjustment to the number of shares of common stock in the surviving company held by the Company and/or SFCE.
Engagement of Third Party Administrator
On November 10, 2015, the Board of Directors approved the Company’s engagement of US Bancorp to provide administration and accounting services to the Company pursuant to an Administration Servicing Agreement and a Fund Accounting Servicing Agreement, respectively. The Board of Directors is also negotiating with another third party to provide administrative consulting services to the Company, including the provision of personnel to act as certain executive officers of the Company, including the Chief Executive Officer and Chief Financial Officer, following the Termination Date.
Authorization of Stock Repurchase Program
On November 10, 2015, the Board of Directors authorized a stock repurchase program of up to $1 million. Under the repurchase program, the Company is authorized to repurchase shares of its common stock in open market transactions, including through block purchases, depending on prevailing market conditions and other factors. This stock repurchase program will expire on May 10, 2016. This stock repurchase program may be extended, modified or discontinued at any time for any reason. Furthermore, the repurchase program does not obligate the Company to acquire any specific number of shares and all repurchases will be made in accordance with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases.



32


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS AND PROJECTIONS
This quarterly report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but are based on current management expectations that involve substantial risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar words. Important assumptions include the timing of an initial public offerings ("IPO") or strategic sale/merger by our existing portfolio companies and our ability to achieve attractive returns on our investments. The forward-looking statements contained in this quarterly report on Form 10-Q include statements as to:
our future operating results;
changes in our investment policies and strategies;
the impact of the termination of our investment adviser;
our ability to obtain ongoing administrative services from one or more third parties on a cost effective basis;
our business prospects and the prospects of our existing portfolio companies;
the impact of changes in interest rates on our investments;
the impact of a protracted decline in the market for IPOs on our business;
the impact of a protracted decline in the capital and/or stock market;
our ability to sell our investments;
our relationships with the management teams of our existing portfolio companies;
the dependence of our future success on the general economy and its impact on the industries in which our existing portfolio companies operate;
the ability of our existing portfolio companies to achieve their operating performance objectives, to raise additional debt and equity capital to fund future operations, and to complete an IPO or strategic sale/merger within a reasonable time;
our ability to find suitable liquid investments which generate current income that would enable us to offset some of our ongoing operating expenses, including costs that we incur to maintain our status as a public reporting and Nasdaq listed company;
our ability to make follow-on investments in our existing portfolio companies in order to maintain or enhance the value of our existing positions;
our regulatory structure and tax status, including any changes in laws and regulations;
our ability to operate as a BDC and a regulated investment company;
the adequacy of our cash resources and working capital;
our ability to generate realized capital gains from the disposition of our equity investments in existing portfolio companies after they have completed an IPO or in connection with a strategic sale/merger or as part of a privately negotiated transaction;
the timing, form and amount of any distributions;
the valuation of any investments in portfolio companies, particularly those having no liquid trading market;
our ability to recover unrealized losses;
the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations issued thereunder; and
actual and potential conflicts of interest with our investment adviser and its affiliates.
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this quarterly report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in "Risk Factors" in our most recent annual report on Form 10-K previously

33


filed with the U.S. Securities and Exchange Commission (the "SEC") and in this quarterly report on Form 10-Q. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this quarterly report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, to reflect events or circumstances occurring after the date of this quarterly report on Form 10-Q. The forward-looking statements and projections contained in this quarterly report on Form 10-Q are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended.

34


Overview
BDCA Venture, Inc. ("we," "our" and "us"), formerly known as Keating Capital, Inc., was incorporated on May 9, 2008 under the laws of the State of Maryland and is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"), as of November 20, 2008. Effective July 1, 2014, we changed our name from Keating Capital, Inc. to BDCA Venture, Inc. Effective January 1, 2010, we elected to be treated for U.S. Federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). We commenced our portfolio company investment activities in January 2010. The shares of our common stock have been listed on the Nasdaq Capital Market since December 12, 2011.
On September 22, 2014, our Board of Directors approved a change in our investment objective to maximize total return by generating current income from debt investments and, to a lesser extent, capital appreciation from equity and equity-related investments. Previously, our investment objective was to maximize capital appreciation by making investments in the equity and equity-linked securities of later stage, typically venture capital-backed, pre-initial public offering companies.
At our 2015 Annual Meeting of Stockholders held on July 9, 2015, our stockholders elected Richard Cohen, Andrew Dakos, Gerald Hellerman and Timothy Keating to serve as our directors until the 2016 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified. Additionally, at the 2015 Annual Meeting, our stockholders approved a proposal to have our Board of Directors consider adopting a plan to “maximize shareholder value within a reasonable period of time.”
On July 28, 2015, Mr. Keating notified our Board of Directors of his resignation from the Board and as our Chief Executive Officer and President. Our Board of Directors appointed Frederic M. Schweiger to serve as our Chief Executive Officer and President effective July 29, 2015.
On October 5, 2015, our Board of Directors approved the termination of the Investment Advisory and Administrative Services Agreement dated July 1, 2014 (the "Investment Advisory Agreement") between the Company and our investment adviser, BDCA Venture Adviser, LLC (our "investment adviser"). The effective date of termination of the Investment Advisory Agreement will be December 6, 2015, unless shortened or extended by mutual written agreement of us and the Adviser (the "Termination Date"). Also on October 5, 2015, our Board of Directors determined that we will no longer make investments in new venture capital-backed or high growth companies and will now shift our focus to the orderly monetization of our current holdings. However, we may consider making opportunistic follow-on investments in its existing portfolio companies. See "-Recent Developments" below.
Our Board of Directors is continuing to assess our Investment Objective and strategy, use of available cash resources and our business operations going forward. Our Board of Directors may also consider using our available cash resources to make suitable liquid investments which generate current income that would enable us to offset some of our ongoing operating expenses, including costs that we incur to maintain our status as a public reporting and Nasdaq-listed company.
For the September 30, 2015 valuation of our portfolio investments that are not publicly traded, an independent valuation firm was used to assist our investment adviser in deriving the valuation of investments in 10 of our private portfolio companies. Beginning with the September 30, 2015 valuation, our Board of Directors also engaged a valuation consultant to assist it in the review and assessment of the valuation of our private portfolio companies.
Pursuant to a directive from our Board of Directors, our investment adviser has agreed that no investment-related decisions or actions by our investment adviser with respect to our portfolio will be made without the prior approval of the Board of Directors.
On November 10, 2015, our Board of Directors approved our engagement of US Bancorp Fund Services, LLC ("US Bancorp") to provide administration and accounting services to us pursuant to an Administration Servicing Agreement and a Fund Accounting Servicing Agreement, respectively. Our Board of Directors is also negotiating with another third party to provide administrative consulting services to us, including the provision of personnel to act as certain of our executive officers, including our Chief Executive Officer and Chief Financial Officer, following the Termination Date. See "-Recent Developments" below.
We have entered into a custody agreement with and have appointed MidFirst Bank, formerly known as Steele Street Bank & Trust, as custodian of our securities.
Portfolio Activity
Given the nature of investing in the securities of private companies, our investments generally will not have readily available market quotations. Generally, our equity investments in publicly traded companies in which the lockup restriction has expired are valued at the closing market price on the valuation date. However, equity investments in publicly traded portfolio companies that remain subject to lockup restrictions are valued in good faith by our Board of Directors based on a discount to the most recently available closing market prices. Our equity investments in private companies will not generally have readily available market quotations and, as such, are valued at fair value as determined in good faith by or under the direction of our Board of Directors, see "-Significant Accounting Policies" below.

35


We did not make any portfolio company investments during the nine months ended September 30, 2015.
On January 6, 2015, 3,986 shares of Millennial Media common stock were released from the indemnity escrow. During December 2014, we wrote-off these released shares based on pending indemnity claims made against such shares. On February 26, 2015, sold these released shares resulting in a net realized gain of $6,178.
On March 12, 2015, we received $13,930 in additional proceeds related to the sale of our investment in Xtime based on a post-closing working capital adjustment to the merger consideration. The receipt of these additional proceeds resulted in a net realized gain of $13,930.
On January 15, 2015, the maturity date of our July 2014 and August 2014 promissory notes issued by BrightSource in the initial principal amount of $107,977 (the "Notes") was extended from January 15, 2015 to January 29, 2015. On January 29, 2015, the maturity date of the Notes was further extended to February 15, 2015. On March 17, 2015, the maturity date of the Notes was further extended to March 30, 2015. On September 23, 2015, BrightSource advised us that it was negotiating a further extension of the maturity date with the holders of the Notes.
On March 17, 2015, the maturity date of our BrightSource convertible bridge notes in the initial principal amount of $205,193 was extended from February 15, 2015 to March 30, 2015. On September 23, 2015, BrightSource advised us that it was negotiating a further extension of the maturity date with the holders of the convertible bridge notes.
During February and March 2015, Agilyx issued non-convertible promissory notes to certain investors in the principal amount of $2.0 million, which triggered the right for certain shareholders to force the conversion of all of Agilyx's outstanding shares of convertible preferred stock (including those held by us) into shares of common stock on a 1-for-1 basis. On April 3, 2015, Agilyx shareholders approved the conversion of all outstanding shares of convertible preferred stock to common stock on a 1-for-1 basis. Accordingly, our 1,092,956 shares of Series C convertible preferred stock and 15,107,090 shares of Series E-2 convertible preferred stock were converted into a total of 16,200,046 shares of common stock. Since April 2015, Agilyx has issued convertible notes in exchange for cash and the cancellation of the $2.0 million of previously-issued non-convertible notes. We have not participated in the convertible notes financing. The convertible notes may be converted into Agilyx's common stock at a conversion price of $0.0001 per share.
During April and May 2015, we sold 300,000 shares of Tremor Video common stock with an aggregate cost basis of $2,000,004 for total net proceeds of $817,764, resulting in a net realized loss of $1,182,240.
On May 8, 2015, Zoosk withdrew its registration statement on Form S-1 for an IPO of its common stock. Zoosk initially filed a registration statement on April 16, 2014 to raise up to $100 million in an initial public offering ("IPO").
On October 15, 2015, Suniva, Inc., a private portfolio company, completed a stock-for-stock merger transaction with Shunfeng International Clean Energy Limited, a Hong Kong Stock Exchange company ("SFCE"), and a global integrated energy provider. In the merger, all outstanding shares of preferred stock and common stock of Suniva were cancelled in exchange for the right of certain Suniva stockholders (including us) to receive their allocable share of the merger consideration, which will be distributed in shares of SFCE common stock and Class A common stock of the private surviving company of the merger transaction. See "-Recent Developments" below.
The following table summarizes the net realized gain (loss) and net change in unrealized appreciation (depreciation) for the three and nine months ended September 30, 2015 and 2014 for: (i) our portfolio company investments sold during each period, and (ii) our portfolio company investments and funds held in escrow from the sale of investments ("Escrowed Funds") held at the end of each period:

36


 
Three Months Ended
 
Nine Months Ended
 
September 30, 2015
 
September 30, 2014
 
September 30, 2015
 
September 30, 2014
 
Net Realized Gain (Loss)
 
Net Change in Unrealized Appreciation (Depreciation)
 
Net Realized Gain (Loss)
 
Net Change in Unrealized Appreciation (Depreciation)
 
Net Realized Gain (Loss)
 
Net Change in Unrealized Appreciation (Depreciation)
 
Net Realized Gain (Loss)
 
Net Change in Unrealized Appreciation (Depreciation)
Portfolio Company Investments Sold During Period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Millennial Media, Inc.
$

 
$

 
$
(1,298,086
)
 
$
(685,065
)
 
$
6,178

 
$

 
$
(12,240
)
 
$
(2,741,189
)
Kabam, Inc.

 

 
671,140

 
(601,140
)
 

 

 
671,140

 
(291,140
)
Tremor Video, Inc.
$

 
$

 
$

 
$

 
$
(1,182,240
)
 
$
1,139,004

 
$

 
$

Xtime, Inc.

 

 

 

 
13,930

 

 

 

Subtotal - Portfolio Company Investments Sold During Period

 

 
(626,946
)
 
(1,286,205
)
 
(1,162,132
)
 
1,139,004

 
658,900

 
(3,032,329
)
Portfolio Company Investments Held at End of Period

 
(5,342,009
)
 

 
(872,721
)
 

 
(6,053,056
)
 

 
445,481

Total Portfolio Company Investments

 
(5,342,009
)
 
(626,946
)
 
(2,158,926
)
 
(1,162,132
)
 
(4,914,052
)
 
658,900

 
(2,586,848
)
Funds Held in Escrow from Sale of Investment

 
5,830

 

 

 

 
17,140

 

 

Total Portfolio Company Financial Assets
$

 
$
(5,336,179
)
 
$
(626,946
)
 
$
(2,158,926
)
 
$
(1,162,132
)
 
$
(4,896,912
)
 
$
658,900

 
$
(2,586,848
)
Portfolio Composition and Potential Exits
The total value of our investments was $39.0 million at September 30, 2015, compared to $45.8 million at December 31, 2014.
The following table summarizes the composition of our portfolio company investments by type of security and Escrowed Funds at cost and value as of September 30, 2015 and December 31, 2014:
 
 
September 30, 2015
 
December 31, 2014
Security Type
 
Cost
 
Fair Value
 
Percentage of Portfolio
 
Cost
 
Fair Value
 
Percentage of Portfolio
Privately Held Portfolio Companies:
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock
 
$
32,937,524

 
$
37,130,000

 
93.81
%
 
$
37,269,880

 
$
43,060,000

 
92.50
%
Preferred Stock Warrants
 

 
400,000

 
1.01
%
 

 
340,000

 
0.73
%
Common Stock
 
6,088,558

 
170,000

 
0.43
%
 
1,756,202

 
160,000

 
0.34
%
Subordinated Convertible Bridge Notes
 
258,558

 
580,000

 
1.47
%
 
238,501

 
450,000

 
0.97
%
Subordinated Secured Notes
 
118,488

 
118,488

 
0.30
%
 
109,202

 
109,202

 
0.23
%
Subtotal - Privately Held Portfolio Companies
 
39,403,128

 
38,398,488

 
97.02
%
 
39,373,785

 
44,119,202

 
94.77
%
Publicly Traded Portfolio Companies:
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
1,999,997

 
557,998

 
1.41
%
 
4,000,001

 
1,721,997

 
3.70
%
Total Portfolio Company Investments
 
41,403,125

 
38,956,486

 
98.43
%
 
43,373,786

 
45,841,199

 
98.47
%
Funds Held in Escrow from Sale of Investment
 
704,101

 
621,498

 
1.57
%
 
809,311

 
709,568

 
1.53
%
Total Portfolio Company Financial Assets
 
$
42,107,226

 
$
39,577,984

 
100.00
%
 
$
44,183,097

 
$
46,550,767

 
100.00
%
See the Schedules of Investments in our financial statements for additional information regarding industry and headquarter locations of our portfolio companies.

37


As of September 30, 2015, the cost, fair value and unrealized appreciation (or write-up) of each of our portfolio companies in an unrealized appreciation position is set forth below:
 
 
September 30, 2015
Portfolio Company
 
Cost
 
Fair Value
 
Unrealized Appreciation
 
Unrealized Appreciation as % of Cost
SilkRoad, Inc.
 
$
6,337,785

 
$
8,750,000

 
$
2,412,215

 
38
%
Metabolon, Inc.
 
4,000,000

 
7,180,000

 
3,180,000

 
80
%
Mode Media Corporation
 
4,999,999

 
6,710,000

 
1,710,001

 
34
%
Deem, Inc.
 
3,000,000

 
3,400,000

 
400,000

 
13
%
Zoosk, Inc.
 
2,999,999

 
3,630,000

 
630,001

 
21
%
Centrify Corporation
 
2,999,999

 
3,320,000

 
320,001

 
11
%
Harvest Power, Inc.
 
2,904,526

 
3,120,000

 
215,474

 
7
%
Total
 
$
27,242,308

 
$
36,110,000

 
$
8,867,692

 
33
%
As of September 30, 2015, the cost, fair value and unrealized depreciation (or write-down) of each of our portfolio companies in an unrealized depreciation position is set forth below:
 
 
September 30, 2015
Portfolio Company
 
Cost
 
Fair Value
 
Unrealized Depreciation
 
Unrealized Depreciation as % of Cost
BrightSource Energy, Inc.
 
$
3,274,177

 
$
1,598,488

 
$
(1,675,689
)
 
(51
)%
Tremor Video, Inc.
 
1,999,997

 
557,998

 
(1,441,999
)
 
(72
)%
MBA Polymers, Inc.
 
2,000,000

 
360,000

 
(1,640,000
)
 
(82
)%
Suniva, Inc.
 
2,554,287

 
330,000

 
(2,224,287
)
 
(87
)%
Agilyx Corporation
 
4,332,356

 

 
(4,332,356
)
 
(100
)%
Total
 
$
14,160,817

 
$
2,846,486

 
$
(11,314,331
)
 
(80
)%
As of September 30, 2015, the unrealized depreciation (or write-down) on our Escrowed Funds was $82,603.
As of September 30, 2015, we held equity investments in 12 portfolio companies, one of which is publicly traded (Tremor Video), and 11 of which are private companies. Based on our quarterly calls with the management of our private portfolio companies, we do not believe that any of our 11 private portfolio companies will complete an IPO or a strategic merger or sale during the next 12 months, other than Suniva. If and when any private portfolio companies complete an IPO, our shares in such portfolio companies would only become eligible for sale following the expiration of post-IPO lockup periods, typically 180 days. We further believe there may be limited opportunities to sell our interests in existing private portfolio companies to third parties in privately negotiated transactions. Accordingly, it is possible that an orderly monetization of our current holdings may take three to five years or more.
We believe there are three factors, among others, that have an impact on the IPO market: (i) volatility, (ii) recent IPO performance, and (iii) equity market trends. During the third quarter of 2015, there was an increase in volatility, a decline in recent IPO performance, and unfavorable equity market trends, all of which we believe may adversely impact the IPO market. If these factors continue to be unfavorable, we believe it may be more difficult for our private portfolio companies to complete an IPO in the future.
Since we do not have any visibility to a strategic merger or sale of any of our portfolio companies for the remainder of 2015 and considering the year-to-date realized loss of approximately $1.2 million from the sale of Tremor Video common stock, we expect to incur a net realized loss for 2015.
There can be no assurance that any of our existing private portfolio companies will complete an IPO or a strategic sale/merger.
Results of Operations
The principal measure of our financial performance is the net increase (decrease) in our net assets resulting from operations, which is the sum of (i) net investment income (loss), (ii) net realized gain (loss), and (iii) the net change in unrealized appreciation (depreciation). Net investment income (loss) is the difference between our income from interest, dividends, fees and other investment income and our operating expenses. Net realized gain (loss), if any, is the difference between the net proceeds from the disposition of portfolio company investments or other relevant assets and their stated cost. Net unrealized appreciation (depreciation) is the net change in the fair value of our portfolio company investments or other relevant assets.
Set forth below are the results of operations for the three and nine months ended September 30, 2015 and 2014.

38


Comparison of the Three Months Ended September 30, 2015 and 2014
Investment Income
For the three months ended September 30, 2015 and 2014, we earned interest and dividend income from cash and cash equivalents of $482 and $529, respectively. During the three months ended September 30, 2015, we also earned payment-in-kind ("PIK") interest totaling $10,139 on our subordinated convertible bridge note and our subordinated secured note investments in BrightSource. During the three months ended September 30, 2014, we earned PIK interest totaling $6,426 on our subordinated convertible bridge note investments in BrightSource and Agilyx.
To maintain our status as a RIC, PIK interest, which is a non-cash source of income, must generally be distributed to stockholders at least annually from other sources such as available cash or the proceeds from the disposition of our portfolio company investments.  However, since we do not expect to have investment company taxable income, we would generally not be required to distribute PIK interest from our available cash or the proceeds from the disposition of our portfolio company investments.
The following table shows our PIK loan activity for the three months ended September 30, 2015 and 2014, at cost:
 
Three Months Ended September 30,
 
2015
 
2014
Beginning PIK loan balance (inclusive of PIK interest capitalized)
$
366,908

 
$
558,219

Addition of PIK loans during period

 

PIK interest accreted to principal during period
10,139

 
6,426

Conversion of PIK loans into equity during the period

 
(332,356
)
Payments received from PIK loans during the period

 
(398
)
Ending PIK loan balance (inclusive of PIK interest capitalized)
$
377,047

 
$
231,891

We did not make any investments in PIK loans during the three months ended September 30, 2015. As of September 30, 2015, the only notes with PIK interest that we held were issued by BrightSource. As of September 30, 2015, we were accruing PIK interest on each of our PIK loans, and none of our PIK loans were on non-accrual status.
During the three months ended September 30, 2014, the subordinated convertible bridge notes of Agilyx that we held in the principal amount of $332,356 were converted into shares of Series E-2 convertible preferred stock. The accrued PIK interest under the Agilyx bridge notes of $398 at the time of conversion was paid in cash.
Operating Expenses
Our primary operating expenses include the payment of: (i) investment advisory fees to our investment adviser under the Investment Advisory Agreement, (ii) our allocable portion of overhead and other expenses incurred by our investment adviser, as our administrator, in performing its administrative obligations under the Investment Advisory Agreement, and (iii) other operating costs. Following the Termination Date, we will no longer pay any investment advisory fees or allocated administrative expenses to our investment adviser. Our Board of Directors recently approved the engagement of U.S. Bancorp to provide administrative and fund accounting services to us. Our Board of Directors is also negotiating with another third party to provide administrative consulting services to us, including the provision of personnel to act as certain of our executive officers, including our Chief Executive Officer and Chief Financial Officer, following the Termination Date. See "-Recent Developments" below. Following the Termination Date, although we will no longer bear the costs of the various fees and expenses we have paid to our investment adviser under the Investment Advisory Agreement, by engaging third parties to provide administrative and management functions, we will incur additional costs, including those of executive officers that are now paid by our investment adviser or its affiliates.
The composition of our operating expenses for the three months ended September 30, 2015 and 2014, respectively, were as follows:

39


 
Three Months Ended September 30,
 
 
 
2015
 
2014
 
Increase / Decrease
Operating expenses:
 
 
 
 
 
Base management fees
$
321,813

 
$
375,088

 
$
(53,275
)
Incentive fees
(1,067,236
)
 
(557,175
)
 
(510,061
)
Administrative expenses allocated from investment adviser
110,713

 
181,048

 
(70,335
)
Professional fees
91,384

 
100,168

 
(8,784
)
Directors fees
48,750

 
31,250

 
17,500

Stock transfer agent fees
11,761

 
14,358

 
(2,597
)
Public and investor relations expenses
21,731

 
4,114

 
17,617

Travel expenses
1,013

 
14,828

 
(13,815
)
Marketing and advertising expenses
4,950

 
8,450

 
(3,500
)
Postage and fulfillment expenses
16,447

 
6,637

 
9,810

Printing and production expenses
39

 
13,962

 
(13,923
)
Interest expense on borrowings

 
6,736

 
(6,736
)
Custody fees
1,500

 
1,500

 

General and administrative expenses
43,543

 
75,355

 
(31,812
)
Total operating expenses
(393,592
)
 
276,319

 
(669,911
)
Waived or reimbursed expenses from investment adviser
68,221

 

 
68,221

Net operating expenses
$
(325,371
)
 
$
276,319

 
$
(601,690
)
Total operating expenses for the three months ended September 30, 2015 and 2014 were $(393,592) and $276,319, respectively, a decrease of $669,911 compared to the prior period.
Total operating expenses, excluding base management fees and incentive fees, for the three months ended September 30, 2015 and 2014 were $351,831 and $458,406, respectively, a decrease of $106,575 compared to the prior period. This decrease was due primarily to decreases in administrative expenses allocated from our investment adviser which were partially offset by increases in legal and litigation expenses of $12,857, proxy administrative and solicitation services of $22,402, and other expenses of $9,793, all related to the contested proxy campaign in connection with our 2015 Annual Meeting of Stockholders (the "Annual Meeting").
Base management fees for the three months ended September 30, 2015 and 2014 were $321,813 and $375,088, respectively, a decrease of $53,275 compared to the prior period. For the three months ended September 30, 2015 and 2014, we recorded a reduction of accrued incentive fees of $1,067,236 and $557,175, a decrease of $510,061 compared to the prior period. No incentive fees were earned for the three months ended September 30, 2015 and 2014. See Note 4 - Related Party Agreements and Transactions - to the financial statements for a further discussion of our incentive fees.
Administrative expenses allocated from our investment adviser for the three months ended September 30, 2015 and 2014 were $110,713 and $181,048, respectively, a decrease of $70,335 compared to the prior period which was a result of decreased allocations of adviser expenses. For the three months ended September 30, 2015, we recorded a reduction in expenses waived or reimbursed from our investment adviser in the amount of $68,221, representing the amount by which our Adjusted Operating Expenses (as defined below) for the three months ended September 30, 2015 were less than $375,000, the prorated amount of the annualized $1,500,000 Adjusted Operating Expense threshold for the period. There were no expenses waived or reimbursed from our investment adviser for the three months ended September 30, 2014 as no such arrangement between us and our investment adviser existed in 2014. See "-Related Party Agreements and Transactions" below.
Professional fees for the three months ended September 30, 2015 and 2014 were $91,384 and $100,168, respectively, a decrease of $8,784 compared to the prior period due primarily to a decrease in non-proxy contest related legal fees of $18,080 partially offset by an increase in legal and litigation expenses of $12,857 related to the contested proxy campaign in connection with our Annual Meeting compared to the prior period.
Directors fees for the three months ended September 30, 2015 and 2014 were $48,750 and $31,250, respectively, an increase of $17,500 compared to the prior period due primarily to the payment of directors fees to: (i) the incumbent Board of Directors prior to our Annual Meeting during July 2015, and (ii) our new Board of Directors in August 2015 following their election at our Annual Meeting.
Public and investor relations expenses for the three months ended September 30, 2015 and 2014 were $21,731 and $4,114, respectively, an increase of $17,617 compared to the prior period due primarily to an increase in proxy administrative and solicitation services of $22,402 related to the contested proxy campaign in connection with our Annual Meeting, partially offset by a decrease in stockholder calls and webinar expenses compared to the prior period.

40


Net Investment Income (Loss)
Net investment income three months ended September 30, 2015 was $335,992 compared to net investment loss for the three months ended September 30, 2014 of $269,364. The increase of $605,356 in net investment income for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 is primarily attributable to decreases in accrued incentive fees and administrative expenses allocated from the investment adviser during the three months ended September 30, 2015, which were partially offset by increases in directors fees and public and investor relations expenses related to the contested proxy campaign in connection with our Annual Meeting during the three months ended September 30, 2015, as discussed above.
Basic and diluted net investment income per common share outstanding was $0.03 for the three months ended September 30, 2015 compared to basic and diluted net investment loss per common share outstanding of $0.03 for the three months ended September 30, 2014. The weighted average common shares outstanding for the three months ended September 30, 2015 and 2014 were 9,709,456 and 9,805,871, respectively.
Net Realized Loss
For the three months ended September 30, 2015 and 2014, net realized loss totaled $0 and $626,946, respectively. We did not complete any sales of portfolio company investments during the three months ended September 30, 2015. During the three months ended September 30, 2014, we sold our entire position in Kabam and 696,735 shares of Millennial Media.
For additional information regarding the investment cost, net proceeds and net realized loss for the portfolio company position sold by us during the three months ended September 30, 2015, see "-Portfolio Activity" above.
Net Decrease in Unrealized Appreciation
For the three months ended September 30, 2015, the net decrease in unrealized appreciation on portfolio company investments and Escrowed Funds totaled $5,336,179. For the three months ended September 30, 2014, the net decrease in unrealized appreciation on portfolio company investments totaled $2,158,926. The following table summarizes the cost and fair value of our portfolio company investments and Escrowed Funds as of September 30, 2015 and June 30, 2015, and the change in unrealized appreciation (depreciation) on our portfolio company investments and Escrowed Funds comprising the net decrease in unrealized appreciation of $5,336,179 for the three months ended September 30, 2015, or $0.54 per common share outstanding during the period:
 
 
September 30, 2015
 
June 30, 2015
 
Quarter to Date
Portfolio Company
 
Cost
 
Fair Value
 
Unrealized Appreciation (Depreciation)
 
Cost
 
Fair Value
 
Unrealized Appreciation (Depreciation)
 
Net Change In Unrealized Appreciation (Depreciation)
 
Net Change In Unrealized Appreciation (Depreciation) Per Share(1)
Harvest Power, Inc.
 
$
2,904,526

 
$
3,120,000

 
$
215,474

 
$
2,904,526

 
$
3,020,000

 
$
115,474

 
$
100,000

 
$
0.01

BrightSource Energy, Inc.
 
3,274,177

 
1,598,488

 
(1,675,689
)
 
3,264,037

 
1,565,358

 
(1,698,679
)
 
22,990

 
*

Agilyx Corporation
 
4,332,356

 

 
(4,332,356
)
 
4,332,356

 

 
(4,332,356
)
 

 

Centrify Corporation
 
2,999,999

 
3,320,000

 
320,001

 
2,999,999

 
3,540,000

 
540,001

 
(220,000
)
 
(0.02
)
Tremor Video, Inc.
 
1,999,997

 
557,998

 
(1,441,999
)
 
1,999,997

 
872,997

 
(1,127,000
)
 
(314,999
)
 
(0.03
)
Zoosk, Inc.
 
2,999,999

 
3,630,000

 
630,001

 
2,999,999

 
3,970,000

 
970,001

 
(340,000
)
 
(0.03
)
Deem, Inc.
 
3,000,000

 
3,400,000

 
400,000

 
3,000,000

 
3,770,000

 
770,000

 
(370,000
)
 
(0.04
)
Metabolon, Inc.
 
4,000,000

 
7,180,000

 
3,180,000

 
4,000,000

 
7,590,000

 
3,590,000

 
(410,000
)
 
(0.04
)
SilkRoad, Inc.
 
6,337,785

 
8,750,000

 
2,412,215

 
6,337,785

 
9,360,000

 
3,022,215

 
(610,000
)
 
(0.06
)
Mode Media Corporation
 
4,999,999

 
6,710,000

 
1,710,001

 
4,999,999

 
7,500,000

 
2,500,001

 
(790,000
)
 
(0.08
)
MBA Polymers, Inc.
 
2,000,000

 
360,000

 
(1,640,000
)
 
2,000,000

 
1,420,000

 
(580,000
)
 
(1,060,000
)
 
(0.11
)
Suniva, Inc.
 
2,554,287

 
330,000

 
(2,224,287
)
 
2,554,287

 
1,680,000

 
(874,287
)
 
(1,350,000
)
 
(0.14
)
Total Portfolio Company Investments
 
41,403,125

 
38,956,486

 
(2,446,639
)
 
41,392,985

 
44,288,355

 
2,895,370

 
(5,342,009
)
 
(0.54
)
Funds held in escrow from sale of investment
 
704,101

 
621,498

 
(82,603
)
 
704,101

 
615,668

 
(88,433
)
 
5,830

 
*

Total Portfolio Company Financial Assets
 
$
42,107,226

 
$
39,577,984

 
$
(2,529,242
)
 
$
42,097,086

 
$
44,904,023

 
$
2,806,937

 
$
(5,336,179
)
 
$
(0.54
)
* Per share amount less than $0.01 per share.
(1) Per share amounts based on weighted-average shares outstanding of 9,709,456 during the three months ended September 30, 2015.
The net increase in unrealized depreciation in Tremor Video, a publicly traded company, during the three months ended September 30, 2015 reflects the change in the market price for this portfolio company.

41


Net Decrease in Net Assets Resulting From Operations and Per Share Information
The net decrease in our net assets resulting from operations for the three months ended September 30, 2015 was $5,000,187, which included a net decrease in unrealized appreciation of $5,336,179 during such period, compared to a net decrease in our net assets resulting from operations for the three months ended September 30, 2014 of $3,055,236, which included a net realized loss of $626,946 and a net decrease in unrealized appreciation of $2,158,926 during such period.
Basic and diluted net decrease in net assets resulting from operations per common share was $0.51 for the three months ended September 30, 2015, compared to basic and diluted net decrease in net assets resulting from operations per common share of $0.31 per common share for the three months ended September 30, 2014. The weighted average common shares outstanding for the three months ended September 30, 2015 and 2014 were 9,709,456 and 9,805,871, respectively.
Comparison of the Nine Months Ended September 30, 2015 and 2014
Investment Income
For the nine months ended September 30, 2015 and 2014, we earned interest and dividend income from cash and cash equivalents of $2,681 and $1,843, respectively. During the nine months ended September 30, 2015, we also earned PIK interest totaling $29,344 on our subordinated convertible bridge note and our subordinated secured note investments in BrightSource. During the nine months ended September 30, 2014, we earned PIK interest totaling $58,651 on our subordinated convertible bridge note investments in BrightSource, SilkRoad and Agilyx.
The following table shows our PIK loan activity for the nine months ended September 30, 2015 and 2014, at cost:
 
Nine Months Ended September 30,
 
2015
 
2014
Beginning PIK loan balance (inclusive of PIK interest capitalized)
$
347,703

 
$
1,242,569

Addition of PIK loans during period

 
332,357

PIK interest accreted to principal during period
29,344

 
58,651

Conversion of PIK loans into equity during the period

 
(1,401,288
)
Payments received from PIK loans during the period

 
(398
)
Ending PIK loan balance (inclusive of PIK interest capitalized)
$
377,047

 
$
231,891

We did not make any investments in PIK loans during the nine months ended September 30, 2015. As of September 30, 2015, the only notes with PIK interest that we held were issued by BrightSource. As of September 30, 2015, we were accruing PIK interest on each of our PIK loans, and none of our PIK loans were on non-accrual status.
During the nine months ended September 30, 2014, we invested in the subordinated convertible bridge notes of Agilyx which, during the same period, were subsequently converted into shares of Series E-2 convertible preferred stock. We also received shares of SilkRoad's Series D-1 convertible preferred stock upon the conversion of the $1,000,000 convertible bridge note issued to us by SilkRoad, including the PIK interest of $68,932 which was also converted.
Operating Expenses
The composition of our operating expenses for the nine months ended September 30, 2015 and 2014, respectively, were as follows:

42


 
Nine Months Ended September 30,
 
 
 
2015
 
2014
 
Increase / Decrease
Operating expenses:
 
 
 
 
 
Base management fees
$
1,027,442

 
$
1,116,534

 
$
(89,092
)
Incentive fees
(1,211,809
)
 
(385,589
)
 
(826,220
)
Administrative expenses allocated from investment adviser
354,236

 
509,352

 
(155,116
)
Professional fees
727,134

 
289,317

 
437,817

Directors fees
105,000

 
81,250

 
23,750

Stock transfer agent fees
39,636

 
40,266

 
(630
)
Public and investor relations expenses
135,733

 
59,913

 
75,820

Travel expenses
17,118

 
62,882

 
(45,764
)
Marketing and advertising expenses
14,850

 
40,797

 
(25,947
)
Postage and fulfillment expenses
33,713

 
28,710

 
5,003

Printing and production expenses
20,517

 
41,644

 
(21,127
)
Interest expense on borrowings

 
6,736

 
(6,736
)
Custody fees
4,500

 
4,500

 

General and administrative expenses
155,952

 
204,109

 
(48,157
)
Total operating expenses
1,424,022

 
2,100,421

 
(676,399
)
Waived or reimbursed expenses from investment adviser
(35,822
)
 

 
(35,822
)
Net operating expenses
$
1,388,200

 
$
2,100,421

 
$
(712,221
)
Total operating expenses for the nine months ended September 30, 2015 and 2014 were $1,424,022 and $2,100,421, respectively, a decrease of $676,399 compared to the prior period.
Total operating expenses, excluding base management fees and incentive fees, for the nine months ended September 30, 2015 and 2014 were $1,608,389 and $1,369,476, respectively, an increase of $238,913 compared to the prior period. This increase was due primarily to increases in legal and litigation expenses of $305,961and proxy administrative and solicitation services of $107,861, each related to the contested proxy campaign in connection with our Annual Meeting, as well as audit fees of $146,672 as a result of the resignation of our former auditor and the appointment of a new auditor, partially offset by reductions in allocated administrative expenses allocated from our investment adviser and other operating expense categories.
Base management fees for the nine months ended September 30, 2015 and 2014 were $1,027,442 and $1,116,534, respectively, a decrease of $89,092 compared to the prior period. For the nine months ended September 30, 2015 and 2014, we recorded a reduction of accrued incentive fees of $1,211,809 and $385,589, respectively, a decrease of $826,220 compared to the prior period. No incentive fees were earned for the nine months ended September 30, 2015 and 2014. See Note 4 - Related Party Agreements and Transactions - to the financial statements for a further discussion of our incentive fees.
Administrative expenses allocated from our investment adviser for the nine months ended September 30, 2015 and 2014 were $354,236 and $509,352, respectively, a decrease of $155,116 compared to the prior period which was a result of decreased allocations of adviser expenses. For the nine months ended September 30, 2015, we recorded expenses waived or reimbursed from our investment adviser in the amount of $35,822 representing the amount by which our Adjusted Operating Expenses (as defined below) for the nine months ended September 30, 2015 exceeded $1,125,000, or the prorated amount of the annualized $1,500,000 Adjusted Operating Expense threshold for the period. There were no expenses waived or reimbursed from our investment adviser for the nine months ended September 30, 2014 as no such arrangement between us and our investment adviser existed in 2014. See "-Related Party Agreements and Transactions" below.
Professional fees for the nine months ended September 30, 2015 and 2014 were $727,134 and $289,317, respectively, an increase of $437,817 compared to the prior period due primarily to increases in: (i) legal and litigation expenses of $305,961 related to the contested proxy campaign in connection with our Annual Meeting, and (ii) audit fees of $146,672 as a result of the resignation of our former auditor and the appointment of a new auditor compared to the prior period.
Public and investor relations expenses for the nine months ended September 30, 2015 and 2014 were $135,733 and $59,913, respectively, an increase of $75,820 compared to the prior period due primarily to increases in proxy administrative and solicitation services of $107,861 related to the contested proxy campaign in connection with our Annual Meeting and investor relations services of $17,955, partially offset by a decrease in seminar and conference registration fees of $39,850.
The decrease of $25,947 in marketing and advertising expenses was primarily the result of a decrease in web-based advertising compared to the prior period.
The increase of $23,750 in directors’ fees for the nine months ended September 30, 2015 was primarily the result of the payment of directors fees to: (i) the incumbent Board of Directors prior to our Annual Meeting during July 2015, and (ii) our new

43


Board of Directors in August 2015 following their election at our Annual Meeting.
Net Investment Loss
Net investment losses for the nine months ended September 30, 2015 and 2014 were $1,356,175 and $2,039,927, respectively. The decrease of $683,752 in net investment loss for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 is primarily attributable to decreases in accrued incentive fees and administrative expenses allocated from our investment adviser during the nine months ended September 30, 2015, which were partially offset by increases in professional fees and public and investor relations expenses related to the contested proxy campaign in connection with our Annual Meeting during the nine months ended September 30, 2015, as discussed above.
Basic and diluted net investment loss per common share outstanding was $0.14 for the nine months ended September 30, 2015 compared to basic and diluted net investment loss per common share outstanding of $0.21 for the nine months ended September 30, 2014. The weighted average common shares outstanding for the nine months ended September 30, 2015 and 2014 were 9,760,384 and 9,675,623, respectively.
Net Realized Gain (Loss)
For the nine months ended September 30, 2015, net realized loss totaled $1,162,132. During the nine months ended September 30, 2015, we sold 300,000 shares of Tremor Video common stock. During the same period, we also sold 3,986 shares of previously written-off Millennial Media common stock which had been released from the indemnity escrow and received additional proceeds related to the sale of our investment in Xtime based on a post-closing working capital adjustment to the merger consideration.
For the nine months ended September 30, 2014, net realized gain on investments totaled $658,900. During the nine months ended September 30, 2014, we sold our entire position of Kabam and 1,112,699 shares of Millennial Media common stock.
For additional information regarding the investment cost, net proceeds and net realized gain (loss) for each of the portfolio company positions sold by us during the nine months ended September 30, 2015, see "-Portfolio Activity" above.
Net Decrease in Unrealized Appreciation
For the nine months ended September 30, 2015, the net decrease in unrealized appreciation on portfolio company investments and Escrowed Funds totaled $4,896,912. For the nine months ended September 30, 2014, the net decrease in unrealized appreciation on portfolio company investments totaled $2,586,848. The following table summarizes the cost and fair value of our portfolio company investments and Escrowed Funds as of September 30, 2015 and December 31, 2014, and the change in unrealized appreciation (depreciation) on our portfolio company investments and Escrowed Funds comprising the net decrease in unrealized appreciation of $4,896,912 for the nine months ended September 30, 2015, or $0.50 per common share outstanding during the period:
 
 
September 30, 2015
 
December 31, 2014
 
Year to Date
Portfolio Company
 
Cost
 
Fair Value
 
Unrealized Appreciation (Depreciation)
 
Cost
 
Fair Value
 
Unrealized Appreciation (Depreciation)
 
Net Change In Unrealized Appreciation (Depreciation)
 
Net Change In Unrealized Appreciation (Depreciation) Per Share(1)
Tremor Video, Inc.
 
$
1,999,997

 
$
557,998

 
$
(1,441,999
)
 
$
4,000,001

 
$
1,721,997

 
$
(2,278,004
)
 
$
836,005

 
$
0.09

Harvest Power, Inc.
 
2,904,526

 
3,120,000

 
215,474

 
2,904,526

 
2,620,000

 
(284,526
)
 
500,000

 
0.05

BrightSource Energy, Inc.
 
3,274,177

 
1,598,488

 
(1,675,689
)
 
3,244,834

 
1,389,202

 
(1,855,632
)
 
179,943

 
0.02

Centrify Corporation
 
2,999,999

 
3,320,000

 
320,001

 
2,999,999

 
3,310,000

 
310,001

 
10,000

 
*

SilkRoad, Inc.
 
6,337,785

 
8,750,000

 
2,412,215

 
6,337,785

 
8,860,000

 
2,522,215

 
(110,000
)
 
(0.01
)
Mode Media Corporation
 
4,999,999

 
6,710,000

 
1,710,001

 
4,999,999

 
6,850,000

 
1,850,001

 
(140,000
)
 
(0.01
)
Zoosk, Inc.
 
2,999,999

 
3,630,000

 
630,001

 
2,999,999

 
3,790,000

 
790,001

 
(160,000
)
 
(0.02
)
Metabolon, Inc.
 
4,000,000

 
7,180,000

 
3,180,000

 
4,000,000

 
7,790,000

 
3,790,000

 
(610,000
)
 
(0.06
)
Deem, Inc.
 
3,000,000

 
3,400,000

 
400,000

 
3,000,000

 
4,290,000

 
1,290,000

 
(890,000
)
 
(0.09
)
Agilyx Corporation
 
4,332,356

 

 
(4,332,356
)
 
4,332,356

 
1,380,000

 
(2,952,356
)
 
(1,380,000
)
 
(0.14
)
Suniva, Inc.
 
2,554,287

 
330,000

 
(2,224,287
)
 
2,554,287

 
1,740,000

 
(814,287
)
 
(1,410,000
)
 
(0.15
)
MBA Polymers, Inc.
 
2,000,000

 
360,000

 
(1,640,000
)
 
2,000,000

 
2,100,000

 
100,000

 
(1,740,000
)
 
(0.18
)
Total Portfolio Company Investments
 
41,403,125

 
38,956,486

 
(2,446,639
)
 
43,373,786

 
45,841,199

 
2,467,413

 
(4,914,052
)
 
(0.50
)
Funds held in escrow from sale of investment
 
704,101

 
621,498

 
(82,603
)
 
809,311

 
709,568

 
(99,743
)
 
17,140

 
*

Total Portfolio Company Financial Assets
 
$
42,107,226

 
$
39,577,984

 
$
(2,529,242
)
 
$
44,183,097

 
$
46,550,767

 
$
2,367,670

 
$
(4,896,912
)
 
$
(0.50
)
* Per share amount less than $0.01 per share.
(1) Per share amounts based on weighted-average shares outstanding of 9,760,384 during the nine months ended September 30, 2015.

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The net decrease in unrealized depreciation in Tremor Video, a publicly traded company, during the nine months ended September 30, 2015 is comprised of: (i) the net decrease (reversal) of unrealized depreciation of $1,139,004 on the shares of Tremor Video we sold during the period for which we realized a net loss of $1,182,240, and (ii) the change in market price for the shares of Tremor Video we continue to hold, representing a net increase in unrealized depreciation of $302,999.
Net Decrease in Net Assets Resulting From Operations and Per Share Information
The net decrease in our net assets resulting from operations for the nine months ended September 30, 2015 was $7,415,219, which included a net realized loss of $1,162,132 and a net decrease in unrealized appreciation of $4,896,912 during such period, compared to a net decrease in our net assets resulting from operations for the nine months ended September 30, 2014 of $3,967,875, which included a net realized gain of $658,900 and a net decrease in unrealized appreciation of $2,586,848 during such period.
Basic and diluted net decrease in net assets resulting from operations per common share was $0.76 for the nine months ended September 30, 2015, compared to basic and diluted net decrease in net assets resulting from operations per common share of $0.41 per common share for the nine months ended September 30, 2014. The weighted average common shares outstanding for the nine months ended September 30, 2015 and 2014 were 9,760,384 and 9,675,623, respectively.
Financial Condition, Liquidity and Capital Resources
Cash and Cash Equivalents
As of September 30, 2015, we had cash and cash equivalents of $16.2 million as compared to $27.4 million as of December 31, 2014. The decrease of $11.3 million in cash and cash equivalents during the nine months ended September 30, 2015 was primarily the result of: (i) our fourth quarter 2014 cash distribution to stockholders of $3.9 million sourced from long-term capital gain and paid in 2015, (ii) our first, second and third quarter 2015 cash distributions totaling $4.4 million, (iii) repurchases of our common stock totaling $0.6 million, and (iv) net cash used in operating activities of $2.4 million during the nine months ended September 30, 2015.
As of September 30, 2015, we had no indebtedness and total accounts payable and accrued expenses of $1.4 million, including amounts owed to our investment adviser. As of September 30, 2015, amounts owed to our investment adviser consisted of $321,813 of base management fees, $110,265 of administrative expenses and $918,635 of accrued theoretical incentive fees. No earned incentive fees were payable to our investment adviser as of September 30, 2015. For accounting purposes only, we are required under U.S. GAAP to accrue a theoretical incentive fee which assumes all unrealized balances are realized in order to reflect an incentive fee that would theoretically be payable to our investment adviser. As of December 31, 2014, we had no indebtedness and total accounts payable and accrued expenses of $7.2 million, including amounts owed to our investment adviser. As of December 31, 2014, amounts owed to our investment adviser consisted of $354,633 of base management fees, $113,596 of administrative expenses, $635,241 of earned incentive fees for the 2014 year and $2,130,443 of accrued theoretical incentive fees. We paid the earned incentives for the 2014 year in March 2015. The amount of earned incentive fees actually payable to our investment adviser as of December 31, 2014 is consistent with the Advisers Act and the formula reflected in the Investment Advisory Agreement which specifically excludes consideration of unrealized appreciation.
Our Board of Directors is currently assessing our use of available cash resources going forward. Our Board of Directors will no longer make investments in new venture capital-backed or high growth companies and will now shift our focus to the orderly monetization of our current holdings. However, we may consider making opportunistic follow-on investments in our existing portfolio companies. Our Board of Directors may also consider using our available cash resources to make suitable liquid investments which generate current income that would enable us to offset some of our ongoing operating expenses. See "-Recent Developments" below.
Capital Raising
As of September 30, 2015, we had 9,676,484 shares of our common stock issued and outstanding.
Except for a rights offering, we are not generally able to issue and sell our common stock at a price below current net asset value per share. We may, however, sell our common stock, at a price below the current net asset value of the common stock, or sell warrants, options or rights to acquire such common stock, at a price below the current net asset value of the common stock if (i) our Board of Directors determines that such sale is in the best interests of the Company and (ii) our stockholders have approved such sale. If our Board of Directors determines that a sale of common stock at a price below the current net asset value is in the best interests of the Company and our stockholders, our Board may consider a rights offering or it may seek approval from our stockholders for the authority to sell shares of our common stock below net asset value.
We do not currently intend to raise additional common equity capital in 2015 or 2016 unless and until our stock price is at or above our net asset value.
In the future, we may borrow funds to make investments. However, there is no assurance that we would be able to obtain debt financing at attractive terms or that the returns on the leveraged investments would cover the interest expense associated with such debt financing. Further, any interest expense associated with a debt financing would increase our operating expenses. We do

45


not currently anticipate issuing any preferred stock, although we could do so if our Board of Directors determines that it is in our best interest and the best interests of our stockholders.  The costs associated with any borrowings or preferred stock issuance will be indirectly borne by our common stockholders.
Regulatory Compliance
Due to the limited number of investments we currently hold, we closely monitor our asset composition in order to continue to satisfy the asset diversification test and maintain our status as a RIC. To maintain our status as a RIC, in addition to other requirements, as of the close of each quarter end, we must meet the asset diversification test, which requires that at least 50% of the value of our assets consist of cash, cash items, U.S. government securities or certain other qualified securities (the "50% Threshold"). However, the failure to meet the 50% Threshold alone will not result in our loss of RIC status. In circumstances where the failure to meet the 50% Threshold is the result of fluctuations in the value of our assets, including as a result of the sale of assets, we will still be deemed to have satisfied the 50% Threshold and, therefore, maintain our RIC status, provided that we have not made any new investments in non-qualifying securities, including additional investments in non-qualifying securities of existing portfolio companies, since the time that we fell below the 50% Threshold. As of September 30, 2015, we did not meet the 50% Threshold, however, such failure was due to fluctuations in the value of our assets. Accordingly, we satisfied the diversification test as of September 30, 2015.
To maintain our status as a RIC for tax purposes, we purchased $20 million of short-term U.S. Treasury bills ("T-Bills") on September 24, 2014. We financed the purchase of these T-Bills using $600,000 in cash and the proceeds from a $19.4 million short-term borrowing financed through a margin account agreement with National Financial Services, LLC. The $20 million of T-Bills were pledged as collateral for the short-term borrowing. On October 3, 2014, we sold the T-Bills for a realized loss of $94 and repaid the short-term borrowing in full together with accrued interest.
Distributions
Distributions to our stockholders are payable only when and as declared by our Board of Directors and are paid out of assets legally available for distribution. We may fund cash distributions to stockholders from any sources of funds available to us. We have not established limits on the amount of funds we may use from available sources to make distributions.
The following table summarizes our dividends declared for the nine months ended September 30, 2015 and the years ended 2014, 2013, 2012 and 2011:
Date Declared
 
Record Date
 
Payment Date
 
Dividend
Per Share
 
Source of Distribution
 
2015 Dividends:
 
 
 
 
 
 
 
 
 
 
March 26, 2015
 
April 15, 2015
 
April 29, 2015
 
$
0.15

 
 
Return of Capital
(1) 
March 26, 2015
 
June 11, 2015
 
June 25, 2015
 
0.15

 
 
Return of Capital
(1) 
March 26, 2015
 
September 11, 2015
 
September 25, 2015
 
$
0.15

 
 
Return of Capital
(1) 
Total - 2015 Dividends
 
 
 
0.45

 
 
 
 
2014 Dividends:
 
 
 
 
 
 
 
 
 
 
February 20, 2014
 
March 6, 2014
 
April 14, 2014
 
0.10

(2) 
 
Capital Gains
 
February 20, 2014
 
May 8, 2014
 
June 17, 2014
 
0.10

(2) 
 
Capital Gains
 
February 20, 2014
 
August 11, 2014
 
September 18, 2014
 
0.10

(2) 
 
Capital Gains
 
December 12, 2014
 
December 31, 2014
 
January 13, 2015
 
0.40

 
 
Capital Gains
(3) 
Total - 2014 Dividends
 
 
 
0.70

 
 
 
 
2013 Dividends:
 
 
 
 
 
 
 
 
 
 
May 28, 2013
 
June 14, 2013
 
June 26, 2013
 
0.24

 
 
Capital Gains
 
May 28, 2013
 
September 13, 2013
 
September 25, 2013
 
0.24

 
 
Capital Gains
 
December 19, 2013
 
December 30, 2013
 
January 13, 2014
 
0.01

 
 
Capital Gains
(4) 
Total - 2013 Dividends
 
 
 
0.49

 
 
 
 
2012 Dividends:
 
 
 
 
 
 
 
 
 
 
December 6, 2012
 
December 14, 2012
 
December 26, 2012
 
0.03

 
 
Capital Gains
 
Total - 2012 Dividends
 
 
 
0.03

 
 
 
 
2011 Dividends:
 
 
 
 
 
 
 
 
 
 
February 11, 2011
 
February 15, 2011
 
February 17, 2011
 
0.13

 
 
Return of Capital
(5) 
Total - 2011 Dividends
 
 
 
0.13

 
 
 
 
Total - Cumulative
 
 
 
$
1.80

 
 
 
 
(1) The determination of the tax attributes of our 2015 distributions will be made as of the end of 2015 based upon our net realized gain for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of the 2015 distributions for a full year. If we

46


had determined the tax attributes of our first, second and third quarter 2015 distributions as of September 30, 2015, 100% of such distributions would be a return of capital.
(2) This dividend was paid in cash and shares of our common stock.
(3) Although the dividend of $0.40 per share was paid on January 13, 2015, this dividend was taxable to stockholders as if paid in 2014. For income and excise tax purposes, this dividend was eligible for the dividends paid deduction by us in 2014.
(4) Although the dividend of $0.01 per share was paid on January 13, 2014, this dividend was taxable to stockholders as if paid in 2013. For income and excise tax purposes, this dividend was eligible for the dividends paid deduction by us in 2013.
(5) The February 2011 distribution was a special cash distribution based on the unrealized appreciation of a portfolio company investment.
On March 26, 2015, our Board of Directors declared cash distributions of $0.15 per share, which were paid on April 29, 2015, June 25, 2015 and September 25, 2015, to common stockholders of record on April 15, 2015, June 11, 2015 and September 11, 2015, respectively. A total of approximately $4.4 million was paid to our stockholders in connection with the April 29, 2015, June 25, 2015 and September 25, 2015 distributions. The determination of the tax attributes of our 2015 distributions will be made as of the end of 2015 based upon our net realized gain for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of the 2015 distributions for a full year. If we had determined the tax attributes of our first, second and third quarter 2015 distributions as of September 30, 2015, 100% of such distributions would be a return of capital.
On February 20, 2014, our Board of Directors declared a dividend of $0.10 per share payable on April 14, 2014, June 17, 2014 and September 18, 2014, to common stockholders of record on March 6, 2014, May 8, 2014 and August 11, 2014, respectively. Consistent with applicable tax rules, our Board of Directors determined to pay these quarterly distributions in cash or our common stock at the election of stockholders, subject to a limitation that no more than 25% of the aggregate distribution would be paid in cash with the remainder paid in shares of our common stock.
Based on stockholder elections, the April 14, 2014 dividend consisted of $238,722 in cash and 119,157 shares of newly-issued common stock, the June 17, 2014 dividend consisted of $241,701 in cash and 118,542 shares of common stock, and the September 18, 2014 dividend consisted of $244,665 in cash and 136,370 shares of common stock. The amount of cash elected to be received by stockholders was greater than the cash limit of 25% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to stockholders who elected to receive cash.
On December 12, 2014, our Board of Directors declared a special fourth quarter dividend of $0.396 per share payable to stockholders of record on December 31, 2014. This special fourth quarter dividend was paid 100% in cash on January 13, 2015.
Distribution Policy
We generally pay quarterly distributions to our stockholders out of assets legally available for distribution, as determined by our Board of Directors, with the intention of distributing 100% of our net realized capital gains annually. 
Under our distribution policy, we intend to pay quarterly distributions (the "Regular Distributions") to our stockholders in an amount determined and declared by the Board in the first quarter of each year. The Regular Distributions are intended to provide a minimum level of distributions to our stockholders each year notwithstanding that we are generating net investment losses. Since our current portfolio company investments do not generate current income (i.e., dividends or interest income), we do not expect our Regular Distributions to be sourced from net investment income. To the extent our net realized capital gains exceed the aggregate amount of our Regular Distributions for a year, our Board of Directors also intends to declare a special distribution in December of each year (the "Special Distribution") so that the total distributions for the year represent at least 100% of our net realized capital gains. However, our Board of Directors may eliminate or adjust the amount of the Regular and Special Distributions we pay each year based on other factors that it deems relevant from time to time including, without limitation, our financial condition, cash availability, maintenance of our RIC status, corporate-level income and excise tax planning, and compliance with applicable BDC regulations.  Further, we intend to pay any distributions entirely in cash.
Because of the unpredictable and inconsistent nature of the net realized capital gains we may earn over the next several years, the Regular Distributions are intended to provide a more consistent and predictable return to our stockholders. If our Regular Distributions for the year exceed our net investment income and net realized capital gains, the difference will be distributed from our capital and will constitute a return of capital to our stockholders.  A return of capital is generally not taxable and, instead, reduces a stockholder's tax basis in his shares of our common stock.  A return of capital does also not necessarily reflect our investment performance and generally does not reflect income earned. The tax character of a distribution is determined based upon our total net investment income, net realized capital gains and distributions made with respect to a taxable year and, therefore, cannot be finally determined until after the close of the relevant taxable year. Distributions representing a return of capital also deplete our total assets available for investments. Due to the uncertainty of our current portfolio companies achieving a liquidity event and our ability to sell our positions at a gain following a liquidity event, as well as the uncertainty of when, if ever, we may be able to generate net investment income, we can give no assurance that we will be able to earn net investment income or net realized capital gains during the year from which we can pay distributions.  Furthermore, we can give no assurance that we will achieve investment results or maintain a tax status that will allow us to pay distributions from year-to-year. Our ability to pay

47


distributions will be based on our portfolio companies achieving a liquidity event and our ability to sell our publicly traded portfolio positions at a gain.  There is no assurance that our current portfolio companies will complete an IPO, sale/merger or other liquidity event or that we will be able to realize any net capital gains from the sale of our publicly traded portfolio company investments.  Our ability to pay distributions may also be adversely affected by, among other things, the impact of one or more risk factors described herein.  Accordingly, no assurances can be made that we will make distributions to our stockholders in the future.
Consistent with our distribution policy, on March 26, 2015, our Board of Directors declared quarterly Regular Distributions for 2015, including a fourth quarter distribution in the amount of $0.15 per share. The record and payment dates for this fourth quarter distribution are as follows:
Regular Distributions
 
Amount Per Share
 
Record Date
 
Payment Date
Fourth Quarter
 
$
0.15

 
December 4, 2015
 
December 18, 2015
Our Board of Directors has confirmed that the previously declared fourth quarter distribution will be paid based on the record and payment dates set forth above. Our Board of Directors is currently assessing our distribution policy. However, our Board of Directors does not currently intend to pay Regular Distributions for 2016.
As of the date of this quarterly report, we do not expect to earn net investment income and have no visibility to any net realized capital gains for 2015. Accordingly, these 2015 Regular Distributions are likely to represent a return of capital, and our stockholders should not draw any conclusions about our investment performance from the amount of our scheduled Regular Distributions.   Our total return in relation to changes in our net asset value and our stock price is presented in the Financial Highlights.
Section 19 of the 1940 Act requires us to accompany each distribution payment with a notice if any part of that payment is from a source other than taxable net investment income.  This Section 19(a) notice is not for tax reporting purposes and is provided for informational purposes.  The Section 19(a) notice provides details on the anticipated source(s) of our distributions. The amounts and sources of distributions reported in Section 19(a) notices are only estimates and the actual amounts and sources of the amounts for tax reporting purposes will depend upon our investment experience during the year and may be subject to changes based on tax regulations.  Distributions in excess of our accumulated earnings and profits would generally be treated first as a return of capital to the extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain.  We will send stockholders a Form 1099-DIV for the calendar years that will report to stockholders the tax characterization of these distributions for federal income tax purposes.
Our Board of Directors may amend or terminate the distribution policy at any time.
Dividend Reinvestment Plan
We maintain a dividend reinvestment plan ("DRIP") that provides for the reinvestment of dividends on behalf of our stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if we declare a dividend, stockholders who have not "opted out" of the DRIP by the dividend record date will have their dividend automatically reinvested into additional shares of our common stock. Although we have a number of options to satisfy the share requirements of the DRIP, we currently expect that the shares required to be purchased under the DRIP will be acquired through open market purchases of common stock by the DRIP administrator. The shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP administrator.
Stock Repurchases
On September 22, 2014, our Board of Directors authorized a stock repurchase program of up to $5 million. This stock repurchase program expired on September 22, 2015, without being extended by the Board of Directors.
During the nine months ended September 30, 2015, we repurchased 117,510 shares of our common stock at an average price of $4.96 per share, including commissions, for a total cost of $582,468. We retired all 117,510 shares of our repurchased common stock during the nine months ended September 30, 2015, with $118 of the total cost of the retired shares charged to common stock and $582,350 charged to additional paid-in capital. Our net asset value per share increased by $0.02 per share as a result of the shares repurchased during the nine months ended September 30, 2015. The weighted average discount to net asset value per share of the shares repurchased during the nine months ended September 30, 2015 was 24%.
During the year ended December 31, 2014, we repurchased 128,977 shares of our common stock at an average price of $5.16 per share, including commissions, for a total cost of $665,998. Our net asset value per share increased by $0.03 per share as a result of the shares repurchased during the year ended December 31, 2014. The weighted average discount to net asset value per share of the shares repurchased during the year ended December 31, 2014 was 25%.
Effective as of December 31, 2014, we retired all 577,418 shares of our common stock that were held in treasury at our transfer agent prior to being retired. The cumulative cost of the treasury shares retired, $3,628,592, was charged to common stock, $577, and additional paid-in capital, $3,628,015, as of December 31, 2014.
We accounted for the repurchases of our common stock under the cost method based on the actual cost of the repurchases.

48


On November 10, 2015, our Board of Directors authorized a stock repurchase program of up to $1 million. See "-Recent Developments" below.
Commitments and Contingencies
In the normal course of business, we may enter into investment agreements under which we commit to make an investment in a portfolio company at some future date or over a specified period of time. As of September 30, 2015, we had not entered into any investment agreements, which required us to make a future investment in a portfolio company.
On October 15, 2015, Suniva completed a stock-for-stock merger transaction with SFCE. Pursuant to the merger agreement, we are required to indemnify SFCE for certain breaches of warranties and representations made to SFCE, subject to a cap of approximately 12.5% of the merger consideration received by us. Any damages payable by us would be settled through an adjustment to the number of shares of common stock in the surviving company held by us and/or SFCE. See "-Recent Developments" below.
On November 18, 2014, Xtime, Inc., a private portfolio company, completed an all-cash merger transaction with Cox Automotive, Inc. At the closing of the merger, we were required to set aside approximately $809,311 in escrow as partial security for potential stockholder indemnification obligations under the merger agreement. The $809,311 represents additional proceeds that may be released to us at a later date subject to potential indemnity claims. On January 13, 2015, Escrowed Funds totaling $105,210 were released to us from the Xtime escrow without any offset for indemnity claims. The remaining funds held in the Xtime escrow are expected to be released in phases with anticipated distributions occurring January of 2016 and November of 2017, net of settlement of any indemnity claims. As of September 30, 2015, the Escrowed Funds were fair valued at $621,498. Although recovery under the stockholder indemnity obligation is generally limited to the escrow fund, we may be liable for our pro rata amount of any damages for certain types of indemnity claims not to exceed the cash consideration received by us, provided, however, in the case of our fraud or intentional misrepresentation, there is no limitation on liability. Except as discussed above, we have not been notified of any stockholder indemnity claims.
On November 18, 2014, Stoke, Inc. was acquired in an all-cash merger. Under the merger agreement, the preferred stockholders entitled to receive cash consideration under the merger, including us, are obligated to indemnify the buyer for their pro rata amount of any damages for certain indemnity claims. Although recovery under the stockholder indemnity obligation is generally limited to the cash consideration received by us, our potential liability for indemnity claims could exceed the cash consideration we received at the closing in the event of our or Stoke's fraud, willful misconduct or intentional misrepresentation. We have not been notified of any stockholder indemnity claims.
On November 6, 2013, we exchanged our preferred stock interests in Jumptap, Inc. for shares of common stock in Millennial Media, Inc., a publicly traded company, pursuant to a merger transaction. As part of the merger agreement, we, together with other participating stockholders of Jumptap, agreed to indemnify Millennial Media for inaccuracies in any representations or warranties made by Jumptap, any breach by Jumptap of any covenants or agreements, and certain other claims. Participating stockholders, including us, were required to set aside in escrow shares of Millennial Media for the one-year period following the closing as partial security for potential stockholder indemnification obligations. We set aside 135,194 shares of Millennial Media as part of this escrow fund. In November 2014, 118,048 shares were released from the indemnity escrow and sold by us. As of December 31, 2014, we wrote off the remaining 17,146 shares of Millennial Media common stock that continued to be held in escrow based on actual indemnity claims made against such escrowed shares. On January 6, 2015, 12,629 shares of our Millennial Media common stock were used for the payment of stockholder indemnity claims and 3,986 shares of Millennial Media common stock were released to us from the indemnity escrow. On February 26, 2015, we sold these released shares resulting in a net realized gain of $6,178. On June 12, 2015, 156 shares of our Millennial Media common stock were released from escrow to pay stockholder indemnity claims. As of September 30, 2015, a total of 375 shares of Millennial Media common stock continued to be held in escrow. Although recovery under the stockholder indemnity obligation is generally limited to the escrow fund, we may be liable for our pro rata share of any damages for certain types of indemnity claims not to exceed the consideration received by us, provided, however, in the case of our fraud or intentional misrepresentation, there is no limitation on liability. Except as discussed above, we have not been notified of any stockholder indemnity claims.
We maintain a directors and officers liability insurance policy (the "D&O Policy") and an excess coverage policy (the "Excess Policy") that provide liability insurance coverage for our officers and directors. We have also agreed to indemnify our directors and officers to the maximum extent permitted by Maryland law subject to the restrictions in the 1940 Act.
Absent the willful misfeasance, bad faith or gross negligence of our investment adviser or our investment adviser’s reckless disregard of its duties and obligations, we have agreed to indemnify our investment adviser (including its officers, managers, agents, employees and members of its investment committee) for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising out of our investment adviser’s performance of its duties and obligations under both the Prior Advisory Agreement and the Investment Advisory Agreement, except to the extent specified in the 1940 Act.

49


As of September 30, 2015, we and our officers and directors are not a party to any material legal proceedings. However, from time to time, we may be party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies.
Recent Developments
Termination of Investment Advisory and Administrative Services Agreement
On October 5, 2015, our Board of Directors approved the termination of the Investment Advisory Agreement between us and our investment adviser effective as of the Termination Date. Following the Termination Date, our investment adviser will no longer be obligated to perform investment advisory and administrative services or provide personnel to serve as our officers.
Also on October 5, 2015, our Board of Directors determined that we will no longer make investments in new venture capital-backed or high growth companies and will now shift our focus to the orderly monetization of our current holdings. However, we may consider making opportunistic follow-on investments in our existing portfolio companies.
We will continue to accrue the base management fee ("Base Fee") and incentive fees under the Investment Advisory Agreement through the Termination Date at which time our investment adviser's obligation to provide services to us will end. Additionally, we will continue to reimburse our investment adviser for our allocable share of administrative expenses through the Termination Date.
Following the termination of the Investment Advisory Agreement, we and our investment adviser will agree on the final amounts due for Base Fees, incentive fees and administrative expense reimbursement as of the Termination Date. This will include agreement on any waiver of Base Fees and any obligations under the Adjusted Operating Expense threshold program. See "-Related Party Agreements and Transactions" below.
As a result of the termination of the Investment Advisory Agreement, we intend to change our corporate name on or before the Termination Date.
Portfolio Company Activity
On October 15, 2015, Suniva completed a stock-for-stock merger transaction with SFCE, a Hong Kong Stock Exchange company and a global integrated energy provider. The transaction was effected through the merger of an indirect, wholly owned subsidiary of SFCE with and into Suniva, with Suniva being the surviving company (“Surviving Company”).
As part of the merger, the Surviving Company received US$20 million of equity financing from existing Suniva shareholders and SFCE to support the Surviving Company’s operations and manufacturing expansion plans in the United States. We did not participate in the equity financing. Following the merger and the equity financing, the Surviving Company became a majority-owned subsidiary of SFCE.
In the merger, all outstanding shares of preferred stock and common stock of Suniva were cancelled in exchange for the right of certain Suniva stockholders (including us) to receive their allocable share of the merger consideration, which will be distributed in shares of SFCE common stock and Surviving Company Class A common stock. The shares of SFCE common stock received by us in the merger will be subject to lockup for a period of 90 days following the October 15, 2015 closing date.
Based on a floor for price protection on SFCE common stock, the final merger consideration and number of shares of SFCE common stock and Surviving Company Class A common stock to be distributed to us will be reduced if the aggregate volume weighted average closing price per share of SFCE common stock for the 60 consecutive trading days beginning on the closing date (the “60-day VWAP”) is less than HK$2.88.
As of September 30, 2015, based on the expectation that the merger would be completed and other assumptions, we determined the fair value of our interests in Suniva's Series D and F preferred stock based on the estimated value of the SFCE common stock and the Surviving Company Class A common stock that we expect to receive for our Suniva securities.
Because the calculation of the final merger consideration and number of shares of SFCE common stock and Surviving Company Class A common stock shares to be distributed to us will not be available until on or about January 12, 2016 (i.e., after the 60-day VWAP period), the final value of the SFCE common stock and the Surviving Company Class A common stock may be higher or lower than the estimated value.
Pursuant to the merger agreement, we are required to indemnify SFCE for certain breaches of warranties and representations made to SFCE, subject to a cap of approximately 12.5% of the merger consideration received by us. Any damages payable by us would be settled through an adjustment to the number of shares of common stock in the surviving company held by us and/or SFCE.
Engagement of Third Party Administrator
On November 10, 2015, our Board of Directors approved our engagement of US Bancorp to provide administration and accounting services to us pursuant to an Administration Servicing Agreement and a Fund Accounting Servicing Agreement, respectively. Our Board of Directors is also negotiating with another third party to provide administrative consulting services to

50


us, including the provision of personnel to act as certain of our executive officers, including our Chief Executive Officer and Chief Financial Officer, following the Termination Date.
Authorization of Stock Repurchase Program
On November 10, 2015, our Board of Directors authorized a stock repurchase program of up to $1 million. Under the repurchase program, we are authorized to repurchase shares of our common stock in open market transactions, including through block purchases, depending on prevailing market conditions and other factors. This stock repurchase program will expire on May 10, 2016. This stock repurchase program may be extended, modified or discontinued at any time for any reason. Furthermore, the repurchase program does not obligate us to acquire any specific number of shares and all repurchases will be made in accordance with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases.
Off Balance Sheet Arrangements
As of September 30, 2015, we had no off-balance sheet arrangements.
Significant Accounting Policies
A summary of our significant accounting policies is set forth in Note 2 - Summary of Significant Accounting Policies to our financial statements included in this quarterly report on Form 10-Q. A full disclosure of our significant accounting policies is disclosed in our annual report on Form 10-K for the year ended December 31, 2014, which has been filed with the SEC.
U.S. Federal Income Tax Considerations
From incorporation through December 31, 2009, we were treated as a corporation under the Internal Revenue Code of 1986, as amended (the "Code"). Effective January 1, 2010, we elected to be treated for tax purposes as a regulated investment company, or RIC, under the Code and intend to maintain our qualification as a RIC thereafter. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any income that we distribute to our stockholders from our tax earnings and profits. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our stockholders, for each taxable year, at least 90% of our "investment company taxable income," which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gain over realized net long-term capital loss, or the annual distribution requirement. Even if we qualify as a RIC, we generally will be subject to corporate-level U.S. federal income tax on our undistributed taxable income and could be subject to U.S federal excise, state, local and foreign taxes. We will be subject to a 4% nondeductible U.S. Federal excise tax on certain undistributed income of RICs unless we distribute in a timely manner an amount at least equal to 98% of net ordinary income and 98.2% of capital gain net income each calendar year, if any, and any recognized and undistributed income from prior years for which we paid no federal income taxes. We will generally endeavor each year to avoid any federal excise taxes.
Regulation as a BDC
We have elected to be regulated as a BDC under the 1940 Act. The 1940 Act requires that a majority of our directors be persons other than "interested persons," as that term is defined in the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC without the approval of a "majority of our outstanding voting securities," within the meaning of the 1940 Act.
Qualifying assets
Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to here as "qualifying assets," unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets (the "70% test"). The principal categories of qualifying assets relevant to our business are any of the following:
1.
Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:
a.
is organized under the laws of, and has its principal place of business in, the United States;
b.
is not an investment company (other than a small business investment company wholly owned by the BDC) or a company that would be an investment company but for certain exclusions under the 1940 Act; and
c.
Satisfies any of the following:
i.
does not have any class of securities that is traded on a national securities exchange;
ii.
has a class of securities listed on a national securities exchange, but has an aggregate market value of outstanding voting and non-voting common equity of less than $250 million;

51


iii.
is controlled by a BDC or group of companies including a BDC and the BDC has an affiliated person who is a director of the eligible portfolio company; or
iv.
is a small and solvent company having gross assets of not more than $4.0 million and capital and surplus of not less than $2.0 million.
2.
Securities of any eligible portfolio company that we control.
3.
Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.
4.
Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.
5.
Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of warrants or rights relating to such securities.
6.
Cash, cash equivalents, certificates of deposit, U.S. Government securities or high-quality debt securities maturing in one year or less from the time of investment.
If less than 70% of our total assets are comprised of qualifying assets, we would generally not be permitted to acquire any additional non-qualifying assets, until such time as 70% of our then current total assets were comprised of qualifying assets. We would not be required, however, to dispose of any non-qualifying assets in such circumstances. As of September 30, 2015, approximately 99% of our portfolio company investments constituted qualifying investments under Section 55(a) of the 1940 Act.
We do not intend to acquire securities issued by any investment company that exceed the limits imposed by the 1940 Act. Under these limits, we generally cannot acquire more than 3% of the voting stock of any investment company (as defined in the 1940 Act), invest more than 5% of the value of our gross assets in the securities of one such investment company or invest more than 10% of the value of our gross assets in the securities of such investment companies in the aggregate.
Managerial assistance to portfolio companies
In general, in order to count portfolio securities as qualifying assets for the purpose of the 70% test, we must either control the issuer of the securities or must offer to make available to the issuer of the securities (other than small and solvent companies described above) significant managerial assistance; except that, where we purchase such securities in conjunction with one or more other persons acting together, one of the other persons in the group may make available such managerial assistance. Making available managerial assistance means, among other things, any arrangement whereby the BDC, through its directors, officers or employees, offers to provide, and, if requested to, provides significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.
Senior securities
We are permitted, under specified conditions, to issue multiple classes of debt and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 200% immediately after each such issuance. In addition, while any senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our gross assets for temporary or emergency purposes without regard to asset coverage.
We may borrow funds to make investments, to the extent we determine that additional capital would allow us to take advantage of investment opportunities, or if our Board of Directors determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders.  While a debt offering could raise additional capital for investment, we would need to carefully weigh the interest expense of the debt relative to the expected return on the invested capital.  There is no assurance that any return from investments funded by debt would cover the interest expense associated with the debt, which could adversely impact stockholders. Further, any interest expense associated with a debt offering would increase our operating expenses, which continue to be high compared to our peers because of our comparatively lower capital base. We do not currently anticipate issuing any preferred stock, although we could do so if our Board of Directors determines that it is in our best interest and the best interests of our stockholders.  The costs associated with any borrowing or preferred stock issuance will be indirectly borne by our common stockholders.
Proxy voting policies and procedures
We vote proxies relating to our portfolio securities in the best interest of our stockholders. We review on a case-by-case basis each proposal submitted to a stockholder vote to determine its impact on the portfolio securities held by us. Although we generally

52


vote against proposals that may have a negative impact on our portfolio securities, we may vote for such a proposal if there exists compelling long-term reasons to do so.
Our proxy voting decisions have been made by our investment adviser. To ensure that our vote is not the product of a conflict of interest, we require that: (i) anyone involved in the decision making process disclose to our Chief Compliance Officer any potential conflict that he is aware of and any contact that he has had with any interested party regarding a proxy vote; and (ii) employees involved in the decision making process or vote administration are prohibited from revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties.
Stockholders may obtain information regarding how we voted proxies with respect to our portfolio securities by making a written request for proxy voting information to: Chief Compliance Officer, BDCA Venture, Inc., 405 Park Avenue, New York, NY 10022.
Temporary investments
Pending investment in other types of "qualifying assets," as described above, our investments may consist of cash, cash equivalents, certificates of deposit, U.S. government securities or high-quality debt securities maturing in one year or less.
Code of ethics
We and our investment adviser have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, respectively, that establishes procedures for personal investments and restricts certain transactions by our personnel. Our codes of ethics generally do not permit investments by our employees in securities that may be purchased or held by us. You may read and copy these codes of ethics at the SEC’s Public Reference Room in Washington, DC. You may obtain information on the operation of the Public Reference Room by calling the SEC at (202) 551-8090. In addition, each code of ethics is available on the SEC’s website at www,sec.gov. You may also obtain copies of the codes of ethics, after paying a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, 100 F Street, N.E., Washington, DC 20549. You may also obtain a copy of our code of ethics on our website at www.bdcv.com.
Related Party Agreements and Transactions
On October 5, 2015, our Board of Directors implemented the initial phase of its plan to attempt to maximize value for our stockholders by approving the termination of the Investment Advisory Agreement between us and our investment adviser effective as of the Termination Date. See "-Recent Developments" above.
Pursuant to the Investment Advisory Agreement, our investment adviser agreed to serve as our investment adviser and to furnish us with certain administrative services necessary to conduct our day-to-day operations. A more detailed description of the Investment Advisory Agreement, the services provided to us by our investment adviser and the fees we pay to our investment adviser is discussed in our annual report on Form 10-K for the year ended December 31, 2014, which has been filed with the SEC.
RCS Advisory Services, LLC ("RCS Advisory"), an affiliated entity of our investment adviser, provides us with legal services, website design and maintenance and investor relations services. RCS Advisory began providing us with services on July 1, 2014 following the completion of the Transaction. See Note 4 - Related Party Agreements and Transactions - to the financial statements for a further discussion of the various related-party transactions, agreements and fees.
Our investment adviser has certain conflicts of interest in connection with the management of our business affairs, including, but not limited to, the following:
Personnel of BDCA Venture Adviser must allocate their time between advising us and managing other investment activities and business activities in which they may be involved, including the other programs sponsored by affiliates of AR Capital, LLC, the indirect owner of our investment adviser, as well as BDCA Adviser the investment adviser to Business Development Corporation of America ("BDCA"), BDCA Adviser II, LLC, the investment adviser to Business Development Corporation of America II ("BDCA II"), each a public, non-listed BDC, and with any BDCs or other investment programs that may be sponsored by our investment adviser and its affiliates in the future.
The compensation payable by us to our investment adviser must be approved by our board of directors consistent with the exercise of the requisite standard of conduct applicable to directors under Maryland law and the 1940 Act. Such compensation is payable, in most cases, regardless of the quality of the assets acquired, the services provided to us or whether or not our stockholders receive distributions, and may be based in part on the value of assets acquired with leverage.
Our investment adviser and its affiliates are not restricted from forming additional BDCs or other investment programs, from entering into other investment advisory relationships or from engaging in other business activities, even though such activities may be in competition with us or may involve substantial time and resources of our investment adviser and its affiliates.    
To the extent permitted by the 1940 Act and the interpretations of the SEC staff, our investment adviser may determine it is appropriate for us and one or more other investment accounts managed by our investment adviser or any of its affiliates to participate

53


in an investment opportunity. These co-investment opportunities may give rise to conflicts of interest or perceived conflicts of interest among us and the other participating accounts. To mitigate these conflicts, our investment adviser will seek to execute such transactions for all of the participating investment accounts, including us, on a fair and equitable basis, taking into account such factors as the relative amounts of capital available for new investments and the investment programs and portfolio positions of us, the clients for which participation is appropriate and any other factors deemed appropriate.
As a BDC, we may be limited in our ability to invest in any portfolio company in which BDCA, BDCA II or any other investment account managed by investment advisers affiliated with our investment adviser or any of its affiliates has an investment unless we obtain exemptive relief from the SEC, which we do not intend to pursue.
Our investment adviser has also granted us a non-exclusive license to use the name "BDCA." Under our sublicense agreement, we have a right to use the BDCA name and logo, for so long as our investment adviser remains our investment adviser. Other than with respect to this limited license, we have no legal right to the "BDCA" name or logo. The sublicense agreement will remain in effect for so long as the Investment Advisory Agreement with our investment adviser is in effect. As a result of the termination of the Investment Advisory Agreement, we intend to change our corporate name on or before the Termination Date. See "-Recent Developments" above.
Beginning October 1, 2014 and continuing through September 30, 2016 (the "Term"), our investment adviser has agreed to defer the payment of base management fees ("Base Fees") to our investment adviser unless and until we realize net capital gains equal to two times the Base Fees due (the "Program"). When determining the deferral amount, the Base Fees and net realized capital gains will be calculated on a cumulative basis over the Term. At the end of the Term of the Program, our investment adviser agrees to waive, without recourse against or reimbursement by us, any Base Fees previously deferred and not paid during the Program. Prior to September 30, 2016, our investment adviser may, in its sole discretion, extend the Term of the Program by written notice to us. As of September 30, 2015, no Base Fees had been deferred under the Program. See "-Recent Developments" above.
Separately, our investment adviser has also agreed that, to the extent that our Adjusted Operating Expenses (as defined below) in 2015 exceed $1,500,000 (the “Excess Amount”), our investment adviser will, without recourse against or reimbursement by us, waive Reimbursable Expenses (as defined below) due and owing by us and/or pay on our behalf certain Adjusted Operating Expenses, in such amounts so that the total of the waived Reimbursable Expenses and expenses paid by our investment adviser on our behalf equals the Excess Amount. Adjusted Operating Expenses means our total operating expenses (as reported on our audited financial statements for 2015 included in our annual report on Form 10-K for the year ended December 31, 2015) less Base Fees, incentive fees, any stock issuance costs, any costs related to borrowings by us (including any interest and fees), any litigation costs, expenses or fees and any extraordinary expenses. For purposes of clarity, any operating expenses incurred by our investment adviser and reimbursable by us with respect to 2015 (“Reimbursable Expenses”) are included in Adjusted Operating Expenses.
For accounting purposes, as of September 30, 2015, we recorded an amount due from our investment adviser of $35,822 representing the amount by which our Adjusted Operating Expenses for the nine months ended September 30, 2015 exceeded $1,125,000, or the prorated amount of the annualized $1,500,000 Adjusted Operating Expense threshold for the nine months ended September 30, 2015. During the three months ended September 30, 2015, we recorded a reduction in expenses waived or reimbursed from our investment adviser of $68,221. During the nine months ended September 30, 2015, we recorded expenses waived or reimbursed from our investment adviser of $35,822. During the three and nine months ended September 30, 2015, we incurred $45,052 and $447,567, respectively, of expenses not subject to the annualized $1,500,000 Adjusted Operating Expense threshold.
The table set forth below provides a summary of the calculation of Adjusted Operating Expenses and waived or reimbursed expenses from our investment adviser for the three and nine months ended September 30, 2015:
 
 
Incurred for the
 
 
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2015
Total operating expenses
 
$
(393,592
)
 
$
1,424,022

Less: Base management fees
 
321,813

 
1,027,442

Less: Incentive fees
 
(1,067,236
)
 
(1,211,809
)
Less: Expenses not subject to annualized $1,500,000 adjusted operating expense threshold (1)
 
45,052

 
447,567

Adjusted operating expenses (2)
 
306,779

 
1,160,822

Adjusted operating expense threshold (3)
 
375,000

 
1,125,000

Increase (decrease) in waived or reimbursed expenses from investment adviser
 
$
(68,221
)
 
$
35,822

(1) During the three months ended September 30, 2015, we incurred $45,052 of expenses not subject to the annualized $1,500,000 Adjusted Operating Expense threshold, which consisted of $12,857 in legal and litigation expenses, $22,402 in proxy administrative and solicitation services and $9,793 in

54


other expenses related to the contested proxy campaign in connection with our Annual Meeting. During the nine months ended September 30, 2015, we incurred $447,567 of expenses not subject to the annualized $1,500,000 Adjusted Operating Expense threshold, which consisted of $305,961 in legal and litigation expenses, $107,861 in proxy administrative and solicitation services and $33,745 in other expenses related to the contested proxy campaign in connection with our Annual Meeting. Costs incurred in relation to the proxy contest are considered extraordinary in nature.
(2) Adjusted operating expenses is defined as total operating expenses (as reported on the Company's audited financial statements for 2015 included in the Company's annual report on Form 10-K for the year ended December 31, 2015) less Base Fees, incentive fees, any stock issuance costs, any costs related to borrowings (including any interest and fees), any litigation costs, expenses or fees and any extraordinary expenses.
(3) Represents the prorated amount of the annualized $1,500,000 Adjusted Operating Expense threshold for the period.
To the extent that the Excess Amount calculated for the 2015 fiscal year exceeds the amount of Reimbursable Expenses due and owing by us as of December 31, 2015, our investment adviser will either pay certain Adjusted Operating Expenses on behalf of us or make a payment of such amount to us. No such arrangement between us and our investment adviser existed in 2014.
We will continue to accrue the Base Fee and incentive fees under the Investment Advisory Agreement through the Termination Date at which time our investment adviser's obligation to provide services to us will end. Additionally, we will continue to reimburse our investment adviser for our allocable share of administrative expenses through the Termination Date.
Following the termination of the Investment Advisory Agreement, we and our investment adviser will agree on the final amounts due for Base Fees, incentive fees and administrative expense reimbursement as of the Termination Date. This will include agreement on any waiver of Base Fees and any obligations under the Adjusted Operating Expense threshold program. See "-Recent Developments" above.
The Audit Committee of our Board of Directors is required to review and approve any transactions with related parties (as such term is defined in Item 404 of Regulation S-K).
In addition, our code of business conduct and ethics, which is applicable to all of our employees, officers and directors, requires that all employees, officers and directors avoid any conflict, or the appearance of a conflict, between an individual’s personal interests and our interests. Our code of business conduct and ethics is available on our website at www.bdcv.com.


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Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Our business activities contain elements of risk. We consider the primary type of market risk attributable to us to be valuation risk.
Valuation Risk
Value, as defined in Section 2(a)(41) of the 1940 Act, is (i) the market price for those securities for which market quotations are readily available, and (ii) fair value as determined in good faith by, or under the direction of, the Board of Directors for all other assets. See Note 2 - Summary of Significant Accounting Policies and Note 3 - Portfolio Investments and Fair Value in the interim financial statements filed in this quarterly report on Form 10-Q.
Because there is initially no public market for the securities of the private companies in which we invest, the valuation of these investments is estimated in good faith by our Board of Directors, in accordance with our valuation procedures. In the absence of a readily ascertainable market value, the estimated value of our portfolio company investments may differ significantly from the value that would be placed on the portfolio if a ready market for such securities existed. Changes in valuation of these portfolio company investments are recorded in our Statement of Operations as "Net change in unrealized appreciation (depreciation)." Changes in valuation of any of our investments in privately held companies from one period to another may be volatile.
Interest Rate Risk
We are subject to financial market risks, including changes in interest rates. Changes in interest rates may affect our interest income from portfolio investments and cash and cash equivalents. As of September 30, 2015, we had cash and cash equivalents of $16.2 million. We currently invest our cash on hand primarily in short-term U.S. Treasury securities and money market funds that invest primarily in U.S. Treasury securities, U.S. Government agency securities, and repurchase agreements fully-collateralized by such securities. As of September 30, 2015, we held money market fund investments of $16.0 million, pending subsequent investment in portfolio companies in accordance with our investment objective, payment of our operating expenses, or payment of distributions or potential stock repurchases, for which we have market risk exposure relating to fluctuations in interest rates.
During the nine months ended September 30, 2015, our money market funds earned an effective annualized dividend of approximately 0.02%. Assuming no other changes to our holdings of money market funds as of September 30, 2015, a one percentage point change in the underlying dividend rate payable on our money market funds as of September 30, 2015 would not have a material effect on the amount of dividend income earned from our money market funds for the following 90-day period.
Our investment income from portfolio companies will also be affected by changes in various interest rates to the extent our debt investments include floating interest rates. As of September 30, 2015, none of our income-bearing debt investments in portfolio companies bore interest based on floating rates.
Changes in interest rates may affect our cost of borrowing in the event we incur debt to finance the purchase of our investments in portfolio companies. As of September 30, 2015, we had no debt for borrowed money. However, we may borrow additional funds to make investments, to the extent we determine that additional capital would allow us to take advantage of such investment opportunities, or if our Board of Directors determines that leveraging our portfolio would be in our best interests and the best interests of our stockholders.
We may engage in hedging transactions with respect to the market risks to which we are exposed subject to the requirements of the 1940 Act. We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. However, if we do engage in hedging transactions, we may expose ourselves to risks associated with such transactions. We have not engaged in any hedging activities since our inception, and we currently do not expect to engage in any hedging activities with respect to the market risks to which we are exposed. We also do not intend to lend the securities of our publicly traded portfolio companies to generate fee income.
Item 4. Controls and Procedures
As of September 30, 2015 (the end of the period covered by this quarterly report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act).  Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Management has not identified any change in our internal control over financial reporting that occurred during the first, second

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and third quarters of 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II
Item 1. Legal Proceedings.
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies.
Item 1A. Risk Factors.
In addition to other information set forth in this quarterly report on Form 10-Q, you should carefully consider the "Risk Factors" discussed in our annual report on Form 10-K for the year ended December 31, 2014, which has been filed with the SEC. Except as set forth below, there have been no material changes during the nine months ended September 30, 2015 to the risk factors discussed in Item 1A. Risk Factors in our annual report on Form 10-K for the year ended December 31, 2014.

We are internalizing and engaging one or more third parties to provide administrative and management functions to us, and, therefore, expect to incur significant costs. In addition, the replacement of the management personnel provided by our investment adviser may affect our ability to achieve our investment objective.

On October 5, 2015, our Board of Directors approved the termination of the Investment Advisory Agreement to take effect on the Termination Date. Our Board of Directors has decided to internalize and engage one or more third parties to provide administrative and management functions to us in anticipation of the Termination Date. For example, our Board of Directors recently approved the engagement of US Bancorp to provide administrative and fund accounting services to us. Our Board of Directors is also negotiating with another third party to provide administrative consulting services to us, including the provision of personnel to act as certain of our executive officers, including our Chief Executive Officer and Chief Financial Officer, following the Termination Date. Following the Termination Date, although we will no longer bear the costs of the various fees and expenses we have paid to our investment adviser under the Investment Advisory Agreement, by engaging third parties to provide administrative and management functions, we will incur additional costs, including those of executive officers, that are now paid by our investment adviser or its affiliates.
The coordination of our internal management and investment activities is likely to suffer if we are unable to adequately internalize and engage third parties to provide administrative and management functions who have the expertise comparable to our investment advisor and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objective and our portfolio companies may result in additional costs and time delays that may adversely affect our financial condition, business and results of operations.
We may have difficulty monetizing assets which could have an adverse impact on our business and operations as well as our ability to pay distributions.
As we begin to divest our portfolio company holdings, we may be unable to monetize assets in a challenging market environment that may preclude buyers from making investments at the fair values established by our Board of Directors. We are susceptible to the risk of significant loss if we are forced to discount the value of our investments in order to monetize assets to provide liquidity to fund operations. In addition, we may be unable to monetize assets in the relatively near future. Some assets may take years to monetize, which could result in increased costs to us during such period and adversely affect our financial condition, business and results of operations as well as our ability to pay distributions. Outside of IPOs or a strategic sale or merger involving our existing portfolio companies, which we do not expect during the next months, there may be limited opportunities to sell our interests in existing private portfolio companies to third parties in privately negotiated transactions. Accordingly, it is possible that an orderly monetization of our current holdings may take three to five years or more.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
We did not engage in any unregistered sales of equity securities during the nine months ended September 30, 2015. Details of the monthly share repurchases under our stock repurchase program during the nine months ended September 30, 2015 are set forth below:

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Period
 
Total Number of Shares Repurchased
 
Total Cost of Shares Repurchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of the Publicly Announced Program (1)
 
Total Cost of Shares Purchased as Part of the Publicly Announced Program (1)
 
Maximum Dollar Value of Shares that May Yet be Purchased Under the Program (1)
Balance at December 31, 2014
 
 
 
 
 
 
 
128,977

 
$
665,998

 
$
4,334,002

January 2015
 

 
$

 
$

 
128,977

 
665,998

 
4,334,002

February 2015
 

 

 

 
128,977

 
665,998

 
4,334,002

March 2015
 

 

 

 
128,977

 
665,998

 
4,334,002

April 2015
 

 

 

 
128,977

 
665,998

 
4,334,002

May 2015
 
15,231

 
78,103

 
5.13

 
144,208

 
744,101

 
4,255,899

June 2015
 
55,308

 
273,935

 
4.95

 
199,516

 
1,018,036

 
3,981,964

July 2015
 

 

 

 
199,516

 
1,018,036

 
3,981,964

August 2015
 
16,554

 
81,757

 
4.94

 
216,070

 
1,099,793

 
3,900,207

September 2015
 
30,417

 
148,673

 
4.89

 
246,487

 
1,248,466

 
3,751,534

Total
 
117,510

 
$
582,468

 
$
4.96

 
246,487

 
$
1,248,466

 
$
3,751,534

(1) On September 22, 2014, our Board of Directors authorized a stock repurchase program of up to $5 million which expired on September 22, 2015, without being extended by the Board of Directors.
Since the inception of our stock repurchase program in September 2014, we have repurchased a total of 246,487 shares of our common stock at an average price of $5.07 per share, including commissions, with a total cost of $1,248,466.
On November 10, 2015, our Board of Directors authorized a stock repurchase program of up to $1 million. See "-Recent Developments" above.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.

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Item 6. Exhibits.
Exhibit No.
 
Description
3.1
 
Amended and Restated Articles of Incorporation (Incorporated by reference to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 (File No. 333-157217), filed on April 21, 2010)
3.2
 
Articles of Amendment to Amended and Restated Articles of Incorporation (Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (File No. 333-157217), filed on May 27, 2010)
3.3
 
Articles of Amendment to Amended and Restated Articles of Incorporation (Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 0-53504), filed on July 1, 2014)
3.4
 
Amended and Restated Bylaws (Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 0-53504), filed on April 23, 2009)
3.5
 
Amendment to Amended and Restated Bylaws dated August 5, 2010 (Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 0-53504), filed on August 9, 2010)
3.6
 
Amendment to Amended and Restated Bylaws dated October 22, 2010 (Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 0-53504), filed on October 26, 2010)
3.7
 
Amendment to Amended and Restated Bylaws dated July 1, 2014 (Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 0-53504), filed on July 1, 2014)
3.8
 
Amended and Restated Dividend Reinvestment Plan (Incorporated by reference to the Registrant’s Registration Statement on Form N-2 (File No. 333-191525), filed on October 2, 2013)
4.1
 
Form of Share Certificate (Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 0-53504), filed on March 9, 2009)
10.1
 
Investment Advisory and Administrative Services Agreement between BDCA Venture, Inc. and BDCA Venture Adviser, LLC dated July 1, 2014 (Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 0-53504), filed on July 1, 2014)
10.2
 
Trademark Sublicense Agreement between BDCA Venture, Inc. and BDCA Venture Adviser, LLC dated July 1, 2014 (Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 0-53504), filed on July 1, 2014)
10.3
 
Form of Indemnification Agreement for Officers and Directors of BDCA Venture, Inc.
10.4
 
Custody Agreement between the Company and MidFirst Bank (formerly known as Steele Street Bank & Trust) (Incorporated by reference to the Registrant’s Registration Statement on Form 10 (File No. 0-53504), filed on November 20, 2008)
10.5
 
First Amendment to Custody Agreement between BDCA Venture, Inc. and MidFirst Bank (formerly known as Steele Street Bank & Trust) dated December 21, 2012 (Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 0-53504), filed on February 15, 2013)
10.6
 
Second Amendment to Custody Agreement between BDCA Venture, Inc. and MidFirst Bank (formerly known as Steele Street Bank & Trust) dated September 24, 2014 (Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 0-53504), filed on September 29, 2014)
11
 
Computation of Per Share Earnings (included in the notes to the unaudited financial statements contained in this report)
31.1*
 
Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended
31.2*
 
Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended
32.1*
 
Certification of Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
32.2*
 
Certification of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
* Filed herewith.

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 12, 2015
 
BDCA VENTURE, INC.
 
By:
/s/ Frederic M. Schweiger
 
 
Frederic M. Schweiger
President and Chief Executive Officer
(Principal Executive Officer)
 
By:
/s/ Katie P. Kurtz
 
 
Katie P. Kurtz
Chief Financial Officer and Treasurer
(Principal Accounting and Financial Officer)


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