Firsthand Technology Value Fund, Inc. - FORM 10-Q

Attached files

file	filename
EX-32 - Firsthand Technology Value Fund, Inc.	fp033350_ex32.htm
EX-31.2 - Firsthand Technology Value Fund, Inc.	fp033350_ex31-2.htm
EX-31.1 - Firsthand Technology Value Fund, Inc.	fp033350_ex31-1.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period of March 31, 2018 or

[ ]

TRANSITION QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 333-168195

FIRSTHAND TECHNOLOGY VALUE FUND, INC.

(Exact Name of Registrant as Specified in Charter)

MARYLAND	27-3008946
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No)

150 Almaden Boulevard, Suite 1250
San Jose, California	95113
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (408) 886-7096

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. [X] Yes [ ] No

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	[X] Accelerated Filer
[ ] Non-accelerated Filer	[ ] Smaller Reporting Company (Do not check if 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 [X] No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at April 30, 2018
Common Stock, $0.001 par value per share		7,302,146

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		2
Item 1.	Financial Statements	2
	Consolidated Statements of Assets and Liabilities as of March 31, 2018 (Unaudited) and December 31, 2017	3
	Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2018, March 31, 2017, and March 31, 2016	4
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 (Unaudited), the Year Ended December 31, 2017, and the Year Ended December 31, 2016	5
	Consolidated Statements of Changes in Net Assets for the Three Months Ended March 31, 2018 (Unaudited), the Year Ended December 31, 2017, and the Year Ended December 31, 2016	6
	Selected Per Share Data and Ratios for the Three Months Ended March 31, 2018 (Unaudited) (Consolidated), for the Year Ended December 31, 2017 (Consolidated), for the Year Ended December 31, 2016 (Consolidated), for the Year Ended December 31, 2015 (Consolidated), for the Year Ended December 31, 2014, and for the Year Ended December 31, 2013	7
	Consolidated Schedule of Investments as of March 31, 2018 (Unaudited) and for the Year Ended December 31, 2017	8
	Consolidated Notes To Financial Statements (Unaudited)	18
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
PART II. OTHER INFORMATION		43
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44
SIGNATURES		45

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Statements of Assets and Liabilities

	AS OF MARCH 31, 2018 (UNAUDITED)			AS OF DECEMBER 31, 2017
ASSETS
Investment securities:
Unaffiliated investments at acquisition cost	$	23,767,073	*	$	33,014,039	*
Affiliated investments at acquisition cost		26,285,161			24,035,159
Controlled investments at acquisition cost		119,229,161			117,890,661
Total acquisition cost	$	169,281,395		$	174,939,859
Unaffiliated investments at market value	$	32,963,495	*	$	40,191,055	*
Affiliated investments at market value		25,511,448			24,656,252
Controlled investments at market value		123,803,673			109,992,218
Total market value ** (Note 6)		182,278,616			174,839,525
Cash		20,377			110,077
Receivable from dividends and interest		2,215,075			1,794,003
Other assets		43,512			27,985
Total Assets		184,557,580			176,771,590
LIABILITIES
Incentive fees payable (Note 4)		3,865,640			1,691,040
Payable to affiliates (Note 4)		915,604			879,085
Consulting fee payable		19,500			21,000
Accrued expenses and other payables		193,830			186,876
Total Liabilities		4,994,574			2,778,001
NET ASSETS	$	179,563,006		$	173,993,589
Net Assets consist of:
Common Stock, par value $0.001 per share 100,000,000 shares authorized	$	7,302		$	7,302
Paid-in-capital		180,772,769			180,772,769
Accumulated net investment loss		(4,437,943	)		(1,691,040	)
Accumulated net realized loss from security transactions		(9,776,343	)		(4,995,108	)
Net unrealized appreciation (depreciation) on investments and warrants transactions		12,997,221			(100,334	)
NET ASSETS	$	179,563,006		$	173,993,589
Shares of Common Stock outstanding		7,302,146			7,302,146
Net asset value per share (Note 2)	$	24.59		$	23.83

Includes Fidelity Investment Money Market Treasury Portfolio - Class I, which invests primarily in U.S. Treasury securities. The yields as of 03/31/18 and 12/31/17 were 1.49% and 1.14%, respectively. Please see https://fundresearch.fidelity.com/mutual-funds/ summary/316175504 for additional information.

Includes warrants whose primary exposure is equity risk.

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Statements of Operations (Unaudited)

	FOR THE THREE MONTHS ENDED
	MARCH 31, 2018			MARCH 31, 2017			MARCH 31, 2016
INVESTMENT INCOME
Unaffiliated interest	$	28,711		$	6,708		$	236
Affiliated/Controlled interest		568,804			254,090			159,679
TOTAL INVESTMENT INCOME		597,515			260,798			159,915
EXPENSES
Investment advisory fees (Note 4)		890,949			741,152			860,821
Administration fees		54,296			46,167			36,877
Custody fees		4,391			2,774			3,538
Transfer agent fees		8,323			7,195			7,175
Registration and filing fees		7,545			5,696			5,743
Professional fees		88,468			116,141			180,688
Printing fees		15,122			14,136			18,978
Trustees fees		50,000			25,000			25,000
Compliance fees		27,848			26,384			49,450
Miscellaneous fees		22,876			23,543			13,657
TOTAL GROSS EXPENSES		1,169,818			1,008,188			1,201,927
Incentive fee adjustments (Note 4)		2,174,600			—			—
TOTAL NET EXPENSES		3,344,418			1,008,188			1,201,927
NET INVESTMENT LOSS		(2,746,903	)		(747,390	)		(1,042,012	)

Net Realized and Unrealized Gains (Losses) on Investments:
Net realized gains (losses) from security transactions Affiliated/controlled		(1,399,496	)		—			(360,753	)
Non-affiliated and other assets		(3,381,739	)		(1,072,452	)		3,675,596
Net change in unrealized appreciation (depreciation) on investments		2,019,406			562,498			(5,780,279	)
Net change in unrealized appreciation (depreciation) on affiliated/controlled investments		6,666,847			781,222			(10,445,079	)
Net change in unrealized appreciation (depreciation) on affiliated/controlled warrants investments (1)		4,411,302			380,663			5,936,428
Net Realized and Unrealized Gains (Losses) on Investments		8,316,320			651,931			(6,974,087	)
Net Increase (Decrease) In Net Assets Resulting From Operations	$	5,569,417		$	(95,459	)	$	(8,016,099	)
Net Increase (Decrease) In Net Assets Per Share Resulting From Operations (2)	$	0.76		$	(0.01	)	$	(1.04	)

(1)

Primary exposure is equity risk.

(2)

Per share results are calculated based on weighted average shares outstanding for each period.

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Statements of Cash Flows

	FOR THE THREE MONTHS ENDED MARCH 31, 2018 (UNAUDITED)			FOR THE YEAR ENDED DECEMBER 31, 2017			FOR THE YEAR ENDED DECEMBER 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in Net Assets resulting from operations	$	5,569,417		$	26,179,569		$	(24,661,554	)
Adjustments to reconcile net increase (decrease) in Net Assets derived from operations to net cash provided by (used in) operating activities:
Purchases of investments		(23,486,160	)		(30,958,618	)		(76,522,603	)
Proceeds from disposition of investments		31,038,824			34,282,019			80,015,681
Net purchases/sales from short-term investments		(6,675,435	)		65,833			(1,171,203	)
(Decrease) increase in dividends, interest, and reclaims receivable		(421,072	)		(973,179	)		2,615,902
(Decrease) increase in restricted cash		—			—			1,000,000
Increase (decrease) in payable for investment purchased		—			(395,532	)		395,532
Increase (decrease) in payable to affiliates		36,519			82,552			(98,839	)
Increase (decrease) in incentive fees payable		2,174,600			1,691,040			—
(Decrease) increase in other assets		(15,527	)		528			757,955
Increase (decrease) in accrued expenses and other payables		5,454			(2,101	)		15,473
Net realized gain (loss) from investments		4,781,235			(3,541,944	)		6,167,339
Net unrealized appreciation (depreciation) from investments and warrants transactions		(13,097,555	)		(27,155,966	)		14,658,712
Net cash provided by (used in) operating activities		(89,700	)		(725,799	)		3,172,395

CASH FLOWS FROM FINANCING ACTIVITIES
Cost of shares repurchased		—			(1,098,371	)		(2,005,434	)
Net cash (used in) financing activities		—			(1,098,371	)		(2,005,434	)

Net increase (decrease) in cash		(89,700	)		(1,824,170	)		1,166,961
Cash - beginning of period		110,077			1,934,247			767,286
Cash - end of period	$	20,377		$	110,077		$	1,934,247

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Statements of Changes in Net Assets

	FOR THE THREE MONTHS ENDED MARCH 31, 2018 (UNAUDITED)			FOR THE YEAR ENDED DECEMBER 31, 2017			FOR THE YEAR ENDED DECEMBER 31, 2016
FROM OPERATIONS:
Net investment loss	$	(2,746,903	)	$	(4,518,341	)	$	(3,835,503	)
Net realized gains (losses) from security transactions and warrants transactions		(4,781,235	)		3,541,944			(6,167,339	)
Net change in unrealized appreciation (depreciation) on investments and warrants transactions		13,097,555			27,155,966			(14,658,712	)
Net increase (decrease) in net assets from operations		5,569,417			26,179,569			(24,661,554	)

FROM CAPITAL SHARE TRANSACTIONS:
Value for shares repurchased		—			(1,098,371	)		(2,005,434	)
Net decrease in net assets from capital share transactions		—			(1,098,371	)		(2,005,434	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		5,569,417			25,081,198			(26,666,988	)

NET ASSETS:
Beginning of period		173,993,589			148,912,391			175,579,379
End of period	$	179,563,006		$	173,993,589		$	148,912,391
Accumulated Net Investment Loss	$	(4,437,943	)	$	(1,691,040	)	$	—

COMMON STOCK ACTIVITY:
Shares repurchased		—			(128,551	)		(272,008	)
Net decrease in shares outstanding		—			(128,551	)		(272,008	)
Shares outstanding, beginning of period		7,302,146			7,430,697			7,702,705
Shares outstanding, end of period		7,302,146			7,302,146			7,430,697

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Financial Highlights

Selected per share data and ratios for a share outstanding throughout each period

	FOR THE THREE MONTHS ENDED MARCH 31, 2018* (UNAUDITED)			FOR THE YEAR ENDED DECEMBER 31, 2017*			FOR THE YEAR ENDED DECEMBER 31, 2016*			FOR THE YEAR ENDED DECEMBER 31, 2015*			FOR THE YEAR ENDED DECEMBER 31, 2014			FOR THE YEAR ENDED DECEMBER 31, 2013
Net asset value at beginning of period	$	23.83		$	20.04		$	22.79		$	24.49		$	28.32		$	22.90
Income from investment operations:
Net investment loss		(0.38	)		(0.62	)		(0.52	)		(0.06)	⁽¹⁾		(1.26	)		(1.42	)
Net realized and unrealized gains (losses) on investments		1.14			4.21			(2.76	)		(1.78	)		3.04			7.16
Total from investment operations		0.76			3.59			(3.28	)		(1.84	)		1.78			5.74

Distributions from:
Realized capital gains		—			—			—			—			(5.86	)		(0.32	)
Premiums from shares sold in offerings		—			—			—			—			—			—	⁽²⁾
Anti-dilutive effect from capital share transactions		—			0.20			0.53			0.14			0.25			—
Net asset value at end of period	$	24.59		$	23.83		$	20.04		$	22.79		$	24.49		$	28.32
Market value at end of period	$	11.29		$	8.96		$	7.67		$	8.17		$	18.65		$	23.17

Total return
Based on Net Asset Value		3.19	%^(A)		18.91	%		(12.07	)%		(6.94	)%		12.54	%		25.30	%
Based on Market Value		26.00	%^(A)		16.82	%		(6.12	)%		(56.19	)%		4.76	%		34.61	%
Net assets at end of period (millions)	$	180.0		$	174.0		$	148.9		$	175.6		$	209.7		$	256.9
Ratio of total expenses to average net assets		7.67	%^(B)(3)		4.13	%⁽³⁾		2.90	%		1.36	%⁽³⁾		5.29	%⁽³⁾		6.52	%⁽³⁾
Ratio of total expenses to average net assets, excluding incentive fees		2.68	%^(B)		2.98	%		2.90	%		2.68	%		3.12	%		2.67	%
Ratio of net investment loss to average net assets		(6.30	)%^(B)		(3.07	)%		(2.36	)%		(0.24	)%		(4.31	)%		(5.96	)%
Portfolio turnover rate		45	%^(A)		22	%		49	%		22	%		95	%		17	%

Consolidated.

(1)

Calculated using average shares outstanding.

(2)

Less than $0.005 per share.

(3)

Amount includes the incentive fee. For the period ended March 31, 2018, the year ended December 31, 2017, the year ended December 31, 2015, the year ended December 31, 2014 and the year ended December 31, 2013, the ratio of the incentive fee to average net assets was 4.99%, 1.15%, (1.32)%, 2.17% and 3.85%, respectively.

(A)

Not Annualized.

(B)

Annualized.

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Schedule of Investments

MARCH 31, 2018 (UNAUDITED)

PORTFOLIO COMPANY (% OF NET ASSETS) AND INDUSTRY	TYPE OF INVESTMENT	ACQUISITION DATE	SHARES/PAR VALUE ($)		COST BASIS		VALUE
ALIPHCOM, INC. (0.0%)	Common Stock*(1)(7)	08/20/13		2,128,005	$	10,108,024	$	0
Consumer Electronics
EQX CAPITAL, INC. (2.2%)	Common Stock*(1)(2)(7)	06/10/16		100,000		20,000		45,540
Equipment Leasing	Preferred Stock - Series A *(1)(2)(7)	06/10/16		4,000,000		4,000,000		3,986,400
								4,031,940
HERA SYSTEMS, INC. (1.5%)	Convertible Promissory Note
Aerospace	Matures January 2019
	Interest Rate 10% (1)(2)(7)	01/19/18		500,000		500,000		500,000
	Preferred Stock - Series A*(1)(2)(7)	09/18/15		3,642,324		2,000,000		157,712
	Preferred Stock - Series B*(1)(2)(7)	08/07/17 - 09/28/17		2,039,203		1,587,102		453,315
	Preferred Stock Warrants -Series B*(1)(2)(7)	08/07/17		6,214,922		0		1,380,956
	Preferred Stock Warrants -Series B*(1)(2)(7)	09/28/17		700,000		0		155,540
								2,647,523
INTRAOP MEDICAL CORP. (14.5%)	Convertible Note
Medical Devices	Matures June 2020
	Interest Rate 15% (1)(2)(7)	05/31/17		1,000,000		1,000,000		1,000,000
	Convertible Note
	Matures June 2020
	Interest Rate 15% (1)(2)(7)	07/13/17		1,000,000		1,000,000		1,000,000
	Convertible Note
	Matures June 2020
	Interest Rate 15% (1)(2)(7)	09/28/17		1,500,000		1,500,000		1,500,000
	Convertible Note
	Matures June 2020
	Interest Rate 15% (1)(2)(7)	07/08/14		1,000,000		1,000,000		1,000,000
	Convertible Note
	Matures June 2020
	Interest Rate 15% (1)(2)(7)	03/21/18		2,000,000		2,000,000		2,000,000
	Preferred Stock - Series C *(1)(2)(7)	07/12/13		26,856,187		26,299,938		14,575,658

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Schedule of Investments - continued

MARCH 31, 2018 (UNAUDITED)

PORTFOLIO COMPANY (% OF NET ASSETS) AND INDUSTRY	TYPE OF INVESTMENT	ACQUISITION DATE	SHARES/PAR VALUE ($)		COST BASIS		VALUE
INTRAOP MEDICAL CORP. (cont’d.)	Term Note
	Matures February 2020
	Interest Rate 8% (1)(2)(7)	02/10/17		2,000,000	$	2,000,000	$	2,000,000
	Term Note
	Matures February 2020
	Interest Rate 8% (1)(2)(7)	02/28/14		3,000,000		3,000,000		3,000,000
								26,075,658
NUTANIX, INC. (11.5%)	Common Stock*	05/15/15 - 08/23/16		418,772		6,638,112		20,565,893
Networking
PHUNWARE, INC. (8.1%)	Preferred Stock - Series E*(1)(3)(7)	03/14/14		3,257,328		9,999,997		14,591,201
Mobile Computing
PIVOTAL SYSTEMS CORP. (24.8%)	Common Stock Warrants -
Semiconductor Equipment	Class B*(1)(2)(7)	02/12/16		18,180,475		0		12,501,622
	Preferred Stock Warrants -Series D*(1)(2)(7)	09/02/16		4,158,654		0		1,118,262
	Preferred Stock - Series A*(1)(2)(7)	11/28/12 - 04/30/14		11,914,217		6,000,048		10,589,713
	Preferred Stock - Series B*(1)(2)(7)	04/30/14		13,065,236		6,321,482		11,612,774
	Preferred Stock - Series C*(1)(2)(7)	12/31/14		2,291,260		2,657,862		2,698,646
	Preferred Stock - Series D*(1)(2)(7)	09/02/16		6,237,978		3,975,801		5,943,545
								44,464,562
QMAT, INC. (11.9%)	Preferred Stock -Series A*(1)(2)(5)(7)(8)	12/14/12 - 04/28/16		16,000,240		14,609,819		14,373,496
Advanced Materials	Preferred Stock - Series B*(1)(2)(7)	09/28/16 - 11/07/16		2,000,000		2,000,000		1,976,800
	Preferred Stock Warrants -Series A*(1)(2)(7)	12/14/12		2,000,000		0		766,600
	Preferred Stock Warrants -Series C *(1)(2)(7)	02/22/18		3,482,209		0		426,222
	Preferred Stock Warrants -Series C *(1)(2)(7)	03/13/18		350,000		0		42,840
	Convertible Note
	Matures May 2018
	Interest Rate 8% (1)(2)(7)	02/22/18		3,482,209		3,482,209		3,482,209
	Convertible Note
	Matures May 2018
	Interest Rate 8% (1)(2)(7)	03/13/18		350,000		350,000		350,000
								21,418,167

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Schedule of Investments - continued

MARCH 31, 2018 (UNAUDITED)

PORTFOLIO COMPANY (% OF NET ASSETS) AND INDUSTRY	TYPE OF INVESTMENT	ACQUISITION DATE	SHARES/PAR VALUE ($)		COST BASIS		VALUE
QUICKLOGIC CORP. (1.0%)	Common Stock *	12/27/16 - 11/09/17		1,200,000	$	1,859,835	$	1,824,000
Semiconductors
REVASUM, INC. (9.0%)	Preferred Stock - Series B* (1)(2)(7)	10/27/17 - 12/20/17		313,719		2,550,033		2,669,310
Semiconductor Equipment	Common Stock*(1)(2)(7)	11/14/16		10,000		1,000		33,274
	Preferred Stock - Series A*(1)(2)(7)	03/01/17		441,998		1,999,997		2,491,587
	Term Note
	Matures February 2020
	Interest Rate 5% (1)(2)(7)	03/01/17		1,000,000		1,000,000		1,000,000
	Preferred Stock - Series Seed* (1)(2)(7)	11/14/16		2,200,000		7,275,070		9,969,080
								16,163,251
ROKU, INC. (4.3%)	Common Stock*	05/26/15 - 08/06/15		250,000		2,312,500		7,775,000
Consumer Electronics
RORUS, INC. (0.0%)	Convertible Note
Water Purification	Matures June 2021
	Interest Rate 2% (1)(7)	10/04/16		50,000		50,000		0
SILICON GENESIS CORP. (3.2%)	Common Stock*(1)(2)(7)	04/18/11		921,892		169,045		15,211
Intellectual Property	Common Stock Warrants*(1)(2)(7)	04/18/11		37,982		6,678		319
	Common Stock Warrants*(1)(2)(7)	10/13/11		5,000,000		0		10,000
	Common Stock Warrants*(1)(2)(7)	02/06/12		3,000,000		0		6,000
	Preferred Stock - Series 1-C*(1)(2)(7)	04/18/11		82,914		109,518		68,387
	Preferred Stock - Series 1-D*(1)(2)(7)	04/18/11		850,830		431,901		188,969
	Preferred Stock - Series 1-E*(1)(2)(7)	04/18/11		5,704,480		2,372,403		1,977,173
	Preferred Stock - Series 1-F*(1)(2)(7)	04/18/11		912,453		456,389		429,948
	Preferred Stock - Series 1-G*(1)(2)(5)(7)	03/10/16		48,370,793		4,500,969		2,806,957
	Preferred Stock - Series 1-H*(1)(2)(7)	03/10/16		837,942		936,895		222,557
								5,725,521
SVXR, INC. (1.7%)	Preferred Stock - Series A*(1)(3)(7)	01/11/17		2,013,491		1,000,000		1,000,000
Semiconductor Equipment	Convertible Note
	Matures December 2018
	Interest Rate 10% (1)(3)(7)	12/21/17 - 03/22/18		2,000,000		2,000,000		2,000,000
								3,000,000

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Schedule of Investments - continued

MARCH 31, 2018 (UNAUDITED)

PORTFOLIO COMPANY (% OF NET ASSETS) AND INDUSTRY	TYPE OF INVESTMENT	ACQUISITION DATE	SHARES/PAR VALUE ($)		COST BASIS		VALUE
TELEPATHY INVESTORS, INC. (0.9%)	Convertible Note
Consumer Electronics	Matures January 2019
	Interest Rate 10% (1)(2)(7)	01/29/16		300,000	$	300,000	$	42,519
	Convertible Note
	Matures January 2019
	Interest Rate 10% (1)(2)(7)	04/20/16		500,000		500,000		70,865
	Convertible Note
	Matures January 2019
	Interest Rate 10% (1)(2)(7)	06/21/16		150,000		150,000		21,259
	Convertible Note
	Matures January 2019
	Interest Rate 10% (1)(2)(7)	12/13/16		500,000		500,000		70,865
	Convertible Note
	Matures January 2019
	Interest Rate 10% (1)(2)(7)	06/23/15		2,000,000		2,000,000		283,460
	Convertible Note
	Matures July 2018
	Interest Rate 10% (1)(2)(7)	05/03/17		300,000		300,000		42,519
	Preferred Stock - Series A*(1)(2)(7)	07/29/14		15,238,000		3,999,999		1,036,184
								1,567,671
UCT COATINGS, INC. (0.4%)	Common Stock*(1)(3)(7)	04/18/11		1,500,000		662,235		728,100
Advanced Materials	Common Stock Warrants*(1)(3)(7)	04/18/11		2,283		67		2
								728,102
VUFINE, INC. (0.9%)	Common Stock*(1)(2)(7)	02/26/15		750,000		15,000		0
Consumer Electronics	Convertible Note
	Matures July 2019
	Interest Rate 6% (1)(2)(7)	07/10/17		1,500,000		1,500,000		1,220,985
	Convertible Note
	Matures October 2019
	Interest Rate 12% (1)(2)(7)	10/16/17		250,000		250,000		203,498
	Convertible Note
	Matures July 2019
	Interest Rate 12% (1)(2)(7)	01/31/18		350,000		350,000		284,897
	Preferred Stock - Series A*(1)(2)(7)	03/04/15 - 02/18/16		22,500,000		2,250,000		0
								1,709,380

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Schedule of Investments - continued

MARCH 31, 2018 (UNAUDITED)

PORTFOLIO COMPANY (% OF NET ASSETS)AND INDUSTRY	TYPE OF INVESTMENT	ACQUISITION DATE	SHARES/PAR VALUE ($)		COST BASIS		VALUE
WRIGHTSPEED, INC. (4.0%)	Preferred Stock -	04/11/13		2,267,659	$	6,837,983	$	3,710,344
Automotive	Series C*(1)(3)(4)(5)(7)	12/15/14		1,100,978		3,375,887		2,032,736
	Preferred Stock - Series D *(1)(3)(7)	07/10/15		450,814		1,658,996		865,563
	Preferred Stock - Series E *(1)(3)(7)	08/31/17		90,707		499,995		301,238
	Preferred Stock - Series F *(1)(3)(7)
	Preferred Stock Warrants - Series F*(1)(3)(7)	02/07/18		11,338		0		12,409
	Preferred Stock Warrants - Series F*(1)(3)(7)	08/31/17		18,141		0		19,855
	Promissory Note
	Matures August 2018	02/07/18		250,000		250,000		250,000
	Interest Rate 12% (1)(3)(7)
								7,192,145

INVESTMENT COMPANY (1.6%)	Fidelity Investments Money Market Treasury Portfolio - Class I (6)	Various		2,798,602		2,798,602		2,798,602
TOTAL INVESTMENTS (Cost $169,281,395) — 101.5%								182,278,616
LIABILITIES IN EXCESS OF OTHER ASSETS — (1.5)%								(2,715,610	)
NET ASSETS — 100.0%							$	179,563,006

Non-income producing security.

(1)

Restricted security. Fair Value is determined by or under the direction of the Company’s Board of Directors (See Note 3). At March 31, 2018, we held $149,315,121 (or 83.2% of net assets) in restricted securities (See Note 2).

(2)

Controlled investments.

(3)

Affiliated issuer.

(4)

A portion represents position held in Firsthand Holdings, Ltd. (See Note 1).

(5)

A portion represents position held in Firsthand Development, Ltd. (See Note 1).

(6)

The Fidelity Investments Money Market Portfolio invests primarily in U.S. Treasury securities.

(7)

Fair Value Level 3 Security.

(8)

A portion represents position held in Firsthand Investments, Ltd. (See note 1).

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Schedule of Investments

DECEMBER 31, 2017

PORTFOLIO COMPANY (% OF NET ASSETS) AND INDUSTRY	TYPE OF INVESTMENT	ACQUISITION DATE	SHARES/PAR VALUE ($)		COST BASIS		VALUE
ALIPHCOM, INC. (0.0%)	Common Stock*(1)(7)	08/20/13		2,128,005	$	10,108,024	$	0
Consumer Electronics
EQX CAPITAL, INC. (2.3%)	Common Stock*(1)(2)(7)	06/10/16		100,000		20,000		44,810
Equipment Leasing	Preferred Stock - Series A *(1)(2)(7)	06/10/16		4,000,000		4,000,000		3,975,200
								4,020,010

HERA SYSTEMS, INC. (1.2%)	Preferred Stock - Series A*(1)(2)(7)	09/18/15		3,642,324		2,000,000		154,799
Aerospace	Preferred Stock - Series B*(1)(2)(7)	08/07/17 - 09/28/17		2,039,203		1,587,102		453,315
	Preferred Stock Warrants - Series B*(1)(2)(7)	08/07/17
				6,214,922		0		1,380,956
	Preferred Stock Warrants - Series B*(1)(2)(7)	09/28/17
				700,000		0		155,540
								2,144,610
HIGHTAIL, INC. (4.9%)	Preferred Stock - Series E *(1)(4)(7)	03/27/14		2,268,602		9,620,188		8,561,704
Cloud Computing
INTRAOP MEDICAL CORP. (12.1%)
Medical Devices	Convertible Note (1)(2)(7) Matures June 2020 Interest Rate 15%	05/31/17		1,000,000		1,000,000		1,000,000
	Convertible Note (1)(2)(7) Matures June 2020 Interest Rate 15%	09/28/17		1,500,000		1,500,000		1,500,000
	Convertible Note (1)(2)(7) Matures June 2020 Interest Rate 15%	07/13/17		1,000,000		1,000,000		1,000,000
	Convertible Note (1)(2)(7) Matures June 2020 Interest Rate 15%	07/08/14		1,000,000		1,000,000		1,000,000
	Preferred Stock - Series C *(1)(2)(7)	07/12/13		26,856,187		26,299,938		11,479,677
	Term Note (1)(2) Matures February 2020 Interest Rate 8%	02/10/17		2,000,000		2,000,000		2,000,000
	Term Note (1)(2)(7) Matures February 2020 Interest Rate 8%	02/28/14		3,000,000		3,000,000		3,000,000
								20,979,677

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Schedule of Investments - continued

DECEMBER 31, 2017

PORTFOLIO COMPANY (% OF NET ASSETS) AND INDUSTRY	TYPE OF INVESTMENT	ACQUISITION DATE	SHARES/PAR VALUE ($)		COST BASIS		VALUE
NUTANIX, INC. (9.3%)	Common Stock*	05/15/15 - 08/23/16		458,772	$	7,358,112	$	16,185,476
Networking
PHUNWARE, INC. (6.9%)	Preferred Stock - Series E*(1)(3)(7)	03/14/14		3,257,328		9,999,997		12,018,563
Mobile Computing

PIVOTAL SYSTEMS CORP. (19.9%)	Common Stock Warrants -Class B*(1)(2)(7)	02/12/16		18,180,475		0		8,741,172
Semiconductor Equipment	Preferred Stock Warrants - Series D*(1)(2)(7)	09/02/16		4,158,654		0		618,392
	Preferred Stock - Series A*(1)(2)(7)	11/28/12 - 04/30/14		11,914,217		6,000,048		8,453,614
	Preferred Stock - Series B*(1)(2)(7)	04/30/14		13,065,236		6,321,482		9,270,308
	Preferred Stock - Series C*(1)(2)(7)	12/31/14		2,291,260		2,657,862		2,560,254
	Preferred Stock - Series D*(1)(2)(7)	09/02/16		6,237,978		3,975,801		5,009,720
								34,653,460

QMAT, INC. (13.4%)	Preferred Stock - Series A*(1)(2)(7)	12/14/12 - 04/28/16		16,000,240		16,000,240		17,394,341
Advanced Materials	Preferred Stock - Series B*(1)(2) (7)	09/28/16 - 11/07/16		2,000,000		2,000,000		2,132,600
	Preferred Stock Warrants -Series A*(1)(2)	12/14/12		2,000,000		0		1,086,600
	Convertible Note Matures March 2019 Interest Rate 8% (1)(2)(7)	12/29/17		2,745,485		2,745,485		2,745,485
								23,359,026

QUICKLOGIC CORP. (1.2%)	Common Stock *	12/27/16 - 11/09/17		1,200,000		1,859,835		2,088,000
Semiconductors

REVASUM, INC. (8.5%)	Preferred Stock - Series B(1)(2)(7)(8)	10/27/17 - 12/20/17		313,719		2,550,033		2,550,033
Semiconductor Equipment	Common Stock*(1)(2)(7)	11/14/16		10,000		1,000		29,908
	Preferred Stock - Series A*(1)(2)(7)	03/01/17		441,998		1,999,997		2,256,355
	Term Note (1)(2)(7) Matures February 2020 Interest Rate 5%	03/01/17		1,000,000		1,000,000		1,000,000
	Preferred Stock - Series Seed* (1)(2)(7)	11/14/16		2,200,000		7,284,145		8,966,760
								14,803,056

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Schedule of Investments - continued

DECEMBER 31, 2017

PORTFOLIO COMPANY (% OF NET ASSETS) AND INDUSTRY	TYPE OF INVESTMENT	ACQUISITION DATE	SHARES/PAR VALUE ($)		COST BASIS		VALUE
ROKU, INC. (6.7%) Consumer Electronics	Common Stock*(1)(7)	05/26/15 - 08/06/15		250,000	$	2,312,500	$	11,650,500

RORUS, INC. (0.0%)Water Purification	Convertible Note (1)(7) Matures June 2021 Interest Rate 2%	10/04/16		50,000		50,000		0

SILICON GENESIS CORP. (3.5%)	Common Stock*(1)(2)(7)	04/18/11		921,892		169,045		16,871
Intellectual Property	Common Stock Warrants*(1)(2)(7)	04/18/11		5,000,000		0		11,000
	Common Stock Warrants*(1)(2)(7)	10/13/11		37,982		6,678		357
	Common Stock Warrants*(1)(2)(7)	02/06/12		3,000,000		0		6,600
	Preferred Stock - Series 1-C*(1)(2)(7)	04/18/11		82,914		109,518		74,258
	Preferred Stock - Series 1-D*(1)(2)(7)	04/18/11		850,830		431,901		205,646
	Preferred Stock - Series 1-E*(1)(2)(7)	04/18/11		5,704,480		2,459,808		2,063,310
	Preferred Stock - Series 1-F*(1)(2)(7)	04/18/11		912,453		475,674		456,318
	Preferred Stock - Series 1-G*(1)(2)(5)(7)	03/10/16		48,370,793		4,583,405		3,023,658
	Preferred Stock - Series 1-H*(1)(2)(7)	03/10/16		837,942		946,502		236,551
								6,094,569

SVXR, INC. (1.2%)	Preferred Stock - Series A*(1)(3)(7)	01/11/17		2,013,491		1,000,000		1,000,000
Semiconductor Equipment	Convertible Note (1)(2)(7) Matures December 2018 Interest Rate 10% (1)(2)(7)	12/21/17		1,000,000		1,000,000		1,000,000
								2,000,000

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Schedule of Investments - continued

DECEMBER 31, 2017

PORTFOLIO COMPANY (% OF NET ASSETS) AND INDUSTRY	TYPE OF INVESTMENT	ACQUISITION DATE	SHARES/PAR VALUE ($)		COST BASIS		VALUE
TELEPATHY INVESTORS, INC. (0.9%)	Convertible Note (1)(2)(7) Matures January 2018 Interest Rate 10%	01/29/16		300,000	$	300,000	$	45,321
Consumer Electronics	Convertible Note (1)(2)(7) Matures January 2018 Interest Rate 10%	04/20/16		500,000		500,000		75,535
	Convertible Note (1)(2)(7) Matures January 2018 Interest Rate 10%	06/21/16		150,000		150,000		22,661
	Convertible Note (1)(2)(7) Matures January 2018 Interest Rate 10%	12/13/16		500,000		500,000		75,535
	Convertible Note (1)(2)(7) Matures January 2018 Interest Rate 10%	06/23/15		2,000,000		2,000,000		302,140
	Convertible Note (1)(2)(7) Matures January 2018 Interest Rate 10%	05/03/17		300,000		300,000		45,321
	Preferred Stock - Series A*(1)(2)(7)	07/29/14		15,238,000		3,999,999		937,137
								1,503,650
UCT COATINGS, INC. (0.5%)	Common Stock*(1)(3)(7)	04/18/11		1,500,000		662,235		922,050
Advanced Materials	Common Stock Warrants*(1)(3)(7)	04/18/11		2,283		67		4
								922,054
VUFINE, INC. (0.8%)	Common Stock*(1)(2)(7)	02/26/15		750,000		15,000		0
Consumer Electronics	Convertible Note (1)(2)(7) Matures July 2019 Interest Rate 6%	07/10/17		1,500,000		1,500,000		1,229,280
	Preferred Stock - Series A*(1)(2)(7)	03/04/15 - 02/18/16		22,500,000		2,250,000		0
	Convertible Note (1)(2)(7) Matures October 2019 Interest Rate 12%	10/16/17		250,000		250,000		204,880
								1,434,160
WRIGHTSPEED, INC. (6.2%)	Preferred Stock - Series C*(1)(3)(4)(7)	04/11/13		2,267,659		6,837,983		5,704,296
Automotive	Preferred Stock - Series D *(1)(3)(7)	12/15/14		1,100,978		3,375,887		3,161,018
	Preferred Stock - Series E *(1)(3)(7)	07/10/15		450,814		1,658,996		1,350,323
	Preferred Stock - Series F *(1)(3)(7)	08/31/17		90,707		499,995		471,295
	Preferred Stock Warrants - Series F*(1)(3)(7)	08/31/17
				18,141		0		28,703
								10,715,635

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Schedule of Investments - continued

DECEMBER 31, 2017

PORTFOLIO COMPANY (% OF NET ASSETS) AND INDUSTRY	TYPE OF INVESTMENT	ACQUISITION DATE	SHARES/PAR VALUE ($)		COST BASIS		VALUE
INVESTMENT COMPANY (1.0%)	Fidelity Investments Money Market Treasury Portfolio - Class I (6)	Various		1,705,375	$	1,705,375	$	1,705,375

TOTAL INVESTMENTS (Cost $174,939,859) — 100.5%								174,839,525

LIABILITIES IN EXCESS OF OTHER ASSETS — (0.5)%								(845,936	)

NET ASSETS — 100.0%							$	173,993,589

Non-income producing security.

(1)

Restricted security. Fair Value is determined by or under the direction of the Company’s Board of Directors (see Note 3). At December 31, 2017, we held $154,860,674 (or 89.0% of net assets) in restricted securities (see Note 2).

(2)

Controlled Investments.

(3)

Affiliated issuer.

(4)

A portion represents position held in Firsthand Holdings, Ltd. (see Note 1).

(5)

A portion represents position held in Firsthand Development, Ltd. (see Note 1).

(6)

The Fidelity Investments Money Market Portfolio invests primarily in U.S. Treasury securities.

(7)

Fair Value Level 3 Security.

(8)

A portion represents position held in Firsthand Investments, Ltd. (see Note 1).

See accompanying notes to financial statements

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements

MARCH 31, 2018 (UNAUDITED)

NOTE 1. THE COMPANY

Firsthand Technology Value Fund, Inc. (the “Company,” “us,” “our,” and “we”), is a Maryland corporation and an externally managed, non-diversified, closed-end management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company acquired its initial portfolio of securities through the reorganization of Firsthand Technology Value Fund, a series of Firsthand Funds, into the Company. The reorganization was completed on April 15, 2011. The Company commenced operations on April 18, 2011. Under normal circumstances, the Company will invest at least 80% of its assets for investment purposes in technology companies, which are considered to be those companies that derive at least 50% of their revenues from products and/ or services within the information technology sector or the “cleantech” sector. Information technology companies include, but are not limited to, those focused on computer hardware, software, telecommunications, networking, Internet, and consumer electronics. While there is no standard definition of cleantech, it is generally regarded as including goods and services designed to harness renewable energy and materials, eliminate emissions and waste, and reduce the use of natural resources. In addition, under normal circumstances we will invest at least 70% of our assets in privately held companies and in public companies with market capitalizations less than $250 million. Our portfolio is primarily composed of equity and equity derivative securities of technology and cleantech companies (as defined above). These investments generally range between $1 million and $10 million each, although the investment size will vary proportionately with the size of the Company’s capital base. The Company’s shares are listed on the NASDAQ Global Market under the symbol “SVVC.”

The Company is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946.

CONSOLIDATION OF SUBSIDIARIES. On May 8, 2015, the Board of Directors of the Company approved the formation of a fully owned and controlled subsidiary (as defined by the 1940 Act) of the Company named Firsthand Venture Investors (“FVI”), a California general partnership formed on March 30, 2015. After the closing of business on June 30, 2015, the Company contributed substantially all of its assets to FVI in return for a controlling general partner ownership interest in FVI. The transaction was completed July 1, 2015. Under this new structure, we will have all or substantially all of our investment activities conducted through our fully owned subsidiary, FVI.

On June 10, 2016, the Board of Directors of the Company approved the formation of a fully owned and controlled subsidiary (as defined by the 1940 Act) of FVI named Firsthand Holdings, Ltd. (“FHL”), a Cayman Islands corporation formed on May 4, 2016. Under this structure, we may from time to time transfer investments in the Company held in the Company or FVI to FHL in return for ownership interests in FHL. The net assets of FHL at March 31, 2018, were $2,421,576 or 1.3% of the Company’s consolidated net assets. On September 27, 2016, the Board of Directors of the Company approved the formation of a fully owned and controlled subsidiary (as defined by the 1940 Act) of FVI named Firsthand Development, Ltd (“FDL”), a Cayman Islands corporation formed on September 22, 2016. Under this structure, we may from time to time transfer investments in the Company held in the Company or FVI to FDL in return for ownership interests in FDL. The net assets of FDL at March 31, 2018, were $8,197,651 or 4.6% of the Company’s consolidated net assets. On November 10, 2017, the Board of Directors of the Company approved the formation of a fully owned and controlled subsidary (as defined by the 1940 Act) of FVI named Firsthand Investments, Ltd. (“FIL”), a Cayman Islands corporation formed on November 15, 2017. The net assets of FIL at March 31, 2018, were $8,534,135 or 4.8% of the Company’s consolidated net assets. The financial statements of the Company, FVI, FHL, FDL, and FIL are presented in the report on a consolidated basis.

FHL, FDL, and FIL are all treated as controlled foreign corporations under the Internal Revenue Code and are not expected to be subject to U.S. federal income tax. FVI is treated as a U.S. shareholder of each of FHL, FDL, and FIL. As a result, FVI is required to include in gross income for U.S. federal tax purposes all of FHL, FDL, and FIL’s income, whether or not such income is distributed by FHL, FDL, or FIL. If a net loss is realized by FHL, FDL, or FIL, such loss is not generally available to offset the income earned by FVI.

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed in the preparation of the Company’s financial statements included in this report:

USE OF ESTIMATES. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires 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 reporting period. Actual results could differ from those estimates.

PORTFOLIO INVESTMENT VALUATIONS. Investments are stated at “value” as defined in the 1940 Act and in the applicable regulations of the Securities and Exchange Commission and in accordance with GAAP. Value, as defined in Section 2(a)(41) of the 1940 Act, is (i) the market value of 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 securities and assets. On March 31, 2018, our financial statements include venture capital investments valued at approximately $149.3 million. The fair values of our venture capital investments were determined in good faith by, or under the direction of, the Board. Upon sale of these investments, the values that are ultimately realized may be different from what is presently estimated. The difference could be material. Also see note 6 regarding the fair value of the company’s investments.

CASH AND CASH EQUIVALENTS. The Company considers liquid assets deposited with a bank, investments in money market funds, and certain short-term debt instruments with maturities of three months or less to be cash equivalents. These investments represent amounts held with financial institutions that are readily accessible to pay our expenses or purchase investments. Cash and cash equivalents are valued at cost plus accrued interest, which approximates market value.

RESTRICTED SECURITIES. At March 31, 2018 and December 31, 2017, we held $149,315,121 and $154,860,674 in restricted securities, respectively.

INCOME RECOGNITION. Dividend income is recorded on the ex-dividend date. Interest income is accrued as earned. Discounts and premiums on securities purchased are amortized over the lives of the respective securities. Other non-cash dividends are recognized as investment income at the fair value of the property received. When debt securities are determined to be non-income producing, the Company ceases accruing interest and writes off any previously accrued interest. These write-offs are recorded as a reduction to interest income.

SHARE VALUATION. The net asset value (“NAV”) per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash or other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of the Fund, rounded to the nearest cent.

REALIZED GAIN OR LOSS AND UNREALIZED APPRECIATION OR DEPRECIATION OF PORTFOLIO INVESTMENTS. A realized gain or loss is recognized when an investment is disposed of and is computed as the difference between the Company’s cost basis in the investment at the disposition date and the net proceeds received from such disposition. Realized gains and losses are calculated on a specific identification basis. Unrealized appreciation or depreciation is computed as the difference between the fair value of the investment and the cost basis of such investment.

INCOME TAXES. As we intend to continue to qualify as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), the Company does not provide for income taxes. The Company recognizes interest and penalties in income tax expense.

FOREIGN CURRENCY TRANSLATION. The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation.

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

SECURITIES TRANSACTIONS. Securities transactions are accounted for on the date of the transaction for the purchase or sale of the securities entered into by the Company (i.e., trade date).

CONCENTRATION OF CREDIT RISK. The Company places its cash and cash equivalents with financial institutions and, at times, cash held in checking accounts may exceed the Federal Deposit Insurance Corporation insured limit.

OPTIONS. The Company is subject to equity price risk in the normal course of pursuing its investment objectives and may enter into options written to hedge against changes in the value of equities. The Company may purchase put and call options to attempt to provide protection against adverse price effects from anticipated changes in prevailing prices of securities or stock indices. The Company may also write put and call options. When the Company writes an option, an amount equal to the premium received by the Company is recorded as a liability and is subsequently adjusted to the current fair value of the option written.

Premiums received from writing options that expire unexercised are treated by the Company on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or currency in determining whether the Company has realized a gain or loss. The Company as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.

The Company had no option transactions for the three months ended March 31, 2018.

The average volume of the Company’s derivatives during the three months ended March 31, 2018, is as follows:

	PURCHASED OPTIONS (CONTRACTS)	WARRANTS (NOTIONAL VALUE)	WRITTEN OPTIONS (CONTRACTS)
Firsthand Technology Value Fund, Inc.	—	13,132,150	—

NOTE 3. BUSINESS RISKS AND UNCERTAINTIES

We plan to invest a substantial portion of our assets in privately-held companies, the securities of which are inherently illiquid. We also seek to invest in small publicly-traded companies that we believe have exceptional growth potential and to make opportunistic investments in publicly-traded companies, both large and small. In the case of investments in small publicly-traded companies, although these companies are publicly traded, their stock may not trade at high volumes, and prices can be volatile, which may restrict our ability to sell our positions. These privately held and publicly traded businesses tend to lack management depth, have limited or no history of operations and typically have not attained profitability. Because of the speculative nature of our investments and the lack of public markets for privately held investments, there is greater risk of loss than is the case with traditional investment securities.

We do not choose investments based on a strategy of diversification. We also do not rebalance the portfolio should one of our portfolio companies increase in value substantially relative to the rest of the portfolio. Therefore, the value of our portfolio may be more vulnerable to events affecting a single sector, industry or portfolio company and, therefore, may be subject to greater volatility than a company that follows a diversification strategy.

Because there is typically no public or readily-ascertainable market for our interests in the small privately-held companies in which we invest, the valuation of those securities is determined in good faith by the Valuation Committee, comprised of all members of the Board who are not “interested persons” of the Company, as such term is defined in Section 2(a)(19) of the 1940 Act, in accordance with our Valuation Procedures and is subject to significant estimates and judgments. The determined value of the securities in our portfolio may differ significantly from the values that would be placed on these securities if a ready market for the securities existed. Any changes in valuation are recorded in our Statement of Operations as “Net increase (decrease) in unrealized appreciation on investments.” Changes in valuation of any of our investments in privately-held companies from one period to another may be volatile.

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

The Board may, from time to time, engage an independent valuation firm to provide it with valuation assistance with respect to certain of our portfolio investments. The Company intends to continue to engage an independent valuation firm to provide us with assistance regarding our determination of the fair value of select portfolio investments each quarter unless directed by the Board to cancel such valuation services. The scope of the services rendered by an independent valuation firm is at the discretion of the Board. The Board is ultimately and solely responsible for determining the fair value of the Company’s investments in good faith.

With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, the Board has approved a multi-step valuation process to be followed each quarter, as described below:

(1)

each quarter the valuation process begins with each portfolio company or investment being initially valued by the Adviser Valuation Committee or the independent valuation firm;

(2)

the Valuation Committee of the Board on a quarterly basis reviews the preliminary valuation of the Adviser Valuation Committee and that of the independent valuation firms and makes the fair value determination, in good faith, based on the valuation recommendations of the Adviser Valuation Committee and the independent valuation firms; and

(3)

at each quarterly Board meeting, the Board considers the valuations recommended by the Adviser Valuation Committee and the independent valuation firms that were previously submitted to the Valuation Committee of the Board and ratifies the fair value determinations made by the Valuation Committee of the Board.

NOTE 4. INVESTMENT MANAGEMENT FEE

The Company has entered into an investment management agreement (the “Investment Management Agreement”) with Firsthand Capital Management, Inc., which was previously known as SiVest Group, Inc. (“FCM” or the “Adviser”), pursuant to which the Company will pay FCM a fee for providing investment management services consisting of two components—a base management fee and an incentive fee.

The base management fee will be calculated at an annual rate of 2.00% of our gross assets. For services rendered under the Investment Management Agreement, the base management fee will be payable quarterly in arrears. The base management fee will be calculated based on the average of (1) the value of our gross assets at the end of the current calendar quarter and (2) the value of the Company’s gross assets at the end of the preceding calendar quarter; and will be appropriately adjusted for any share issuances or repurchases during the current calendar quarter. Base management fees for any partial month or quarter will be pro-rated.

The incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement, as of the termination date), commencing on April 15, 2011, 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, provided that the incentive fee determined as of December 31, 2017, will be calculated for a period of shorter than twelve calendar months to take into account any realized gains computed net of all realized capital losses and unrealized capital depreciation from inception. As of March 31, 2018, there was an incentive fee expensed for $2,174,600. As of December 31, 2017, there was an incentive fee expensed for $1,691,040. As of December 31, 2016, there was an incentive fee expensed for $0. As of December 31, 2015, there was an incentive fee expensed for $(2,478,204).

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

NOTE 5. DEBT

The Company currently has no plan to use leverage and does not have any significant outstanding debt obligations (other than normal operating expense accruals).

NOTE 6. FAIR VALUE

Securities traded on stock exchanges, or quoted by NASDAQ, are valued according to the NASDAQ Stock Market, Inc. (“NASDAQ”) official closing price, if applicable, or at their last reported sale price as of the close of trading on the New York Stock Exchange (“NYSE”) (normally 4:00 P.M. Eastern Time). If a security is not traded that day, the security will be valued at its most recent bid price.

Securities traded in the over-the-counter market, but not quoted by NASDAQ, are valued at the last sale price (or, if the last sale price is not readily available, at the most recent closing bid price as quoted by brokers that make markets in the securities) at the close of trading on the NYSE.

Securities traded both in the over-the-counter market and on a stock exchange are valued according to the broadest and most representative market.

Securities and other assets that do not have market quotations readily available are valued at their fair value as determined in good faith by the Board of Directors of the Company (the “Board”) in accordance with the Valuation Procedures adopted by the Valuation Committee, a committee of the Board.

In pricing illiquid, privately placed securities, the Board of Directors is responsible for (1) determining overall valuation guidelines and (2) ensuring that the investments of the Company are valued within the prescribed guidelines.

The Valuation Committee, comprised of all of the independent Board members, is responsible for determining the valuation of the Company’s assets within the guidelines established by the Board of Directors. The Valuation Committee receives information and recommendations from the Adviser and an independent valuation firm.

The values assigned to these investments are based on available information and do not necessarily represent amounts that might ultimately be realized when that investment is sold, as such amounts depend on future circumstances and cannot reasonably be determined until the individual investments are actually liquidated or become readily marketable.

APPROACHES TO DETERMINING FAIR VALUE. GAAP 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 effect, GAAP applies fair value terminology to all valuations whereas the 1940 Act applies market value terminology to readily marketable assets and fair value terminology to other assets.

The main approaches to measuring fair value utilized are the market approach, the income approach, and the asset-based approach. The choice of which approach to use in a particular situation depends on the specific facts and circumstances associated with the company, as well as the purpose for which the valuation analysis is being conducted. Firsthand and the independent valuation firm rely primarily on the market approach. We also considered the income and asset-based approaches in our analysis because certain of the portfolio companies do not have substantial operating earnings relative to the value of their underlying assets.

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

Market Approach (M): The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. For example, the market approach often uses market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range each appropriate multiple falls requires the use of judgment in considering factors specific to the measurement (qualitative and quantitative).

Income Approach (I): The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present value amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. Those valuation techniques include present value techniques; option-pricing models, such as the Black-Scholes-Merton formula (a closed-form model) and a binomial model (a lattice model), which incorporate present value techniques; and the multi-period excess earnings method, which is used to measure the fair value of certain assets.

Asset-Based Approach (A): The asset-based approach examines the value of a company’s assets net of its liabilities to derive a value for the equity holders.

FAIR VALUE MEASUREMENT. In accordance with the guidance from the Financial Accounting Standards Board on fair value measurements and disclosures under GAAP, the Company discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements).

The guidance establishes three levels of the fair value hierarchy as follows:

Level 1 -

Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the date of measurement.

Level 2 -

Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument in an inactive market, prices for similar instruments in an active or inactive market, interest rates, prepayment speeds, credit risks, yield curves, default rates, and similar data.

Level 3 -

Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Company’s own assumptions about the assumptions a market participant would use in valuing the asset or liability based on the best information available.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the Company’s net assets as of March 31, 2018:

	LEVEL 1 QUOTED PRICES		LEVEL 2 OTHER SIGNIFICANT OBSERVABLE INPUTS		LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS
ASSETS
Common Stocks
Advanced Materials	$	—	$	—	$	728,100
Consumer Electronics		7,775,000		—		—
Equipment Leasing		—		—		45,540
Intellectual Property		—		—		15,211
Networking		20,565,893		—		—
Semiconductors		1,824,000		—		—
Semiconductor Equipment		—		—		33,274
Total Common Stocks		30,164,893		—		822,125
Preferred Stocks
Advanced Materials		—		—		16,350,296
Aerospace		—		—		611,028
Automotive		—		—		6,909,881
Consumer Electronics		—		—		1,036,184
Equipment Leasing		—		—		3,986,400
Intellectual Property		—		—		5,693,991
Medical Devices		—		—		14,575,658
Mobile Computing		—		—		14,591,201
Semiconductor Equipment		—		—		46,974,655
Total Preferred Stocks		—		—		110,729,294
Asset Derivatives *
Equity Contracts		—		—		16,440,626
Total Asset Derivatives		—		—		16,440,626
Convertible Notes
Advanced Materials		—		—		3,832,209
Aerospace		—		—		500,000
Automotive		—		—		250,000
Consumer Electronics		—		—		2,240,867
Medical Devices		—		—		11,500,000
Semiconductor Equipment		—		—		3,000,000
Total Convertible Notes		—		—		21,323,076
Mutual Funds		2,798,602		—		—
Total	$	32,963,495	$	—	$	149,315,121

Asset derivatives include warrants.

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

At the end of each calendar quarter, management evaluates the Level 2 and Level 3 assets and liabilities for changes in liquidity, including but not limited to: whether a broker is willing to execute at the quoted price, the depth and consistency of prices from third party services, and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges. Transfers in and out of the levels are recognized at the value at the end of the period. There were no transfers between Levels 1 and 2 as of March 31, 2018.

Following is a reconciliation of Level 3 assets (at either the beginning or the ending of the quarter) for which significant unobservable inputs were used to determine fair value.

INVESTMENTS AT FAIR VALUE USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)	BALANCE AS OF 12/31/17		NET PURCHASES/ CONVERSION		NET SALES/ CONVERSION			NET REALIZED GAINS/ (LOSSES)			NET UNREALIZED APPRECIATION (DEPRECIATION) ⁽¹⁾			TRANSFERS IN (OUT) OF LEVEL 3			BALANCE AS OF 3/31/18
Common Stocks
Advanced Materials	$	922,050	$	—	$	—		$	—		$	(193,950	)	$	—		$	728,100
Consumer Electronics		11,650,500		—		—			—			(3,875,500	)		(7,775,000	)		—
Equipment Leasing		44,810		—		—			—			730			—			45,540
Intellectual Property		16,871		—		—			—			(1,660	)		—			15,211
Semiconductor Equipment		29,908		—		—			—			3,366			—			33,274
Preferred Stocks
Advanced Materials		19,526,941		14,609,819		(14,609,819	)		(1,390,421	)		(1,786,224	)		—			16,350,296
Aerospace		608,114		—		—			—			2,914			—			611,028
Automotive		10,686,932		—		—			—			(3,777,051	)		—			6,909,881
Cloud Computing		8,561,704		—		(5,462,741	)		(4,157,447	)		1,058,484			—			—
Consumer Electronics		937,137		—		—			—			99,047			—			1,036,184
Equipment Leasing		3,975,200		—		—			—			11,200			—			3,986,400
Intellectual Property		6,059,741		—		(198,731	)		—			(167,019	)		—			5,693,991
Medical Devices		11,479,677		—		—			—			3,095,981			—			14,575,658
Mobile Computing		12,018,563		—		—			—			2,572,638			—			14,591,201
Semiconductor Equipment		40,067,044		6,725,070		(6,725,070	)		(9,075	)		6,916,686			—			46,974,655

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

INVESTMENTS AT FAIR VALUE USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)	BALANCE AS OF 12/31/17		NET PURCHASES/ CONVERSION		NET SALES/ CONVERSION			NET REALIZED GAINS /(LOSSES)			NET UNREALIZED APPRECIATION (DEPRECIATION) ⁽¹⁾			TRANSFERS IN (OUT) OF LEVEL 3			BALANCE AS OF 3/31/18
Asset Derivatives
Equity Contracts	$	12,029,324	$	—	$	—		$	—		$	4,411,302		$	—		$	16,440,626
Convertible Notes
Advanced Materials		2,745,485		3,832,209		(2,745,485	)		—			—			—			3,832,209
Aerospace		—		500,000		—			—			—			—			500,000
Automotive		—		250,000		—			—			—			—			250,000
Consumer Electronics		2,000,673		350,000		—			—			(109,806	)		—			2,240,867
Medical Devices		9,500,000		2,000,000		—			—			—			—			11,500,000
Semiconductor Equipment		2,000,000		1,000,000		—			—			—			—			3,000,000
Total	$	154,860,674	$	29,267,098	$	(29,741,846	)	$	(5,556,943	)	$	8,261,138		$	(7,775,000	)	$	149,315,121

(1)

The net change in unrealized depreciation from Level 3 instruments held as of March 31, 2018, was $11,078,149.

The below chart represents quantitative disclosure about significant unobservable inputs for Level 3 fair value measurements at March 31, 2018.


	FAIR VALUE AT 3/31/18	VALUATION TECHNIQUES	UNOBSERVABLE INPUTS	RANGE (WEIGHTED AVG.)
Direct venture capital investments: Advanced Materials	$22.2M	Market Comparable Companies Prior Transaction Analysis Probability-Weighted Expected Return Option Pricing Model	EBITDA Multiple Years to Maturity Volatility Risk-Free Rate Going Concern Probability Discount for Lack of Marketability	10.3x - 11.6x (11.0x) 5 years (5 years) 50.0% (50.0%) 2.56% (2.56%) 90% - 100% (90.0%) 0.0% - 22.7% (0.7%)
Direct venture capital investments: Aerospace	$2.6M	Prior Transaction Analysis Option Pricing Model	Years to Maturity Volatility Risk-Free Rate	5 years (5 years) 60.0% (60.0%) 2.56% (2.56%)
Direct venture capital investments: Automotive	$7.2M	Prior Transaction Analysis Option Pricing Model	Years to Maturity Volatility Risk-Free Rate	3 years (3 years) 55.0% (55.0%) 2.39% (2.39%)

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)


*continued*	FAIR VALUE AT 3/31/18	VALUATION TECHNIQUES	UNOBSERVABLE INPUTS	RANGE (WEIGHTED AVG.)
Direct venture capital investments: Consumer Electronics	$3.3M	Market Comparable Companies Probability-Weighted Expected Return Invested Capital (Cost) Option Pricing Model	Revenue Multiple Going Concern Probability Years to Maturity Volatility Risk-Free Rate	1.3x - 1.8x (1.6x) 30% - 100% (67%) 1 year - 5 years (3.1 years) 60.0% - 70.0% (64.8%) 2.09% - 2.56% (2.34%)
Direct venture capital investments: Equipment Leasing	$4.0M	Prior Transaction Analysis Option Pricing Model	Years to Maturity Volatility Risk-Free Rate	5 years (5 years) 50.0% (50.0%) 2.56% (2.56%)
Direct venture capital investments: Intellectual Property	$5.7M	Prior Transaction Analysis Option Pricing Model	Years to Maturity Volatility Risk-Free Rate Discount for Lack of Marketability Adjustment for Market Movement	5 years (5 years) 55.0% (55.0%) 2.56% (2.56%) 24.3% (24.3%) -25.6% (-25.6%)
Direct venture capital investments: Medical Devices	$26.1M	Market Comparable Companies Option Pricing Model	Revenue Multiple Years to Maturity Volatility Risk-Free Rate	2.9x - 3.0x (2.9x) 4 years (4 years) 50.0% (50.0%) 2.48% (2.48%)
Direct venture capital investments: Mobile Computing	$14.6M	Prior Transaction Analysis Probability-Weighted Expected Return Option Pricing Model	Years to Maturity Volatility Risk-Free Rate Transaction Completion Probability	2 years (2 years) 60.0% (60.0%) 2.27% (2.27%) 90.0% (90.0%)
Direct venture capital investments: Semiconductor Equipment	$63.6M	Market Comparable Companies Prior Transaction Analysis Option Pricing Model	Revenue Multiple Years to Maturity Volatility Risk-Free Rate Discount for Lack of Marketability	1.1x - 3.6x (2.7x) 2 years - 5 years (2.9 years) 40.0% - 60.0% (52.1%) 2.27% - 2.56%) (2.36%) 0.0% - 25.8% (3.0%)

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

NOTE 7. FEDERAL INCOME TAXES

The Company has elected, and intends to qualify annually, for the special tax treatment afforded regulated investment companies under the Internal Revenue Code of 1986, as amended (the “Code”). As provided in the Code, in any fiscal year in which a BDC so qualifies and distributes at least 90% of its taxable net income, the BDC (but not the shareholders) will be relieved of federal income tax on the income distributed. Accordingly, no provision for income taxes has been made. To avoid imposition of the excise tax applicable to regulated investment companies, the Company intends to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the 12 months ended October 31) plus undistributed amounts, if any, from prior years.

The reorganization described in Note 1 (the formation of FVI as a fully owned subsidiary for investment activities) was structured to avoid any adverse tax consequences for the Company and its shareholders. The Company’s engaging in investment activities through FVI does not, in our view, jeopardize the Company’s ability to continue to qualify as a RIC under the Code.

The following information is based upon the federal income tax cost of portfolio investments as of March 31, 2018.

Gross unrealized appreciation	$	57,583,932
Gross unrealized depreciation		(44,586,711	)
Net unrealized appreciation	$	12,997,221
Federal income tax cost	$	169,281,395

The Company is subject to tax provisions that establish a minimum threshold for recognizing, and a system for measuring, the benefits of a tax position taken or expected to be taken in a tax return. Taxable years ending 2014, 2015, 2016, and 2017 remain open to federal and state audit. As of December 31, 2017, management has evaluated the application of these provisions to the Company and has determined that no provision for income tax is required in the Company’s financial statements for uncertain tax provisions.

NOTE 8. INVESTMENT TRANSACTIONS

Investment transactions (excluding short-term investments) were as follows for the three months ended March 31, 2018.

PURCHASES AND SALES
Purchases of investment securities	$	23,486,160
Proceeds from sales and maturities of investment securities	$	31,038,824

NOTE 9. SHARE BUYBACK/TENDER OFFER

SHARE BUYBACKS. On April 26, 2016, the Board of Directors of the Company approved a discretionary share repurchase plan (the “Plan”). Pursuant to the Plan, the Company was authorized to purchase in the open market up to $2 million worth of its common stock. The Plan allowed the Company to acquire its own shares at certain thresholds below its net asset value (NAV) per share, in accordance with the guidelines specified in Rule 10b-18 of the Securities Act of 1934, as amended. The intent of the Plan was to increase NAV per share and thereby enhance shareholder value. The Company completed the repurchase plan in September 2016, having repurchased and retired a total of 272,008 shares of stock, at a total cost of approximately $2 million.

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

On November 10, 2017, the Board of Directors of the Company approved a discretionary share purchase plan (the “Plan”). Pursuant to the Plan, the Company was authorized to purchase in the open market up to $2 million worth of its common stock. The Plan allowed the Company to acquire its own shares in accordance with the guidelines specified in Rule 10b-18 of the Securities Act of 1934, as amended. The intent of the Plan was to increase NAV per share and thereby enhance shareholder value. Through the closing of the Plan at the end of March, we had repurchased and retired 128,551 shares of stock at a total cost of approximately $1.1 million. Purchases under the Plan were restricted during certain months in order to comply with SEC rules regarding material nonpublic information. As of March 31, 2018, the Company had 7,302,146 shares outstanding.

TENDER OFFER. In connection with our agreement with a shareholder, we agreed to commence an issuer tender offer for up to $20 million of our shares of common stock at a purchase price per share equal to 95% of the Company’s net asset value per share (“NAV”) as of the close of ordinary trading on the NASDAQ Global Market on December 31, 2014 (the “Offer”). On December 22, 2014, the Company commenced a tender offer to purchase up to $20 million of its issued and outstanding common shares for cash at a price per share equal to 95% of the NAV determined on December 31, 2014 ($23.2702 per share). The tender offer, which expired on January 22, 2015 at 12:00 midnight, New York City time, was oversubscribed. Because the number of shares tendered exceeded the maximum amount of its offer, the Company purchased shares from tendering shareholders on a pro-rata basis based on the number of shares properly tendered. Of the 5,044,728 shares properly tendered, the Company purchased 859,468 shares of common stock pursuant to the tender offer.

NOTE 10. INVESTMENTS IN AFFILIATES AND CONTROLLED INVESTMENTS

Under the 1940 Act, the Company is required to identify investments where it owns greater than 5% (but less than 25%) of the portfolio company’s outstanding voting shares as an affiliate of the Company. Also, under the 1940 Act, the Company is required to identify investments where it owns greater than 25% of the portfolio company’s outstanding voting shares as a controlled investment of the Company. A summary of the Company’s investments in affiliates and controlled investments for the period from December 31, 2017, through March 31, 2018, is noted below:

AFFILIATE/ CONTROLLED INVESTMENTS*	VALUE AT 12/31/17		PURCHASES/ MERGER		INTEREST		SALES/ MATURITY/ EXPIRATION		REALIZED GAIN (LOSS)		CHANGE IN APPRECIATION/ DEPRECIATION		VALUE 03/31/18		SHARES HELD/PAR VALUE AT 3/31/18
EQX, Inc. Common Stock*	$	44,810	$	—	$	—	$	—	$	—	$	730	$	45,540		100,000
EQX, Inc. Preferred Stock - Series A*		3,975,200		—		—		—		—		11,200		3,986,400		4,000,000
Hera Systems, Inc. Series A Preferred*		154,799		—		—		—		—		2,913		157,712		3,642,324
Hera Systems Convertible Promissory Note*		—		500,000		10,000		—		—		—		500,000		500,000
Hera Systems, Inc. Series B Preferred*		453,315		—		—		—		—		—		453,315		2,039,203
Hera Systems, Inc. Series B Warrants*		155,540		—		—		—		—		—		155,540		700,000
Hera Systems, Inc. Series B Warrants*		1,380,956		—		—		—		—		—		1,380,956		6,214,922
IntraOp Medical Corp. Series C Preferred*		11,479,677		—		—		—		—		—		14,575,658		26,856,187

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

AFFILIATE/ CONTROLLED INVESTMENTS*	VALUE AT 12/31/17		PURCHASES/ MERGER		INTEREST		SALES/ MATURITY/ EXPIRATION			REALIZED GAIN (LOSS)			CHANGE IN APPRECIATION/ DEPRECIATION			VALUE 03/31/18		SHARES HELD/PAR VALUE AT 3/31/18
IntraOp Medical Corp. Convertible Note*	$	1,000,000	$	—	$	56,272	$	—		$	—		$	—		$	1,000,000		1,000,000
IntraOp Medical Corp. Convertible Note*		1,000,000		—		36,986		—			—			—			1,000,000		1,000,000
IntraOp Medical Corp. Convertible Note*		1,500,000		—		55,479		—			—			—			1,500,000		1,500,000
IntraOp Medical Corp. Convertible Note*		1,000,000		—		36,986		—			—			—			1,000,000		1,000,000
IntraOp Medical Corp. Convertible Note*		—		2,000,000		9,041		—			—			—			2,000,000		2,000,000
IntraOp Medical Corp. Term Note*		3,000,000		—		59,178		—			—			—			3,000,000		3,000,000
IntraOp Medical Corp. Term Note*		2,000,000		—		39,452		—			—			—			2,000,000		2,000,000
Phunware, Inc. Preferred Stock - Series E		12,018,563		—		—		—			—			2,572,638			14,591,201		3,257,328
Pivotal Systems, Series A Preferred*		8,453,614		—		—		—			—			2,136,099			10,589,713		11,914,217
Pivotal Systems, Series B Preferred*		9,270,308		—		—		—			—			2,342,466			11,612,774		13,065,236
Pivotal Systems, Series C Preferred*		2,560,254		—		—		—			—			138,392			2,698,646		2,291,260
Pivotal Systems, Series D Preferred*		5,009,720		—		—		—			—			933,825			5,943,545		6,237,978
Pivotal Systems, Series D Warrants*		618,392		—		—		—			—			499,870			1,118,262		4,158,654
Pivotal Systems, Common Stocks Warrants - Class B*		8,741,172		—		—		—			—			3,760,450			12,501,622		18,180,475
QMAT, Preferred Stock Series A*		17,394,341		14,609,819		—		(14,609,819	)		(1,390,421	)		(1,630,424	)		14,373,496		16,000,240
QMAT, Preferred Stock Series B*		2,132,600		—		—		—			—			(155,800	)		1,976,800		2,000,000
QMAT, Series A Warrant*		1,086,600		—		—		—			—			(320,000	)		766,600		2,000,000
QMAT, Preferred Stock Warrants - Series B*		—		—		—		—			—			426,222			426,222		3,482,208
QMAT, Preferred Stock Warrants - Series C*		—		—		—		—			—			42,840			42,840		350,000
QMAT Convertible Note*		—		3,482,209		29,002		—			—			—			3,482,209		3,482,209

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

AFFILIATE/ CONTROLLED INVESTMENTS*	VALUE AT 12/31/17		PURCHASES/ MERGER		INTEREST		SALES/ MATURITY/ EXPIRATION			REALIZED GAIN (LOSS)			CHANGE IN APPRECIATION/ DEPRECIATION			VALUE 03/31/18		SHARES HELD/PAR VALUE AT 3/31/18
QMAT, Convertible Note*	$	2,745,485	$	—	$	—	$	(2,745,485	)	$	—		$	—		$	—		—
QMAT Convertible Note*		—		350,000		1,459		—			—			—			350,000		350,000
Revasum, Preferred Stock, Series B*		2,550,033		—		—		—			—			119,277			2,669,310		313,719
Revasum, Term Note*		1,000,000		—		12,500		—			—			—			1,000,000		1,000,000
Revasum, Common Stock*		29,908		—		—		—			—			3,366			33,274		10,000
Revasum, Preferred Stock - Series Seed*		8,966,760		6,725,070		—		(6,725,070	)		(9,075	)		1,011,395			9,969,080		2,200,000
Revasum, Preferred Stock Series A*		2,256,355		—		—		—			—			235,232			2,491,587		441,998
Silicon Genesis Corp., Common *		16,871		—		—		—			—			(1,660	)		15,211		921,892
Silicon Genesis Corp., Common Warrants*		357		—		—		—			—			(38	)		319		37,982
Silicon Genesis Corp., Common Warrants*		11,000		—		—		—			—			(1,000	)		10,000		5,000,000
Silicon Genesis Corp., Common Warrants*		6,600		—		—		—			—			(600	)		6,000		3,000,000
Silicon Genesis Corp., Series 1-C Preferred*		74,258		—		—		—			—			(5,871	)		68,387		82,914
Silicon Genesis Corp., Series 1-D Preferred*		205,646		—		—		—			—			(16,677	)		188,969		850,830
Silicon Genesis Corp., Series 1-E Preferred*		2,063,310		—		—		(87,402	)		—			1,265			1,977,173		5,704,480
Silicon Genesis Corp., Series 1-F Preferred*		456,318		—		—		(19,285	)		—			(7,085	)		429,948		912,453
Silicon Genesis Corp., Series 1-G Preferred*		3,023,658		—		—		(82,436	)		—			(134,265	)		2,806,957		48,370,793
Silicon Genesis Corp., Series 1-H Preferred*		236,551		—		—		(9,606	)		—			(4,388	)		222,557		837,942
SVXR, Inc., Preferred Stock Series A		1,000,000		—		—		—			—			—			1,000,000		2,013,491
SVXR, Inc. Convertible Note		1,000,000		1,000,000		52,329		—			—			—			2,000,000		2,000,000
Telepathy Investors, Inc. Convertible Note*		302,140		—		59,686		—			—			(18,680	)		283,460		2,000,000

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

AFFILIATE/ CONTROLLED INVESTMENTS*	VALUE AT 12/31/17		PURCHASES/ MERGER		INTEREST		SALES/ MATURITY/ EXPIRATION		REALIZED GAIN (LOSS)		CHANGE IN APPRECIATION/ DEPRECIATION			VALUE 03/31/18		SHARES HELD/PAR VALUE AT 3/31/18
Telepathy Investors, Inc. Convertible Note*	$	45,321	$	—	$	7,500	$	—	$	—	$	(2,802	)	$	42,519		300,000
Telepathy Investors, Inc. Convertible Note*		22,661		—		4,069		—		—		(1,402	)		21,259		150,000
Telepathy Investors, Inc. Convertible Note*		75,535		—		13,562		—		—		(4,670	)		70,865		500,000
Telepathy Investors, Inc. Convertible Note*		45,321		—		8,700		—		—		(2,802	)		42,519		300,000
Telepathy Investors, Inc. Convertible Note*		75,535		—		13,562		—		—		(4,670	)		70,865		500,000
Telepathy Investors, Inc. Series A Preferred*		937,137		—		—		—		—		99,047			1,036,184		15,238,000
Vufine, Inc., Convertible Note*		1,229,280		—		44,384		—		—		(8,295	)		1,220,985		1,500,000
Vufine, Inc., Convertible Note*		204,880		—		7,397		—		—		(1,382	)		203,498		250,000
Vufine, Inc., Convertible Note*		—		350,000		6,904		—		—		(65,103	)		284,897		350,000
UCT Coatings, Inc. Common Stock		922,050		—		—		—		—		(193,950	)		728,100		1,500,000
UCT Coatings, Inc. Common Stock Warrants		4		—		—		—		—		(2	)		2		2,283
Wrightspeed, Inc., Series C Preferred Stock		5,704,296		—		—		—		—		(1,993,952	)		3,710,344		2,267,659
Wrightspeed, Inc., Series D Preferred Stock		3,161,018		—		—		—		—		(1,128,282	)		2,032,736		1,100,978
Wrightspeed, Inc., Series E Preferred Stock		1,350,323		—		—		—		—		(484,760	)		865,563		450,814
Wrightspeed, Inc., Series F Preferred Stock		471,295		—		—		—		—		(170,057	)		301,238		90,707

Firsthand Technology Value Fund, Inc.

Consolidated Notes to Financial Statements - continued

MARCH 31, 2018 (UNAUDITED)

AFFILIATE/ CONTROLLED INVESTMENTS*	VALUE AT 12/31/17		PURCHASES/ MERGER		INTEREST		SALES/ MATURITY/ EXPIRATION		REALIZED GAIN (LOSS)			CHANGE IN APPRECIATION/ DEPRECIATION			VALUE 03/31/18		SHARES HELD/PAR VALUE AT 3/31/18
Wrightspeed, Inc. Series F Warrants	$	28,703	$	—	$	—	$	—	$	—		$	(8,848	)	$	19,855		18,141
Wrightspeed, Inc. Series F Warrants		—		—		—		—		—			12,409			12,409		11,338
Wrightspeed Convertible Promissory Note		—		250,000		4,356		—		—			—			250,000		250,000
Total Affiliates and Controlled Investments	$	134,648,470			$	568,804			$	(1,399,496	)	$	11,078,152		$	149,315,121
Total Affiliates		25,656,252				56,685				—			(1,394,804	)		25,511,448
Total Controlled Investments	$	108,992,218			$	512,119			$	(1,399,496	)	$	12,472,956		$	123,803,673

Controlled investment.

As of March 31, 2018, Kevin Landis represents the Company and sits on the board of directors of Hera Systems, Inc.; IntraOp Medical, Inc.; Pivotal Systems, Inc.; QMAT, Inc.; Revasum, Inc.; Silicon Genesis Corp.; Telepathy Investors, Inc.; Vufine, Inc.; and Wrightspeed, Inc. Serving on boards of directors of portfolio companies may cause conflicts of interest. The Adviser has adopted various procedures to ensure that the Company will not be unfavorably affected by these potential conflicts.

NOTE 11. SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Company through the date that financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD-LOOKING STATEMENTS

The matters discussed in this report, as well as in future oral and written statements by management of the Company, include forward-looking statements based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements related 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 our ability to originate new investments and to achieve certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking statements contained in this report include, without limitations, statements as to:

•

our future operating results;

•

our business prospects and the prospects of our prospective portfolio companies;

•

the impact of investments that we expect to make;

•

the impact of a protracted decline in the liquidity of the credit markets on our business;

•

our informal relationships with third parties;

•

the expected market for venture capital investments and our addressable market;

•

the dependence of our future success on the general economy and its impact on the industries in which we invest;

•

our ability to access the equity market;

•

the ability of our portfolio companies to achieve their objectives;

•

our expected financings and investments;

•

our regulatory structure and tax status;

•

our ability to operate as a business development company and a regulated investment company;

•

the adequacy of our cash resources and working capital;

•

the timing of cash flows, if any, from the operation of our portfolio companies;

•

the timing, form, and amount of any dividend distributions;

•

impact of fluctuation of interest rates on our business;

•

valuation of any investments in portfolio companies particularly those having no liquid trading market; and

•

our ability to recover unrealized losses.

You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this report.

The following discussion should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this prospectus. In addition to historical information, the following discussion and other parts of this prospectus contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under “Risk Factors” and “Forward-Looking Statements” appearing elsewhere herein.

OVERVIEW

We are an externally managed, closed-end, non-diversified management investment company organized as a Maryland corporation that has elected to be treated as a BDC under the 1940 Act. As such, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities of private or micro-cap public U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. In addition, for tax purposes we have elected to be treated as a RIC under Subchapter M of the Code. FCM serves as our investment adviser and manages the investment process on a daily basis.

Our investment objective is to seek long-term growth of capital, principally by seeking capital gains on our equity and equity-related investments. There can be no assurance that we will achieve our investment objective. Under normal circumstances, we invest at least 80% of our net assets for investment purposes in technology companies. We consider technology companies to be those companies that derive at least 50% of their revenues from products and/or services within the information technology sector or in the “cleantech” sector. Information technology companies include, but are not limited to, those focused on computer hardware, software, telecommunications, networking, Internet, and consumer electronics. While there is no standard definition of cleantech, it is generally regarded as including goods and services designed to harness renewable energy and materials, eliminate emissions and waste, and reduce the use of natural resources. In addition, under normal circumstances we invest at least 70% of our total assets in privately held companies and public companies with market capitalizations of less than $250 million. Our portfolio is primarily composed of equity and equity derivative securities of technology and cleantech companies (as defined above). These investments generally range between $1 million and $10 million each, although the investment size will vary proportionately with the size of our capital base. We acquire our investments through direct investments in private companies, negotiations with selling shareholders, and in organized secondary marketplaces for private securities.

While our primary focus is to invest in illiquid private technology and cleantech companies, we also may invest in micro-cap publicly traded companies. In addition, we may invest up to 30 percent of the portfolio in opportunistic investments that do not constitute the private companies and micro-cap public companies described above. These other investments may include investments in securities of public companies that are actively traded or in actively traded derivative securities such as options on securities or security indices. These other investments may also include investments in high-yield bonds, distressed debt, or securities of public companies that are actively traded and securities of companies located outside of the United States. Our investment activities are managed by FCM.

PORTFOLIO COMPOSITION

The following table summarizes the fair value of our investment portfolio by industry sector as of March 31, 2018, and December 31, 2017.

	March 31, 2018	December 31, 2017
Semiconductor Equipment	35.5%	29.6%
Medical Devices	14.5%	12.1%
Advanced Materials	12.3%	13.9%
Networking	11.5%	9.3%
Mobile Computing	8.1%	6.9%
Consumer Electronics	6.1%	8.4%
Automotive	4.0%	6.2%
Intellectual Property	3.2%	3.5%
Equipment Leasing	2.2%	2.3%
Aerospace	1.5%	1.2%
Semiconductor	1.0%	1.2%
Cloud Computing	0.0%	4.9%
Water Purification	0.0%	0.0%
Exchange-Traded/Money Market Funds	1.6%	1.0%
(Liabilities)/Other Assets	(1.5%)	(0.5%)
Net Assets	100.0%	100.0%

MATURITY OF PRIVATE COMPANIES IN THE CURRENT PORTFOLIO

The Fund invests in private companies at various stages of maturity. As our portfolio companies mature, they move from the “early (development) stage” to the “middle (revenue) stage” and then to the “late stage.” We expect that this continuous progression may create a pipeline of potential exit opportunities through initial public offerings (IPOs) or acquisitions. Of course, some companies do not progress.

The illustration on the next page describes typical characteristics of companies at each stage of maturity and where we believe our current portfolio companies fit within these categories. We expect some of our portfolio companies to transition between stages of maturity over time. The transition may be forward if the company is maturing and is successfully executing its business plan or may be backward if the company is not successfully executing its business plan or decides to change its business plan substantially from its original plan.

EARLY STAGE

MIDDLE STAGE

LATE STAGE

Developing product or service for market, high level of research and development, little or no revenue.

Established product, customers, business model; limited revenues.

Appreciable revenue; may be break-even or profitable; IPO or acquisition candidate.

RESULTS OF OPERATIONS

The following information is a comparison for the three months ended March 31, 2018, March 31, 2017, and March 31, 2016

INVESTMENT INCOME

For the three months ended March 31, 2018, we had investment income of $597,515 primarily attributable to interest accrued on convertible/term note investments with QMAT, Revasum, Vufine, Telepathy Investors and IntraOp Medical Corp.

For the three months ended March 31, 2017, we had investment income of $260,798 primarily attributable to interest accrued on convertible/term note investments with QMAT, Revasum, Vufine, Telepathy Investors and IntraOp Medical Corp.

For the three months ended March 31, 2016, we had investment income of $159,915 primarily attributable to interest accrued on convertible/term note investments with Pivotal Systems, Telepathy Investors and IntraOp Medical Corp.

The higher level of investment income in the three months ended March 31, 2018, compared to the three months ended March 31, 2017 was due to the Fund’s increased investments in convertible/term notes.

OPERATING EXPENSES

Net operating expenses totaled approximately $3,344,418 during the three months ended March 31, 2018, $1,008,188 during the three months ended March 31, 2017, and $1,201,927 during the three months ended March 31, 2016.

Significant components of gross operating expenses for the three months ended March 31, 2018, were management fee expense of $890,949, professional fees (audit, legal, and consulting) of $88,468, and incentive fees (which were accrued but are not payable until gains in the portfolio are realized) of $2,174,600. Significant components of gross operating expenses for the three months ended March 31, 2017, were management fee expense of $741,152 and professional fees (audit, legal, and consulting) of $116,141. Significant components of operating expenses for the three months ended March 31, 2016, were management fee expense of $860,821 and professional fees (audit, legal, and consulting) of $180,688.

The higher level of gross operating expenses for the three months ended March 31, 2018, compared to the three months ended March 31, 2017 is primarily attributable to the incentive fee accrual in the three months ended March 31, 2018, which is a quarterly accrual based on what the incentive fee would be if the entire portfolio were liquidated at fair market value.

The lower level of gross operating expenses for the three months ended March 31, 2017, compared to the three months ended March 31, 2016 is primarily attributable to a decrease in our total net assets, on which the investment advisory fees are based.

NET INVESTMENT LOSS

The net investment loss was $(2,746,903) for the three months ended March 31, 2018, $(747,390) for the three months ended March 31, 2017, and $(1,042,012) for the three months ended March 31, 2016.

The greater net investment loss in the three months ended March 31, 2018, compared to the three months ended March 31, 2017 is primarily due to the accrual of an incentive fee in the first quarter of 2018 which was accrued but is not payable until gains in the portfolio are realized.

The lesser net investment loss in the three months ended March 31, 2017, compared to the three months ended March 31, 2016 is primarily due to a decrease in our total net assets, on which the investment advisory fees are based and an increase to investment income from convertible/term notes.

NET INVESTMENT REALIZED GAINS AND LOSSES AND UNREALIZED APPRECIATION AND DEPRECIATION

A summary of the net realized and unrealized gains and loss on investments for the three month periods ended March 31, 2018, March 31, 2017, and March 31, 2016, is shown below.


	Three Months Ended March 31, 2018
Realized losses	$	(4,781,235	)
Net change in unrealized appreciation on investments		13,097,555
Net realized and unrealized gains/(losses) on investments	$	8,316,320

		As of March 31, 2018
Gross unrealized appreciation on portfolio investments	$	57,583,932
Gross unrealized depreciation on portfolio investments		(44,586,711	)
Net unrealized appreciation on portfolio investments	$	12,997,221

	Three Months Ended March 31, 2017
Realized losses	$	(1,072,452	)
Net change in unrealized depreciation on investments		1,724,383
Net realized and unrealized gains/(losses) on investments	$	651,931

	As of March 31, 2017
Gross unrealized appreciation on portfolio investments	$	11,776,189
Gross unrealized depreciation on portfolio investments		(37,308,106	)
Net unrealized depreciation on portfolio investments	$	(25,531,917	)

	Three Months Ended March 31, 2016
Realized gains	$	3,314,843
Net change in unrealized depreciation on investments		(10,288,930	)
Net realized and unrealized gains/(losses) on investments	$	(6,974,087	)

	As of March 31, 2016
Gross unrealized appreciation on portfolio investments	$	15,290,850
Gross unrealized depreciation on portfolio investments		(38,177,368	)
Net unrealized depreciation on portfolio investments	$	(22,886,518	)

During the three months ended March 31, 2018, we recognized net realized losses of approximately $4,781,235 from the sale of investments, primarily Hightail. Realized losses were higher than those in the year-ago period due to the sale of Hightail.

During the three months ended March 31, 2018, net unrealized appreciation on total investments increased by $13,097,555. The change in net unrealized appreciation and depreciation of our private investments is based on portfolio asset valuations determined in good faith by our Board of Directors. This change in net unrealized appreciation was primarily composed of an increase in the fair value of our portfolio companies, notably Pivotal.

During the three months ended March 31, 2017, we recognized net realized losses of approximately $1,072,452 from the sale of investments. Realized losses were substantially higher than those in the year-ago period due to the sale of Intevac, Sunrun and Pure Storage.

During the three months ended March 31, 2017, net unrealized depreciation on total investments decreased by $1,724,383. The change in net unrealized appreciation and depreciation of our private investments is based on portfolio asset valuations determined in good faith by our Board of Directors. This change in net unrealized depreciation was primarily composed of an increase in the fair value of our portfolio companies, notably Turn and Hera.

During the three months ended March 31, 2016, we recognized net realized gains of approximately $3,314,843 from the sale of investments, notably the sale of TapAd to Telenor.

During the three months ended March 31, 2016, net unrealized depreciation on total investments increased by $10,288,930. The change in net unrealized appreciation and depreciation of our private investments is based on portfolio asset valuations determined in good faith by our Board of Directors. This change in net unrealized depreciation was primarily composed of a decrease in the fair value of our portfolio companies, notably Sunrun, Turn and Aliphcom.

INCOME AND EXCISE TAXES

It is our intent to continue to qualify as a RIC under Subchapter M of the Code; accordingly, the Company does not provide for income taxes. The Company does, however, recognize interest and penalties in income tax expense.

NET INCREASE/(DECREASE) IN ASSETS RESULTING FROM OPERATIONS AND CHANGE IN NET ASSETS PER SHARE

For the three months ended March 31, 2018, the net increase in net assets resulting from operations totaled $5,569,417 and basic and fully diluted net change in net assets per share for the three months ended March 31, 2018, was $0.76.

For the three months ended March 31, 2017, the net decrease in net assets resulting from operations totaled $95,459 and basic and fully diluted net change in net assets per share for the three months ended March 31, 2017, was $(0.01).

For the three months ended March 31, 2016, the net decrease in net assets resulting from operations totaled $8,016,099 and basic and fully diluted net change in net assets per share for the three months ended March 31, 2016, was $(1.04).

The increase in net assets resulting from operations for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017, is due primarily to an increase in unrealized appreciation from investments, most notably Pivotal.

The lesser decrease in net assets resulting from operations for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016, is due primarily to a decrease in unrealized depreciation from investments, most notably Turn and Hera.

DISTRIBUTION POLICY

Our board of directors will determine the timing and amount, if any, of our distributions. We intend to pay distributions on an annual basis out of assets legally available therefore. In order to qualify as a RIC and to avoid corporate-level tax on our income, we must distribute to our stockholders at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, on an annual basis. In addition, we also intend to distribute any realized net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) at least annually.

CONTRACTUAL OBLIGATIONS

The Fund does not have any Contractual Obligations that meet the requirements for disclosure under Item 303 of Regulation S-K.

OFF-BALANCE SHEET ARRANGEMENTS

The Fund does not have any Off-Balance Sheet Arrangements.

CRITICAL ACCOUNTING POLICIES

This discussion of our financial condition and results of operations is based upon our financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The preparation of these financial statements will require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. In addition to the discussion below, we will describe our critical accounting policies in the notes to our future financial statements.

Valuation of Portfolio Investments

As a business development company, we generally invest in illiquid equity and equity derivatives of securities of venture capital stage technology companies. Under written procedures established by our board of directors, securities traded on stock exchanges, or quoted by NASDAQ, are valued according to the NASDAQ Stock Market, Inc. (“NASDAQ”) official closing price, if applicable, or at their last reported sale price as of the close of trading on the New York Stock Exchange (“NYSE”) (normally 4:00 P.M. Eastern Time). If a security is not traded that day, the security will be valued at its most recent bid price. Securities traded in the over-the-counter market, but not quoted by NASDAQ, are valued at the last sale price (or, if the last sale price is not readily available, at the most recent closing bid price as quoted by brokers that make markets in the securities) at the close of trading on the NYSE. Securities traded both in the over-the-counter market and on a stock exchange are valued according to the broadest and most representative market. We obtain these market values from an independent pricing service or at the mean between the bid and ask prices obtained from at least two brokers or dealers (if available, otherwise by a principal market maker or a primary market dealer). In addition, a large percentage of our portfolio investments are in the form of securities that are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable. We value these securities quarterly at fair value as determined in good faith by our board of directors. Our board of directors may use the services of a nationally recognized independent valuation firm to aid it in determining the fair value of these securities. The methods for valuing these securities may include: fundamental analysis (sales, income, or earnings multiples, etc.), discounts from market prices of similar securities, purchase price of securities, subsequent private transactions in the security or related securities, or discounts applied to the nature and duration of restrictions on the disposition of the securities, as well as a combination of these and other factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time, and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such securities.

Revenue Recognition

We record interest or dividend income on an accrual basis to the extent that we expect to collect such amounts. We do not accrue as a receivable interest on loans and debt securities if we have reason to doubt our ability to collect such interest. Loan origination fees, original issue discount, and market discount are capitalized, and we amortize any such amounts as interest income. Upon the prepayment of a loan or debt security, any unamortized loan origination is recorded as interest income. We will record prepayment premiums on loans and debt securities as interest income when we receive such amounts.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Recently Issued Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial statements upon effectiveness.

Inflation

Inflation has not had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, and may in the future experience, the impacts of inflation on their operating results.

SUBSEQUENT EVENTS

Subsequent to the close of the fiscal quarter on March 31, 2018, and through the date of the issuance of the financial statements included herein, a number of material events related to our portfolio of investments occurred, consisting primarily of the purchase and sale of public and private securities. Since that date, we have purchased private securities with an aggregate cost of approximately $3.5 million and public securities with an aggregate cost of approximately $48,000. Since that date, we have sold public securities with an aggregate value of approximately $858,000.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company’s business activities contain elements of risk. We consider the principal types of market risk to be valuation risk and small company investment 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.

Because there is typically no public market for our interests in the small privately-held companies in which we invest, the valuation of the securities in that portion of our portfolio is determined in good faith by our Board of Directors with the assistance of our Valuation Committee, comprised of the independent members of our Board of Directors, in accordance with our Valuation Procedures. In addition, the Board of Directors may use the services of a nationally recognized independent valuation firm to aid it in determining the fair value of some of these securities. In the absence of a readily ascertainable market value, the determined value of our portfolio of securities may differ significantly from the values that would be placed on the portfolio if a ready market for such securities existed. Determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment, although our valuation policy is intended to provide a consistent basis for determining fair value of the portfolio investments. The methods for valuing these securities may include: fundamental analysis (sales, income, or earnings multiples, etc.), discounts from market prices of similar securities, purchase price of securities, subsequent private transactions in the security or related securities, or discounts applied to the nature and duration of restrictions on the disposition of the securities, as well as a combination of these and other factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time, and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed.

Furthermore, changes in valuation of any of our investments in privately-held companies from one period to another may be volatile.

Investments in privately held, immature companies are inherently more volatile than investments in more mature businesses. Such immature businesses are inherently fragile and easily affected by both internal and external forces.

Our portfolio companies can lose much or all of their value suddenly in response to an internal or external adverse event. Conversely, these immature businesses can gain suddenly in value in response to an internal or external positive development.

The values assigned to our assets are based on available information and do not necessarily represent amounts that might ultimately be realized, as these amounts depend on future circumstances and cannot be reasonably determined until the individual investments are actually liquidated or become readily marketable. Upon sale of investments, the values that are ultimately realized may be different from what is presently estimated. This difference could be material.

PRIVATELY PLACED SMALL COMPANIES RISK

The Company invests in small companies, and its investments in these companies are considered speculative in nature. The Company’s investments often include securities that are subject to legal or contractual restrictions on resale that adversely affect the liquidity and marketability of such securities. As a result, the Company is subject to risk of loss which may prevent our shareholders from achieving price appreciation, dividend distributions and return of capital.

WE CURRENTLY HOLD A PORTION OF OUR ASSETS IN CASH

As of March 31, 2018, a portion of the Company’s assets (1.6%) was invested in cash and/or cash equivalents, which are expected to earn low yields. Given the current low interest rate environment, to the extent the management fee and other operating expenses exceed interest income on the cash holdings of the Company, the Company may experience losses. Furthermore, the investment advisory fee payable by us will not be reduced while our assets are invested in cash-equivalent securities.

In some cases, particularly for primary transactions, it is to our advantage to hold sufficient cash reserve so that we can make additional subsequent investments in these companies in order to (a) avoid having our earlier investments become diluted in future dilutive financings, (b) invest additional capital into existing portfolio companies in case additional investments are necessary, and/or (c) exercise warrants, options, or convertible securities that were acquired as part of the earlier transactions. For this reason, in the case of primary transactions (as opposed to secondary transactions where we do not buy the securities from the issuing companies but instead from existing stockholders), we typically reserve cash in an amount at least equal to our initial investment for such follow-on opportunities. Cash reserves held with respect to a particular investment should, therefore, decline as it is held longer, and will typically not be needed once that portfolio company becomes public or we determine it is no longer in our best interest to make investments in such portfolio company.

We may from time to time liquidate various investments. We are required to distribute substantially all of our net realized gains to stockholders on an annual basis and, therefore, will generally hold the proceeds of liquidated investments in cash pending its distribution.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon this evaluation, 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 by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting, as defined in Rule 13a-15(f ) under the Exchange Act, that occurred during the fiscal quarter ended March 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are not a party to any material pending legal proceeding, and no such proceedings are known to be contemplated.

ITEM 1A. RISK FACTORS.

There have been no material changes from risk factors as previously disclosed in our Form 10-K for the period ended March

31, 2018, in response to Item 1A of Part 1 of Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

EXHIBIT NUMBER	DESCRIPTION
31.1	Chief Executive Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Chief Financial Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.	Chief Executive Officer and Chief Financial Officer Certification Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FIRSTHAND TECHNOLOGY VALUE FUND, INC.

Dated: May 10, 2018	By:
		Kevin Landis Chief Executive Officer

Dated: May 10, 2018	By:
		Omar Billawala Chief Financial Officer

EXHIBIT INDEX

EXHIBIT NUMBER	DESCRIPTION
31.1	Chief Executive Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Chief Financial Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.	Chief Executive Officer and Chief Financial Officer Certification Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Firsthand Technology Value Fund, Inc. - FORM 10-Q - May 10, 2018

Attached files

Firsthand Technology Value Fund, Inc. Reports