10-K: Firsthand Technology Value Fund Faces Insolvency

Firsthand Technology Value Fund, Inc. reported a significant net loss for 2025, with total liabilities exceeding assets, raising substantial doubt about its ability to continue as a going concern.

Summary

• Net assets decreased to $(235,128) as of December 31, 2025, from $1,060,679 in 2024, indicating insolvency.
• Net asset value per share dropped to $0.00 as of December 31, 2025, from $0.15 in 2024.
• The company incurred a net investment loss of $(1,286,068) for the year ended December 31, 2025, compared to a gain of $1,875,422 in 2024.
• Net realized losses from security transactions were $(25,942,832) in 2025, primarily due to the maturity of Wrightspeed Notes.
• Net change in unrealized appreciation on investments was $25,933,093 in 2025, primarily due to the liquidation of Wrightspeed.
• Total cash reserves and liquid securities decreased approximately 92% in 2025, primarily due to cash needed for operating expenses.
• The company is engaged in multiple legal proceedings, including VestedCap v. IntraOp Medical Corp., et al., and Star Equity Fund L.P. v. Firsthand Capital Management, Inc., et al.
• Management is exploring options to mitigate going concern issues, including asset sales, liquidation, cash infusion from the Advisor, raising capital, and reducing overhead costs, though success is not guaranteed.

Sentiment

Score: 1

Explanation: StockSavvy.ai views this filing as extremely negative, reflecting severe financial distress, insolvency, and significant operational challenges, with substantial doubt about the company's ability to continue as a going concern.

Positives

• The net change in unrealized appreciation on investments was $25,933,093 in 2025, a positive shift from previous years' depreciation, primarily due to the liquidation of Wrightspeed.
• Disclosure controls and procedures were evaluated as effective as of December 31, 2025.
• Internal control over financial reporting was effective as of December 31, 2025.

Negatives

• Net assets are negative $(235,128) as of December 31, 2025, down from $1,060,679 in 2024, indicating insolvency.
• Net asset value per share is $0.00 as of December 31, 2025, a significant drop from $0.15 in 2024.
• Net investment income was a loss of $(1,286,068) for the year ended December 31, 2025, compared to a gain of $1,875,422 in 2024, primarily due to no management fee waiver in 2025.
• Net realized losses from security transactions were $(25,942,832) in 2025, higher than 2024.
• Gross unrealized depreciation on portfolio investments was $(89,689,094) as of December 31, 2025.
• Total cash reserves and liquid securities decreased approximately 92% in 2025.
• The company's ability to continue as a going concern is in substantial doubt due to liabilities exceeding assets and ongoing losses.
• The company is involved in multiple legal proceedings, including claims of wire fraud, RICO Act violations, fraud and deceit, and breach of fiduciary duties.
• The company voluntarily delisted from NASDAQ and is now quoted on the OTCQB market.

Risks

• Dependence on Firsthand Capital Management, Inc.'s (FCM) key personnel, including Kevin Landis, for future success.
• FCM's management of other funds may reduce the time devoted to the company and create conflicts of interest.
• No assurance that FCM will achieve similar returns to those achieved by its investment professionals at prior jobs.
• The company's financial condition and results of operations depend on its ability to manage future growth effectively.
• Operating in a highly competitive market for investment opportunities.
• Regulations governing the company's operation as a Business Development Company (BDC) will affect its ability to raise additional capital.
• Any failure to maintain BDC status would reduce operating flexibility and increase costs.
• Failure to invest a sufficient portion of assets in qualifying assets could lead to loss of BDC status or restrict investment strategy.
• As a non-diversified investment company, the company is not limited in the proportion of assets invested in a single issuer, leading to higher volatility.
• The company will need to raise additional capital to grow, which may be limited by BDC regulations requiring distribution of gains.
• Many portfolio investments are recorded at fair value as determined in good faith by the Board of Directors, leading to uncertainty in valuation.
• The lack of liquidity in investments, primarily in private companies, may adversely affect the business.
• The company may experience fluctuations in its quarterly operating results due to various factors.
• Significant potential conflicts of interest exist due to executive officers and directors serving other entities managed by FCM affiliates.
• The incentive fee structure may induce FCM to make speculative investments.
• Changes in laws or regulations governing operations may adversely affect the business.
• Provisions of the Maryland General Corporation Law and the company's charter and bylaws could deter takeover attempts.
• The Board of Directors may change investment objectives, operating policies, and strategies without prior notice or stockholder approval (except as required by the 1940 Act).
• Investments in prospective portfolio companies may be risky, with the potential for complete loss of investment.
• Investments in micro-cap public companies and companies expected to have successful IPOs involve significant risks and volatility.
• The company has not yet identified all future portfolio company investments, increasing investment uncertainty.
• Economic recessions or downturns could impair portfolio companies and harm operating results.
• Failure to make follow-on investments in portfolio companies could impair the value of the portfolio.
• The company sometimes does not hold controlling equity interests in portfolio companies, limiting its ability to prevent adverse decisions.
• An investment strategy focused primarily on privately held companies presents challenges, including lack of available information, dependence on a few key personnel, and greater vulnerability to economic downturns.
• Portfolio companies may issue additional securities or incur debt that ranks equal or senior to the company's investments.
• The company may purchase or sell options on securities and indexes, which may expose it to certain risks.
• Investments in foreign securities may involve significant risks in addition to those inherent in U.S. investments, such as currency exchange risk and political instability.
• Valuation risk due to the inherent uncertainty in determining the fair value of illiquid, privately-held company investments.
• Privately placed small companies risk due to the speculative nature and legal/contractual restrictions on resale.
• Holding a significant portion of assets in cash may lead to losses if management fees and other operating expenses exceed interest income.
• Market disruption and geopolitical risks, such as the COVID-19 pandemic and the Russia-Ukraine conflict, could adversely affect the company's performance.

Future Outlook

The company expects the portion of its portfolio consisting of cash and cash equivalents to decrease. Management is exploring plans to mitigate going concern issues, including asset sales, liquidation, cash infusion from the Advisor, raising capital, and reducing overhead costs, though success is not guaranteed. The Board of Directors may also ask stockholders to vote on a policy and practice of selling common stock below net asset value per share.

Management Comments

• "Based on my knowledge, this report does not contain any untrue statement or a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report." (Kevin Landis, CEO/CFO)
• "Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report." (Kevin Landis, CEO/CFO)
• "The Fund believes that the allegations in the operative complaint lack merit and has filed an answer denying all wrongdoing. The Fund intends to vigorously defend itself." (Regarding VestedCap lawsuit)
• "The Fund and the Management Company deny all allegations of wrongdoing." (Regarding Star Equity Fund lawsuit)
• "Management's plans to mitigate these conditions include sale of assets, liquidation of Company, infusion of cash from Advisor, raising capital, and reducing overhead costs. While management believes these plans are probable, there is no guarantee they will be successful."

Industry Context

StockSavvy.ai notes that the technology industry, particularly cleantech, continues to present opportunities for innovative companies, but the shift of emerging technology companies staying private longer, coupled with volatile equity markets and increased regulatory requirements, has made IPOs less attractive. This creates an environment with more opportunities for investment in relatively mature private companies, either directly or via secondary markets. The company's focus on illiquid private technology and cleantech companies aligns with this trend, but also exposes it to significant valuation and liquidity challenges, especially given its current financial distress.

Comparison to Industry Standards

• The company's net asset value per share of $0.00 and negative net assets of $(235,128) as of December 31, 2025, are significantly below industry benchmarks for healthy investment funds, which typically maintain positive net asset values and a strong capital base.
• The total return based on NAV of (100.00)% and market value of (66.67)% for the year ended December 31, 2025, indicates severe underperformance compared to broad market indices like the S&P 500 and NASDAQ Composite, which generally showed positive returns over similar periods.
• The high ratio of total expenses to average net assets (227.72% in 2025) is exceptionally high and unsustainable, far exceeding typical expense ratios for BDCs or mutual funds, which usually aim for single-digit percentages.
• The company's voluntary delisting from NASDAQ to OTCQB suggests a failure to meet listing standards, contrasting with established BDCs that maintain listings on major exchanges.
• The substantial doubt about the company's ability to continue as a going concern places it in a distressed category, far from the operational stability expected of publicly traded investment vehicles.

Corporate Governance

Legal Proceedings

• **VestedCap v. IntraOp Medical Corp., et al.**: Filed September 5, 2023, in Santa Clara County, California. Initially against IntraOp Medical Corporation and Kevin Landis for breach of contract, fraud, conversion, unjust enrichment, and judicial foreclosure. On January 22, 2025, the Fund was added as a co-defendant, with claims including wire fraud, RICO Act violations, fraud and deceit, conversion, and declaratory relief, alleging the Fund is an alter ego. A Second Amended Complaint was filed January 16, 2026. The Fund denies wrongdoing and intends to vigorously defend itself. Discovery is ongoing, with a trial setting conference in late-April 2026 and a trial expected in 2027.
• **Star Equity Fund L.P. v. Firsthand Capital Management, Inc., et al.**: Filed February 28, 2025, by an investor, asserting derivative claims on behalf of the Fund against FCM and individuals for violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, breach of fiduciary duties, appointment of a receiver, and aiding and abetting breaches of fiduciary duties. A direct cause of action against FCM was also asserted. The Fund and FCM deny all allegations. Motions to dismiss were filed September 18, 2025, leading to voluntary dismissal of some claims without prejudice. Remaining claims are subject to a pending motion to dismiss, likely to be decided in March or April 2026.

Related Party Transactions

• Firsthand Capital Management, Inc. (FCM), where Kevin Landis (CEO/CFO) is the majority owner, President, and Chief Investment Officer, serves as the company's investment adviser.
• The company pays FCM a base management fee (2.00% of gross assets annually) and an incentive fee (20% of realized capital gains, net of losses and unrealized depreciation, cumulatively).
• FCM waived future accruals of the base management fee from October 1, 2023, through December 31, 2024, and waived $2.5 million of accrued but unpaid base management fees prior to September 30, 2023.
• FCM further waived $3.0 million of base management fee accrued but unpaid prior to March 31, 2024. These waived fees may be recouped by FCM within ten years.
• The company reimburses FCM for certain expenses incurred in providing services.
• Executive officers and directors, including Kevin Landis, may serve as officers, directors, or principals of entities that operate in the same or related lines of business or investment funds managed by FCM affiliates, potentially creating conflicts of interest.
• The members of the Board of Directors are also trustees of the Board of Trustees of Firsthand Funds, which are also managed by FCM.
• Kevin Landis served as interim CEO at IntraOp Medical Corp. and Wrightspeed, Inc., which are portfolio companies of the Fund.

Stakeholder Impact

• **Shareholders**: Face significant negative impact due to negative net assets, $0.00 NAV per share, substantial losses, and the company's going concern issues, indicating a high risk of complete loss of investment. The voluntary delisting from NASDAQ to OTCQB reduces market visibility and liquidity. Ongoing legal proceedings add further uncertainty and potential costs.
• **Employees (of FCM)**: While the company itself has no direct employees, the financial distress of the Fund could indirectly impact the stability of employees at Firsthand Capital Management, Inc., although FCM manages other funds.
• **Portfolio Companies**: The Fund's severe financial distress and potential liquidation could impact its ability to provide follow-on investments or managerial assistance to its portfolio companies, potentially jeopardizing their viability or future funding prospects.
• **Creditors**: The company's insolvency (total liabilities exceeding total assets) indicates a high risk for creditors to recover their dues, as the company may lack sufficient assets to cover its obligations.

Next Steps

• Seek shareholder approval to withdraw BDC election and pursue liquidation (announced October 13, 2023).
• Attend a trial setting conference for the VestedCap v. IntraOp Medical Corp., et al. case in late-April 2026.
• Prepare for the expected trial for the VestedCap v. IntraOp Medical Corp., et al. case in 2027.
• Await a decision on motions to dismiss in the Star Equity Fund L.P. v. Firsthand Capital Management, Inc., et al. case in March or April 2026.
• Implement management plans to mitigate going concern issues, including asset sales, liquidation, cash infusion from the Advisor, raising capital, and reducing overhead costs.
• The Board of Directors may ask stockholders to vote on a policy and practice of selling common stock below net asset value per share.

Key Dates

Recommendation

The company is insolvent with negative net assets and a net asset value per share of $0.00. It reported significant net losses, a drastic decrease in cash reserves, and faces substantial doubt about its ability to continue as a going concern. The voluntary delisting from NASDAQ and ongoing legal proceedings further compound the severe financial distress. Given these critical issues, the stock represents an extremely high risk with virtually no intrinsic value, making it a strong sell for any remaining holders.

Keywords

Firsthand Technology Value Fund, SVVC, SEC 10-K, Annual Report, Business Development Company, BDC, Venture Capital, Technology Investments, Cleantech, Private Equity, Insolvency, Going Concern, Net Asset Value, Financial Performance, Legal Proceedings, Investment Management, Portfolio Valuation, Restricted Securities, Micro-cap Companies, Illiquid Investments, Corporate Governance, Risk Factors, Kevin Landis