10-Q: Firsthand Technology Value Fund Q1 2026 Update

Firsthand Technology Value Fund reports Q1 2026 results, with net assets declining to $(444,057) and a focus on managing existing portfolio valuations.

Summary

• Firsthand Technology Value Fund (SVVC) filed its Form 10-Q for the quarter ended March 31, 2026.
• The company reported a net decrease in net assets from operations of $(208,929) for the quarter.
• Net assets at the end of the period were $(444,057), a decrease from $(235,128) at the end of the previous quarter.
• Investment income for the quarter was $140, a significant decrease from $5,965 in the prior year's quarter, attributed to a reduced investment in money market funds.
• Operating expenses increased to $184,239 from $119,183 in the prior year's quarter, primarily due to an increase in deferred director fees.
• The company's portfolio is heavily weighted towards 'Advanced Materials' (32.3% of net assets) and has significant 'Other Liabilities in Excess of Other Assets' (133.0%).
• The company continues to be taxed as a corporation due to not qualifying as a Regulated Investment Company (RIC).
• The company has a full valuation allowance on its net deferred tax assets, indicating management's assessment that it's unlikely to realize these assets.
• The company is facing significant legal proceedings, including a case filed by VestedCap and a derivative lawsuit by Star Equity Fund L.P.

Sentiment

Score: 1

Explanation: StockSavvy.ai views this filing as extremely negative due to the significant decline in net assets, the $0.00 NAV per share, substantial unrealized depreciation, increased expenses, and ongoing, serious legal proceedings that cast doubt on the company's ability to continue as a going concern.

Positives

• The net decrease in net assets resulting from operations for the three months ended March 31, 2026, was smaller than the decrease in the same period of the prior year, due to a decline in net realized and unrealized losses.

Negatives

• Net assets decreased to $(444,057) as of March 31, 2026, from $(235,128) as of December 31, 2025.
• Investment income significantly decreased to $140 for the quarter ended March 31, 2026, compared to $5,965 for the same period in 2025.
• Operating expenses increased to $184,239 for the quarter ended March 31, 2026, from $119,183 for the same period in 2025, largely due to deferred director fees.
• The company has a substantial net unrealized depreciation on its portfolio investments, amounting to $(89,713,945) as of March 31, 2026.
• The company's net asset value per share was $0.00 for the three months ended March 31, 2026.
• The company has substantial 'Other Liabilities in Excess of Other Assets' (133.0% of net assets).

Risks

• The company's investments are concentrated in privately-held companies, which are inherently illiquid.
• Investments in small publicly-traded companies may have low trading volumes and volatile prices, restricting the ability to sell positions.
• The company is subject to contractual restrictions or securities law limits on selling portfolio holdings.
• Privately held and small publicly-traded businesses often lack management depth, have limited operating history, and may not be profitable.
• The speculative nature of investments and lack of public markets for private investments increase the risk of loss.
• The company does not diversify its investments, making its portfolio vulnerable to events affecting a single sector, industry, or portfolio company.
• Valuations of privately held investments are determined in good faith by the Advisor and may differ significantly from realizable values.
• Changes in valuation of private investments can be volatile.
• The company is involved in significant legal proceedings, including a case filed by VestedCap and a derivative lawsuit by Star Equity Fund L.P., which could result in material adverse effects.
• The company's portfolio companies may underperform due to inflation, interest rates, global demand, trade disputes, supply chain disruptions, natural disasters, climate change, pandemics, terrorism, cybersecurity events, regulatory events, and governmental actions.
• The company is subject to market disruption and geopolitical risks, which can cause market volatility and adversely impact portfolio values.
• The company is currently taxed as a corporation and pays federal and state taxes on its income, as it no longer qualifies as a RIC.
• The company has a full valuation allowance on its net deferred tax assets, indicating uncertainty about future profitability.
• The company has substantial 'Other Liabilities in Excess of Other Assets', which could impact its financial stability.

Future Outlook

The company's future outlook is uncertain due to its negative net assets and ongoing legal proceedings. Management is considering asset sales, liquidation, capital infusion, and cost reduction as potential strategies to mitigate these conditions. The company's ability to continue as a going concern is subject to doubt.

Management Comments

• Kevin Landis, CEO and CFO, certified that the report fully complies with SEC requirements and fairly presents the company's financial condition and results of operations.
• Management believes its plans to mitigate going concern issues (asset sales, liquidation, capital infusion, cost reduction) are probable, but success is not guaranteed.
• Management believes the allegations in the VestedCap operative complaint lack merit and intends to vigorously defend itself.
• The Fund and the Management Company deny all allegations of wrongdoing in the Star Equity Fund L.P. lawsuit.

Industry Context

StockSavvy.ai notes that Firsthand Technology Value Fund operates in a challenging segment of the venture capital and BDC market, characterized by illiquid investments in early-stage technology and cleantech companies. The fund's current financial state, with negative net assets and significant unrealized depreciation, highlights the high-risk, high-reward nature of this investment strategy, especially when combined with a lack of diversification and significant legal entanglements.

Comparison to Industry Standards

• The company's net asset value per share of $0.00 for the quarter ended March 31, 2026, is significantly below industry standards for actively managed investment funds, which typically aim for positive and growing NAV.
• The ratio of total expenses to average net assets (220.03% before tax for the three months ended March 31, 2026, annualized) is exceptionally high, indicating a significant drag on performance compared to typical BDCs or investment funds, which often aim for expense ratios below 10-15% of average net assets.
• The company's portfolio composition, with 32.3% in 'Advanced Materials' and a substantial portion in 'Other Liabilities in Excess of Other Assets' (133.0%), deviates from industry norms that favor diversification across multiple sectors and a more balanced asset-liability structure.
• The company's inability to qualify as a Regulated Investment Company (RIC) and its taxation as a corporation is a deviation from the standard structure for many investment funds aiming to pass through income and gains to shareholders without corporate-level tax.

Legal Proceedings

• VestedCap v. IntraOp Medical Corp., et. al.: VestedCap filed a complaint alleging breach of contract, fraud, conversion, unjust enrichment, and judicial foreclosure. The Fund was added as a co-defendant in an amended complaint, facing claims of wire fraud, RICO Act violations, fraud and deceit, conversion, and declaratory relief. The Fund believes the allegations lack merit and intends to vigorously defend itself. A trial is expected in 2027.
• Star Equity Fund L.P. v. Firsthand Capital Management, Inc., et al.: Star Equity filed a lawsuit asserting derivative claims on behalf of the Fund against the Management Company for alleged violations of securities laws, breach of fiduciary duties, and aiding and abetting breaches of fiduciary duties. The Court dismissed the remaining claims on March 30, 2026, but Star Equity filed an appeal on April 29, 2026.

Related Party Transactions

• Payable to affiliates was $320,997 as of March 31, 2026, compared to $21,010 as of December 31, 2025.
• Deferred directors fees payable were $37,500 as of March 31, 2026, compared to $33,384 as of December 31, 2025.
• Consulting fee payable was $6,000 as of March 31, 2026, compared to $3,000 as of December 31, 2025.
• Kevin Landis, the Company's Chairman, President, and CEO, serves on the boards of directors of portfolio companies IntraOp Medical Corp., Revasum, Inc., and Wrightspeed, Inc. He also served as interim CEO at IntraOp Medical Corp. and Wrightspeed, Inc. as of March 31, 2026. The Advisor has adopted procedures to manage potential conflicts of interest arising from these roles.

Stakeholder Impact

• Shareholders have experienced a significant decline in net asset value, with NAV per share at $0.00 as of March 31, 2026.
• The company's going concern issues and potential liquidation could result in substantial losses for shareholders.
• The ongoing legal proceedings pose a significant risk to the company's financial stability and could lead to substantial liabilities, impacting all stakeholders.
• The substantial 'Other Liabilities in Excess of Other Assets' could impact the company's ability to meet its obligations to creditors.

Next Steps

• Management plans to mitigate going concern issues through asset sales, liquidation, infusion of cash from the Advisor, raising capital, and reducing overhead costs.
• The VestedCap lawsuit is proceeding with discovery and depositions, with a trial setting conference scheduled for late April 2026 and a trial expected in 2027.
• Star Equity Fund L.P. has filed an appeal regarding the dismissal of its lawsuit.

Key Dates

Recommendation

The company's financial condition is dire, with negative net assets, a $0.00 NAV per share, and significant unrealized depreciation. The substantial increase in liabilities, coupled with ongoing, complex legal proceedings and doubts about its ability to continue as a going concern, presents an extremely high risk to investors. The lack of diversification and the speculative nature of its investments further exacerbate these risks. A sell recommendation is warranted due to the severe erosion of shareholder value and the significant uncertainties surrounding the company's future.

Keywords

Firsthand Technology Value Fund, Form 10-Q, Quarterly Report, Venture Capital, Technology Investments, BDC, Investment Company, Net Asset Value, Portfolio Valuation, Legal Proceedings, Advanced Materials, Medical Devices