10-Q: Firsthand Technology Value Fund Reports Q1 2024 Results, Impacted by Portfolio Depreciation and Management Fee Waiver

Firsthand Technology Value Fund's Q1 2024 results show a net asset decrease primarily due to unrealized depreciation in portfolio investments, partially offset by a management fee waiver.

Summary

• Firsthand Technology Value Fund reported a net asset value of $167,920 as of March 31, 2024, down from $1,260,371 at the end of 2023.
• The net decrease in net assets resulting from operations was $(1,092,451), or $(0.16) per share, compared to $(4,742,224), or $(0.69) per share, for the same period in 2023.
• The decrease is primarily attributed to net unrealized depreciation on investments of $3,907,923.
• Investment income was $32,045, down from $191,262 in the prior year, mainly due to lower interest accruals.
• Operating expenses were significantly reduced to $(2,783,427) due to a management fee waiver of $3,000,000, compared to $389,351 in the prior year.
• The fair value of the investment portfolio was approximately $4.7 million as of March 31, 2024, compared to approximately $8.7 million as of December 31, 2023.
• The fund's largest holdings include EQX Capital, Hera Systems, IntraOp Medical Corp, Revasum, Inc., and UCT Coatings, Inc.

Sentiment

Score: 3

Explanation: The sentiment is low due to the significant decrease in net assets and the overall poor performance of the investment portfolio, despite the positive impact of the management fee waiver.

Positives

• A $3,000,000 management fee waiver from FCM significantly reduced operating expenses for the quarter.
• The company has net operating loss carryforwards for federal and state income tax purposes of $12,387,144, which may be carried forward indefinitely.

Negatives

• Net assets decreased significantly to $167,920.
• The fund experienced a net decrease in net assets from operations of $(1,092,451).
• The fair value of the investment portfolio decreased from $8.7 million to $4.7 million.
• The fund recognized no net realized losses.

Risks

• The fund invests in illiquid securities of privately-held companies, which are inherently risky.
• Valuations of private securities are subject to significant estimates and judgments, and may differ materially from realized values.
• The fund's portfolio is not diversified, making it vulnerable to events affecting specific sectors or companies.
• The fund's investments in small companies are considered speculative in nature.
• The fund currently holds a portion of its assets in cash, which earns low yields and may result in losses if operating expenses exceed interest income.

Future Outlook

The document does not provide a detailed future outlook, but it mentions the expectation that portfolio companies will transition between stages of maturity, potentially creating exit opportunities.

Industry Context

The document provides limited industry context, but it notes that the fund invests in technology and cleantech companies, which are subject to various market and economic risks.

Related Party Transactions

• The document discusses the investment management agreement with Firsthand Capital Management (FCM) and the related management fees and waivers.

Stakeholder Impact

• Shareholders are negatively impacted by the decrease in net asset value and the poor performance of the investment portfolio.
• The management fee waiver benefits the company by reducing operating expenses.

Key Dates

Keywords

Firsthand Technology Value Fund, Net Asset Value, Investment Portfolio, Management Fee Waiver, Unrealized Depreciation, Restricted Securities, Technology Companies, Venture Capital, Financial Results, Q1 2024