UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



 

FORM 10-Q



 

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013

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

COMMISSION FILE NUMBER: 814-00852



 

GSV Capital Corp.



 

(Exact name of registrant as specified in its charter)

 
Maryland   27-4443543
(State of incorporation)   (I.R.S. Employer Identification No.)

 
2965 Woodside Road
Woodside, CA
  94062
(Address of principal executive offices)   (Zip Code)

(650) 206-2965

(Registrant’s telephone number, including area code)



 

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

o

 

Accelerated filer

x

Non-accelerated filer

o

 

Smaller reporting company

o

(do not check if a smaller reporting company)     

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

The number of shares of the issuer’s Common Stock, $0.01 par value, outstanding as of May 9, 2013 was 19,320,100.

 

 


 
 

GSV CAPITAL CORP. AND SUBSIDIARY

TABLE OF CONTENTS

 
  PAGE
PART I.  FINANCIAL INFORMATION
        

Item 1.

Financial Statements

    2  
Consolidated Statements of Assets and Liabilities as of March 31, 2013 (unaudited) and December 31, 2012     2  
Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2013, and March 31, 2012     3  
Consolidated Statements of Changes in Net Assets (unaudited) for the three months ended March 31, 2013, and March 31, 2012     4  
Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2013, and March 31, 2012     5  
Consolidated Schedule of Investments as of March 31, 2013 (unaudited)     6  
Consolidated Schedule of Investments as of December 31, 2012     11  
Notes to the Consolidated Financial Statements as of March 31, 2013 (unaudited)     16  

Item 2.

Management’s Discussion and Analysis of Financial Condition and
Results of Operations

    30  

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

    38  

Item 4.

Controls and Procedures

    38  
PART II.  OTHER INFORMATION
        

Item 1.

Legal Proceedings

    39  

Item 1A.

Risk Factors

    39  

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

    40  

Item 3.

Defaults Upon Senior Securities

    40  

Item 4.

Mine Safety Disclosure

    40  

Item 5.

Other Information

    40  

Item 6.

Exhibits

    41  
Signatures     42  

i


 
 

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

GSV CAPITAL CORP. AND SUBSIDIARY
  
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

   
  March 31, 2013   December 31, 2012
     (Unaudited)
ASSETS
                 
Investments at fair value:
                 
Investments in affiliated securities (cost of $40,175,504 and $38,210,753, respectively)   $ 34,353,557     $ 34,648,363  
Investments in non-control/non-affiliated securities (cost of $195,306,389 and $198,936,982, respectively)     187,801,048       190,748,722  
Investments in money market funds (cost of $16,000,000 and $16,000,000, respectively)     16,000,000       16,000,000  
Total Investments (cost of $251,481,893 and $253,147,735, respectively)     238,154,605       241,397,085  
Cash     6,818,379       11,318,525  
Due from:
                 
GSV Asset Management     8,505       5,723  
Portfolio companies     323,041       316,377  
Prepaid expenses     65,741       63,953  
Dividend receivable     1,477       1,920  
Other assets     48,489       27,145  
Total Assets     245,420,237       253,130,728  
LIABILITIES
                 
Due to:
                 
GSV Asset Management     39,012       51,194  
Accounts payable     236,359       204,093  
Accrued expenses     53,320       292,640  
Total Liabilities     328,691       547,927  
Commitments and contingencies (Note 6)
                 
Net Assets   $ 245,091,546     $ 252,582,801  
NET ASSETS
                 
Common stock, par value $0.01 per share (100,000,000 authorized; 19,320,100 and 19,320,100 issued and outstanding, respectively)   $ 193,201     $ 193,201  
Paid-in capital in excess of par     275,837,514       275,837,514  
Accumulated net investment loss     (12,884,470 )      (10,316,745 ) 
Accumulated net realized loss on investments     (4,727,411 )      (1,380,519 ) 
Accumulated net unrealized depreciation on investments     (13,327,288 )      (11,750,650 ) 
Net Assets   $ 245,091,546     $ 252,582,801  
Net Asset Value Per Share   $ 12.69     $ 13.07  

 
 
See Notes to the Consolidated Financial Statements.

2


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
  
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

   
  Three months ended March 31, 2013   Three months ended March 31, 2012
INVESTMENT INCOME
                 
Interest income from non-control/non-affiliated securities   $     $ 112,101  
Dividend income     4,535       5,704  
Total Investment Income     4,535       117,805  
OPERATING EXPENSES
                 
Investment management fees     1,283,599       621,926  
Costs incurred under administration agreement     887,984       345,594  
Directors’ fees     65,250       42,500  
Professional fees     236,886       131,845  
Insurance expense     53,013       46,669  
Investor relations expense     43,562       14,250  
Other expenses     1,966       9,023  
Total Operating Expenses     2,572,260       1,211,807  
Net Investment Loss     (2,567,725 )      (1,094,002 ) 
Net Realized Loss on Investments     (3,346,892 )      (256 ) 
Net Change in Unrealized Appreciation (Depreciation) on Investments     (1,576,638 )      1,011,195  
Net Decrease in Net Assets Resulting From Operations   $ (7,491,255 )    $ (83,063 ) 
Net Decrease in Net Assets Resulting From Operations Per Common Share   $ (0.38 )    $ (0.01 ) 
Weighted Average Common Shares Outstanding     19,320,100       9,387,133  

 
 
See Notes to the Consolidated Financial Statements.

3


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
  
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)

   
  Three months ended March 31, 2013   Three months ended March 31, 2012
Decrease in Net Assets Resulting From Operations
                 
Net Investment Loss   $ (2,567,725 )    $ (1,094,002 ) 
Net Realized Loss on Investments     (3,346,892 )      (256 ) 
Net Change in Unrealized Appreciation (Depreciation) on Investments     (1,576,638 )      1,011,195  
Net Decrease in Net Assets Resulting From Operations     (7,491,255 )      (83,063 ) 
Capital Share Transactions
                 
Net Proceeds from Common Shares Issued           96,255,000  
Offering Costs           (326,077 ) 
Net Capital Share Transactions           95,928,923  
Total Increase (Decrease) in Net Assets     (7,491,255 )      95,845,860  
Net Assets at Beginning of Period     252,582,801       71,503,248  
Net Assets at End of Period   $ 245,091,546     $ 167,349,108  
Capital Share Activity
                 
Shares Issued           6,900,000  
Shares Outstanding at Beginning of Period     19,320,100       5,520,100  
Shares Outstanding at End of Period     19,320,100       12,420,100  

 
 
See Notes to the Consolidated Financial Statements.

4


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

   
  Three months ended March 31, 2013   Three months ended March 31, 2012
Cash Flows from Operating Activities
                 
Net decrease in net assets resulting from operations   $ (7,491,255 )    $ (83,063 ) 
Adjustments to reconcile net decrease in net assets resulting from operations to net cash used in operating activities:
                 
Net realized loss on investments     3,346,892       256  
Net change in unrealized (appreciation) depreciation on investments     1,576,638       (1,011,195 ) 
Purchases of investments in:
                 
Portfolio investments     (3,466,394 )      (10,666,649 ) 
United States treasury bill           (19,999,128 ) 
Money market funds           (10,000,000 ) 
Proceeds from sales of investments in:
                 
Portfolio investments     1,785,344        
United States treasury bill           19,998,872  
Money market funds           1,000,000  
Change in operating assets and liabilities:
                 
Due from GSV Asset Management     (2,782 )      (750 ) 
Due from portfolio companies     (6,664 )      (60,896 ) 
Accrued interest           (100,350 ) 
Prepaid expenses     (1,788 )      74,538  
Dividend receivable     443       (1,723 ) 
Other assets     (21,344 )      (56,721 ) 
Due to GSV Asset Management     (12,182 )      (61,903 ) 
Due to other affiliates           (5,113 ) 
Accounts payable     32,266       47,987  
Accrued expenses     (239,320 )      2,264  
Net Cash Used in Operating Activities     (4,500,146 )      (20,923,574 ) 
Cash Flows from Financing Activities
                 
Net proceeds from common shares issued           96,255,000  
Offering costs           (326,077 ) 
Net Cash Provided by Financing Activities           95,928,923  
Total Increase (Decrease) in Cash Balance     (4,500,146 )      75,005,349  
Cash Balance at Beginning of Period     11,318,525       385,995  
Cash Balance at End of Period   $ 6,818,379     $ 75,391,344  
Non-Cash Operating Items
                 
Structured notes converted to preferred shares   $     $ 674,651  
Warrants exercised for preferred shares   $     $ 53,665  
Non-Cash Financing Items
                 
Increase in deferred offering costs   $     $ (62,536 ) 
Increase in accounts payable   $     $ 62,536  

 
 
See Notes to the Consolidated Financial Statements.

5


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS
March 31, 2013
(Unaudited)

         
Portfolio Investments*   Headquarters/Industry   Shares   Cost   Fair Value   % of
Net Assets
Twitter, Inc.
    San Francisco, CA                                      
Common shares     Social Communication       1,835,600     $ 31,755,821     $ 34,013,669       13.88 % 
Preferred shares, Series A           65,000       1,235,290       1,204,450       0.49 % 
Total                 32,991,111       35,218,119       14.37 % 
Palantir Technologies, Inc.
    Palo Alto, CA                                      
Common shares, Class A     Cyber Security       7,145,690       20,051,479       19,650,648       8.02 % 
Preferred shares, Series G           326,797       1,008,968       973,855       0.40 % 
Total                 21,060,447       20,624,503       8.42 % 
Dropbox, Inc.
    San Francisco, CA                                      
Common share     Online Storage       760,000       8,641,153       8,674,133       3.54 % 
Preferred shares, Series A-1           552,486       5,015,333       6,305,707       2.57 % 
Total                 13,656,486       14,979,840       6.11 % 
Chegg, Inc.
    Santa Clara, CA                                      
Common shares     Textbook Rental       1,274,193       10,012,543       9,763,275       3.98 % 
Preferred shares, Series F           500,000       4,008,654       4,431,600       1.81 % 
Total                 14,021,197       14,194,875       5.79 % 
Violin Memory, Inc.
    Mountain View, CA                                      
Preferred shares, Series B     Flash Memory       800,000       4,800,798       4,189,312       1.71 % 
Preferred shares, Series D           1,666,666       10,018,370       9,999,996       4.08 % 
Total                 14,819,168       14,189,308       5.79 % 
2U, Inc. (f/k/a 2tor, Inc.)
    Landover, MD                                      
Common shares     Online Education       1,151,802       8,757,599       8,963,899       3.66 % 
Preferred shares, Series A           167,431       1,273,125       1,303,032       0.53 % 
Total                 10,030,724       10,266,931       4.19 % 
Avenues World Holdings LLC(3)
    New York, NY                                      
Preferred shares, Class A-1     Globally-focused
Private School
      5,000,000       10,026,005       10,037,500       4.10 % 
Solexel, Inc.
    Milpitas, CA                                      
Preferred shares, Series C     Solar Power       4,576,659       10,016,559       10,000,000       4.08 % 
Kno, Inc.
    Santa Clara, CA                                      
Preferred shares, Series C     Digital Textbooks       440,313       2,262,006       2,249,999       0.92 % 
Preferred shares, Series C-1              1       7,510,334       7,500,000       3.06 % 
Common shares           50,000       214,681       162,025       0.07 % 
Total                 9,987,021       9,912,024       4.05 % 
Facebook, Inc.(8)
    Menlo Park, CA                                      
Common shares, Class B     Social Networking       350,000       10,472,294       8,953,000       3.65 % 
Control4 Corporation
    Salt Lake City, UT                                      
Common shares     Home Automation       4,070,667       7,011,025       7,261,052       2.96 % 
SugarCRM, Inc.
    Cupertino, CA                                      
Common shares     Customer Relationship Manager       1,086,047       3,813,378       3,801,165       1.55 % 
Preferred shares, Series E           373,134       1,500,247       1,499,999       0.61 % 
Total                 5,313,625       5,301,164       2.16 % 

 
 
See Notes to the Consolidated Financial Statements.

6


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
March 31, 2013
(Unaudited)

         
Portfolio Investments*   Headquarters/Industry   Shares   Cost   Fair Value   % of
Net Assets
Totus Solutions, Inc.(2)
    Carrollton, TX                                      
Common shares     LED Lighting       20,000,000     $ 5,023,748     $ 3,960,000       1.62 % 
Grockit, Inc.(2)
    San Francisco, CA                                      
Preferred shares, Series D     Online Test Preparation       2,728,252       2,005,945       2,247,398       0.92 % 
Preferred shares, Series E           1,731,501       1,503,670       1,499,999       0.61 % 
Total                 3,509,615       3,747,397       1.53 % 
StormWind, LLC(2)(5)
    Scottsdale, AZ                                      
Preferred shares, Series B     Interactive Learning Platform       3,279,629       2,019,687       3,552,931       1.45 % 
Bloom Energy Corporation
    Sunnyvale, CA                                      
Common shares     Fuel Cell Energy       201,589       3,855,601       3,408,870       1.39 % 
Fullbridge, Inc.(2)
    Cambridge, MA                                      
Preferred shares, Series C     Business Education       1,728,724       3,260,465       3,250,001       1.33 % 
Spotify Technology S.A.(8)
    Stockholm, Sweden                                      
Common shares     Music
Streaming Service
      3,658       3,598,472       3,164,575       1.29 % 
Gilt Groupe, Inc.
    New York, NY                                      
Common shares     e-Commerce Flash Sales       248,600       6,594,346       3,115,269       1.27 % 
ZocDoc Inc.
    New York, NY                                      
Preferred shares, Series A     Online Medical
Scheduling
      200,000       3,563,178       3,100,000       1.26 % 
Global Education Learning (Holdings) Ltd.(2)(8)
    Hong Kong                                      
Preferred shares, Series A     Education
Technology
      1,472,175       2,999,998       3,076,110       1.26 % 
Parchment, Inc.
    Scottsdale, AZ                             
Preferred shares, Series D     E-Transcript
Exchange
      2,400,384       3,000,000       3,036,486       1.24 % 
Whittle Schools, LLC(2)(4)
    New York, NY                                      
Preferred shares, Series B     Globally-focused
Private School
      3,000,000       3,000,000       3,000,000       1.22 % 
CUX, Inc. (d/b/a CorpU)(2)
    San Francisco, CA                                      
Preferred shares, Series C     Corporate Education       246,305       2,006,077       1,999,997       0.82 % 
Preferred shares, Series C-1           50,960       519,989       517,244       0.21 % 
Total                 2,526,066       2,517,241       1.03 % 
SharesPost, Inc.
    San Bruno, CA                                      
Preferred shares, Series B     Online Marketplace (Finance)       1,771,653       2,257,984       2,232,283       0.91 % 
Common warrants, $0.13 strike price, expire 6/15/2018           770,934       23,128       146,477       0.06 % 
Total                 2,281,112       2,378,760       0.97 % 
TrueCar, Inc.
    Santa Monica, CA                                      
Common shares     Online Marketplace
(Cars)
      377,358       2,014,863       2,307,922       0.94 % 

 
 
See Notes to the Consolidated Financial Statements.

7


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
March 31, 2013
(Unaudited)

         
Portfolio Investments*   Headquarters/ Industry   Shares   Cost   Fair Value   % of
Net Assets
Maven Research, Inc.(2)
    San Francisco, CA                                      
Preferred shares, Series B     Knowledge Networks       49,505     $ 217,206     $ 293,713       0.12 % 
Preferred shares, Series C           318,979       1,999,998       1,892,501       0.77 % 
Total                 2,217,204       2,186,214       0.89 % 
Dailybreak, Inc.(2)
    Boston, MA                                      
Preferred shares, Series A-1     Social Advertising       1,545,181       2,000,000       2,097,583       0.86 % 
Dataminr, Inc.
    New York, NY                                      
Preferred shares, Series B     Social Media
Analytics
      904,977       2,060,791       2,036,198       0.83 % 
The Echo System Corp.(1)(2)
    New York, NY                                      
Preferred shares, Series A     Social Analytics       512,365       1,436,404       1,607,545       0.66 % 
Preferred warrants, $0.20 strike price, expire 11/14/2016           68,359       75,988       60,156       0.02 % 
Total                 1,512,392       1,667,701       0.68 % 
Silver Spring Networks, Inc.(9)
    Redwood City, CA                                      
Common shares     Smart Grid       102,028       5,145,271       1,591,331       0.65 % 
AltEgo, LLC(2)(6)
    Santa Monica, CA                                      
Preferred shares, Series B-2     Social Media
Customer Acquisition
Platform
      1,400,000       1,420,406       1,194,200       0.49 % 
S3 Digital Corp.
(d/b/a S3i)
(2)
    New York, NY                                      
Preferred shares, Class A1     Sports Analytics       1,033,452       989,058       1,050,504       0.43 % 
Preferred warrants, $1.00 strike price, expire 11/21/2017           500,000       31,354             % 
Total                 1,020,412       1,050,504       0.43 % 
NestGSV, Inc.(2)
    Redwood City, CA                                      
Preferred shares, Series A     Incubator       1,000,000       1,021,778       976,000       0.40 % 
The rSmart Group, Inc.
    Scottsdale, AZ                                      
Preferred shares, Series B     Higher Education Learning Platform       1,201,923       1,266,940       911,058       0.37 % 
DreamBox Learning, Inc.
    Bellevue, WA                                      
Preferred shares, Series A     Education Technology       3,579,610       758,017       787,514       0.32 % 
AlwaysOn, Inc.(1)(2)
    Woodside, CA                                      
Preferred shares, Series A     Social Media       1,066,626       1,027,391       203,011       0.08 % 
Preferred shares, Series A-1           2,101,612       416,706       400,000       0.16 % 
Total                 1,444,097       603,011       0.24 % 
Ozy Media, Inc.
    Mountain View, CA                                      
Preferred shares, Series Seed     Social Media       500,000       500,000       512,250       0.21 % 
Starfish Holdings, Inc. (d/b/a YourOffers)(2)
    Beverly Hills, CA                                      
Preferred shares, Series A, and common warrants, $0.00001 strike price, expire 11/13/2019     Marketing Platform       43,878,894       2,029,695       500,000       0.20 % 

 
 
See Notes to the Consolidated Financial Statements.

8


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
March 31, 2013
(Unaudited)

         
Portfolio Investments*   Headquarters/ Industry   Shares/Capital
Contribution
  Cost   Fair Value   % of
Net Assets
NestGSV Silicon Valley, LLC(2)(7)
    Redwood City, CA                                      
Common membership interest     Incubator     $    500,000     $ 500,000     $ 500,000       0.20 % 
SinoLending Ltd.(2)(8)
    Shanghai, China                                      
Preferred shares, Class A     Chinese P2P Lending       6,414,368       501,998       474,663       0.19 % 
NewZoom, Inc.
(d/b/a ZoomSystems)

    San Francisco, CA                                      
Preferred shares, Series A     Smart e-tail (Retail)       1,250,000       260,476       262,500       0.12 % 
Neuron Fuel, Inc.
    San Jose, CA                                      
Preferred shares, Series AAI     Computer Software       250,000       262,530       250,000       0.10 % 
Serious Energy, Inc.(8)
    Sunnyvale, CA                                      
Common shares     Green Materials       178,095       739,130             % 
Top Hat 430, Inc.(2)(8)(10)
    Shakopee, MN                                      
Preferred shares, Series A     Jewelry Retailing Technology       1,844,444       4,167,943             % 
Preferred warrants, $2.25 strike price, expire 11/2/2017           13,333                   % 
Total                 4,167,943             % 
Total Portfolio Investments
                235,481,893       222,154,605       90.65 % 
Money Market Funds(1)
                                            
Fidelity Institutional Money Market Funds                                             
Money Market Portfolio              8,000,000       8,000,000       8,000,000       3.26 % 
Prime Money Market Portfolio           8,000,000       8,000,000       8,000,000       3.26 % 
Total Money Market Funds                 16,000,000       16,000,000       6.52 % 
Total Investments
              $ 251,481,893     $ 238,154,605       97.17 % 

* All portfolio investments are non-control/non-affiliated and non-income producing, unless identified. Equity investments are subject to lock-up restrictions upon their initial public offering.
(1) Investment is income producing.
(2) Denotes an Affiliate Investment. “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of GSV Capital Corp., as defined in the Investment Company Act of 1940. A company is deemed to be an “Affiliate” of GSV Capital Corp. if GSV Capital Corp. owns 5% or more of the voting securities of such company.
(3) GSV Capital Corp.’s investment in Avenues World Holdings LLC is held through its wholly-owned subsidiary GSVC AV Holdings, Inc.
(4) GSV Capital Corp.’s investment in Whittle Schools, LLC is held through its wholly-owned subsidiary GSVC WS Holdings, Inc.
(5) GSV Capital Corp.’s investment in StormWind, LLC is held through its wholly-owned subsidiary GSVC SW Holdings, Inc.
(6) GSV Capital Corp.’s investment in AltEgo, LLC is held through its wholly-owned subsidiary GSVC AE Holdings, Inc.
(7) GSV Capital Corp.’s investment in NestGSV Silicon Valley, LLC is held through its wholly-owned subsidiary GSVC NG Holdings, Inc.
(8) Indicates assets that GSV Capital Corp. believes do not represent “qualifying assets” under Section 55(a)

 
 
See Notes to the Consolidated Financial Statements.

9


 
 

of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70% of GSV Capital Corp.’s total assets at the time of acquisition of any additional non-qualifying assets.
(9) On March 12, 2013, Silver Spring Networks, Inc. priced its initial public offering, selling 4,750,000 shares at a price of $17 per share. GSV Capital Corp.’s shares in Silver Spring Networks, Inc. are subject to a lock-up agreement that expires on September 8, 2013. At March 31, 2013, GSV Capital Corp. valued Silver Spring Networks, Inc. based on its March 31, 2013 closing price.
(10)   On March 25, 2013, Top Hat 430, Inc. filed for Chapter 7 bankruptcy after filing for Chapter 11 bankruptcy in February 2013 and failing to reach a reorganization agreement.

 
 
See Notes to the Consolidated Financial Statements.

10


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2012

         
Portfolio Investments*   Headquarters/Industry   Shares   Cost   Fair Value   % of
Net Assets
Twitter, Inc.
    San Francisco, CA                                      
Common shares     Social Communication       1,835,600     $ 31,755,821     $ 34,876,400       13.81 % 
Preferred shares, Series A           65,000       1,235,290       1,235,000       0.49 % 
Total                 32,991,111       36,111,400       14.30 % 
Palantir Technologies, Inc.
    Palo Alto, CA                                      
Common shares, Class A     Cyber Security       7,145,690       20,051,479       20,150,846       7.98 % 
Preferred shares, Series G           326,797       1,008,968       921,568       0.36 % 
Total                 21,060,447       21,072,414       8.34 % 
Violin Memory, Inc.
    Mountain View, CA                                      
Preferred shares, Series B     Flash Memory       800,000       4,800,798       4,800,000       1.90 % 
Preferred shares, Series D           1,666,666       10,018,045       9,999,996       3.96 % 
Total                 14,818,843       14,799,996       5.86 % 
Dropbox, Inc.
    San Francisco, CA                                      
Common share     Online Storage       760,000       8,641,153       8,360,000       3.31 % 
Preferred shares, Series A-1           552,486       5,015,333       6,077,346       2.41 % 
Total                 13,656,486       14,437,346       5.72 % 
Chegg, Inc.
    Santa Clara, CA                                      
Common shares     Textbook Rental       1,274,193       10,012,543       10,193,544       4.03 % 
Preferred shares, Series F           500,000       4,008,654       4,000,000       1.58 % 
Total                 14,021,197       14,193,544       5.61 % 
Avenues World Holdings LLC(5)
    New York, NY                                      
Preferred shares, Class A-1     Globally-focused
Private School
      5,000,000       10,025,123       10,000,000       3.96 % 
Solexel, Inc.
    Milpitas, CA                                      
Preferred shares, Series C     Solar Power       4,576,659       10,016,559       10,000,000       3.96 % 
2U, Inc. (f/k/a 2tor, Inc.)
    Landover, MD                                      
Common shares     Online Education       1,151,802       8,757,599       8,730,659       3.46 % 
Preferred shares, Series A           167,431       1,273,125       1,269,127       0.50 % 
Total                 10,030,724       9,999,786       3.96 % 
Kno, Inc.
    Santa Clara, CA                                      
Preferred shares, Series C     Digital Textbooks       440,313       2,262,006       2,249,999       0.89 % 
Preferred shares, Series C-1              1       7,510,334       7,500,000       2.97 % 
Common shares           50,000       214,681       178,850       0.07 % 
Total                 9,987,021       9,928,849       3.93 % 
Facebook, Inc.(3)(10)
    Menlo Park, CA                                      
Common shares, Class B     Social Networking       350,000       10,472,294       9,317,000       3.69 % 
Control4 Corporation
    Salt Lake City, UT                                      
Common shares     Home Automation       4,070,667       7,011,025       7,123,667       2.82 % 
Totus Solutions, Inc.(2)
    Carrollton, TX                                      
Common shares     LED Lighting       20,000,000       5,023,748       5,000,000       1.98 % 

 
 
See Notes to the Consolidated Financial Statements.

11


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2012

         
Portfolio Investments*   Headquarters/Industry   Shares   Cost   Fair Value   % of
Net Assets
Grockit, Inc.(2)
    San Francisco, CA                                      
Preferred shares, Series D     Online Test Preparation       2,728,252     $  2,005,945     $  2,373,579       0.94 % 
Preferred shares, Series E           1,731,501       1,503,670       1,506,406       0.60 % 
Total                 3,509,615       3,879,985       1.54 % 
SugarCRM, Inc.
    Cupertino, CA                                      
Common shares     Customer
Relationship Manager
      1,086,047       3,813,378       3,801,165       1.50 % 
Gilt Groupe, Inc.
    New York, NY                                      
Common shares     e-Commerce
Flash Sales
      248,600       6,594,346       3,637,329       1.44 % 
Spotify Technology S.A.(10)
    Stockholm, Sweden                                      
Common shares     Music Streaming
Service
      3,658       3,598,472       3,589,669       1.42 % 
ZocDoc Inc.
    New York, NY                                      
Preferred shares, Series A     Online Medical
Scheduling
      200,000       3,563,178       3,500,000       1.38 % 
Bloom Energy Corporation
    Sunnyvale, CA                                      
Common shares     Fuel Cell Energy       201,589       3,855,601       3,225,424       1.28 % 
Global Education Learning (Holdings) Ltd.(2)(10)
    Hong Kong                                      
Preferred shares, Series A     Education
Technology
      1,472,175       2,999,998       3,003,237       1.19 % 
Parchment, Inc.
    Scottsdale, AZ                                      
Preferred shares, Series D     E-Transcript
Exchange
      2,400,384       3,000,000       3,000,480       1.19 % 
Whittle Schools, LLC(2)(6)
    New York, NY                                      
Preferred shares, Series B     Globally-focused
Private School
      3,000,000       3,000,000       3,000,000       1.19 % 
StormWind, LLC(2)(7)
    Scottsdale, AZ                                      
Preferred shares, Series B     Interactive Learning
Platform
      3,279,629       2,019,687       2,545,812       1.01 % 
SharesPost, Inc.
    San Bruno, CA                                      
Preferred shares, Series B     Online Marketplace (Finance)       1,771,653       2,257,984       2,249,999       0.89 % 
Common warrants, $0.13 strike price, expire 6/15/2018           770,934       23,128       123,349       0.05 % 
Total                 2,281,112       2,373,348       0.94 % 
Maven Research, Inc.(2)
    San Francisco, CA                                      
Preferred shares, Series B     Knowledge Networks       49,505       217,206       310,396       0.12 % 
Preferred shares, Series C           318,979       1,999,998       1,999,998       0.79 % 
Total                 2,217,204       2,310,394       0.91 % 

 
 
See Notes to the Consolidated Financial Statements.

12


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2012

         
Portfolio Investments*   Headquarters/Industry   Shares   Cost   Fair Value   % of
Net Assets
Fullbridge, Inc.(2)
    Cambridge, MA                                      
Preferred shares, Series C     Business Education       1,196,809     $  2,250,001     $  2,250,001       0.89 % 
Starfish Holdings, Inc. (d/b/a YourOffers)(2)
    Beverly Hills, CA                                      
Preferred shares, Series A,
and common warrants, $0.00001 strike price,
expire 11/13/2019
    Marketing Platform       43,878,894       2,012,103       2,193,945       0.87 % 
TrueCar, Inc.
    Santa Monica, CA                                      
Common shares     Online Marketplace
(Cars)
      377,358       2,014,863       2,011,318       0.79 % 
Dataminr, Inc.
    New York, NY                                      
Preferred shares, Series B     Social Media
Analytics
      904,977       2,060,602       1,999,999       0.79 % 
CUX, Inc. (d/b/a CorpU)(2)
    San Francisco, CA                                      
Preferred shares, Series C     Corporate Education       246,305       2,006,077       1,999,997       0.79 % 
Dailybreak, Inc.(2)
    Boston, MA                                      
Preferred shares, Series A-1     Social Advertising       1,545,181       2,000,000       1,993,283       0.79 % 
Silver Spring Networks, Inc.
    Redwood City, CA                                      
Common shares(11)     Smart Grid       510,143       5,145,271       1,976,804       0.78 % 
The Echo System Corp.(1)(2)
    New York, NY                                      
Preferred shares, Series A     Social Analytics       512,365       1,436,404       1,639,568       0.65 % 
Preferred warrants, $0.20 strike price, expire 11/14/2016           68,359       75,988       68,359       0.03 % 
Total                 1,512,392       1,707,927       0.68 % 

 
 
See Notes to the Consolidated Financial Statements.

13


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2012

         
Portfolio Investments*   Headquarters/Industry   Shares/Capital
Contribution
  Cost   Fair Value   % of
Net Assets
AltEgo, LLC(2)(8)
    Santa Monica, CA
                                     
Preferred shares, Series B-2     Social Media
Customer Acquisition
Platform
      1,400,000     $  1,420,406     $  1,400,000       0.55 % 
Zynga, Inc.(10)
    San Francisco, CA                                      
Common shares     Social Gaming       533,333       3,003,462       1,258,666       0.50 % 
The rSmart Group, Inc.
    Scottsdale, AZ                                      
Preferred shares, Series B     Higher Education
Learning Platform
      1,201,923       1,266,940       1,250,000       0.49 % 
S3 Digital Corp.
(d/b/a S3i)
(2)
    New York, NY                                      
Preferred shares, Class A1     Sports Analytics       1,033,452       989,058       1,033,452       0.41 % 
Preferred warrants, $1.00 strike price, expire 11/21/2017           500,000       31,354       31,354       0.01 % 
Total                 1,020,412       1,064,806       0.42 % 
NestGSV, Inc.(2)
    Redwood City, CA                                      
Preferred shares, Series A     Incubator       1,000,000       1,021,778       1,000,000       0.40 % 
DreamBox Learning, Inc.
    Bellevue, WA                                      
Preferred shares, Series A     Education Technology       3,579,610       758,017       751,718       0.30 % 
SinoLending Ltd.(2)(10)
    Shanghai, China                                      
Preferred shares, Class A     Chinese P2P Lending       6,414,368       501,998       500,321       0.20 % 
Ozy Media, Inc.
    Mountain View, CA                                      
Preferred shares, Series Seed     Social Media       500,000       500,000       500,000       0.20 % 
NestGSV Silicon Valley,
LLC
(2)(9)
    Redwood City, CA                                      
Common membership interest     Incubator     $ 500,000       500,000       500,000       0.20 % 
Groupon, Inc.(4)(10)
    Chicago, IL                                      
Common shares     Online Deals       80,000       2,128,774       388,800       0.15 % 
AlwaysOn, Inc.(1)(2)
    Woodside, CA                                      
Preferred shares, Series A     Social Media       1,066,626       1,027,391       298,655       0.12 % 
NewZoom, Inc.
(d/b/a ZoomSystems)
    San Francisco, CA                                      
Preferred shares, Series A     Smart e-tail (Retail)       1,250,000       260,476       250,000       0.10 % 

 
 
See Notes to the Consolidated Financial Statements.

14


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
December 31, 2012

         
Portfolio Investments*   Headquarters/Industry   Shares   Cost   Fair Value   % of
Net Assets
Neuron Fuel, Inc.
    San Jose, CA                                      
Preferred shares, Series AAI     Computer Software       250,000     $ 262,530     $ 250,000       0.10 % 
Serious Energy, Inc.(10)
    Sunnyvale, CA                                      
Common shares     Green Materials       178,095       739,130             % 
Top Hat 430, Inc.(2)(10)
    Shakopee, MN                                      
Preferred shares, Series A     Jewelry Retailing Technology       1,844,444       4,167,943             % 
Preferred warrants, $2.25 strike price, expire 11/2/2017           13,333                   % 
Total                 4,167,943             % 
Total Portfolio Investments
                237,147,735       225,397,085       89.23 % 
Money Market Funds(1)
                                            
Fidelity Institutional Money Market Funds                                             
Money Market Portfolio              8,000,000       8,000,000       8,000,000       3.17 % 
Prime Money Market Portfolio           8,000,000       8,000,000       8,000,000       3.17 % 
Total Money Market Funds                 16,000,000       16,000,000       6.34 % 
Total Investments               $ 253,147,735     $ 241,397,085       95.57 % 

* All portfolio investments are non-control/non-affiliated and non-income producing, unless identified. Equity investments are subject to lock-up restrictions upon their initial public offering.
(1) Investment is income producing.
(2) Denotes an Affiliate Investment. “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of GSV Capital Corp., as defined in the Investment Company Act of 1940. A company is deemed to be an “Affiliate” of GSV Capital Corp. if GSV Capital Corp. owns 5% or more of the voting securities of such company.
(3) On May 17, 2012, Facebook, Inc. priced its initial public offering, selling 421,233,615 shares at a price of $38.00 per share. GSV Capital Corp.’s shares in Facebook, Inc. are subject to a lock-up agreement that expired on November 14, 2012. At December 31, 2012, GSV Capital Corp. valued Facebook based on its December 31, 2012 closing price.
(4) On November 8, 2011, Groupon, Inc. priced its initial public offering, selling 35,000,000 shares at a price of $20.00 per share. GSV Capital Corp.’s shares in Groupon, Inc. are subject to a lock-up agreement that expired on June 1, 2012. At December 31, 2012, GSV Capital Corp. valued Groupon, Inc. based on its December 31, 2012 closing price.
(5) GSV Capital Corp.’s investment in Avenues World Holdings LLC is held through its wholly-owned subsidiary GSVC AV Holdings, Inc.
(6) GSV Capital Corp.’s investment in Whittle Schools, LLC is held through its wholly-owned subsidiary GSVC WS Holdings, Inc.
(7) GSV Capital Corp.’s investment in StormWind, LLC is held through its wholly-owned subsidiary GSVC SW Holdings, Inc.
(8) GSV Capital Corp.’s investment in AltEgo, LLC is held through its wholly-owned subsidiary GSVC AE Holdings, Inc.
(9) GSV Capital Corp.’s investment in NestGSV Silicon Valley, LLC is held through its wholly-owned subsidiary GSVC NG Holdings, Inc.
(10) Indicates assets that GSV Capital Corp. believes do not represent “qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70% of GSV Capital Corp.’s total assets at the time of acquisition of any additional non-qualifying assets.
(11) On February 11, 2013, Silver Spring Networks, Inc. conducted a five-for-one reverse stock split of its common stock, which has not been reflected above.

 
 
See Notes to the Consolidated Financial Statements.

15


 
 

GSV CAPITAL CORP. AND SUBSIDIARY
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2013
(Unaudited)

NOTE 1 — NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

GSV Capital Corp. (the “Company”, “we”, “our” or “GSV Capital”) was formed in September 2010 as a Maryland corporation structured as an externally managed, non-diversified closed-end management investment company. The Company has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company is managed by GSV Asset Management, LLC (“GSV Asset Management”).

The Company’s date of inception is January 6, 2011, which is the date it commenced its development stage activities. The Company’s shares are currently listed on the NASDAQ Capital Market under the symbol “GSVC”. The Company began its investment operations during the second quarter.

On April 13, 2012, the Company formed a wholly-owned subsidiary, GSV Capital Lending, LLC (“GCL”), a Delaware limited liability company, which will originate portfolio loan investments within the state of California. An application for a California lender license was submitted by GCL to the California Department of Corporations and GCL is awaiting receipt of its license from the State.

On November 28, 2012, the Company formed wholly-owned subsidiaries, GSVC AE Holdings, Inc. (“GAE”), GSVC AV Holdings, Inc. (“GAV”), GSVC NG Holdings, Inc. (“GNG”), GSVC SW Holdings, Inc. (“GSW”) and GSVC WS Holdings, Inc. (“GWS”) (collectively the “GSVC Holdings”), all Delaware corporations, to hold portfolio investments.

The Company’s investment objective is to maximize our portfolio’s total return, principally by seeking capital gains on our equity investments. The Company invests principally in the equity securities of venture capital-backed and rapidly growing emerging companies. The Company may also invest on an opportunistic basis in select publicly-traded equity securities of rapidly growing companies that otherwise meet its investment criteria.

On February 10, 2012, the Company priced a subsequent follow-on equity offering, selling 6,900,000 of common shares at a price of $15.00 per share, including an exercise in full by the underwriters of their option to purchase an additional 900,000 shares of common stock to cover overallotments. The follow-on equity offering resulted in net proceeds to the Company of approximately $96.2 million.

On May 11, 2012, the Company priced an additional follow-on equity offering, selling 6,900,000 of common shares at a price of $16.25 per share, including an exercise in full by the underwriters of their option to purchase an additional 900,000 shares of common stock to cover overallotments. The follow-on equity offering resulted in net proceeds to the Company of approximately $105.4 million.

Summary of Significant Accounting Policies

Basis of Presentation

The interim consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments, all of which were of a normal recurring nature, considered necessary for the fair presentation of financial statements for the interim period have been included. The results of operations for the current period are not necessarily indicative of results that ultimately may be achieved for any other interim period or for the year ending December 31, 2013. The interim unaudited consolidated financial statements and notes hereto should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

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In accordance with Regulation S-X under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, the Company does not consolidate portfolio company investments. The Company has not consolidated the GSVC Holdings which hold portfolio investments.

Basis of Consolidation

Under Article 6 of Regulation S-X and the American Institute of Certified Public Accountants’ Audit and Accounting Guide for Investment Companies, we are precluded from consolidating any entity other than another investment company or a controlled operating company which provides substantially all of its services and benefits to us. Accordingly, our financial statements include our accounts and the accounts of GCL, our wholly-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements requires the Company to make a number of significant estimates. These include estimates of fair value of certain assets and liabilities and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the consolidated financial statements and the reported amounts of certain revenues and expenses during the reported period. It is likely that changes in these estimates will occur in the near term. Our estimates are inherently subjective in nature and actual results could differ from our estimates and the differences could be material.

Investments

The Company applies fair value accounting in accordance with GAAP. The Company generally values its assets on a quarterly basis, or more frequently if required under the 1940 Act. Securities for which market quotations are readily available on an exchange are valued at the closing price of such security on the valuation date; however, if they remain subject to lock-up restrictions they are discounted accordingly. The Company may also obtain quotes with respect to certain of its investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is sufficient according to GAAP to determine the fair value of the security. If determined adequate, the Company uses the quote obtained.

Securities for which reliable market quotations are not readily available or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of GSV Asset Management, the Board or the Valuation Committee of the Board (the “Valuation Committee”), does not represent fair value, shall each be valued as follows:

1. The quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals responsible for the portfolio investment;
2. Preliminary valuation conclusions are then documented and discussed with GSV Asset Management senior management;
3. An independent third-party valuation firm is engaged by, or on behalf of, the Valuation Committee to conduct independent appraisals and review management’s preliminary valuations and make their own independent assessment, for all material investments;
4. The Valuation Committee discusses valuations and recommends the fair value of each investment in the portfolio in good faith based on the input of GSV Asset Management and the independent third-party valuation firm; and,
5. The Board then discusses the valuations and determines in good faith the fair value of each investment in the portfolio based upon input of GSV Asset Management, estimates from the independent valuation firm and the recommendations of the Valuation Committee.

In making our good faith determination of the fair value of investments, we consider valuation methodologies consistent with industry practice. Valuation methods, among other measures and as applicable, may include comparisons to prices from secondary market transactions and recent venture capital financings, analysis of financial ratios and valuation metrics of the portfolio companies that issued such private equity securities to peer companies that are public, analysis of the portfolio companies’ most recent financial

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statements and forecasts, and the markets in which the portfolio company does business, and other relevant factors. The Company assigns a weighting based upon the relevance of each factor to determine the fair value of each investment.

When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will consider the pricing indicated by the external event to corroborate the private equity valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

Fair value is defined 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. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1.  Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access (examples include active exchange-traded equity securities, exchange-traded derivatives, and most U.S. Government and agency securities).

Level 2.  Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

a) Quoted prices for similar assets or liabilities in active markets;
b) Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);
c) Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and,
d) Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.

Level 3.  Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability (examples include certain of our private equity investments).

When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore gains and losses for such assets and liabilities categorized within the Level 3 table set forth in Note 3 may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur.

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Valuation of Financial Instruments

The carrying amounts of our financial instruments, consisting of cash, receivables, accounts payable, and accrued expenses, approximate fair value due to their short-term nature.

Securities Transactions

Securities transactions are accounted for on the date the transaction for the purchase or sale of the securities is entered into by the Company (i.e., trade date). Securities transactions outside conventional channels, such as private transactions, are recorded as of the date the Company obtains the right to demand the securities purchased or to collect the proceeds from a sale, and incurs an obligation to pay for securities purchased or to deliver securities sold, respectively.

Portfolio Company Investment Classification

We are a non-diversified company within the meaning of the 1940 Act. We classify our investments by level of control. As defined in the 1940 Act, control investments are those where there is the power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual directly or indirectly owns beneficially more than 25% of the voting securities of an investee company. Affiliated investments and affiliated companies are defined by a lesser degree of influence and are deemed to exist when a company or individual directly or indirectly owns, controls or holds the power to vote 5% or more of the outstanding voting securities of another person.

Cash

The Company places its cash with U.S. Bank, N.A. and First Republic Bank, N.A., and at times, cash held in these accounts may exceed the Federal Deposit Insurance Corporation insured limit. The Company may invest a portion of its cash in money market funds, within limitations of the 1940 Act.

Revenue Recognition

The Company’s revenue recognition policies are as follows:

Sales:  Gains or losses on the sale of investments are determined using the specific identification method.

Interest:  Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis.

Dividends:  Dividend income is recognized on the ex-dividend date.

Investment Transaction Costs and Escrow Deposits

Commissions and other costs associated with an investment transaction, including legal expenses not reimbursed by the issuer, are included in the cost basis of purchases and deducted from the proceeds of sales. The Company makes certain acquisitions on the secondary markets which may involve making deposits to escrow accounts until certain conditions are met including the underlying private company’s right of first refusal. If the underlying private company does not exercise or assign its right of first refusal and all other conditions are met, then the funds in the escrow account are delivered to the seller and the account is closed. These transactions are reflected on the Consolidated Statement of Assets and Liabilities as Escrow deposits. At March 31, 2013 and December 31, 2012, the Company had $0 in Escrow deposits.

Unrealized Appreciation or Depreciation on Investments

Unrealized appreciation or depreciation is calculated as the difference between the fair value of the investment and the cost basis of such investment.

U.S. Federal and State Income Taxes

The Company was taxed as a regular corporation (a “C corporation”) under subchapter C of the Internal Revenue Code of 1986, as amended, for its 2012 taxable year. The Company uses the liability method of accounting for income taxes. Deferred tax assets and liabilities are recorded for tax loss carryforwards and temporary differences between the tax basis of assets and liabilities and their reported amounts in the

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consolidated financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. Certain tax attributes may be subject to limitations on timing and usage. A valuation allowance is provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Beginning with its 2013 taxable year, the Company may elect to be treated as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), if management determines that it is in the best interests of the Company to do so and the Company is able to satisfy the requirements under subchapter M of the Code. In order to qualify as a RIC, among other things, the Company is required to distribute to its stockholders on a timely basis at least 90% of investment company taxable income, as defined by the Code, for each year, and meet certain asset diversification requirements on a quarterly basis. So long as the Company qualifies and maintains its status as a RIC, it generally will not pay corporate-level U.S. federal and state income taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends. Rather, any tax liability related to income earned by the Company will represent obligations of the Company’s investors and will not be reflected in the consolidated financial statements of the Company. Although it is currently its intention to do so, at the present time, the Company cannot assure you whether it will elect to be treated as a RIC for its 2013 taxable year. If it opts not to do so, the Company will continue to be taxed as a C corporation under the Code for its 2013 taxable year.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. The Company recognizes the tax benefits of uncertain tax positions only where the position has met the “more-likely-than-not” threshold. The Company classifies penalties and interest associated with income taxes, if any, as income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, ongoing analyses of tax laws, regulations and interpretations thereof.

Offering Costs

Offering costs include legal fees and other costs pertaining to the public offerings. As of March 31, 2013 there were no deferred offering costs. As of December 31, 2012, $738,697 of offering costs were offset against capital proceeds from the secondary offerings on May 11, 2012 and February 10, 2012.

Per Share Information

Basic and diluted earnings (loss) per common share is calculated using the weighted average number of shares outstanding for the period presented.

Capital Accounts

Certain capital accounts including undistributed net investment income, accumulated net realized gain or loss, net unrealized appreciation or depreciation, and paid-in capital in excess of par, are adjusted, at least annually, for permanent differences between book and tax. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from GAAP. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on the net assets or net asset value per share and are intended to enable the Company’s stockholders to determine the amount of accumulated and undistributed earnings they potentially could receive in the future and on which they could be taxed.

Recently Adopted Accounting Standards

In May 2011, the Financial Accounting Standards Board (“FASB”) issued guidance clarifying how to measure and disclose fair value. This guidance amends the application of the “highest and best use” concept to be used only in the measurement of fair value of nonfinancial assets, clarifies that the measurement of the fair value of equity-classified financial instruments should be performed from the perspective of a market participant who holds the instrument as an asset, clarifies that an entity that manages a group of financial assets and liabilities on the basis of its net risk exposure can measure those financial instruments on the basis of its net exposure to those risks, and clarifies when premiums and discounts should be taken into account

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when measuring fair value. The fair value disclosure requirements also were amended. The amended guidance is to be applied prospectively. For public entities, the guidance is effective during interim and annual periods beginning after December 15, 2011. The adoption of this guidance did not have a significant impact on our financial condition, results of operations or cash flows.

NOTE 2 — RELATED PARTY ARRANGEMENTS

Investment Advisory Agreement

The Company entered into an investment advisory agreement with GSV Asset Management (the “Advisory Agreement”) in connection with its initial public offering. Pursuant to the Advisory Agreement, GSV Asset Management will be paid a base annual fee of 2% of gross assets, and an annual incentive fee equal to the lesser of (i) 20% of the Company’s realized capital gains during each calendar year, if any, calculated on an investment-by-investment basis, subject to a non-compounded preferred return, or “hurdle,” and a “catch-up” feature, and (ii) 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. For the three months ended March 31, 2013 and March 31, 2012, GSV Asset Management earned $1,283,599 and $621,926, respectively, in base management fees and $0 and $0 in incentive fees, respectively.

As of March 31, 2013, the Company was due $8,505 from GSV Asset Management for reimbursement of expenses paid for by the Company that were the responsibility of GSV Asset Management, and is included in the Consolidated Statement of Assets and Liabilities.

As of March 31, 2013, the Company owed GSV Asset Management $39,012 for reimbursements of travel-related and other expenses, and is included in the Consolidated Statement of Assets and Liabilities.

As of December 31, 2012, the Company was due $5,723 from GSV Asset Management for reimbursement of expenses paid by the Company that were the responsibility of GSV Asset Management, and is included in the Consolidated Statement of Assets and Liabilities.

As of December 31, 2012, the Company owed GSV Asset Management $51,194 for reimbursements of travel-related expenses. These are included in the Consolidated Statement of Assets and Liabilities.

Administration Agreement

The Company entered into an administration agreement with GSV Capital Service Company (the “Administration Agreement”) to provide administrative services, including furnishing the Company with office facilities, equipment, clerical, bookkeeping, record keeping services and other administrative services, in connection with its initial public offering and ongoing operations. The Company reimburses GSV Capital Service Company an allocable portion of overhead and other expenses in performing its obligations under the Administration Agreement. There were $887,984 and $345,594 in such costs incurred under the Administration Agreement for the three months ended March 31, 2013 and March 31, 2012, respectively.

License Agreement

The Company entered into a license agreement with GSV Asset Management pursuant to which GSV Asset Management has agreed to grant the Company a non-exclusive, royalty-free license to use the name “GSV.” Under this agreement, the Company has the right to use the GSV name for so long as the Advisory Agreement with GSV Asset Management is in effect. Other than with respect to this limited license, the Company has no legal right to the “GSV” name.

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NOTE 3 — PORTFOLIO INVESTMENTS AND FAIR VALUE

At March 31, 2013, the Company had 63 positions in 45 portfolio companies. The total cost and fair value of the 63 positions were $235,481,893 and $222,154,605, respectively. At December 31, 2012, the Company had 61 positions in 47 portfolio companies. The total cost and fair value of the 61 positions were $237,147,735 and $225,397,085, respectively. The composition of our investments as of March 31, 2013 and December 31, 2012 are as follows:

       
  March 31, 2013 (Unaudited)   December 31, 2012
     Cost   Fair Value   Cost   Fair Value
Common Stock   $ 127,701,404     $ 118,790,833     $ 132,833,640     $ 123,820,141  
Preferred Stock     107,150,019       102,657,139       103,683,625       100,853,882  
Common Membership Interest     500,000       500,000       500,000       500,000  
Warrants     130,470       206,633       130,470       223,062  
Total Portfolio Investments     235,481,893       222,154,605       237,147,735       225,397,085  
Non-Portfolio Investments     16,000,000       16,000,000       16,000,000       16,000,000  
Total Investments   $ 251,481,893     $ 238,154,605     $ 253,147,735     $ 241,397,085  

The table below presents the valuation techniques and the nature of significant inputs used to determine the fair values of our Level 3 investments as of March 31, 2013.

       
Asset   Fair Value   Valuation Techniques   Unobservable inputs   Range (Average)
Common stock in private companies   $108,246,502   Market approach   Precedent transactions   N/A
  Income approach   Revenue multiples   1.3x – 9.4x (3.4x)
  Revenue growth rate (5 year)   20% – 50% (38%)
  EBIT multiples   9.3x – 40.7x (23.8x)
  EBIT margin (5 year)   15% – 30% (24%)
  Discount rate   35% – 50% (38%)
  Scenario analysis   IPO/M&A probability   50/50% – 80/20%
Preferred stock in private companies   102,657,139   Market approach