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 June 30, 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.)

 
2925 Woodside Road
Woodside, CA
  94062
(Address of principal executive offices)   (Zip Code)

(650) 235-4769

(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 August 9, 2013 was 19,320,100.

 

 


 
 

TABLE OF CONTENTS

GSV CAPITAL CORP. AND SUBSIDIARY

TABLE OF CONTENTS

 
  PAGE
PART I.  FINANCIAL INFORMATION
        

Item 1.

Financial Statements

    1  
Consolidated Statements of Assets and Liabilities as of June 30, 2013 (unaudited) and December 31, 2012     1  
Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2013, and June 30, 2012     2  
Consolidated Statements of Changes in Net Assets (unaudited) for the six months ended June 30, 2013, and June 30, 2012     3  
Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2013, and June 30, 2012     4  
Consolidated Schedule of Investments as of June 30, 2013 (unaudited)     5  
Consolidated Schedule of Investments as of December 31, 2012     9  
Notes to the Consolidated Financial Statements as of June 30, 2013 (unaudited)     14  

Item 2.

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

    30  

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

    39  

Item 4.

Controls and Procedures

    39  
PART II.  OTHER INFORMATION
        

Item 1.

Legal Proceedings

    40  

Item 1A.

Risk Factors

    40  

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

    41  

Item 3.

Defaults Upon Senior Securities

    41  

Item 4.

Mine Safety Disclosure

    41  

Item 5.

Other Information

    41  

Item 6.

Exhibits

    42  
Signatures     43  

i


 
 

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

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

   
  June 30, 2013   December 31, 2012
     (Unaudited)     
ASSETS
                 
Investments at fair value:
                 
Investments in affiliated securities (cost of $35,632,566 and $38,210,753, respectively)   $ 31,939,574     $ 34,648,363  
Investments in non-control/non-affiliated securities (cost of $209,662,962 and $198,936,982, respectively)     212,258,912       190,748,722  
Investments in money market funds (cost of $0 and $16,000,000, respectively)           16,000,000  
Total Investments (cost of $245,295,528 and $253,147,735, respectively)     244,198,486       241,397,085  
Cash     4,634,110       11,318,525  
Due from:
                 
GSV Asset Management     2,606       5,723  
Portfolio companies     190,630       316,377  
Prepaid expenses     113,682       63,953  
Dividend receivable     13,225       1,920  
Other assets     6,255       27,145  
Total Assets     249,158,994       253,130,728  
LIABILITIES
                 
Due to:
                 
GSV Asset Management     438,848       51,194  
Accounts payable     91,954       204,093  
Accrued expenses     20,943       292,640  
Total Liabilities     551,745       547,927  
Commitments and contingencies (Note 6)
                 
Net Assets   $ 248,607,249     $ 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     (15,271,381 )      (10,316,745 ) 
Accumulated net realized loss on investments     (11,055,043 )      (1,380,519 ) 
Accumulated net unrealized depreciation on investments     (1,097,042 )      (11,750,650 ) 
Net Assets   $ 248,607,249     $ 252,582,801  
Net Asset Value Per Share   $ 12.87     $ 13.07  

 
 
See Notes to the Consolidated Financial Statements.

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TABLE OF CONTENTS

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

       
  Three Months Ended
June 30,
  Six Months Ended
June 30,
     2013   2012   2013   2012
INVESTMENT INCOME
                                   
Interest income   $     $ 7,808     $     $ 7,808  
Interest income from non-control/non-affiliated securities           95,075             207,176  
Dividend income     15,723       7,471       20,258       13,175  
Total Investment Income     15,723       110,354       20,258       228,159  
OPERATING EXPENSES
                                   
Investment management fees     1,246,378       1,126,091       2,529,977       1,748,017  
Costs incurred under administration agreement     709,885       602,201       1,597,869       947,795  
Directors’ fees     65,000       65,000       130,250       107,500  
Professional fees     220,978       222,561       457,864       354,406  
Insurance expense     64,062       55,485       117,075       102,154  
Investor relations expense     72,943       95,038       116,505       109,288  
Other expenses     23,388       24,097       25,354       33,120  
Total Operating Expenses     2,402,634       2,190,473       4,974,894       3,402,280  
Net Investment Loss     (2,386,911 )      (2,080,119 )      (4,954,636 )      (3,174,121 ) 
Net Realized Loss on Investments     (6,327,632 )      (1,380,263 )      (9,674,524 )      (1,380,519 ) 
Net Change in Unrealized Appreciation (Depreciation) on Investments     12,230,246       (2,014,512 )      10,653,608       (1,003,317 ) 
Net Increase (Decrease) in Net Assets Resulting from Operations   $ 3,515,703     $ (5,474,894 )    $ (3,975,552 )    $ (5,557,957 ) 
Net Increase (Decrease) in Net Assets Resulting from Operations per Common Share   $ 0.18     $ (0.34 )    $ (0.21 )    $ (0.43 ) 
Weighted Average Common Shares Outstanding     19,320,100       16,287,133       19,320,100       12,837,133  

 
 
See Notes to the Consolidated Financial Statements.

2


 
 

TABLE OF CONTENTS

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

   
  Six months ended
June 30, 2013
  Six months ended
June 30, 2012
Decrease in Net Assets Resulting From Operations
                 
Net Investment Loss   $ (4,954,636 )    $ (3,174,121 ) 
Net Realized Loss on Investments     (9,674,524 )      (1,380,519 ) 
Net Change in Unrealized Appreciation (Depreciation) on Investments     10,653,608       (1,003,317 ) 
Net Decrease in Net Assets Resulting From Operations     (3,975,552 )      (5,557,957 ) 
Capital Share Transactions
                 
Net Proceeds from Common Shares Issued           201,652,500  
Offering Costs           (737,737 ) 
Net Capital Share Transactions           200,914,763  
Total Increase (Decrease) in Net Assets     (3,975,552 )      195,356,806  
Net Assets at Beginning of Period     252,582,801       71,503,248  
Net Assets at End of Period   $ 248,607,249     $ 266,860,054  
Capital Share Activity
                 
Shares Issued           13,800,000  
Shares Outstanding at Beginning of Period     19,320,100       5,520,100  
Shares Outstanding at End of Period     19,320,100       19,320,100  

 
 
See Notes to the Consolidated Financial Statements.

3


 
 

TABLE OF CONTENTS

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

   
  Six months ended
June 30, 2013
  Six months ended
June 30, 2012
Cash Flows from Operating Activities
                 
Net decrease in net assets resulting from operations   $ (3,975,552 )    $ (5,557,957 ) 
Adjustments to reconcile net decrease in net assets resulting from operations to net cash used in operating activities:
                 
Net realized loss on investments     9,674,524       1,380,519  
Net change in unrealized (appreciation) depreciation on investments     (10,653,608 )      1,003,317  
Purchases of investments in:
                 
Portfolio investments     (19,607,661 )      (109,902,924 ) 
United States treasury bill           (19,999,128 ) 
Money market funds           (10,000,000 ) 
Proceeds from sales of investments in:
                 
Portfolio investments     17,785,344        
United States treasury bill           19,998,872  
Money market funds           1,000,000  
Change in operating assets and liabilities:
                 
Due from GSV Asset Management     3,117       7,569  
Due from portfolio companies     125,747       (236,816 ) 
Accrued interest           148,990  
Prepaid expenses     (49,729 )      (98,889 ) 
Dividend receivable     (11,305 )      (1,251 ) 
Other assets     20,890       (80,910 ) 
Due to GSV Asset Management     387,654       (61,268 ) 
Due to other affiliates           1,935  
Accounts payable     (112,139 )      555,107  
Accrued expenses     (271,697 )      159,144  
Net Cash Used in Operating Activities     (6,684,415 )      (121,683,690 ) 
Cash Flows from Financing Activities
                 
Net proceeds from common shares issued           201,652,500  
Offering costs           (737,737 ) 
Net Cash Provided by Financing Activities           200,914,763  
Total Increase (Decrease) in Cash Balance     (6,684,415 )      79,231,073  
Cash Balance at Beginning of Period     11,318,525       385,995  
Cash Balance at End of Period   $ 4,634,110     $ 79,617,068  
Non-Cash Operating Items
                 
Structured notes converted to preferred shares   $     $ 674,651  
Structured notes converted to common shares   $     $ 3,002,665  
Preferred shares converted to common shares   $ 1,999,997     $  
Warrants exercised for preferred shares   $     $ 53,665  

 
 
See Notes to the Consolidated Financial Statements.

4


 
 

TABLE OF CONTENTS

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS
June 30, 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     $ 36,351,602       14.62 % 
Preferred shares, Series A           65,000       1,235,290       1,287,238       0.52 % 
Total                 32,991,111       37,638,840       15.14 % 
Palantir Technologies, Inc.     Palo Alto, CA                                      
Common shares, Class A     Cyber Security       7,145,690       20,051,479       21,994,434       8.85 % 
Preferred shares, Series G           326,797       1,008,968       1,012,664       0.41 % 
Total                 21,060,447       23,007,098       9.26 % 
Dropbox, Inc.     San Francisco, CA                                      
Common share     Online Storage       760,000       8,641,153       8,740,000       3.52 % 
Preferred shares, Series A-1           552,486       5,015,333       6,353,589       2.56 % 
Total                 13,656,486       15,093,589       6.08 % 
Violin Memory, Inc.     Mountain View, CA                                      
Preferred shares, Series D     Memory Flash       1,666,666       10,018,370       9,999,996       4.02 % 
Preferred shares, Series B           800,000       4,800,798       4,360,000       1.75 % 
Total                 14,819,168       14,359,996       5.77 % 
Chegg, Inc.     Santa Clara, CA                                      
Common shares     Textbook Rental       1,274,193       10,014,248       9,571,313       3.85 % 
Preferred shares, Series F           500,000       4,008,654       4,478,523       1.80 % 
Total                 14,022,902       14,049,836       5.65 % 
Solexel, Inc.     Milpitas, CA                                      
Preferred shares, Series C     Solar Power       5,034,324       11,016,624       10,999,998       4.42 % 
2U, Inc. (f/k/a 2tor, Inc.)     Landover, MD                                      
Common shares     Online Education       1,151,802       8,757,668       9,247,603       3.72 % 
Preferred shares, Series A           167,431       1,273,125       1,344,272       0.54 % 
Total                 10,030,793       10,591,875       4.26 % 
Avenues World Holdings LLC(3)     New York, NY                                      
Preferred shares, Class A-1     Globally-focused Private School       5,000,000       10,026,005       10,395,159       4.18 % 
Coursera, Inc.     Mountain View, CA                                      
Preferred shares, Series B     Online Education       2,039,609       9,999,999       9,999,999       4.02 % 
Kno, Inc.     Santa Clara, CA                                      
Preferred shares, Series C     Digital Textbooks       440,313       2,262,006       2,249,999       0.91 % 
Preferred shares, Series C-1              1       7,510,334       7,500,000       3.02 % 
Common shares           50,000       214,681       172,914       0.07 % 
Total                 9,987,021       9,922,913       4.00 % 
Facebook, Inc.(7)     Menlo Park, CA                                      
Common shares, Class A     Social Networking       350,000       10,472,294       8,708,000       3.50 % 
Control4 Corporation(9)     Salt Lake City, UT                                      
Common shares     Home Automation       782,821       7,011,025       7,518,198       3.02 % 
SugarCRM, Inc.     Cupertino, CA                                      
Common shares     Customer Relationship Manager       1,480,131       5,192,673       5,180,459       2.08 % 
Preferred shares, Series E           373,134       1,500,522       1,652,476       0.66 % 
Total                 6,693,195       6,832,935       2.74 % 

 
 
See Notes to the Consolidated Financial Statements.

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TABLE OF CONTENTS

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
June 30, 2013
(Unaudited)

         
Portfolio Investments*   Headquarters/Industry   Shares   Cost   Fair Value   % of Net Assets
ZocDoc Inc.     New York, NY                                      
Preferred shares, Series A     Online Medical       200,000     $ 3,563,178     $ 3,100,000       1.25 % 
Common Stock     Scheduling       111,866       1,734,878       1,733,923       0.70 % 
Total                 5,298,056       4,833,923       1.95 % 
Bloom Energy Corporation     Sunnyvale, CA                                      
Common shares     Fuel Cell Energy       201,589       3,855,601       4,008,093       1.61 % 
Gilt Groupe, Inc.     New York, NY                                      
Common shares     e-Commerce Flash Sales       248,600       6,594,433       3,841,793       1.55 % 
Spotify Technology S.A.(7)     Stockholm, Sweden                                      
Common shares     Music Streaming Service       3,658       3,598,472       3,682,927       1.48 % 
StormWind, LLC(2)(5)     Scottsdale, AZ                                      
Preferred shares, Series B     Interactive Learning Platform       3,279,629       2,019,687       3,667,495       1.48 % 
Learnist Inc, (f/k/a Grockit, Inc.)(2)(10)     San Francisco, CA                                      
Preferred shares, Series D     Online Test Preparation       2,728,252       2,005,945       2,018,906       0.82 % 
Preferred shares, Series E           1,731,501       1,503,670       1,427,558       0.57 % 
Total                 3,509,615       3,446,464       1.39 % 
Fullbridge, Inc.(2)     Cambridge, MA                                      
Preferred shares, Series C     Business Education       1,728,724       3,260,465       3,289,115       1.32 % 
Warrants           186,170                   % 
Total                 3,260,465       3,289,115       1.32 % 
CUX, Inc. (d/b/a CorpU)(1)(2)     San Francisco, CA                                      
Common Stock     Corporate Education       615,763       2,006,077       2,483,986       1.00 % 
Convertible preferred shares, Series D              169,033       778,607       775,861       0.31 % 
Warrants           16,903                   % 
Total                 2,784,684       3,259,847       1.31 % 
Global Education Learning (Holdings) Ltd.(2)(7)     Hong Kong                                      
Preferred shares, Series A     Education Technology       1,472,175       2,999,998       3,187,140       1.28 % 
Parchment, Inc.     Scottsdale, AZ                                      
Preferred shares, Series D     E-Transcript Exchange       2,400,384       3,000,000       3,040,167       1.22 % 
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       1.21 % 
Dataminr, Inc.     New York, NY                                      
Preferred shares, Series B     Social Media Analytics       904,977       2,063,356       2,972,849       1.20 % 
Totus Solutions, Inc.(2)     Carrollton, TX                                      
Common shares     LED Lighting       20,000,000       5,023,748       2,586,345       1.04 % 

 
 
See Notes to the Consolidated Financial Statements.

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TABLE OF CONTENTS

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
June 30, 2013
(Unaudited)

         
Portfolio Investments*   Headquarters/Industry   Shares/Capital Contribution   Cost   Fair Value   % of Net Assets
Dailybreak, Inc.(2)     Boston, MA                                      
Preferred shares, Series A-1     Social Advertising       1,878,129     $ 2,430,950     $ 2,422,788       0.97 % 
SharesPost, Inc.     San Bruno, CA                                      
Preferred shares, Series B     Online Marketplace (Finance)       1,771,653       2,258,328       2,232,283       0.90 % 
Common warrants, $0.13 strike price, expire 6/15/2018           770,934       23,128       138,768       0.06 % 
Total                 2,281,456       2,371,051       0.96 % 
Silver Spring Networks, Inc.(8)     Redwood City, CA                                      
Common shares     Smart Grid       102,028       5,145,271       2,366,472       0.95 % 
TrueCar, Inc.     Santa Monica, CA                                      
Common shares     Online Marketplace (Cars)       377,358       2,014,863       2,305,338       0.93 % 
Maven Research, Inc.(2)     San Francisco, CA                                      
Preferred shares, Series C     Knowledge Networks       318,979       1,999,998       1,828,817       0.74 % 
Preferred shares, Series B           49,505       217,206       232,971       0.09 % 
Total                 2,217,204       2,061,788       0.83 % 
S3 Digital Corp. (d/b/a   S3i)(2)     New York, NY                                      
Preferred shares, Class A1     Sports Analytics       1,033,452       989,058       1,123,622       0.45 % 
Preferred warrants, $1.00 strike price, expire 11/21/2017           500,000       31,354             % 
Total                 1,020,412       1,123,622       0.45 % 
NestGSV, Inc.(2)     Redwood City, CA                                      
Preferred shares, Series A     Incubator       1,000,000       1,021,778       1,093,866       0.44 % 
The rSmart Group, Inc.     Scottsdale, AZ                                      
Preferred shares, Series B     Higher Education Learning Platform       1,201,923       1,266,940       933,381       0.38 % 
DreamBox Learning, Inc.     Bellevue, WA                                      
Preferred shares, Series A     Education Technology       3,579,610       758,017       828,257       0.33 % 
AlwaysOn, Inc.(2)     Woodside, CA                                      
Preferred shares, Series A     Social Media       1,066,626       1,027,391       600,000       0.24 % 
Preferred shares, Series A-1           3,152,417       624,783       203,011       0.08 % 
Total                 1,652,174       803,011       0.32 % 
AliphCom, Inc. (d/b/a Jawbone)     San Francisco, CA                                      
Common Stock     Smart Device Company       150,000       793,152       750,000       0.30 % 
SinoLending Ltd.(2)(7)     Shanghai, China                                      
Preferred shares, Class A     Chinese P2P Lending       6,414,368       501,998       604,859       0.24 % 
NestGSV Silicon Valley, LLC(2)(6)     Redwood City, CA                                      
Common membership interest     Incubator
  
    $ 500,000       500,000       514,084       0.21 % 
Ozy Media, Inc.     Mountain View, CA                                      
Preferred shares, Series Seed     Social Media       500,000       500,000       513,725       0.21 % 

 
 
See Notes to the Consolidated Financial Statements.

7


 
 

TABLE OF CONTENTS

GSV CAPITAL CORP. AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)
June 30, 2013
(Unaudited)

         
Portfolio Investments*   Headquarters/Industry   Shares   Cost   Fair Value   % of Net Assets
Starfish Holdings, Inc. (d/b/a YourOffers)(2)     Beverly Hills, CA                                      
Preferred shares, Series A     Marketing Platform       43,878,894     $ 2,177,461     $ 500,000       0.20 % 
Common warrants, $0.00001 strike price, expire 11/13/2019           144,800,351                   % 
Total                 2,177,461       500,000       0.20 % 
The Echo System Corp.(2)     New York, NY                                      
Preferred shares, Series A     Social Analytics       512,365       1,436,404       379,150       0.15 % 
Preferred warrants, $0.20 strike price, expire 11/14/2016           68,359       75,988             — %  
Total                 1,512,392       379,150       0.15 % 
NewZoom, Inc. (d/b/a ZoomSystems)     San Francisco, CA                                      
Preferred shares, Series A     Smart e-tail (Retail)       1,250,000       260,476       262,500       0.11 % 
Neuron Fuel, Inc.     San Jose, CA                                      
Preferred shares, Series AAI     Computer Software       250,000       262,530       250,000       0.10 % 
Odesk Corporation     Redwood City, CA                                      
Common Stock     Online Workplace Platform       30,000       183,269       180,000       0.07 % 
Total Portfolio Investments                 245,295,528       244,198,486       98.23 % 
Total Investments               $ 245,295,528     $ 244,198,486       98.23 % 

  * 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 NestGSV Silicon Valley, LLC is held through its wholly-owned subsidiary GSVC NG Holdings, Inc.
 (7) 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.
 (8) 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 June 30, 2013, GSV Capital Corp. valued Silver Spring Networks, Inc. based on its June 30, 2013 closing price.
 (9) On July 22, 2013, Control4 Corporation completed a 1:5.2 reverse stock split which has been reflected above.
(10) On July 31 2013, Grockit, Inc. changed its name to Learnist, Inc. Refer to note 9 for further detail.

 
 
See Notes to the Consolidated Financial Statements.

8


 
 

TABLE OF CONTENTS

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

         
Portfolio Investments*   Headquarters/Industry   Shares/Capital
Contribution
  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(14)     Salt Lake City, UT                                      
Common shares     Home Automation       782,821       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 % 
Learnist Inc, (f/k/a Grockit, Inc.)(2)(13)     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 % 

 
 
See Notes to the Consolidated Financial Statements.

9


 
 

TABLE OF CONTENTS

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

         
Portfolio Investments*   Headquarters/Industry   Shares   Cost   Fair Value   % of Net Assets
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 % 
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)(12)     Beverly Hills, CA                                      
Preferred shares, Series A     Marketing Platform       43,878,894       2,012,103       2,193,945       0.87 % 
Common warrants, $0.00001 strike price, expire 11/13/2019           144,800,351                   % 
Total                 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 % 

 
 
See Notes to the Consolidated Financial Statements.

10


 
 

TABLE OF CONTENTS

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
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.(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 % 
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.(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 % 
Neuron Fuel, Inc.     San Jose, CA                                      
Preferred shares, Series AAI     Computer Software       250,000       262,530       250,000       0.10 % 

 
 
See Notes to the Consolidated Financial Statements.

11


 
 

TABLE OF CONTENTS

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

         
Portfolio Investments*   Headquarters/Industry   Shares   Cost   Fair Value   % of Net Assets
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.

12


 
 

TABLE OF CONTENTS

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

(12) The common warrants held in Starfish Holdings, Inc. (d/b/a YourOffers) is presented separately to in order to be consistent with the presentation in the June 30, 2013 Consolidated Schedule of Investments.
(13) On July 31 2013, Grockit, Inc. changed its name to Learnist, Inc. The schedule of investments was updated in order to be consistent with the presentation in the June 30, 2013 Consolidated Schedule of Investments. Refer to note 9 for further detail.
(14) On July 22, 2013, Control4 Corporation completed a 1:5.2 reverse stock split which has been reflected above.

 
 
See Notes to the Consolidated Financial Statements.

13


 
 

TABLE OF CONTENTS

GSV CAPITAL CORP. AND SUBSIDIARY
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 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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June 30, 2013
(Unaudited)

NOTE 1 — NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES  – (continued)

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 GCL, or 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.

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June 30, 2013
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NOTE 1 — NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES  – (continued)

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 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

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June 30, 2013
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NOTE 1 — NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES  – (continued)

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.

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

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June 30, 2013
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NOTE 1 — NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES  – (continued)

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 June 30, 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 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 June 30, 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.

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June 30, 2013
(Unaudited)

NOTE 1 — NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES  – (continued)

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.

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. There were $1,246,378 and $2,529,977 in base management fees and $0 in incentive fees incurred for the three and six months ended June 30, 2013, respectively. There were $1,126,091 and $1,748,017 in base management fees and $0 in incentive fees incurred for the three and six months ended June 30, 2012, respectively.

As of June 30, 2013, the Company was due $2,606 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 June 30, 2013, the Company owed GSV Asset Management $438,848, of which $415,459 relates to accrued management fees, and $20,783 is for reimbursement of expenses paid for by GSV Asset Management that were the responsibility of the Company, 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 $709,885 and $1,597,869 in such costs incurred under the Administration Agreement for the three and six months ended June 30, 2013, respectively. There were $602,201 and $947,795 in such costs incurred under the Administration Agreement for the three and six months ended June 30, 2012, respectively.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
(Unaudited)

NOTE 2 — RELATED PARTY ARRANGEMENTS  – (continued)

License Agreement