UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


[X]			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


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

For the transition period from ___________ to ______________

Commission file number 814-01162

Venture Lending & Leasing VIII, Inc.

(Exact Name of Registrant as specified in its charter)


Maryland			47-3919702
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

104 La Mesa Drive, Suite 102, Portola Valley, CA			94028
(Address of principal executive offices)			(Zip Code)

(650) 234-4300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

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 [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes [ ] No [ ]

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


Large accelerated filer [ ]	Accelerated filer [ ]	Non-accelerated filer [x]	Smaller reporting company [ ]
Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class						Outstanding as of November 14, 2022
Common Stock, $0.001 par value						100,000

VENTURE LENDING & LEASING VIII, INC.

INDEX


PART I — FINANCIAL INFORMATION

Item 1.			Financial Statements

			Condensed Statements of Assets and Liabilities (Unaudited)
			As of September 30, 2022 and December 31, 2021

			Condensed Statements of Operations (Unaudited)
			For the three and nine months ended September 30, 2022 and 2021

			Condensed Statements of Changes in Net Assets (Unaudited)
			For the three and nine months ended September 30, 2022 and 2021

			Condensed Statements of Cash Flows (Unaudited)
			For the nine months ended September 30, 2022 and 2021

			Condensed Schedules of Investments (Unaudited)
			As of September 30, 2022 and December 31, 2021

			Condensed Schedules of Derivative Instruments (Unaudited)
			As of December 31, 2021

			Notes to Condensed Financial Statements (Unaudited)

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.			Quantitative and Qualitative Disclosures About Market Risk

Item 4.			Controls and Procedures

PART II — OTHER INFORMATION

Item 1.			Legal Proceedings

Item 1A.			Risk Factors

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.			Defaults Upon Senior Securities

Item 4.			Mine Safety Disclosures

Item 5.			Other Information

Item 6.			Exhibits

SIGNATURES

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

VENTURE LENDING & LEASING VIII, INC.

CONDENSED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021


	September 30, 2022		December 31, 2021
ASSETS
Loans, at estimated fair value
(cost of $68,661,523 and $131,576,413)	$	47,255,073	$	108,465,616

Cash and cash equivalents	1,565,652		2,815,756
Dividend and interest receivables	503,705		1,369,848
Other assets	219,729		1,061,128

Total assets	49,544,159		113,712,348

LIABILITIES
Borrowings under debt facility	—		47,000,000
Accrued management fees	309,651		710,702
Derivative liability	—		4,733
Accounts payable and other accrued liabilities	293,664		605,576
Total liabilities	603,315		48,321,011

NET ASSETS	$	48,940,844	$	65,391,337

Analysis of Net Assets:

Capital paid in on shares of capital stock	$	356,075,000	$	356,075,000
Cumulative return of capital distributions	(281,150,303)		(263,033,898)
Total distributable losses	(25,983,853)		(27,649,765)


Net assets (equivalent to $489.41 and $653.91 per share based on 100,000 shares of capital stock outstanding - See Note 5 and Note 10)	$	48,940,844	$	65,391,337
	0		0

See notes to condensed financial statements (unaudited).

VENTURE LENDING & LEASING VIII, INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021


	For the Three Months Ended September 30, 2022		For the Three Months Ended September 30, 2021		For the Nine Months Ended September 30, 2022		For the Nine Months Ended September 30, 2021

INVESTMENT INCOME:
Interest on loans	$	2,323,442	$	11,689,159	$	11,962,673	$	30,749,728
Other interest and other income	15,189		493		22,994		1,304
Total investment income	2,338,631		11,689,652		11,985,667		30,751,032

EXPENSES:
Management fees	309,651		957,499		1,322,644		3,775,126

Interest expense	723,543		713,390		1,490,413		2,548,283
Banking and professional fees	95,690		212,199		845,518		1,015,795
Other operating expenses	103,936		58,986		153,387		118,789
Total expenses	1,232,820		1,942,074		3,811,962		7,457,993
Net investment income	1,105,811		9,747,578		8,173,705		23,293,039

Net realized gain (loss) from loans	546,071		35,689		(1,147,470)		(1,807,590)
Net realized gain (loss) from derivative instruments	—		(13,069)		64,393		(38,340)
Net change in unrealized gain (loss) from loans	(2,161,313)		(2,545,280)		1,661,178		3,419,613
Net change in unrealized gain from derivative instruments	—		10,009		4,733		29,900
Net realized and change in unrealized gain (loss) from loans and derivative instruments	(1,615,242)		(2,512,651)		582,834		1,603,583
Net increase (decrease) in net assets resulting from operations	$	(509,431)	$	7,234,927	$	8,756,539	$	24,896,622

Amounts per common share:
Net increase (decrease) in net assets resulting from operations per share	$	(5.09)	$	72.35	$	87.57	$	248.97
Weighted average shares outstanding	100,000		100,000		100,000		100,000

See notes to condensed financial statements (unaudited).

VENTURE LENDING & LEASING VIII, INC.

CONDENSED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021


	Common stock
	Shares	Par value		Additional paid-in capital		Return of Capital Distributions		Total Distributable Losses		Net assets
Balance at June 30, 2021(a)	100,000	$	100	$	352,074,900	$	(216,297,392)	$	(22,201,933)	$	113,575,675
Net increase in net assets resulting from operations	—	—		—		—		7,234,927		7,234,927
Distributions of income to shareholder	—	—		—		—		(9,770,199)		(9,770,199)
Return of capital to shareholder	—	—		—		(23,241,791)		—		(23,241,791)
Contributions from shareholder	—	—		4,000,000		—		—		4,000,000

Balance at September 30, 2021	100,000	$	100	$	356,074,900	$	(239,539,183)	$	(24,737,205)	$	91,798,612

Balance at June 30, 2022	100,000	$	100	$	356,074,900	$	(276,286,084)	$	(23,822,540)	$	55,966,376
Net decrease in net assets resulting from operations	—	—		—		—		(509,431)		(509,431)
Distributions of income to shareholder	—	—		—		—		(1,651,882)		(1,651,882)
Return of capital to shareholder	—	—		—		(4,864,219)		—		(4,864,219)


Balance at September 30, 2022	100,000	$	100	$	356,074,900	$	(281,150,303)	$	(25,983,853)	$	48,940,844

Balance at December 31, 2020 (a)	100,000	$	100	$	352,074,900	$	(164,154,399)	$	(28,186,717)	$	159,733,884
Net increase in net assets resulting from operations	—	—		—		—		24,896,622		24,896,622
Distributions of income to shareholder	—	—		—		—		(21,447,109)		(21,447,109)

Return of capital to shareholder	—	—		—		(75,384,785)		—		(75,384,785)
Contributions from shareholder	—	—		4,000,000		—		—		4,000,000

Balance at September 30, 2021	100,000	$	100	$	356,074,900	$	(239,539,184)	$	(24,737,204)	$	91,798,612

Balance at December 31, 2021	100,000	$	100	$	356,074,900	$	(263,033,898)	$	(27,649,765)	$	65,391,337
Net increase in net assets resulting from operations	—	—		—		—		8,756,539		8,756,539
Distributions of income to shareholder	—	—		—		—		(7,090,627)		(7,090,627)
Return of capital to shareholder	—	—		—		(18,116,405)		—		(18,116,405)


Balance at September 30, 2022	100,000	$	100	$	356,074,900	$	(281,150,303)	$	(25,983,853)	$	48,940,844

(a) Additional prior period information is shown for comparability with current period presentation.

See notes to condensed financial statements (unaudited).

VENTURE LENDING & LEASING VIII, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021


	For the Nine Months Ended		For the Nine Months Ended
	September 30, 2022		September 30, 2021 (a)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations	$	8,756,539	$	24,896,622
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Net realized loss from loans	1,147,470		1,807,590
Net realized (gain) loss from derivative instruments	(64,393)		38,340
Net change in unrealized gain from loans	(1,661,178)		(3,419,613)
Net change in unrealized gain from derivative instruments	(4,733)		(29,900)

Amortization of deferred costs related to borrowing facility	912,077		410,435
Origination of loans	—		(1,500,000)
Principal payments on loans, net of accretion	59,060,388		132,099,590

Proceeds from sale of loan	—		1,425,000
Acquisition of equity securities	—		(87,566)
Change in operating assets and liabilities:
Net decrease in dividend and interest receivables	866,143		1,568,082
Net increase in other assets	(113,848)		(222,799)
Net decrease in accounts payable, other accrued liabilities and accrued management fees	(712,962)		(1,590,862)
Net cash provided by operating activities	68,185,503		155,394,919

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to shareholder	(22,500,000)		(95,600,000)
Contributions from shareholder	—		4,000,000
Borrowings under debt facility	—		34,000,000
Repayments of borrowings under debt facility	(47,000,000)		(89,500,000)

Payments made for derivative instruments	(7,107)		(38,340)
Payments received from derivative instruments	71,500		—

Net cash used in financing activities	(69,435,607)		(147,138,340)

Net increase (decrease) in cash and cash equivalents	(1,250,104)		8,256,579

CASH AND CASH EQUIVALENTS:
Beginning of period	2,815,756		8,751,396
End of period	$	1,565,652	$	17,007,975

SUPPLEMENTAL DISCLOSURES:
CASH PAID DURING THE PERIOD:
Interest - Debt facility	$	699,946	$	2,278,742
NON-CASH OPERATING AND FINANCING ACTIVITIES:
Distributions of equity securities to shareholder	$	2,707,032	$	1,231,894
Receipt of equity securities as repayment of loans	$	2,707,032	$	1,144,328

(a) Certain prior period information has been merged for comparability with current year presentation

See notes to condensed financial statements (unaudited).

VENTURE LENDING & LEASING VIII, INC.

CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED)

AS OF SEPTEMBER 30, 2022


Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate (b)	End of Term Payment (c)	Principal	Cost	Fair Value (d)	Final Maturity Date
Biotechnology
	Driver Bioengineering, Inc.		Senior Secured	11.0%		$ 285,310	$ 283,395	$ 283,395	6/1/2023
	Driver Bioengineering, Inc.		Senior Secured	11.0%		95,960	92,807	92,807	4/1/2023
	Driver Bioengineering, Inc. Subtotal					381,270	376,202	376,202
	Orpheus Therapeutics, Inc.		Senior Secured	18.0%		178,510	174,288	-	*
	Quartzy, Inc.		Senior Secured	12.0%		717,081	708,976	708,976	5/1/2024
	Quartzy, Inc.		Senior Secured	12.0%		274,702	263,577	263,577	8/1/2023
	Quartzy, Inc.		Senior Secured	12.0%		781,366	771,662	771,662	7/1/2024
	Quartzy, Inc. Subtotal					1,773,149	1,744,215	1,744,215
Biotechnology Total		4.4%				$ 2,332,929	$ 2,294,705	$ 2,120,417

Computers & Storage
	Canary Connect, Inc.		Senior Secured	12.8%		$ 558,570	$ 554,838	$ 554,838	3/1/2023
Computers & Storage Total		1.2%				$ 558,570	$ 554,838	$ 554,838

Internet
	Ainsly, Inc. ** ^		Senior Secured	12.5%		$ 108,204	$ 103,092	$ 103,092	9/1/2023
	Daily Muse, Inc.		Senior Secured	11.0%		3,052,982	3,046,121	3,046,121	12/1/2024
	Lenddo International ** ^		Senior Secured	18.0%		545,048	544,703	-	*
	Merchbar, Inc.		Senior Secured	11.8%		110,787	109,467	109,467	3/1/2023
	OneLocal, Inc. ** ^		Senior Secured	12.3%		564,950	548,732	548,732	3/1/2023
	RenoFi, Inc.		Senior Secured	12.0%		82,125	81,554	81,554	6/1/2023
	RenoFi, Inc.		Senior Secured	12.0%		82,080	80,307	80,307	6/1/2023
	RenoFi, Inc. Subtotal					164,205	161,861	161,861
	Residently USA, LLC ** ^		Senior Secured	12.0%		433,128	412,643	333,176	9/1/2024
	Serface Care, Inc.		Senior Secured	12.3%		597,411	364,785	18,929	*
	Stay Alfred, Inc.		Senior Secured	18.0%		8,664,902	6,579,266	389,238	*
	Verishop, Inc.		Senior Secured	12.0%		1,138,426	1,131,263	1,131,263	12/1/2023
	Verishop, Inc.		Senior Secured	12.0%		1,137,995	1,116,126	1,116,126	12/1/2023
	Verishop, Inc. Subtotal					2,276,421	2,247,389	2,247,389
Internet Total		14.2%				$ 16,518,038	$ 14,118,059	$ 6,958,005

Medical Devices
	Ablacon, Inc.		Senior Secured	11.0%		$ 550,550	$ 544,906	$ 544,906	3/1/2023
	Ablacon, Inc.		Senior Secured	11.0%		550,753	548,667	548,667	3/1/2023
	Ablacon, Inc. Subtotal					1,101,303	1,093,573	1,093,573
	Anutra Medical, Inc.		Senior Secured	12.0%		9,490	9,461	9,461	10/1/2022


Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate (b)	End of Term Payment (c)	Principal	Cost	Fair Value (d)	Final Maturity Date
	CytoVale, Inc.		Senior Secured	12.0%		214,335	209,971	209,971	10/1/2023
	CytoVale, Inc.		Senior Secured	12.0%		229,776	228,002	228,002	11/1/2023
	CytoVale, Inc. Subtotal					444,111	437,973	437,973
	Medrobotics Corporation, Inc.		Senior Secured	18.0%		10,000,000	8,895,103	709,541	*
	Renovia, Inc.		Senior Secured	18.0%		4,416,737	4,183,123	2,950,420	*
Medical Devices Total		10.6%				$ 15,971,641	$ 14,619,233	$ 5,200,968

Other Healthcare
	GoForward, Inc.		Senior Secured	11.5%		$ 2,685,541	$ 2,612,090	$ 2,612,090	9/1/2023
	GoForward, Inc.		Senior Secured	11.5%		2,254,915	2,226,181	2,226,181	6/1/2024
	GoForward, Inc. Subtotal					4,940,456	4,838,271	4,838,271
	Hello Heart Inc.		Senior Secured	11.0%		371,822	369,360	369,360	11/1/2023
	Hello Heart Inc.		Senior Secured	11.0%		319,703	315,780	315,780	4/1/2023
	Hello Heart Inc.		Senior Secured	11.0%		255,835	254,836	254,836	4/1/2023
	Hello Heart Inc. Subtotal					947,360	939,976	939,976
	HumanAPI, Inc.		Senior Secured	11.8%		567,258	559,987	559,987	7/1/2023
	Myolex, Inc.		Senior Secured	18.0%		762,531	726,537	-	*
	Therapydia, Inc.		Senior Secured	11.5%		28,808	28,735	28,735	12/1/2022
	Therapydia, Inc.		Senior Secured	11.5%		38,230	38,108	38,108	1/1/2023
	Therapydia, Inc.		Senior Secured	12.0%	1.7%	25,788	25,391	25,391	3/1/2023
	Therapydia, Inc.		Senior Secured	12.5%	1.7%	37,063	37,063	37,063	6/1/2023
	Therapydia, Inc. Subtotal					129,889	129,297	129,297
Other Healthcare Total		13.2%				$ 7,347,494	$ 7,194,068	$ 6,467,531

Other Technology
	Abiquo Group, Inc. ** ^		Senior Secured	18.0%		$ 53,294	$ 53,294	$ 26,647	*
	Aclima, Inc.		Senior Secured	12.0%		930,440	884,048	884,048	10/1/2023
	ATeam Army, Inc.		Senior Secured	12.0%		322,385	317,905	317,905	4/1/2023
	Beautiful Beanfields, Inc.		Senior Secured	6.0%		275,000	267,699	267,699	*
	BloomTech Inc.		Senior Secured	11.3%		988,393	988,393	988,393	8/1/2023
	BloomTech Inc.		Senior Secured	11.3%		1,805,241	1,773,413	1,773,413	7/1/2023
	BloomTech Inc. Subtotal					2,793,634	2,761,806	2,761,806
	Brightside Benefit, Inc.		Senior Secured	12.4%		191,137	190,505	190,505	3/1/2023
	BW Industries, Inc.		Senior Secured	11.8%		603,916	600,496	600,496	6/1/2023
	BW Industries, Inc.		Senior Secured	11.8%		539,485	526,863	526,863	5/1/2023
	BW Industries, Inc. Subtotal					1,143,401	1,127,359	1,127,359
	Fitplan, Inc. ** ^		Senior Secured	12.5%		633,571	557,378	557,378	11/1/2023
	Flo Water, Inc.		Senior Secured	11.8%		909,370	889,641	889,641	12/1/2023
	Higher Ground Education, Inc.		Senior Secured	12.5%		135,732	135,104	135,104	5/1/2023
	Higher Ground Education, Inc.		Senior Secured	12.5%		183,781	182,675	182,675	8/1/2023
	Higher Ground Education, Inc.		Senior Secured	12.5%		346,350	343,400	343,400	1/1/2023
	Higher Ground Education, Inc.		Senior Secured	12.5%		358,117	356,663	356,663	4/1/2023
	Higher Ground Education, Inc. Subtotal					1,023,980	1,017,842	1,017,842
	Hint, Inc.		Senior Secured	12.0%		1,797,335	1,738,783	1,738,783	6/1/2023
	Jiko Group, Inc.		Senior Secured	12.0%		1,149,656	1,133,175	1,133,175	6/1/2023
	Merlin Labs, Inc.		Senior Secured	11.0%		37,058	36,956	36,956	1/1/2023


Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate (b)	End of Term Payment (c)	Principal	Cost	Fair Value (d)	Final Maturity Date
	NewGlobe Education, Inc. ** ^		Senior Secured	12.5%		1,394,630	1,369,482	1,369,482	8/1/2023
	Noteleaf, Inc.		Senior Secured	18.0%		2,277,124	1,861,011	-	*
	Opya, Inc.		Senior Secured	12.0%		242,079	236,659	236,659	11/1/2023
	Percepto, Inc.		Senior Secured	12.2%		246,910	244,113	244,113	4/1/2023
	Plae Co.		Senior Secured	2.7%		667,500	33,375	33,375	*
	Romaine Empire, Inc.		Senior Secured	12.3%		2,307,581	2,266,674	2,266,674	9/1/2023
	Saltbox, Inc.		Senior Secured	12.3%		141,007	139,282	139,282	6/1/2023
	SMS OPCO LLC		Senior Secured	8.0%		29,942	11,192	11,192	*
	Sustainable Living Partners, LLC		Senior Secured	12.5%		1,710,100	1,637,353	1,637,353	8/1/2023
	UniEnergy Technologies LLC		Senior Secured	18.0%		1,120,954	1,078,852	700,068	*
	Veev Group, Inc.		Senior Secured	12.5%		1,235,417	1,228,821	1,228,821	6/1/2023
	Veev Group, Inc.		Senior Secured	12.5%		411,719	398,545	398,545	6/1/2023
	Veev Group, Inc. Subtotal					1,647,136	1,627,366	1,627,366
	Velo Holdings Limited		Senior Secured	12.0%		2,471,720	1,733,187	1,339,364	*
	Wheels Labs, Inc.		Senior Secured	18.0%		1,643,896	1,640,190	1,125,149	*
Other Technology Total		44.3%				$ 27,160,840	$ 24,855,127	$ 21,679,821

Software
	Bloomboard, Inc.		Senior Secured	11.5%		$ 926,597	$ -	$ 902,808	*
	Censia Inc.		Senior Secured	11.0%		37,550	37,417	37,417	10/1/2022
	Eskalera, Inc.		Senior Secured	10.5%		219,285	217,705	217,705	3/1/2023
	Estify, Inc.		Senior Secured	18.0%		842,819	567,450	24,317	*
	ICX Media, Inc.		Senior Secured	18.0%		762,829	604,265	451,939	*
	Medable, Inc.		Senior Secured	12.0%		371,960	367,449	367,449	2/1/2023
	Medable, Inc.		Senior Secured	12.0%		186,004	185,441	185,441	2/1/2023
	Medable, Inc. Subtotal					557,964	552,890	552,890
	Metarail, Inc.		Senior Secured	18.0%		709,588	700,656	47,254	*
	Parkoursc, Inc.		Senior Secured	12.0%		549,400	536,926	536,926	8/1/2023
	Parkoursc, Inc.		Senior Secured	12.0%		562,835	557,603	557,603	9/1/2024
	Parkoursc, Inc. Subtotal					1,112,235	1,094,529	1,094,529
	Safe Securities Inc.		Senior Secured	12.0%		93,010	91,739	91,739	2/1/2023
	Splitwise, Inc.		Senior Secured	12.3%		56,494	56,171	56,171	12/1/2022
	Swivel, Inc.		Senior Secured	12.0%		8,748	8,748	8,748	10/1/2022
	Truthset, Inc.		Senior Secured	10.5%		336,131	316,192	267,499	1/1/2024
	Workspot, Inc.		Senior Secured	12.0%		28,468	28,423	28,423	10/1/2022
Software Total		7.7%				$ 5,691,718	$ 4,276,185	$ 3,781,439

Technology Services
	Blazent, Inc.		Senior Secured	12.0%		$ 1,135,737	$ 319,316	$ 136,566	*
	Klar Holdings Limited ** ^		Senior Secured	12.5%		9,539	9,403	9,403	10/1/2022
	Klar Holdings Limited ** ^		Senior Secured	14.2%	4.0%	99,285	97,330	97,330	7/1/2023
	Klar Holdings Limited ** ^ Subtotal					108,824	106,733	106,733
	Liftit, Inc. ** ^		Senior Secured	12.0%		18,974	18,952	18,952	10/1/2022
	Loansnap Holdings Inc. **		Senior Secured	11.0%		307,076	304,307	229,803	12/1/2022
Technology Services Total		1.0%				$ 1,570,611	$ 749,308	$ 492,054
Grand Total		96.6%				$ 77,151,841	$ 68,661,523	$ 47,255,073

* As of September 30, 2022, loans with a cost basis of $30.3 million and a fair value of $9.1 million were classified as non-accrual. These loans have been accelerated from their original maturity and are due in their entirety. During the period for which these loans have been on non-accrual status, no interest income has been recognized.

** Indicates assets that the Fund deems “non-qualifying assets.” As of September 30, 2022, 6.7% of the Fund’s total assets represented non-qualifying assets. Under Section 55(a) of the 1940 Act, the Fund is prohibited from acquiring any additional non-qualifying assets unless, at the time of acquisition, certain specified qualifying assets (e.g., securities issued by an “eligible portfolio company, ” as defined in Section 2(a)(46)) represent at least 70% of its total assets. As part of this calculation, the numerator consists of the fair value of the Fund’s investments in all eligible portfolio companies and the denominator consists of total assets less those assets described in Section 55(a)(7) of the 1940 Act.

^ Entity is not domiciled in the United States and does not have its principal place of business in the United States.

(a) The percentage of net assets that each industry group represents is shown with the industry totals (the sum of the percentages does not equal 100% because the percentages are based on net assets as opposed to total loans).

(b) The interest rate is the designated annual interest rate exclusive of any original issue discount, fees or end of term payment.

(c) The end of term payments are contractually due on the maturity date and are in addition to the interest rate shown. End of term payments are the percentage of the final payment divided by the original loan amount and are amortized over the full term of the loan.

(d) There is no readily available market price or secondary market for the Fund’s loan investments, hence the Manager determines fair value of all loan investments presented in the Condensed Schedule of Investments based on a hypothetical market and the estimates may include the use of significant unobservable inputs.

As of September 30, 2022, all loans were made to non-affiliates.

See notes to condensed financial statements (unaudited).

VENTURE LENDING & LEASING VIII, INC.

CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED)

AS OF DECEMBER 31, 2021


Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate (b)	End of Term Payment (c)	Principal		Cost		Fair Value (d)		Final Maturity Date
Biotechnology
	Driver Bioengineering, Inc.		Senior Secured	11.0%		$	548,126	$	541,260	$	541,260	6/1/2023
	Driver Bioengineering, Inc.		Senior Secured	11.0%		210,665		196,510		196,510		4/1/2023
	Driver Bioengineering, Inc. Subtotal					758,791		737,770		737,770
	Orpheus Therapeutics, Inc.		Senior Secured	18.0%		178,510		174,288		-		*
	Quartzy, Inc.		Senior Secured	12.0%		996,046		980,260		980,260		5/1/2024
	Quartzy, Inc.		Senior Secured	12.0%		1,054,875		1,036,987		1,036,987		7/1/2024
	Quartzy, Inc.		Senior Secured	12.0%		478,138		445,430		445,430		8/1/2023
	Quartzy, Inc. Subtotal					2,529,059		2,462,677		2,462,677
Biotechnology Total		4.9%				$	3,466,360	$	3,374,735	$	3,200,447

Computers & Storage
	Canary Connect, Inc.		Senior Secured	12.8%		$	1,332,737	$	1,312,821	$	1,312,821	3/1/2023
Computers & Storage Total		2.0%				$	1,332,737	$	1,312,821	$	1,312,821

Internet
	Ainsly, Inc. ** ^		Senior Secured	12.5%		$	73,617	$	73,617	$	73,617	8/1/2022
	Ainsly, Inc. ** ^		Senior Secured	12.5%		220,835		215,380		215,380		8/1/2022
	Ainsly, Inc. ** ^		Senior Secured	12.5%		180,970		167,037		167,037		9/1/2023
	Ainsly, Inc. ** ^ Subtotal					475,422		456,034		456,034
	Daily Muse, Inc.		Senior Secured	11.0%		3,539,095		3,525,008		3,525,008		7/1/2023
	Lenddo International ** ^		Senior Secured	18.0%		545,048		544,703		9,975		*
	Merchbar, Inc.		Senior Secured	11.8%		265,285		258,235		258,235		3/1/2023
	MyPizza Technologies, Inc.		Senior Secured	11.5%		2,179,705		2,160,762		2,160,762		2/1/2024
	MyPizza Technologies, Inc.		Senior Secured	11.5%		4,061,477		3,981,527		3,981,527		12/1/2023
	MyPizza Technologies, Inc. Subtotal					6,241,182		6,142,289		6,142,289
	OneLocal, Inc. ** ^		Senior Secured	12.3%		844,634		794,936		794,936		3/1/2023
	RenoFi, Inc.		Senior Secured	12.0%		157,216		155,178		155,178		6/1/2023
	RenoFi, Inc.		Senior Secured	12.0%		157,130		150,858		150,858		6/1/2023
	RenoFi, Inc. Subtotal					314,346		306,036		306,036
	Residently USA, LLC ** ^		Senior Secured	12.0%		305,431		305,431		305,431		12/1/2023
	Residently USA, LLC ** ^		Senior Secured	12.0%		498,522		470,265		470,265		2/1/2023
	Residently USA, LLC ** ^ Subtotal					803,953		775,696		775,696
	Serface Care, Inc.		Senior Secured	12.3%		597,411		433,243		36,200		*
	Shadow, PBC		Senior Secured	18.0%		331,399		310,681		-		*
	Stay Alfred, Inc.		Senior Secured	18.0%		10,181,111		8,095,475		814,127		*
	Verishop, Inc.		Senior Secured	12.0%		1,744,243		1,727,396		1,727,396		12/1/2023
	Verishop, Inc.		Senior Secured	12.0%		1,743,583		1,692,394		1,692,394		12/1/2023
	Verishop, Inc. Subtotal					3,487,826		3,419,790		3,419,790
Internet Total		25.3%				$	27,626,712	$	25,062,126	$	16,538,326


Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate (b)	End of Term Payment (c)	Principal		Cost		Fair Value (d)		Final Maturity Date

Medical Devices
	Ablacon, Inc.		Senior Secured	11.0%		$	1,322,356	$	1,311,100	$	1,311,100	3/1/2023
	Ablacon, Inc.		Senior Secured	11.0%		1,321,869		1,291,586		1,291,586		3/1/2023
	Ablacon, Inc. Subtotal					2,644,225		2,602,686		2,602,686
	Anutra Medical, Inc.		Senior Secured	12.0%		90,784		89,283		89,283		10/1/2022
	CytoVale, Inc.		Senior Secured	12.0%		118,901		118,390		118,390		7/1/2022
	CytoVale, Inc.		Senior Secured	12.0%		361,456		357,071		357,071		11/1/2023
	CytoVale, Inc.		Senior Secured	12.0%		128,023		127,543		127,543		6/1/2022
	CytoVale, Inc.		Senior Secured	12.0%		347,288		335,948		335,948		10/1/2023
	CytoVale, Inc.		Senior Secured	12.0%		64,961		64,412		64,412		3/1/2022
	CytoVale, Inc. Subtotal					1,020,629		1,003,364		1,003,364
	eXo Imaging, Inc.		Senior Secured	11.8%		1,445,467		1,425,130		1,425,130		9/1/2023
	eXo Imaging, Inc.		Senior Secured	11.8%		1,444,176		1,379,677		1,379,677		9/1/2023
	eXo Imaging, Inc. Subtotal					2,889,643		2,804,807		2,804,807
	Medrobotics Corporation, Inc.		Senior Secured	18.0%		10,000,000		8,855,103		964,900		*
	RadiAction Ltd. ** ^		Senior Secured	11.5%		148,873		148,438		148,438		4/1/2022
	Renovia, Inc.		Senior Secured	10.5%		5,734,480		5,033,751		5,033,751		1/1/2023
Medical Devices Total		19.3%				$	22,528,634	$	20,537,432	$	12,647,229

Other Healthcare
	GoForward, Inc.		Senior Secured	11.5%		$	3,091,343	$	3,036,842	$	3,036,842	6/1/2024
	GoForward, Inc.		Senior Secured	11.5%		4,507,323		4,304,301		4,304,301		9/1/2023
	GoForward, Inc. Subtotal					7,598,666		7,341,143		7,341,143
	Hello Heart Inc.		Senior Secured	11.0%		586,952		580,837		580,837		11/1/2023
	Hello Heart Inc.		Senior Secured	11.0%		561,643		557,061		557,061		4/1/2023
	Hello Heart Inc.		Senior Secured	11.0%		701,855		683,970		683,970		4/1/2023
	Hello Heart Inc. Subtotal					1,850,450		1,821,868		1,821,868
	HumanAPI, Inc.		Senior Secured	11.8%		1,175,103		1,145,778		1,145,778		7/1/2023
	Myolex, Inc.		Senior Secured	18.0%		762,531		726,537		-		*
	Robin Care, Inc.		Senior Secured	18.0%		319,275		308,844		-		*
	SchoolCare, Inc.		Senior Secured	18.0%		395,761		388,046		82,551		*
	Therapydia, Inc.		Senior Secured	12.5%	1.7%	68,858		68,858		68,858		6/1/2023
	Therapydia, Inc.		Senior Secured	11.5%		110,450		109,550		109,550		12/1/2022
	Therapydia, Inc.		Senior Secured	11.5%		119,096		118,054		118,054		1/1/2023
	Therapydia, Inc.		Senior Secured	11.5%		75,014		73,498		73,498		8/1/2022
	Therapydia, Inc.		Senior Secured	12.0%	1.7%	58,588		56,636		56,636		3/1/2023
	Therapydia, Inc. Subtotal					432,006		426,596		426,596
Other Healthcare Total		16.5%				$	12,533,792	$	12,158,812	$	10,817,936

Other Technology
	Abiquo Group, Inc. ** ^		Senior Secured	18.0%		$	54,713	$	53,294	$	53,294	*
	Aclima, Inc.		Senior Secured	11.9%		149,173		143,913		143,913		4/1/2022
	Aclima, Inc.		Senior Secured	12.0%		1,507,598		1,388,554		1,388,554		10/1/2023
	Aclima, Inc. Subtotal					1,656,771		1,532,467		1,532,467


Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate (b)	End of Term Payment (c)	Principal	Cost	Fair Value (d)	Final Maturity Date
	Antitoxin Technologies Inc. ** ^		Senior Secured	11.5%		163,653	160,030	132,662	9/1/2022
	ATeam Army, Inc.		Senior Secured	12.0%		705,214	684,917	684,917	4/1/2023
	Beanfields, PBC		Senior Secured	18.0%		1,126,232	1,136,604	1,005,226	*
	BloomTech Inc.		Senior Secured	11.3%		3,292,027	3,188,984	3,188,984	7/1/2023
	BloomTech Inc.		Senior Secured	11.3%		1,724,925	1,724,925	1,724,925	8/1/2023
	BloomTech Inc. Subtotal					5,016,952	4,913,909	4,913,909
	Brightside Benefit, Inc.		Senior Secured	12.4%		456,660	453,272	453,272	3/1/2023
	Brightside Benefit, Inc.		Senior Secured	12.1%		211,297	207,383	207,383	9/1/2022
	Brightside Benefit, Inc. Subtotal					667,957	660,655	660,655
	BW Industries, Inc.		Senior Secured	11.8%		1,098,200	1,048,349	1,048,349	5/1/2023
	BW Industries, Inc.		Senior Secured	11.8%		1,157,127	1,144,903	1,144,903	6/1/2023
	BW Industries, Inc. Subtotal					2,255,327	2,193,252	2,193,252
	Eguana Technologies, Inc. ** ^		Senior Secured	12.5%		56,943	56,418	56,418	2/1/2022
	Fitplan, Inc. ** ^		Senior Secured	12.5%		994,922	815,498	815,498	11/1/2023
	Flo Water, Inc.		Senior Secured	11.8%		1,394,506	1,348,314	1,348,314	12/1/2023
	Heartwork, Inc.		Senior Secured	18.0%		379,462	371,981	20,443	*
	Higher Ground Education, Inc.		Senior Secured	12.5%		1,075,086	1,050,104	1,050,104	1/1/2023
	Higher Ground Education, Inc.		Senior Secured	12.5%		781,981	775,361	775,361	4/1/2023
	Higher Ground Education, Inc.		Senior Secured	12.5%		275,567	273,064	273,064	5/1/2023
	Higher Ground Education, Inc.		Senior Secured	12.5%		319,321	316,022	316,022	8/1/2023
	Higher Ground Education, Inc. Subtotal					2,451,955	2,414,551	2,414,551
	Hint, Inc.		Senior Secured	12.0%		3,440,711	3,234,998	3,234,998	6/1/2023
	Jiko Group, Inc.		Senior Secured	12.0%		2,200,833	2,142,294	2,142,294	6/1/2023
	Make School, Inc.		Senior Secured	18.0%		79,946	45,837	19,536	*
	Merlin Labs, Inc.		Senior Secured	11.0%		110,140	109,024	109,024	6/1/2022
	Merlin Labs, Inc.		Senior Secured	11.0%		115,653	114,777	114,777	1/1/2023
	Merlin Labs, Inc. Subtotal					225,793	223,801	223,801
	NewGlobe Schools, Inc. ** ^		Senior Secured	12.5%		1,177,191	1,163,157	1,163,157	8/1/2022
	NewGlobe Schools, Inc. ** ^		Senior Secured	12.5%		2,423,182	2,360,035	2,360,035	8/1/2023
	NewGlobe Schools, Inc. ** ^ Subtotal					3,600,373	3,523,192	3,523,192
	Noteleaf, Inc.		Senior Secured	18.0%		2,277,124	1,861,011	309,063	*
	Opya, Inc.		Senior Secured	12.0%		380,808	367,495	367,495	11/1/2023
	Percepto, Inc.		Senior Secured	12.2%		879,619	856,749	856,749	4/1/2023
	Plae Co.		Senior Secured	2.7%		667,500	33,375	33,375	*
	Plant Prefab, Inc.		Senior Secured	11.0%		306,696	300,902	300,902	8/1/2022
	Platform Science, Inc.		Senior Secured	12.0%		94,426	93,729	93,729	2/1/2022
	Plethora, Inc.		Senior Secured	18.0%		1,751,267	1,700,363	390,219	*
	Romaine Empire, Inc.		Senior Secured	12.3%		3,896,929	3,781,983	3,781,983	9/1/2023
	Saltbox, Inc.		Senior Secured	12.3%		269,697	263,567	263,567	6/1/2023
	SMS OPCO LLC		Senior Secured	8.0%		33,875	15,125	15,125	*
	Sustainable Living Partners, LLC		Senior Secured	12.5%		2,971,313	2,758,178	2,758,178	8/1/2023
	UniEnergy Technologies LLC		Senior Secured	18.0%		1,120,954	1,078,852	799,443	*


Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate (b)	End of Term Payment (c)	Principal		Cost		Fair Value (d)		Final Maturity Date
	Veev Group, Inc.		Senior Secured	12.5%		2,360,822		2,337,325		2,337,325		6/1/2023
	Veev Group, Inc.		Senior Secured	12.5%		786,775		740,586		740,586		6/1/2023
	Veev Group, Inc. Subtotal					3,147,597		3,077,911		3,077,911
	Velo Holdings Limited		Senior Secured	12.0%		2,471,720		1,955,642		1,539,333		*
	Welcome Tech, Inc.		Senior Secured	10.5%		153,082		150,226		150,226		5/1/2022
	Wheels Labs, Inc.		Senior Secured	12.0%		2,221,660		2,134,921		2,134,921		6/1/2023
	Wine Plum, Inc.		Senior Secured	12.5%		329,558		324,821		324,821		9/1/2022
Other Technology Total		64.5%				$	49,446,088	$	46,266,862	$	42,172,467

Security
	Karamba Security Ltd. ** ^		Senior Secured	12.0%		$	332,971	$	326,395	$	326,395	6/1/2022
	Nok Nok Labs, Inc.		Senior Secured	12.5%		191,326		190,411		190,411		6/1/2022
Security Total		0.8%				$	524,297	$	516,806	$	516,806

Software
	Blockdaemon, Inc.		Senior Secured	11.3%		$	55,201	$	54,707	$	54,707	6/1/2022
	Bloomboard, Inc.		Senior Secured	11.5%		2,148,082		542,980		1,002,400		*
	Censia Inc.		Senior Secured	11.0%		360,514		353,690		353,690		10/1/2022
	Cloudleaf, Inc.		Senior Secured	12.0%		741,575		732,365		732,365		9/1/2024
	Cloudleaf, Inc.		Senior Secured	12.0%		956,267		919,269		919,269		8/1/2023
	Cloudleaf, Inc. Subtotal					1,697,842		1,651,634		1,651,634
	Dynamics, Inc.		Senior Secured	12.5%		293,593		291,440		291,440		2/1/2022
	Eskalera, Inc.		Senior Secured	10.5%		527,451		518,933		518,933		3/1/2023
	Estify, Inc.		Senior Secured	18.0%		842,819		640,403		24,317		*
	ICX Media, Inc.		Senior Secured	18.0%		762,829		651,140		449,542		*
	Ipolipo, Inc.		Senior Secured	12.0%		568,765		544,693		544,693		9/1/2022
	Medable, Inc.		Senior Secured	12.0%		498,356		494,657		494,657		2/1/2023
	Medable, Inc.		Senior Secured	12.0%		996,585		967,179		967,179		2/1/2023
	Medable, Inc. Subtotal					1,494,941		1,461,836		1,461,836
	Metarail, Inc.		Senior Secured	18.0%		709,588		700,656		196,719		*
	Metawave Corporation		Senior Secured	12.0%		237,768		235,670		235,670		7/1/2022
	Migo Money, Inc. ** ^		Senior Secured	12.5%		56,631		56,631		56,631		3/1/2022
	Safe Securities Inc.		Senior Secured	12.0%		249,200		240,930		240,930		2/1/2023
	Splitwise, Inc.		Senior Secured	12.3%		216,004		212,084		212,084		12/1/2022
	Swivel, Inc.		Senior Secured	12.0%		67,603		66,233		66,233		8/1/2022
	Swivel, Inc.		Senior Secured	12.0%		83,680		83,680		83,680		10/1/2022
	Swivel, Inc. Subtotal					151,283		149,913		149,913
	Truthset, Inc.		Senior Secured	10.5%		222,283		222,283		222,283		5/1/2023
	Truthset, Inc.		Senior Secured	10.5%		185,411		179,361		179,361		2/1/2023
	Truthset, Inc. Subtotal					407,694		401,644		401,644
	Workspot, Inc.		Senior Secured	12.0%		272,328		270,000		270,000		10/1/2022
	Workspot, Inc.		Senior Secured	12.0%		220,008		215,206		215,206		8/1/2022
	Workspot, Inc. Subtotal					492,336		485,206		485,206
Software Total		12.8%				$	11,272,541	$	9,194,190	$	8,331,989


Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate (b)	End of Term Payment (c)	Principal		Cost		Fair Value (d)		Final Maturity Date
Technology Services
	Blazent, Inc.		Senior Secured	12.0%		$	1,135,737	$	421,827	$	237,106	*
	Klar Holdings Limited ** ^		Senior Secured	12.5%		91,083		84,354		84,354		10/1/2022
	Klar Holdings Limited ** ^		Senior Secured	14.2%	4.0%	171,136		165,351		165,351		7/1/2023
	Klar Holdings Limited ** ^ Subtotal					262,219		249,705		249,705
	Liftit, Inc. ** ^		Senior Secured	12.0%		181,508		180,377		180,377		10/1/2022
	Liftit, Inc. ** ^		Senior Secured	12.0%		146,623		143,541		143,541		8/1/2022
	Liftit, Inc. ** ^ Subtotal					328,131		323,918		323,918
	Loansnap Holdings Inc. **		Senior Secured	11.0%		1,179,442		1,145,802		1,145,802		12/1/2022
	Zeel Networks, Inc.		Senior Secured	11.0%		2,475,549		2,408,076		2,367,763		6/1/2024
Technology Services Total		6.6%				$	5,381,078	$	4,549,328	$	4,324,294

Wireless
	AirVine Scientific, Inc.		Senior Secured	12.0%		$	41,050	$	40,220	$	40,220	9/1/2022
	AirVine Scientific, Inc.		Senior Secured	12.0%		41,078		40,718		40,718		9/1/2022
	AirVine Scientific, Inc. Subtotal					82,128		80,938		80,938
	Parallel Wireless, Inc.		Senior Secured	11.8%		2,245,500		2,223,695		2,223,695		8/1/2023
	Parallel Wireless, Inc.		Senior Secured	11.8%		2,346,787		2,322,840		2,322,840		9/1/2023
	Parallel Wireless, Inc.		Senior Secured	11.8%		4,080,176		3,975,828		3,975,828		6/1/2023
	Parallel Wireless, Inc. Subtotal					8,672,463		8,522,363		8,522,363
Wireless Total		13.2%				$	8,754,591	$	8,603,301	$	8,603,301
Grand Total		165.9%				$	142,866,830	$	131,576,413	$	108,465,616

* As of December 31, 2021, loans with a cost basis of $31.0 million and a fair value of $8.0 million were classified as non-accrual. These loans have been accelerated from their original maturity and are due in their entirety. During the period for which these loans have been on non-accrual status, no interest income has been recognized.

** Indicates assets that the Fund deems “non-qualifying assets.” As of December 31, 2021, 8.0% of the Fund’s total assets represented non-qualifying assets. Under Section 55(a) of the 1940 Act, the Fund is prohibited from acquiring any additional non-qualifying assets unless, at the time of acquisition, certain specified qualifying assets (e.g., securities issued by an “eligible portfolio company,” as defined in Section 2(a)(46)) represent at least 70% of its total assets. As part of this calculation, the numerator consists of the fair value of the Fund’s investments in all eligible portfolio companies and the denominator consists of total assets less those assets described in Section 55(a)(7) of the 1940 Act.

^ Entity is not domiciled in the United States and does not have its principal place of business in the United States.

(b) The interest rate is the designated annual interest rate exclusive of any original issue discount, fees or end of term payment.

As of December 31, 2021, all loans were made to non-affiliates.

See notes to condensed financial statements (unaudited).

VENTURE LENDING & LEASING VIII, INC.

CONDENSED SCHEDULES OF DERIVATIVE INSTRUMENTS (UNAUDITED)

AS OF DECEMBER 31, 2021

On June 3, 2022, Management elected to terminate the interest rate collar contract. As such, there was no derivative instrument as of September 30, 2022.




















			AS OF DECEMBER 31, 2021
Description and terms of payments to be received from another party	Description and terms of payments to be paid to another party	Counterparty	Maturity Date	Notional Amount		Fair Value		Upfront payments / receipts		Unrealized appreciation / (depreciation) (a)





Interest Rate Collar

Floating interest rate of USD-LIBOR-BBA with cap rate of 1.00% to be received monthly	Floating interest rate of USD-LIBOR-BBA with floor interest rate 0.215%, to be paid monthly	MUFG Union Bank, N.A.	1/11/2023	$	30,000,000	$	(4,733)	$	—	$	(4,733)

Total				$	30,000,000	$	(4,733)	$	—	$	(4,733)

(a) The unrealized appreciation/(depreciation) was determined using prices or valuation based on observable inputs other than quoted price in active markets for identical assets and liabilities. See "Note 3. Fair Value Disclosures" for more information.

See notes to condensed financial statements (unaudited).

VENTURE LENDING & LEASING VIII, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

1.ORGANIZATION AND OPERATIONS OF THE FUND

Venture Lending & Leasing VIII, Inc. (the “Fund”) was incorporated in Maryland on May 6, 2015, as a non-diversified, closed-end management investment company electing status as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”) and is managed by Westech Investment Advisors, LLC (the “Manager” or “Management”). The Fund will be dissolved on December 31, 2025 unless the Board of Directors (the “Board”) opts to elect early dissolution. One hundred percent of the stock of the Fund is held by Venture Lending & Leasing VIII, LLC (the “Company”). Prior to commencing its operations on August 12, 2015, the Fund had no operations other than the sale to the Company of 100,000 shares of common stock, $0.001 par value for $25,000 in July 2015. This issuance of stock was a requirement to apply for a finance lender’s license from the California Commissioner of Corporations, which was obtained on August 20, 2015.

The Fund’s investment objective is to achieve superior risk-adjusted investment returns and it seeks to achieve that objective by providing debt financing to portfolio companies, most of which are private. The Fund generally receives warrants to acquire equity securities in connection with its portfolio investments and generally distributes these warrants to its shareholder upon receipt, or soon thereafter. The Fund also has guidelines for the percentages of total assets that are invested in different types of assets. The portfolio investments of the Fund primarily consist of debt financing to early and expansion stage venture capital-backed technology companies.

In the Manager’s opinion, the accompanying condensed interim financial statements (hereafter referred to as “financial statements”) include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of financial position and results of operations for interim periods. Certain information and note disclosures normally included in audited annual financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) have been omitted; however, the Fund believes that the disclosures made are adequate to make the information presented not misleading. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of what the results would be for a full year. These financial statements should be read in conjunction with the financial statements and the notes included in the Fund’s Annual Report on Form 10-K for the year ended December 31, 2021.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting and Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As an investment company, the Fund follows accounting and reporting guidance as set forth in Topic 946 (“Financial Services – Investment Companies”) of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification, as amended (“ASC”). Certain prior period information has been reclassified and/or disclosed to conform to the current year presentation.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and money market mutual funds with maturities of 90 days or less. Money market mutual funds held as cash equivalents are valued at their most recently traded net asset value. Within cash and cash equivalents, as of September 30, 2022, the Fund held 1,565,652 units in the First American Government Obligations Fund, valued at $1 per unit at a yield of 2.73%, which represented 3.20% of the net assets of the Fund. Within cash and cash equivalents, as of December 31, 2021, the Fund held 2,815,756 units in the First American Government Obligations Fund, valued at $1 per unit at a yield of 0.02%, which represented 4.31% of the net assets of the Fund.

Interest Income

Interest income on loans is recognized on an accrual basis using the effective interest method including amounts resulting from the accretion of discount on loans included as additional compensation as part of the loan agreements. Additionally, fees received as part of the transaction are added to the loan discount and accreted over the life of the loan.

Realized Gains and Losses from Loans

Realized gains or losses on the sale of loans are computed using the difference between the amortized cost and the sales proceeds. Realized losses on loan write-offs are recognized when management determines a loan is uncollectible.

Investment Valuation

The Fund accounts for loans at fair value in accordance with the valuation methods below. All valuations are determined under the direction of the Manager, in accordance with the valuation methods.

As of September 30, 2022 and December 31, 2021, the financial statements included nonmarketable investments of $47.3 million and $108.5 million, respectively, (or both 95.4% of the total assets), with the fair values determined by the Manager in the absence of readily determinable market values. Because of the inherent uncertainty of these valuations, estimated fair values of such investments may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material. Below is the information used by the Manager in making these estimates.

Loans

The Fund defines fair value as the price that would be received to sell an asset or paid to lower a liability in an orderly transaction between market participants at the measurement date. Because there is no readily available market price and no secondary market for substantially all of the debt investments made by the Fund in its borrowing portfolio companies, Management determines fair value based on hypothetical markets, and on several factors related to each borrower, including, but not limited to, the borrower’s payment history, available cash and “burn rate,” revenues, net income or loss, the likelihood that the borrower will be able to secure additional financing in the future, and an evaluation of the general interest rate environment. The amount of any valuation adjustment considers the estimated amount and timing of cash payments of principal and interest from the borrower and/or liquidation analysis and is determined based upon a credit analysis of the borrower and an analysis of the expected recovery from the borrower, including consideration of factors such as the nature and quality of the Fund’s security interests in collateral, the estimated fair value of the Fund’s collateral, the size of the loan, and the estimated time that will elapse before the Fund achieves a recovery. Management has evaluated these factors and has concluded that, the effect of deterioration in the quality of the underlying collateral, increase in size of the loan, increase in the estimated time to recovery and increase in the hypothetical market coupon rate would have the effect of lowering the fair value of the current portfolio of loans.

Non-Accrual Loans

The Fund’s policy is to classify a loan as non-accrual when the portfolio company is delinquent for three consecutive months on its monthly loan payment, or, in the opinion of Management, either ceases or drastically curtails its operations and Management deems that it is unlikely that the loan will return to performing status. When a loan is placed on non-accrual status, all interest previously accrued but not collected is reversed for the quarter in which the loan was placed on non-accrual status. Any uncollected interest related to quarters prior to when the loan was placed on non-accrual status is added to the principal balance, and the aggregate balance of the principal and interest is evaluated in accordance with the policy for valuation of loans in determining Management’s best estimate of fair value. Interest received by the Fund on non-accrual loans will be recognized as interest income if and when the proceeds exceed the book value of the respective loan.

If a borrower of a non-accrual loan resumes making regular payments and Management believes that such borrower has regained the ability to service the loan on a sustainable basis, the loan is reclassified back to accrual or performing status. Interest that would have been accrued during the time a loan was classified as non-accrual will be added back to the remaining payment schedule causing a change in the effective interest rate.

As of September 30, 2022, loans with a cost basis of $30.3 million and a fair value of $9.1 million were classified as non-accrual. As of December 31, 2021, loans with a cost basis of $31.0 million and a fair value of $8.0 million were classified as non-accrual.

Warrants and Equity Securities

Warrants and equity securities received in connection with loan transactions are measured at a fair value at the time of acquisition. Warrants are valued based on a modified Black-Scholes option pricing model which considers, among several factors, the underlying stock value, expected term, volatility, and risk-free interest rate. It is anticipated that such securities will be distributed by the Fund to the Company simultaneously with, or shortly following, their acquisition.

The underlying asset value is estimated based on information available, including information regarding recent rounds of funding of the portfolio company, or the publicly-quoted stock price at the end of the financial reporting period for warrants for comparable publicly-quoted securities.

Volatility, or the amount of uncertainty or risk about the size of the changes in the warrant price, is based on an index of publicly traded companies grouped by industry and which are similar in nature to the underlying portfolio companies issuing the warrant (“Industry Index”). The volatility assumption for each Industry Index is based on the average volatility for individual public companies within the portfolio company’s industry for a period of time approximating the expected life of the warrants. A hypothetical increase in the volatility of the warrants used in the modified Black-Scholes option pricing model would have the effect of increasing the fair value of the warrants.

The remaining expected lives of warrants are based on historical experience of the average life of the warrants, as warrants are often exercised in the event of acquisitions, mergers, or initial public offerings, and terminated due to events such as bankruptcies, restructuring activities, or additional financings. These events cause the expected term to be less than the remaining contractual term of the warrants. As of September 30, 2022 and December 31, 2021, the Fund assumed the average duration of a warrant was 4.0 years. The effect of a hypothetical increase in the estimated initial term of the warrants used in the modified Black-Scholes option pricing model would have the effect of increasing the fair value of the warrants. However, the estimated initial term of the warrants is one factor, of many, used in the valuation of warrants, and by itself does not have a significant impact on the results of operations.

The risk-free interest rate is derived from the constant maturity tables issued by the U.S. Treasury Department. The effect of a hypothetical increase in the estimated risk-free rate used in the modified Black-Scholes option pricing model would have the effect of increasing the fair value of the warrants.

Other Assets and Liabilities

Other assets include costs incurred in conjunction with borrowings under the Fund’s debt facility and are stated at initial cost. These costs are amortized over the term of the facility.

The fair values of other assets and accrued liabilities are estimated at their carrying values because of the short-term nature of these assets and liabilities.

The carrying value of the borrowings under the debt facility approximates their fair value based on the borrowing rates available to the Fund.

Deferred Debt Facility Fees

The deferred debt facility fees and costs associated with the debt facility are included in other assets in the Condensed Statements of Assets and Liabilities and are being amortized over the estimated life of the facility, which currently matures on August 26, 2023. The amortization of these costs is recorded as interest expense in the Condensed Statements of Operations.

Commitment Fees

Unearned income and commitment fees on loans are recognized using the effective-interest method over the term of the loan. Commitment fees are carried as liabilities when received for commitments upon which no draws have been made. When the first draw is made, the fee is treated as unearned income and is recognized as described above. If a draw is never made, the forfeited commitment fee, less any applicable legal costs, becomes recognized as other income after the commitment expires.

Derivative Instruments

The Fund used derivative instruments to manage its exposure to changes in interest rates on expected borrowings under its debt facility, as the Fund originates fixed rate loans (see Note 8). The interest rate collar had a notional value of $30.0 million as of December 31, 2021, and on June 3, 2022, Management elected to terminate the interest rate collar contract.

Derivative instruments were primarily valued on the basis of quotes obtained from banks, brokers and dealers and adjusted for counterparty risk and the optionality of the interest rate floor. The valuation of the derivative instruments also considered the future expected interest rates on the notional principal balance remaining which was comparable to what a prospective acquirer would pay on the measurement date. Valuation pricing models considered inputs such as forward rates, anticipated interest rate volatility relating to the reference rate, as well as time value and other factors underlying derivative instruments.

The Fund was a party to a master netting arrangement with MUFG Union Bank, N.A., however, the Fund elected not to offset assets and liabilities under these arrangements for financial statement presentation purposes. A contract was recorded at gross fair value in either derivative asset or derivative liability in the Condensed Statements of Assets and Liabilities, depending on whether the fair value of the contract was in favor of the Fund or the counterparty. The changes in fair value were recorded in net change in unrealized gain (loss) from derivative instruments in the Condensed Statements of Operations and the quarterly interest received or paid on the derivative instruments, if any, was recorded in net realized gain (loss) from derivative instruments in the Condensed Statements of Operations.

3. FAIR VALUE DISCLOSURES

The Fund provides asset-based financing primarily to start-up and emerging growth venture-backed companies pursuant to commitments whereby the Fund agrees to finance assets and provide working or growth capital up to a specified amount for the term of the commitment, upon the terms and subject to the conditions specified by such commitment. Even though these loans are generally secured by the assets of the borrowers, the Fund in most cases is subject to the credit risk of such companies. As of September 30, 2022, the Fund’s investments in loans were primarily to companies based within the United States and were diversified among borrowers in the industry segments shown in the Condensed Schedules of Investments. All loans are senior to unsecured creditors and other secured creditors, unless as indicated in the Condensed Schedules of Investments.

The Fund defines fair value 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; that is, an exit price. The exit price assumes the asset or liability was exchanged in an orderly transaction; it was not a forced liquidation or distressed sale. Because there is no readily available market price and no secondary market for substantially all of the loan investments made by the Fund to borrowing portfolio companies, Management determines fair value (or estimated exit value) based on a hypothetical market, and several factors related to each borrower.

Loan balances in the Condensed Schedules of Investments are listed by borrower. Typically, a borrower’s balance will be composed of several loans drawn under a commitment made by the Fund with the interest rate on each loan fixed at the time each loan is funded. Each loan drawn under a commitment has a different maturity date and amount.

The tables below show the weighted-average interest rate of the performing loans and all loans.


Performing Loans	For the Three Months Ended September 30, 2022	For the Three Months Ended September 30, 2021
Weighted-Average Interest Rate - Cash	11.52%	24.81%
Weighted-Average Interest Rate- Non-Cash	2.88%	5.66%
Weighted-Average Interest Rate	14.40%	30.47%

All Loans	For the Three Months Ended September 30, 2022	For the Three Months Ended September 30, 2021
Weighted-Average Interest Rate - Cash	14.50%	22.92%
Weighted-Average Interest Rate- Non-Cash	2.46%	5.23%
Weighted-Average Interest Rate	16.96%	28.15%


Performing Loans	For the Nine Months Ended September 30, 2022	For the Nine Months Ended September 30, 2021
Weighted-Average Interest Rate - Cash	14.99%	16.30%
Weighted-Average Interest Rate- Non-Cash	3.71%	4.01%
Weighted-Average Interest Rate	18.70%	20.31%

All Loans	For the Nine Months Ended September 30, 2022	For the Nine Months Ended September 30, 2021
Weighted-Average Interest Rate - Cash	17.55%	15.66%
Weighted-Average Interest Rate- Non-Cash	3.36%	3.74%
Weighted-Average Interest Rate	20.91%	19.40%

Interest is calculated using the effective interest method, and rates earned by the Fund will fluctuate based on many factors including early payoffs, volatility of values ascribed to warrants and new loans funded during the period.

The risk profile of a loan changes when events occur that impact the credit analysis of the borrower and loan as discussed in the Fund’s loan accounting policy. Such changes result in the fair value adjustments made to the individual loans, which in accordance with U.S. GAAP, would be based on the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date. Where the risk profile is consistent with the original underwriting, which is primarily the case for this loan portfolio, the cost basis of the loan often approximates fair value.

All loans as of December 31, 2021 were pledged as collateral for the debt facility, and the Fund’s borrowings are generally collateralized by all assets of the Fund. As of September 30, 2022 and December 31, 2021, the Fund’s unfunded commitments had all expired.

Valuation Hierarchy

Under the FASB ASC Topic 820 (“Fair Value Measurement”), the Fund categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Fund’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety.

The three levels of the fair value hierarchy are defined as follows:


Level 1						Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.
Level 2						Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3						Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

Transfers of investments between levels of the fair value hierarchy are recorded on the actual date of the event or change in circumstances that caused the transfer. There were no transfers in and out of Level 1, 2, or 3 during the nine months ended September 30, 2022 and 2021.

The Fund’s cash equivalents were valued at the traded net asset value of the money market fund. As a result, these measurements are classified as Level 1. The Fund’s derivative instruments were based on quotes from the market makers that derived fair values from market data, and therefore, were classified as Level 2. The Fund’s borrowings under the debt facility were also classified as Level 2, because the carrying values of the borrowings were based on rates that are observable at commonly quoted intervals, which were Level 2 inputs, and that approximate fair values. The Fund’s loan investments are individually negotiated and unique, and because there is little to no market in which these assets trade, the inputs for these assets are valued using estimated exit values. As a result, the Fund’s loan investments are classified as Level 3.

The following tables provide quantitative information about the Fund’s Level 3 fair value measurements of the Fund’s investments by industry as of September 30, 2022 and December 31, 2021. In addition to the techniques and inputs noted in the tables below, the Fund may also use other valuation techniques and methodologies when determining its fair value measurements.

Investment Type - Level 3

Loan Investments

Fair Values at
September 30, 2022

Valuation Techniques / Methodologies

Unobservable Inputs

Ranges

Weighted Averages (a)

Biotechnology

2,120,417

Hypothetical market analysis

Hypothetical market coupon rate

14% - 15%

14%

Asset Recovery

Probability weighting of alternative outcomes

100% *

Computers and Storage

554,838

Hypothetical market analysis

Hypothetical market coupon rate

15%

Internet

6,958,005

Hypothetical market analysis

Hypothetical market coupon rate

11% - 22%

13%

Asset Recovery

Probability weighting of alternative outcomes

5% - 100% ^

Medical Devices

5,200,968

Hypothetical market analysis

Hypothetical market coupon rate

13% - 14%

14%

Asset Recovery

Probability weighting of alternative outcomes

10% - 60% ^

Other Healthcare

6,467,531

Hypothetical market analysis

Hypothetical market coupon rate

13% - 15%

15%

Asset Recovery

Probability weighting of alternative outcomes

100% *

Other Technology

21,679,821

Hypothetical market analysis

Hypothetical market coupon rate

12% - 34%

17%

Asset Recovery

Probability weighting of alternative outcomes

10% - 100% ^

Software

3,781,439

Hypothetical market analysis

Hypothetical market coupon rate

13% - 18%

15%

Asset Recovery

Probability weighting of alternative outcomes

5% - 100% ^

Investment Type - Level 3

Loan Investments

Fair Values at
September 30, 2022

Valuation Techniques / Methodologies

Unobservable Inputs

Ranges

Weighted Averages (a)

Technology Services

492,054

Hypothetical market analysis

Hypothetical market coupon rate

17% - 18%

17%

Asset Recovery

Probability weighting of alternative outcomes

3% - 60% ^

Total Loan investments

47,255,073

(a) The weighted average hypothetical market coupon rates were calculated using the fair value of the loans.

* There is only one loan within the industry.

^ Probability weightings vary among portfolio companies within each industry based on different potential future outcomes.

Investment Type - Level 3

Loan Investments

Fair Values at
December 31, 2021

Valuation Techniques / Methodologies

Unobservable Inputs

Ranges

Weighted Averages (a)

Biotechnology

3,200,447

Hypothetical market analysis

Hypothetical market coupon rate

15% - 15%

15%

Asset Recovery

Probability weighting of alternative outcomes

100% *

Computers and Storage

1,312,821

Hypothetical market analysis

Hypothetical market coupon rate

15%

Internet

16,538,326

Hypothetical market analysis

Hypothetical market coupon rate

11% - 19%

14%

Asset Recovery

Probability weighting of alternative outcomes

10% - 100% ^

Medical Devices

12,647,229

Hypothetical market analysis

Hypothetical market coupon rate

13% - 33%

23%

Asset Recovery

Probability weighting of alternative outcomes

35% - 65% *

Other Healthcare

10,817,936

Hypothetical market analysis

Hypothetical market coupon rate

13% - 15%

15%

Asset Recovery

Probability weighting of alternative outcomes

20% - 100%^

Investment Type - Level 3

Loan Investments

Fair Values at
December 31, 2021

Valuation Techniques / Methodologies

Unobservable Inputs

Ranges

Weighted Averages (a)

Other Technology

42,172,467

Hypothetical market analysis

Hypothetical market coupon rate

13% - 34%

17%

Asset Recovery

Probability weighting of alternative outcomes

5% - 100% ^

Security

516,806

Hypothetical market analysis

Hypothetical market coupon rate

14% - 19%

17%

Software

8,331,989

Hypothetical market analysis

Hypothetical market coupon rate

12% - 23%

16%

Asset Recovery

Probability weighting of alternative outcomes

10% - 100%^

Technology Services

4,324,294

Hypothetical market analysis

Hypothetical market coupon rate

13% - 22%

14%

Asset Recovery

Probability weighting of alternative outcomes

5% - 50% ^

Wireless

8,603,301

Hypothetical market analysis

Hypothetical market coupon rate

14% - 16%

14%

Total loan investments

108,465,616

(a) The weighted average hypothetical market coupon rates were calculated using the fair value of the loans.

* There is only one loan within the industry.

^ Probability weightings vary among portfolio companies within each industry based on different potential future outcomes.

The following tables present the balances of assets and liabilities as of September 30, 2022 and December 31, 2021 measured at fair value on a recurring basis:


As of September 30, 2022
ASSETS:	Level 1		Level 2		Level 3		Total

Loans*	$	—	$	—	$	47,255,073	$	47,255,073

Cash equivalents	1,565,652		—		—		1,565,652
Total assets	$	1,565,652	$	—	$	47,255,073	$	48,820,725

* For a detailed listing of borrowers comprising this amount, please refer to the Condensed Schedules of Investments.


As of December 31, 2021
ASSETS:	Level 1		Level 2		Level 3		Total

Loans†	$	—	$	—	$	108,465,616	$	108,465,616

Cash equivalents	2,815,756		—		—		2,815,756
Total assets	$	2,815,756	$	—	$	108,465,616	$	111,281,372

LIABILITIES:	Level 1		Level 2		Level 3		Total

Borrowings under debt facility	$	—	$	47,000,000	$	—	$	47,000,000
Derivative liability	—		4,733		—		4,733
Total liabilities	$	—	$	47,004,733	$	—	$	47,004,733

† For a detailed listing of borrowers comprising this amount, please refer to the Condensed Schedules of Investments.

The following tables provide a summary of changes in Level 3 assets measured at fair value on a recurring basis:


	For the Three Months Ended September 30, 2022				For the Nine Months Ended September 30, 2022
	Loans		Warrants			Stock		Loans		Stock		Warrants
Beginning balance	$	61,342,480	$	—		$	—	$	108,465,616	$	—	$	—
Acquisitions and originations	—		16,101			500,000		—		2,590,759		116,273
Principal payments on loans, net of accretion	(12,515,334)		—			—		(61,767,420)		—		—


Distributions to shareholder	—		(16,101)			(500,000)		—		(2,590,759)		(116,273)


Other adjustment	43,169		—			—		43,169		—		—
Net change in unrealized gain (loss) from loans	(2,161,313)		—			—		1,661,178		—		—
Net realized gain (loss) from loans	546,071		—			—		(1,147,470)		—		—
Ending balance	$	47,255,073	$	—		$	—	$	47,255,073	$	—	$	—
Net change in unrealized gain from loans relating to loans still held at September 30, 2022	$	(2,514,072)						$	(1,123,517)


	For the Three Months Ended September 30, 2021(a)				For the Nine Months Ended September 30, 2021 (a)
	Loans		Warrants		Loans		Warrants
Beginning balance	$	194,333,211	$	—	$	264,629,798	$	—
Acquisitions and originations	—		511,990		1,500,000		1,231,894
Principal payments on loans, net of accretion	(58,750,717)		—		(133,243,918)		—
Proceeds from sale of loan	—		—		(1,425,000)		—

Distributions to shareholder	—		(511,990)		—		(1,231,894)


Net change in unrealized gain (loss) from loans	(2,545,280)		—		3,419,613		—
Net realized gain (loss) from loans	35,689		—		(1,807,590)		—
Ending balance	$	133,072,903	$	—	$	133,072,903	$	—
Net change in unrealized loss from loans relating to loans still held at September 30, 2021	$	(2,556,696)			$	(799,159)

(a) Additional prior period information is shown for comparability with current period presentation.

4. EARNINGS PER SHARE

Basic earnings per share are computed by dividing net increase (decrease) in net assets resulting from operations by the weighted-average common shares outstanding. Diluted earnings (loss) per share are computed by dividing net increase (decrease) in net assets resulting from operations by the weighted-average common shares outstanding, including the dilutive effects of potential common shares (e.g., stock options). The Fund has no instruments that would be potential common shares; thus, reported basic and diluted earnings (loss) per share are the same.

5. CAPITAL STOCK

As of both September 30, 2022 and December 31, 2021, there were 10,000,000 shares of $0.001 par value common stock authorized, and 100,000 shares issued and outstanding. Total committed capital of the Company, as of both September 30, 2022 and December 31, 2021, was $423.6 million. Total contributed capital to the Company through September 30, 2022 and December 31, 2021 was $415.2 million, of which $356.1 million was contributed to the Fund.

The chart below shows the distributions of the Fund for the nine months ended September 30, 2022 and 2021.


	For the Nine Months Ended September 30, 2022		For the Nine Months Ended September 30, 2021

Cash distributions	$	22,500,000	$	95,600,000
Distributions of equity securities	2,707,032		1,231,894
Total distributions to shareholder	$	25,207,032	$	96,831,894

Final classification of the distributions as either a return of capital or a distribution of income is an annual determination made at the end of each year dependent upon the Fund’s current year cumulative earnings and profits.

6. DEBT FACILITY

On April 5, 2016, the Fund established a secured, syndicated revolving loan facility in an initial amount up to $150.0 million (the “Loan Agreement”) led by Wells Fargo, N.A. and MUFG Union Bank, N.A. On September 11, 2017, the Loan Agreement was amended (the “Amended Loan Agreement”) and the borrowing availability thereunder increased the size of the facility to $280.0 million. From 2017, the Fund continued to permanently reduce its commitment to reflect the needs of the Fund. On August 26, 2020 the Loan Agreement was further amended and the facility size further decreased to $180.0 million. The term of the facility was extended under the latest amendment and is now expected to terminate on August 26, 2023, but can be accelerated in the event of default, such as failure by the Fund to make timely interest or principal payments.

Effective from March 31, 2021, the facility size automatically and permanently reduced on the last business day of each quarter by an amount equal to the 10% multiplied by the facility size as of December 31, 2020, or $15.0 million; provided that from and after January 1, 2021, any optional reductions to the facility will reduce, dollar for dollar, the next scheduled reduction amount.

Effective September 8, 2022, the Fund paid off the loan and terminated the debt facility.

The Fund was permitted to borrow in any amounts so long as its asset coverage ratio, as defined in the 1940 Act, was at least 200% after giving effect to such borrowings. As of December 31, 2021, the Fund’s asset coverage ratio was 239%.

The Fund paid interest on its borrowings and a fee on the unused portion of the facility. Under the Amended Loan Agreement, interest was charged to the Fund based on its borrowings at, pursuant to the election of the Fund, an annual rate of either (i) Reference Rate plus 1.75%, (ii) LIBOR plus 2.75% or (iii) LIBOR Market Index Rate plus 2.75%. When the Fund was using 50% or more of the maximum amount available under the Amended Loan Agreement, the applicable commitment fee was 0.25% of the unused portion of the loan facility; otherwise, the applicable commitment fee was 0.50% of the unused portion. The Fund paid the unused credit line fee quarterly. As of December 31, 2021, $47.0 million were outstanding under the facility.

Bank fees and other costs of $3.8 million incurred in connection with the acquisition and extension of the facility were capitalized and were amortized to interest expense on a straight-line basis over the expected life of the facility. The remaining unamortized fees and costs were immediately expensed upon termination of the debt facility on September 8, 2022. As of December 31, 2021, the remaining unamortized fees and costs were $0.9 million.

The facility was revolving and as such did not have a specified repayment schedule, although advances were secured by the assets of the Fund and thus repayments were required as assets declined. The facility contained various covenants including financial covenants related to: (i) minimum debt service coverage ratio, (ii) interest coverage ratio, (iii) maximum loan loss reserves and (iv) unfunded commitment ratio. There were also various restrictive covenants, including limitations on: (i) the incurrence of liens, (ii) consolidations, mergers and asset sales and (iii) capital expenditures. As of December 31, 2021, Management was not aware of instances of non-compliance with financial covenants.

The following is the summary of the outstanding facility draws as of December 31, 2021:


	Amount		Maturity Date	All-In Interest Rate †

LIBOR Market Index Rate Loans	$	47,000,000	August 26, 2023	Variable based on 1-month LIBOR Rate

Total Outstanding	$	47,000,000

† Inclusive of 2.75% applicable LIBOR margin plus LIBOR rate

7. MANAGEMENT FEE

As compensation for its services to the Fund, for the two-year period that commenced with the first capital closing, which took place on August 8, 2015, the Manager received a management fee (“Management Fee”) computed and paid at the end of each quarter at an annual rate of 2.5% of the Company’s committed equity capital (regardless of when or if the capital was called) as of the last day of each fiscal quarter. Following this two-year period, starting on August 12, 2017, Management Fees are calculated and paid at the end of each quarter at an annual rate of 2.5% of the Fund’s total assets (including amounts derived from borrowed funds) as of the last day of each quarter. Management Fees of $0.3 million and $1.0 million were recognized as expenses for the three months ended September 30, 2022 and 2021, respectively. Management Fees of $1.3 million and $3.8 million were recognized as expenses for the nine months ended September 30, 2022 and 2021, respectively.

8. DERIVATIVE INSTRUMENTS

The Fund used derivative instruments to manage its exposure to changes in interest rates on expected borrowings under its debt facility, as the Fund originates fixed rate loans.

Interest Rate Collar

On April 6, 2020, the Fund entered into an interest rate collar instrument with MUFG Union Bank, N.A., which terminated on September 11, 2020. On September 11, 2020, the Fund entered into another interest rate collar instrument with a termination date of January 11, 2023. On June 3, 2022, Management elected to terminate the interest rate collar contract.

The following tables show the Fund’s derivative instruments at fair value on the Fund’s Condensed Statement of Assets and Liabilities as of September 30, 2022 and December 31, 2021:






	Derivative Liability
Derivative Instruments		September 30, 2022		December 31, 2021

Interest rate collar		$	—	$	4,733

The following table shows the effect of the Fund’s derivative instruments on the Fund’s Condensed Statements of Operations:


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Derivative Instruments	Condensed Statements of Operations Caption	2022		2021		2022		2021


Interest rate collar	Net change in unrealized gain from derivative instruments	$	—	$	10,009	$	4,733	$	29,900
	Net realized gain (loss) from derivative instruments	$	—	$	(13,069)	$	64,393	$	(38,340)

9. TAX STATUS

The Fund has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986 (the “Code”) and operates in a manner to qualify for the tax treatment applicable to RICs. Failing to maintain at least 70% of total assets in “qualifying assets” will result in the loss of BDC status, resulting in losing its favorable tax treatment as a RIC. As of September 30, 2022, the Fund has met the BDC and RIC requirements. The Fund elected to be treated for federal income tax purposes as a RIC under the Code with the filing of its federal corporate income tax return for 2016.

In order to qualify for favorable tax treatment as a RIC, the Fund is required to distribute annually to its shareholder at least 90% of its investment company taxable income, as defined by the Code. To avoid federal excise taxes, the Fund must distribute annually at least 98% of its ordinary income and 98.2% of net capital gains from the current year and any undistributed ordinary income and net capital gains from the preceding years. The Fund, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. If the Fund chooses to do so, all other things being equal, this would increase expenses and reduce the amount available to be distributed to its shareholder. The Fund will accrue excise tax on estimated undistributed taxable income as required.

Below are tables summarizing the cost of investments for federal income tax purposes and the appreciation and depreciation of the investments reported on the Condensed Schedules of Investments and Condensed Statements of Assets and Liabilities.

As of September 30, 2022:


Asset	Cost		Unrealized Appreciation		Unrealized Depreciation		Net Appreciation (Depreciation)
Loans	$	68,661,523	$	902,808	$	(22,309,258)	$	(21,406,450)

Total	$	68,661,523	$	902,808	$	(22,309,258)	$	(21,406,450)

As of December 31, 2021:


Asset	Cost		Unrealized Appreciation		Unrealized Depreciation		Net Appreciation (Depreciation)
Loans	$	131,576,413	$	459,420	$	(23,570,217)	$	(23,110,797)
Total	$	131,576,413	$	459,420	$	(23,570,217)	$	(23,110,797)


Liability	Cost		Unrealized Appreciation		Unrealized Depreciation		Net Appreciation (Depreciation)
Derivative liability	$	—	$	—	$	(4,733)	$	(4,733)
Total	$	—	$	—	$	(4,733)	$	(4,733)

Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with U.S. GAAP. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in-capital or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and the tax characterization of income and non-deductible expenses. These differences are generally determined in conjunction with the preparation of the Fund’s annual RIC tax return.

Book and tax basis differences relating to shareholder dividends and distributions and other permanent book and tax differences are reclassified among the Fund’s capital accounts. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from U.S. GAAP. The determination of the tax attributes of the Fund’s distributions is made annually as of the end of the Fund’s taxable year and is generally based upon its taxable income for the full taxable year and distributions paid for the full taxable year. As a result, a determination made on a quarterly basis may not be representative of the actual tax attributes of the Fund’s distributions for a full taxable year. As of September 30, 2022, the Fund had determined the tax attributes of its distributions taxable year-to-date to be from its current and accumulated earnings and profits. There is not yet, however, certainty as to what the actual tax attributes of the Fund’s distributions to the shareholders will be by the year-ending December 31, 2022.

The Fund anticipates distributing all distributable earnings by the end of the year. Through September 30, 2022, the Fund had no undistributed earnings. The Fund may pay distributions in excess of its taxable net investment income. This excess would be a tax-free return of capital in the period and reduce the shareholder’s tax basis in its shares.

The Fund’s tax returns remain open for examination by the federal government for a period of three years and California tax authorities for a period of four years from when they are filed. As of September 30, 2022, the Fund had no uncertain tax positions and no capital loss carryforwards.

10. FINANCIAL HIGHLIGHTS

U.S. GAAP requires disclosure of financial highlights of the Fund for the three and nine months ended September 30, 2022 and 2021.

The total rate of return is defined as the return based on the change in value during the period of a theoretical investment made at the beginning of the period. The total rate of return assumes a constant rate of return for the Fund during the period reported and weights each cash flow by the amount of time held in the Fund. This required methodology differs from an internal rate of return.

The ratios of expenses and net investment income to average net assets, calculated below, are annualized and are computed based upon the aggregate weighted-average net assets of the Fund for the periods presented. Net investment income is inclusive of all investment income, net of expenses and excludes realized or unrealized gains and losses.

Beginning and ending net asset values per share are based on the beginning and ending number of shares outstanding. Other per share information is calculated based upon the aggregate weighted-average net assets of the Fund for the periods presented.

The following per share data and ratios have been derived from the information provided in the financial statements:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021 (a)			2022			2021 (a)

Total return **	(0.99)		%	6.67		%	14.20		%	20.91		%

Per share amounts:
Net asset value, beginning of period	$	559.66		$	1,135.76		$	653.91		$	1,597.34

Net investment income	11.06			97.48			81.74			232.93
Net realized and change in unrealized gain (loss) from loans and derivative instruments	(16.15)			(25.13)			5.83			16.04
Net increase (decrease) in net assets resulting from operations	(5.09)			72.35			87.57			248.97
Distributions of income to shareholder	(16.52)			(97.70)			(70.91)			(214.47)
Return of capital to shareholder	(48.64)			(232.42)			(181.16)			(753.85)
Contributions from shareholder	—			40.00			—			40.00
Net asset value, end of period	$	489.41		$	917.99		$	489.41		$	917.99
Net assets, end of period	$	48,940,844		$	91,798,612		$	48,940,844		$	91,798,612


Ratios to average net assets:

Expenses*	9.58		%	6.99		%	8.59		%	7.70		%
Net investment income*	8.59		%	35.10		%	18.43		%	24.06		%
Portfolio turn-over rate	—		%	—		%	—		%	0.72		%
Average debt outstanding	$	5,875,000		$	72,125,000		$	21,750,000		$	93,100,000
*Annualized
**Total return amounts presented above are not annualized

(a) Additional prior period information is shown for comparability with current period presentation.

11. SUBSEQUENT EVENTS

On October 13, 2022, the Fund entered into a new investment management agreement (the “New Agreement”), by and between the Fund and the Manager, that replaced the current investment management agreement entered into between the Fund and the Manager (the “Current Agreement”).

The Fund entered into the New Agreement in connection with the sale of all the issued and outstanding membership interests of the Manager to P10 Intermediate Holdings LLC, a Delaware limited liability company on October 13, 2022 (the “Transaction”). The closing of the Transaction constituted a change of control of the Manager which caused the Current Agreement to terminate. The terms of the New Agreement are the same as those of the Current Agreement, including the same fee rates, except for the new commencement date of October 13, 2022 and renewal dates, annual continuance approval by the Board, beginning October 13, 2024.

The Fund evaluated other subsequent events through the date the financial statements were issued and determined that no additional subsequent events had occurred that would require accrual or disclosure in the financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In addition to the historical information contained herein, the information in this Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the securities laws. These forward-looking statements reflect the current view of the Fund with respect to future events and financial performance and are subject to several risks and uncertainties, many of which are beyond the Fund’s control. All statements, other than statements of historical facts included in this Quarterly Report, regarding the strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of the Fund are forward-looking statements. For example, statements in this Form 10-Q regarding the potential future impact of the COVID-19 pandemic on the Fund’s business and results of operations are forward-looking statements. When used in this report, the words “will,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements speak only as of the date of this report. The Fund does not undertake any obligation to update or revise publicly any forward-looking statements, whether resulting from new information, future events or otherwise, except as required by law.

The reader of this Quarterly Report should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Fund’s actual results could differ materially from those suggested by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets, return on assets, loan losses, expenses, rates charged on loans and earned on securities investments, competition and macro-economic changes including inflation, interest rate expectations, among other factors including those set forth in the section of this Quarterly Report titled “Risk Factors” and in Item 1A - “Risk Factors” in the Fund’s 2021 Annual Report on Form 10-K. This entire Quarterly Report should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Fund’s business.

Overview

The Fund is 100% owned by the Company. The Fund’s shares of common stock, at $0.001 par value, were sold to its sole shareholder, the Company, under a stock purchase agreement. The Fund has issued 100,000 of the Fund’s 10,000,000 authorized shares. The Company may make additional capital contributions to the Fund.

The Fund provides financing and advisory services to a variety of carefully selected venture-backed companies that have received equity funding from traditional sources of venture capital equity funding (i.e. a professionally managed venture capital firm), as well as non-traditional sources of venture capital equity funding (e.g., angel investors, strategic investors, family offices, crowdfunding investment platforms, etc.) (collectively, “Venture-Backed Companies”), primarily throughout the United States with a focus on growth-oriented companies. The Fund’s portfolio consists of companies in the communications, information services, media, technology (including software and technology-enabled business services), biotechnology, and medical devices industry sectors, among others. The Fund’s capital is generally used by its portfolio companies to finance acquisitions of fixed assets and working capital. On August 31, 2015, the Company completed its first closing of capital contributions. On September 1, 2015, the Fund made its first investment and became a non-diversified, closed-end investment company that elected to be treated as a BDC under the 1940 Act. While the Fund intends to operate as a non-diversified investment company within the meaning of Section 5(b)(2) of the 1940 Act, from time to time the Fund may act as a diversified investment company within the meaning of Section 5(b)(1) of the 1940 Act.

The Fund elected to be treated for federal income tax purposes as a RIC under the Code with the filing of its federal corporate income tax return for 2016. Pursuant to this election, the Fund generally will not have to pay corporate-level taxes on any income distributed to its shareholder as dividends, allowing the Company to substantially reduce or eliminate its corporate-level tax liability.

The Fund will seek to meet the ongoing requirements, including the diversification requirements, to qualify as a RIC under the Code. If the Fund fails to meet these requirements, it will be taxed as an ordinary corporation on

its taxable income for that year (even if that income is distributed to the Company) and all distributions out of its earnings and profits will be taxable to the members of the Company as ordinary income; thus, such income will be subject to a double layer of tax. There is no assurance that the Fund will meet the ongoing requirements to qualify as a RIC for tax purposes.

The portfolio investments of the Fund primarily consist of debt financing to Venture-Backed Companies in the technology sector. The borrower’s ability to repay its loans may be adversely impacted by several factors, and as a result, the loan may not be fully repaid. Furthermore, the Fund’s security interest in any collateral over the borrower’s assets may be insufficient to make up any shortfall in payments. Some of the Fund’s portfolio companies may be impacted by rising inflation, which could have a material impact on their results of operations, specifically cost and revenues. As such, rising inflation may have an adverse impact on the portfolio borrowers’ ability to maintain their good credit standing, as well as their ability to pay their interest and principal obligations to the Fund. In addition, any projected future decreases in our portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments could result in future unrealized losses and therefore reduce our net assets resulting from operations.

Transactions with Venture Lending & Leasing VII, Inc. (“Fund VII”)

The Manager also serves as investment manager for Fund VII. The Fund’s Board of Directors determined that so long as Fund VII had capital available to invest in loan transactions with final maturities earlier than December 31, 2022 (the date on which Fund VII will be dissolved), the Fund would invest in each portfolio company in which Fund VII invested. Generally, the amount of each investment was allocated 50% to the Fund and 50% to Fund VII, or such other allocations as were determined by the respective fund boards, so long as the Fund had capital available to invest. Effective June 30, 2017, Fund VII was no longer permitted to enter new commitments to borrowers; however, Fund VII was permitted to fund existing commitments, in which the Fund might also be invested. Fund VII’s last commitment expired on July 31, 2018. The ability of the Fund to co-invest with Fund VII, and other clients advised by the Manager, is subject to the conditions (“Conditions”) with which the Funds are currently complying while seeking certain exemptive relief from the Securities and Exchange Commission (“SEC”) from the provisions of Sections 17(d) and 57 of the 1940 Act and Rule 17d-1 thereunder. To the extent that clients, other than Fund VII, advised by the Manager (but in which the Manager has no proprietary interest) invest in opportunities available to the Fund, the Manager will allocate such opportunities among the Fund and such other clients in a manner deemed fair and equitable considering all of the circumstances in accordance with the Conditions.

Transactions with Venture Lending & Leasing IX, Inc. (“Fund IX”)

The Manager also serves as manager for Fund IX. The Fund’s Board of Directors determined that so long as Fund IX has capital available to invest in loan transactions with final maturities earlier than December 31, 2028 (the date on which Fund IX will be dissolved), the Fund may invest in each portfolio company in which Fund IX invests. Generally, the amount of each investment will be allocated 50% to the Fund and 50% to Fund IX, or such other allocations as may be determined by the respective fund boards, so long as the Fund has capital available to invest. The ability of the Fund to co-invest with Fund IX, and other clients advised by the Manager, is subject to the Conditions described above. Effective March 31, 2020, the Fund was no longer permitted to enter new commitments to borrowers. To the extent that clients, other than Fund IX, advised by the Manager (but in which the Manager has no proprietary interest) invest in opportunities available to the Fund, the Manager will allocate such opportunities among the Fund and such other clients in a manner deemed fair and equitable considering all of the circumstances in accordance with the Conditions.

Critical Accounting Policies, Practices and Estimates

Critical Accounting Policies and Practices are those accounting policies and practices that are both the most important to the portrayal of the Fund’s net assets and results of operations and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Critical accounting estimates are accounting estimates where the nature of the estimates is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and the impact of the estimates on net assets or operating performance is material.

In evaluating the most critical accounting policies and estimates, the Manager has identified the estimation of fair value of the Fund’s loan investments along with the completeness of loans exhibiting indicators of potential credit deterioration as the most critical of the accounting policies and accounting estimates applied to the Fund’s reporting of net assets or operating performance. In accordance with U.S. GAAP, the Fund defines fair value 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; that is, an exit price. The exit price assumes the asset or liability was exchanged in an orderly transaction; it was not a forced liquidation or distressed sale. There is no readily available market price or secondary market for the loans made by the Fund to borrowers, hence the Manager determines fair value based on a hypothetical market and the estimates are subject to high levels of judgment and uncertainty. The Fund’s loan investments are considered Level 3 fair value measurements in the fair value hierarchy due to the lack of observability over many of the important inputs used in determining fair value. In particular, the Manager has identified the fair value of the Fund’s loan investments that exhibit indicators of the potential for credit deterioration and the completeness of those loan investments, as a critical accounting matter that may involve significant and material estimates and inputs from the Manager in determining the fair value of those loan investments.

Critical judgments and inputs in determining the fair value of a loan include the estimated timing and amount of future cash flows and probability of future payments, based on the assessment of payment history, available cash and “burn rate,” revenues, net income or loss, operating results, financial strength of borrower, prospects for the borrower’s raising future equity rounds, likelihood of sale or acquisition of the borrower, length of expected holding period of the loan, collateral position, the timing and amount of liquidation of collateral for loans that are experiencing significant credit deterioration and, as a result, collection becomes collateral-dependent, as well as an evaluation of the general interest rate environment. Management has evaluated these factors and has concluded that the effect of a deterioration in the quality of the underlying collateral, increase in the size of the loan, increase in the estimated time to recovery, and increase in the hypothetical market coupon rate would have the effect of decreasing the fair value of loan investments. The risk profile of a loan changes when events occur that impact the credit analysis of the borrower and the loan. Such changes result in the fair value being adjusted from par value of the individual loan. Where the risk profile is consistent with the original underwriting, the par value of the loan often approximates fair value.

The actual value of the loans may differ from Management’s estimates, which would affect net change in net assets resulting from operations as well as assets.

COVID-19’s Impact on Results of Operations and Liquidity & Capital Resources

The effects of the COVID-19 pandemic and the related actions by governments around the world to attempt to contain the spread of the virus had an impact on a number of the Fund’s portfolio companies’ business and operations.

Although markets are continuing to stabilize and recover, uncertainty remains regarding the full extent of the long-term economic impact on the Fund’s business operations, results of operations, and access to liquidity and capital resources. The impact on the Fund will depend on many factors beyond the Fund’s control, including, without limitations, (i) the timing, extent, trajectory, and duration of the pandemic, (ii) the restrictions and advisories put in place to combat the pandemic, (iii) the effects of the pandemic and measures to combat the pandemic on the financial markets, and (iv) the impact on the economy overall, all of which are highly uncertain and cannot be predicted. In addition, the impact on local economies is uncertain and the speed of economic recovery may vary across different industries both domestically and globally. The Fund is continuing to maintain close communications with its loan portfolio companies to proactively assess and manage potential risks. In addition, Management is continuing to maintain oversight analysis of credits across the Fund's loan investment portfolio in an attempt to manage the potential credit risk and improve loan performance.

Management is also monitoring the Fund’s continued access to capital resources through periodic and timely communication with the bank syndicate and the Company’s members. The Fund believes its existing cash balance, scheduled monthly payments from borrowers, and access to capital from its debt facility and the Company’s members will be sufficient to satisfy its working capital needs, debt repayments, and other liquidity requirements associated with its existing operations.

Results of Operations - For the Three and Nine Months Ended September 30, 2022 and 2021

Analysis of Interest Income

Total investment income for the three months ended September 30, 2022 and 2021 was $2.3 million and $11.7 million, respectively, which primarily consisted of interest on the venture loans outstanding. The remaining income consisted of interest and dividends on the temporary investment of cash, and other income from commitment fees and warrants.

Interest income is calculated using the effective interest method, and rates earned by the Fund will fluctuate based on many factors including early payoffs, volatility of values ascribed to warrants, and new loans funded during the year.

The following table shows the average balance, interest income, and weighted average interest rate for the cash and non-cash portion of interest income for the three months ended September 30, 2022 and 2021.


	For the Three Months Ended September 30, 2022				For the Three Months Ended September 30, 2021
	Average Balance	Interest Income	Weighted-Ave Int Rate - Cash Portion	Weighted-Ave Int Rate - Noncash Portion	Average Balance	Interest Income	Weighted-Ave Int Rate - Cash Portion	Weighted-Ave Int Rate - Noncash Portion
Performing Loans	$46,843,446	$1,686,499	11.52%	2.88%	$153,448,137	$11,689,159	24.81%	5.66%
All Loans	$54,793,861	$2,323,442	14.50%	2.46%	$166,087,432	$11,689,159	22.92%	5.23%

Interest income for performing and all loans decreased by $10.0 million and $9.4 million, or 85.6% and 80.1%, respectively, for the three months ended September 30, 2022 compared to the same period in 2021. The decrease in interest income was due primarily to the decline in the loan investment portfolio as there were no new loans to offset the loans being paid down. The average outstanding balances for performing and all loans decreased by $106.6 million and $111.3 million, or 69.5% and 67.0%, respectively, for the three months ended September 30, 2022 compared to the same period in 2021.

Total investment income for the nine months ended September 30, 2022 and 2021 was $12.0 million and $30.8 million, respectively, which primarily consisted of interest on the venture loans outstanding. The remaining income consisted of interest and dividends on the temporary investment of cash, and other income from commitment fees and warrants.

The following table shows the average balance, interest income, and weighted average interest rate for the cash and non-cash portion of interest income for the nine months ended September 30, 2022 and 2021.


	For the Nine Months Ended September 30, 2022								For the Nine Months Ended September 30, 2021
	Average Balance		Interest Income		Weighted-Ave Int Rate - Cash Portion		Weighted-Ave Int Rate - Noncash Portion		Average Balance		Interest Income		Weighted-Ave Int Rate - Cash Portion		Weighted-Ave Int Rate - Noncash Portion
Performing Loans	$	69,071,819	$	9,687,607	14.99	%	3.71	%	$	197,403,014	$	30,065,335	16.30	%	4.01	%
All Loans	$	76,266,328	$	11,962,673	17.55	%	3.36	%	$	211,359,910	$	30,749,728	15.66	%	3.74	%

Interest income for performing and all loans decreased by $20.4 million and $18.8 million, or 67.8% and 61.1%, respectively, for the nine months ended September 30, 2022 compared to the same period in 2021. The decrease in interest income was also due primarily to the decline in the loan investment portfolio as there were no new loans to offset the loans being paid down. The average outstanding balances for performing and all loans decreased by $128.3 million and $135.1 million, or 65.0% and 63.9%, respectively, for the nine months ended September 30, 2022 compared to the same period in 2021.

Analysis of Interest Expense

Interest expense was comprised of amounts related to interest on debt amounts drawn down, unused credit line fees and amounts amortized from deferred fees incurred in conjunction with the debt facility.

The following table shows the average balance, interest expense and weighted-average interest rate for the three months ended September 30, 2022 and 2021.


	For the Three Months Ended September 30, 2022						For the Three Months Ended September 30, 2021
	Average Balance		Interest Expense		Int Expense Rate		Average Balance		Interest Expense		Int Expense Rate
Bank Facility	$	5,875,000	$	723,543	63.34	%	$	72,125,000	$	713,390	3.96	%

The following table shows the average balance, interest expense and weighted-average interest rate for the nine months ended September 30, 2022 and 2021.


	For the Nine Months Ended September 30, 2022						For the Nine Months Ended September 30, 2021
	Average Balance		Interest Expense		Int Expense Rate		Average Balance		Interest Expense		Int Expense Rate
Bank Facility	$	21,750,000	$	1,490,413	9.83	%	$	93,100,000	$	2,548,283	3.65	%

Interest expense decreased primarily due to declines in the average outstanding debt.

Analysis of Operating Expense

The following table shows the components of operating expense for the three months ended September 30, 2022 and 2021.


	For the Three Months Ended September 30,
Operating expense	2022		2021		Change
Management fees	$	309,651	$	957,499	$	(647,848)
Banking and professional fees	95,690		212,199		(116,509)
Other operating expenses	103,936		58,986		44,950
Total operating expense	$	509,277	$	1,228,684	$	(719,407)

Management fees were calculated as 2.5% of the Fund’s total assets and the decreases were due to declines in the Fund’s total assets due primarily to fewer new loan fundings to offset monthly loan payments and early pay downs.

Banking and professional fees decreased by $0.1 million, or 54.9%, due primarily to a reduction in legal expenses associated with loan workouts this period.

Other operating expenses included director fees, custody fees, tax fees and other expenses related to the operations of the Fund.

The following table shows the components of operating expense for the nine months ended September 30, 2022 and 2021.


	For the Nine Months Ended September 30,
Operating expense	2022		2021		Change
Management fees	$	1,322,644	$	3,775,126	$	(2,452,482)
Banking and professional fees	845,518		1,015,795		(170,277)
Other operating expenses	153,387		118,789		34,598
Total operating expense	$	2,321,549	$	4,909,710	$	(2,588,161)

Banking and professional fees decreased by $0.2 million, or 16.8%, due primarily to reductions in legal expenses associated with client acquisition and loan workouts this period and partially offset by increases in legal expenses associated with the operation of the Fund.

Other operating expenses included director fees, custody fees, tax fees and other expenses related to the operations of the Fund

Non-recurring fees

The Fund may receive non-recurring fees in connection with the origination and servicing of portfolio loans. Transactions in this category may include forfeited commitment fees and unamortized warrants, that become recognized as other income after the loan commitment period expires. Other non-recurring fees include pre-payment fees which are recognized as other income in the period received. Legal fee reimbursements for deal due diligence and drafting of documents are recognized as offsets against legal expenses. Non-recurring fees for the three and nine months ended September 30, 2022 and 2021 were less than $0.1 million.

Realized and Change in Unrealized Gains (Losses)

Net investment income for the three months ended September 30, 2022 and 2021, was $1.1 million and $9.7 million, respectively.

Net realized gain (loss) from loans was $0.5 million and less than $0.1 million for the three months ended September 30, 2022 and 2021, respectively. The primary reason for the gains were recoveries from loans previously writen-off.

Net realized gain (loss) from derivative instruments were $0 and a net realized loss of less than $0.1 million for the three months ended September 30, 2022 and 2021, respectively. There were no gains or losses for the three months ended September 2022 as the derivative was terminated in June 2022. The net realized loss in 2021 was due to interest payments paid on the interest rate collar as the floating rate was between the ceiling and floor of the collar.

Net change in unrealized gain (loss) from loans was $(2.2) million and $(2.5) million for the three months ended September 30, 2022 and 2021, respectively. The net change in unrealized gain from loans consisted of fair value adjustments taken against loans as a result of an improvement or deterioration in certain portfolio companies’ performance and reversals of prior adjustments on realized loan losses.

Net change in unrealized gain from derivative instruments were a $0 and an unrealized gain of less than $0.1 million for the three months ended September 30, 2022 and 2021, respectively. There were no gains or losses for the three months ended September 2022 as the derivative was terminated in June 2022. The net change in unrealized gain (loss) from derivative instruments from 2021 consisted of fair market value adjustments to the interest rate collar.

Net increase (decrease) in net assets resulting from operations for the three months ended September 30, 2022 and 2021, was $(0.5) million and $7.2 million, respectively. On a per share basis, the net increase (decrease) in net assets resulting from operations for the three months ended September 30, 2022 and 2021 was $(5.09) and $72.35, respectively.

Net investment income for the nine months ended September 30, 2022 and 2021, was $8.2 million and $23.3 million, respectively.

Net realized gain (loss) from loans was $(1.1) million and $(1.8) million for the nine months ended September 30, 2022 and 2021, respectively. The primary reason for the losses were write-offs of non-accrual loans.

Net realized gain (loss) from derivative instruments were a net realized gain of $0.1 million and a net realized loss of less than $0.1 million for the nine months ended September 30, 2022 and 2021, respectively. The realized gain from derivative instruments was due primarily to the termination of the derivative instrument in Q2. The net realized losses were due to interest payments paid on the interest rate collar as the floating rate was below the floor of the collar.

Net change in unrealized gain (loss) from loans was $1.7 million and $3.4 million for the nine months ended September 30, 2022 and 2021, respectively. The net change in unrealized gain from loans consisted of fair value adjustments taken against loans as a result of an improvement or deterioration in certain portfolio companies’ performance as well as reversal of prior adjustments on realized loan losses.

Net change in unrealized gain from derivative instruments were less than a $0.1 million for both the nine months ended September 30, 2022 and 2021. The net change in unrealized gain from derivative instruments consisted of fair market value adjustments to the interest rate collar and the reversal of prior gains with the termination of the derivative.

Net increase (decrease) in net assets resulting from operations for the nine months ended September 30, 2022 and 2021, was $8.8 million and $24.9 million, respectively. On a per share basis, the net increase in net assets resulting from operations for the nine months ended September 30, 2022 and 2021, was $87.57 and $248.97, respectively.

Liquidity and Capital Resources – September 30, 2022 and December 31, 2021

The Fund is owned entirely by the Company. The Company may make further contributions to the capital of the Fund to the extent of the Company’s members’ capital commitment to the Company and excess cash balances of the Company. Total capital contributed to the Fund was $356.1 million as of September 30, 2022 and December 31, 2021. As of both September 30, 2022 and December 31, 2021, the Company had subscriptions for capital in the amount of $423.6 million, of which $415.2 million had been called. The remaining $8.5 million has expired and can no longer be called. Per the operating agreement between the Company’s managing member and members of the Company, only 10% of committed capital may be recalled effective March 31, 2021. As a result, the Company has made $42.4 million in recallable distributions to its investors.

The change in cash for the nine months ended September 30, 2022 and 2021 was as follows:


	For the Nine Months Ended September 30, 2022		For the Nine Months Ended September 30, 2021
Net cash provided by operating activities	$	68,185,503	$	155,394,919
Net cash used in financing activities	(69,435,607)		(147,138,340)
Net increase (decrease) in cash and cash equivalents	$	(1,250,104)	$	8,256,579

As of September 30, 2022 and December 31, 2021, 3.20% and 4.31%, respectively, of the Fund’s net assets consisted of cash and cash equivalents.

Net loan amounts outstanding after amortization and valuation adjustments decreased by $61.2 million for the nine months ended September 30, 2022. As of September 30, 2022, all of the Fund’s unfunded commitments expired.

As of

Cumulative Amount
Disbursed

Principal
Reductions and Fair
Market Adjustments

Balance
Outstanding - Fair
Value

September 30, 2022

$937.9 million

$890.6 million

$47.3 million

December 31, 2021

$937.9 million

$829.4 million

$108.5 million

The Fund seeks to maintain the requirements to qualify for the special pass-through status available to RICs under the Code, and thus to be relieved of federal income tax on that part of its net investment income and realized capital gains that it distributes to its shareholder. To qualify as a RIC, the Fund must distribute to its shareholder for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income and net short-term capital gain) (the “Distribution Requirement”). To the extent that the terms of the Fund’s venture loans provide for the receipt by the Fund of additional interest at the end of the loan term or provide for the receipt by the Fund of a purchase price for the asset at the end of the loan term (“residual income”), the Fund would be required to accrue such residual income over the life of the loan, and to include such accrued undistributed income in its gross income for each taxable year even if it receives no portion of such residual income in that year. Thus, in order to meet the Distribution Requirement and avoid payment of income taxes or an excise tax on undistributed income, the Fund may be required in a particular year to distribute as a dividend an amount in excess of the total amount of income it actually receives. Those distributions will be made from the Fund’s cash assets, from amounts received through amortization of loans or from borrowed funds.

As of September 30, 2022, the Fund had a cash balance of $1.6 million and approximately $35.9 million in scheduled loan receivable payments over the next twelve months. Additionally, the Fund has access to the Company’s recallable distributions of $42.4 million. Together, these amounts are sufficient to meet the operational expenses of the Fund over the next year.

The Fund was permitted to borrow in any amounts so long as its asset coverage ratio, as defined in the 1940 Act, is at least 200% after giving effect to such borrowings. Effective September 8, 2022, the Fund no longer has access to additional debt, as the debt facility was paid off and terminated. As of December 31, 2021, the Fund’s asset coverage ratio was 239%.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Fund’s business activities contain various elements of risk, of which Management considers interest rate and credit risk to be the principal types of risks. Because the Fund considers the management of risk essential to conducting its business and to maintaining profitability, the Fund’s risk management procedures are designed to identify and analyze the Fund’s risks, to set appropriate policies and limits and to continually monitor these risks and limits by means of reliable administrative and information systems and other policies and programs.

The Fund manages its market risk by maintaining a portfolio that is diverse by industry, size of investment, stage of development, and borrower. The Fund has limited exposure to public market price fluctuations as the Fund primarily invests in private business enterprises and distributes all equity investments upon receipt to the Company.

The Fund’s investments are subject to market risk based on several factors, including, but not limited to, the borrower’s credit history, available cash, support of the borrower’s underlying investors, available liquidity, “burn rate,” revenue income, security interest, secondary markets for collateral, the size of the loan, term of the loan and the ability to exit via initial public offering or merger and acquisition.

The Fund’s exposure to interest rate sensitivity is regularly monitored and analyzed by measuring the characteristics of assets and liabilities. The Fund utilizes various methods to assess interest rate risk in terms of the potential effect on interest income net of interest expense, the value of net assets and the value at risk in an effort to ensure that the Fund is insulated from any significant adverse effects from changes in interest rates. Because the Fund terminated the debt facility on September 8, 2022 and does not plan to borrow in the future, a significant change in market interest rates will no longer have a material effect on the Fund’s interest expense.

Because all of the Fund’s loans impose a fixed interest rate upon funding, changes in short-term interest rates will not directly affect interest income associated with the loan portfolio as of September 30, 2022. Changes in short-term interest rates could also affect realized gain from investments and interest on the Fund’s short-term investments.

Based on the Fund’s Condensed Statements of Assets and Liabilities as of September 30, 2022, the following table shows the approximate annualized increase (decrease) in components of net assets resulting from operations of hypothetical base rate changes in interest rates, assuming no changes in investments and cash balances.


Effect of Interest Rate Change By	Other Interest and Other Income (Loss)		Total Income (Loss)
(0.50)%	$	(7,828)	$	(7,828)
1%	$	15,657	$	15,657
2%	$	31,313	$	31,313
3%

Venture Lending & Leasing VIII, Inc. 10-Q