UNITED STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington, DC 20549



FORM 10-K



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended December 31,
2015

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



Commission file number: 000-53504



Crossroads Capital, Inc.



(Exact Name of Registrant as Specified in its
Charter)



|Maryland                                                               |  | 26-2582882                                  
|---------------------------------------------------------------------- |  | --------------------------------------------
|(State or Other Jurisdiction of
        Incorporation or Organization) |  | (I.R.S. Employer
        Identification No.)



|128 N. 13th Street, Suite, #1100
        Lincoln, Nebraska 68508
        (Address of principal executive offices)
        (402) 261-5345 (Registrant’s telephone
        number, including area code)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Securities registered pursuant to Section
12(b) of the Act:



|Title of Each Class Registered           |  | Name of Each Exchange on Which Registered
|---------------------------------------- |  | -----------------------------------------
|Common stock, par value $0.001 per share |  | Nasdaq Capital Market                    



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



Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes  ̈ No x



Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ̈
No x



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



Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. x





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



|Large accelerated filer  ̈ | Accelerated filer  ̈        
|------------------------- | ---------------------------
|Non-accelerated filer x   | Smaller reporting company  ̈



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



The aggregate market value of the voting and
non-voting common stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently
completed second fiscal quarter was approximately $38.1 million based upon a closing price of $4.50 reported for such date on the
Nasdaq Capital Market.  Common shares held by each executive officer and director and by each person who owns 5% or more
of the outstanding common shares have been excluded in that such persons may be deemed to be affiliates.



As of March 28, 2016, the number of outstanding
shares of common stock of the registrant was 9,670,076.



DOCUMENTS INCORPORATED BY REFERENCE



Portions of the registrant’s definitive
Proxy Statement relating to the 2016 Annual Meeting of Stockholders, to be filed within 120 days after the close of the registrant’s
year end, are incorporated by reference into Part III of this Annual Report on Form 10-K.















TABLE OF CONTENTS



|           |                                                                                                              | Page
|---------- | ------------------------------------------------------------------------------------------------------------ | ----
|           | Part I                                                                                                       | 1   
|Item 1.    | Business                                                                                                     | 1   
|Item 1A.   | Risk Factors                                                                                                 | 12  
|Item 1B.   | Unresolved Staff Comments                                                                                    | 32  
|Item 2.    | Properties                                                                                                   | 32  
|Item 3.    | Legal Proceedings                                                                                            | 32  
|Item 4.    | Mine Safety Disclosures                                                                                      | 32  
|           |                                                                                                              |     
|           | Part II                                                                                                      | 33  
|Item 5.    | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 33  
|Item 6.    | Selected Financial Data                                                                                      | 38  
|Item 7.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 39  
|Item 7A.   | Quantitative and Qualitative Disclosures About Market Risk                                                   | 61  
|Item 8.    | Financial Statements and Supplementary Data                                                                  | 63  
|Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         | 64  
|Item 9A.   | Controls and Procedures                                                                                      | 64  
|Item 9B.   | Other Information                                                                                            | 65  
|           |                                                                                                              |     
|           | Part III                                                                                                     | 65  
|Item 10.   | Directors, Executive Officers and Corporate Governance                                                       | 65  
|Item 11.   | Executive Compensation                                                                                       | 65  
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               | 65  
|Item 13.   | Certain Relationships and Related Transactions, and Director Independence                                    | 65  
|Item 14.   | Principal Accountant Fees and Services                                                                       | 65  
|           |                                                                                                              |     
|           | Part IV                                                                                                      | 66  
|Item 15.   | Exhibits and Financial Statement Schedules                                                                   | 66  
|           |                                                                                                             
|Signatures | 68                                                                                                          











PART I



In this annual report
on Form 10-K, unless otherwise indicated, the “Company”, “we”, “us” or “our” refer
to Crossroads Capital, Inc., and “1100 Capital Consulting” or “our Administrator” refer to 1100 Capital
Consulting, LLC.



Item 1.  Business



Overview



Crossroads Capital, Inc.
("we," "our" and "us"), formerly known as BDCA Venture, Inc., was incorporated on May 9, 2008,
under the laws of the State of Maryland and is an internally managed, non-diversified, closed-end management investment company
that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940,
as amended (the "1940 Act"), as of November 20, 2008. Effective December 2, 2015, we changed our name from BDCA
Venture, Inc. to Crossroads Capital, Inc. Effective January 1, 2010, we elected to be treated for U.S. Federal income tax purposes
as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
We commenced our portfolio company investment activities in January 2010. The shares of our common stock have been listed on the
Nasdaq Capital Market since December 12, 2011.



On September 22, 2014,
our former Board of Directors changed our investment objective to maximize total return by generating current income from debt
investments and, to a lesser extent, capital appreciation from equity and equity-related investments. Previously, our investment
objective was to maximize capital appreciation by making investments in the equity and equity-linked securities of later stage,
typically venture capital-backed, pre-initial public offering companies.



At our 2015 Annual Meeting
of Stockholders held on July 9, 2015, our stockholders elected Richard Cohen, Andrew Dakos, Gerald Hellerman and Timothy Keating
to serve as our directors until the 2016 Annual Meeting of Stockholders or until their respective successors are duly elected and
qualified. Additionally, at the 2015 Annual Meeting, our stockholders approved a proposal to have our Board of Directors consider
adopting a plan to “maximize shareholder value within a reasonable period of time.”



On July 28, 2015, Mr.
Keating notified our Board of Directors of his resignation from the Board of Directors and as our Chief Executive Officer and President.
Our Board of Directors appointed Frederic M. Schweiger to serve as our Chief Executive Officer and President effective July 29,
2015.



On October 5, 2015, our
Board of Directors approved the termination of the Investment Advisory and Administrative Services Agreement dated July 1, 2014
(the "Investment Advisory Agreement") between us and our investment adviser, BDCA Venture Adviser, LLC. The effective
date of termination of the Investment Advisory Agreement was December 6, 2015 (the "Termination Date"). Also on October
5, 2015, our Board of Directors determined that we would no longer make investments in new venture capital-backed or high growth
companies and would shift our focus to the orderly monetization of our current holdings. However, we may consider making opportunistic
follow-on investments in our existing portfolio companies.



On November 10, 2015,
our Board of Directors approved our engagement of US Bancorp Fund Services, LLC ("US Bancorp") to provide administration
and accounting services.



On November 13, 2015,
our Board of Directors approved the engagement of 1100 Capital Consulting, LLC (our “Administrator”) to provide administrative
consulting services to us, including the provision of personnel to act as certain of our executive officers, including the
Chief Executive Officer and Chief Financial Officer.



Effective December 2,
2015, our Board of Directors appointed Ben H. Harris to serve as our Chief Executive Officer and President, David M. Hadani to
serve as our Chief Financial Officer, Treasurer and Secretary, both officers of the Administrator, and Stephanie L. Darling to
serve as our Chief Compliance Officer.



We have entered into agreements
with MidFirst Bank to be the custodian of our portfolio securities and Frontier Bank to be the custodian of the majority of our
cash and cash equivalent assets.



1







Effective January 20,
2016, our Board of Directors changed our investment objective to preserve capital and maximize stockholder value (our “Investment
Objective”) by pursuing the sale of our portfolio investments, limiting expenses and deploying surplus cash as appropriate,
including into yielding investments to offset, in part, operating expenses. On March 25, 2016, our Board of Directors resolved to
monetize our portfolio holdings at the earliest practicable date.



While our Board of Directors
plans to distribute cash proceeds to stockholders from the sale or other monetization of our portfolio investments, no assurance
can be given regarding the timing of or amounts realized from any such transactions. Further, while our Board of Directors will
adhere to its previously announced determination not to invest in new venture capital-backed companies, we may consider making
opportunistic follow-on investments in our existing portfolio companies. Our Board of Directors reserves the right to modify or
terminate this plan at any time or to consider additional strategic alternatives. See “- Recent Developments” below.



For the December 31, 2015
valuation of our portfolio investments that are not publicly traded, an independent valuation firm assisted our Board of Directors
in its determination of the value of eight investments in our portfolio. Our Administrator assisted our Board of Directors in its
determination of the value of all of the investments in our portfolio and the funds held in escrow from the sale of investments
(“Escrowed Funds”). Beginning with the September 30, 2015 valuation, our Board of Directors also engaged an independent
valuation consultant to assist it in its review and assessment of the valuation of our investment portfolio.



Governance



Our Board of Directors
monitors and performs an oversight role with respect to our business and affairs, including investment practices and performance,
compliance with regulatory requirements and the services, expenses and performance of our service providers.  Among other
things, our Board of Directors approves the appointment of our Administrator and officers, reviews and monitors the services and
activities performed by our Administrator and officers, approves the engagement, and reviews the performance of, our independent
registered public accounting firm, and provides overall risk management oversight.  Pursuant to the requirements under
the 1940 Act and to satisfy the Nasdaq listing standards, our Board of Directors is composed of a majority of non-interested, directors,
as defined in the 1940 Act.



Our Board of Directors
has established an Audit Committee, a Nominating Committee and a Compensation Committee to assist the Board of Directors in fulfilling
its responsibilities.  Each of these committees is composed solely of non-interested, or independent, directors.  The
Audit Committee’s responsibilities include overseeing our accounting and financial reporting processes, our systems of internal
control over financial reporting, and audits of our financial statements.  The Nominating Committee’s responsibilities
include identifying qualified individuals to serve on our Board of Directors, and to select, or recommend that the Board of Directors
select such individuals. The Compensation Committee’s responsibilities include evaluating our executive officer performance
and overseeing our compensation policies, including making recommendations to our Board of Directors with respect to any incentive
compensation and equity-based plans, if any, that are subject to the Board of Directors’ approval.



Investment Objective



On January 20, 2016, our
Board of Directors changed our investment objective to preserve capital and maximize stockholder value by pursuing the sale of
our portfolio investments, limiting expenses and deploying surplus cash as appropriate, including into yielding investments to
offset, in part, operating expenses. On March 25, 2016, our Board of Directors resolved to monetize our portfolio holdings at the
earliest practicable date.



While our Board of Directors
plans to distribute cash proceeds to stockholders from the sale or other monetization of our portfolio investments, no assurance
can be given regarding the timing of or amounts realized from any such transactions. Further, while our Board of Directors will
adhere to its previously announced determination not to invest in new venture capital-backed companies, we may consider making
opportunistic follow-on investments in our existing portfolio companies. Our Board of Directors reserves the right to modify or
terminate this plan at any time or to consider additional strategic alternatives. See “- Recent Developments” below.



2







Former Investment Objectives



From September 22, 2014
to January 20, 2016, our investment strategy was to maximize total return by generating current income from debt investments and,
to a lesser extent, capital appreciation from equity and equity-related investments. We intended to focus on making secured and
unsecured debt investments in companies that we believed are poised to grow at above-average rates relative to other sectors of
the U.S. economy ("Growth Companies"). This investment strategy was designed to: (i) generate current income and help
offset operating expenses, (ii) create the potential to provide a more predictable and consistent source of return to our stockholders,
and (iii) provide our stockholders with the potential for capital appreciation through warrants and other equity features that
may have been negotiated as part of these debt investments. However, we did not make any new investments under this investment
strategy.



Prior to our debt-focused
investment strategy, our investment strategy focused on making equity investments in emerging growth companies that were committed
to and capable of becoming public, or pre-IPO investments. We sought to provide investors with the ability to participate in a
publicly traded fund that allowed our stockholders to share in the potential value accretion that we believed typically occurred
once a company transformed from private to public status, or what we referred to as the private-to-public valuation arbitrage.



Our former investment
strategies primarily focused on companies in the technology, healthcare, life sciences and energy industries, which our former
management believed had the most favorable prospects for above-average growth and presented the most favorable investment opportunities.
Within these industries, investments were intended to be made in privately held companies across various stages of development,
including early, later and growth stage companies, more established companies and lower middle market companies. Lower middle market
companies were defined as companies with annual revenues ranging from $10 million to $100 million.



Former Investment Criteria
and Selection



Several criteria were
considered important in achieving our former investment strategies with respect to prospective portfolio companies. These criteria,
while not all-inclusive, provided general guidelines for our investment decisions.



| | • | Companies in growth industries.  We generally focused our investments in markets that were
expected to grow at above-average rates relative to other sectors of the economy. While we intended to make investments in privately
held companies across various stages of development, we generally required prospective portfolio companies to be beyond the seed
stage of development and to have already received or anticipated receiving commitments for their first round of institutional venture
capital or private equity financing before we considered making an investment.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Financial sponsor commitment. We generally invested in companies in which one or more venture capital
or private equity firms, which we referred to as "financial sponsors," have previously invested and remained committed
to future capital funding. We believed that financial sponsors could serve as a committed partner and would assist their portfolio
companies and their management teams in creating value.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Operating plan and cash resources. We generally required that prospective portfolio companies,
in addition to having sufficient access to capital to support leverage, demonstrated operating plans capable of generating cash
flows or the ability to potentially raise the additional capital necessary to cover their operating expenses and service their
debt.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Exit strategy. Prior to making an investment in a prospective portfolio company, we analyzed the
potential for a liquidity event that would enable us to realize appreciation in the value of our equity interest. Liquidity events
may include, but are not limited to, an IPO of common stock, a private sale of our equity interest to a third party, a strategic
merger or acquisition of the company, and a purchase of our equity interest by the company or one of its equity holders.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The foundation of our
former investment philosophy was investment analysis, research and diversification. We followed a rigorous selection process based
on:



| | • | An analysis of issuer creditworthiness and growth potential, including a quantitative and qualitative
assessment of the issuer’s business and future prospects, as well as an evaluation of a potential portfolio company provided
by our contacts in venture capital, private equity, and industry participants;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | An evaluation of the management team, including prior experience, cohesiveness, and years of collaboration
together, as well as the level of commitment demonstrated (both financially and otherwise) by the founders;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | An assessment of existing financial sponsors and their commitment to future capital funding, management
assistance and liquidity events;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



| | • | An analysis of business strategy, technology and intellectual property and long-term industry trends
based on a review of relevant industry publications and conversations with knowledgeable industry participants; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | An in-depth review and assessment of capital structure, financial results and financial projections.
| | - | ----------------------------------------------------------------------------------------------------



3







As of December 31, 2015,
our portfolio consisted of equity and equity-related investments in 11 private companies and one publicly traded company that were
made by prior management under a former investment strategy. We may make follow-on investments in our existing portfolio companies
to the extent we believe such investments are in the best interest of our stockholders. In evaluating follow-on investment opportunities,
we typically assess, among other factors, the possible adverse consequences to our existing investment if we elect not to make
a follow-on investment.



We have not taken a control
position in any of our existing portfolio companies through ownership, board seats, observation rights or other control features.
Accordingly, we are not in a position to control the management, operation or strategic decision-making of our existing portfolio
companies. Nevertheless, as part of a portfolio company investment, we have in most cases obtained information rights that give
us access to the portfolio company’s quarterly and annual financial statements, as well as the portfolio company’s
annual budget. We also attempt to have dialogue with our private portfolio company management teams to review the portfolio company’s
business prospects, financial results, and exit strategy plans. We monitor the financial trends of each portfolio company to assess
the performance of individual portfolio companies. as well as to evaluate overall portfolio quality and risk.



Subject to oversight by
our Board of Directors, our Administrator will continue to oversee our existing portfolio of equity and equity-related securities
consistent with past practices.



Portfolio Monitoring



Our Administrator will
monitor our portfolio companies to determine if each company is meeting its business plan, if available to us, and to assess the
appropriate course of action for each company.



We employ several methods
of evaluating and monitoring the performance and value of our investments, which may include, but are not limited to, the following:



| | • | Assessment of successful execution of the portfolio company’s business plan, achievement
of development milestones and compliance with applicable debt covenants;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Regular contact with portfolio company management and, if appropriate, the financial sponsor, to
discuss financial position, requirements and accomplishments;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Evaluation of a portfolio company’s success in achieving periodic benchmarks established
by our Administrator and portfolio company management;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| | • | Offering significant managerial assistance to our portfolio companies from our officers, managers
and personnel, including assistance in director and officer recruitment, referral of outside professionals such as management consultants
or bankers, providing financial, management and capital markets expertise through our investment adviser’s experience in
the business of the portfolio company; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Review of monthly and/or quarterly financial statements and financial projections of the portfolio company.
| | - | -----------------------------------------------------------------------------------------------------------



Our Administrator will
periodically evaluate all existing portfolio investments, both individually and as a component of our overall portfolio, to evaluate
and recommend to the Board of Directors when a portfolio company is raising capital as to whether we should make a follow-on investment.



Competition



Our primary competition
includes other investment funds, BDCs, investment banks and other financial services companies such as commercial banks and finance
companies. As we pursue the sale of our portfolio investments, these competitors may have considerably greater financial resources
than we do, may have a lower cost of funds, and may have higher risk tolerances or different risk assessments, which could allow
them to have a wider variety of investments and establish more relationships than we are able to do. Furthermore, many of our competitors
are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC.



Employees



Currently, we do not have
any employees.  The management of our investment portfolio is the responsibility of our Administrator and our Board of
Directors.



4







Administrative Services



On November 10, 2015,
our Board of Directors approved the engagement of US Bancorp to provide administration and accounting services to us pursuant to
an Administration Servicing Agreement and a Fund Accounting Servicing Agreement, respectively.



On November 13, 2015,
our Board of Directors approved the engagement of our Administrator to provide administrative consulting services to us, including
the provision of personnel to act as certain of our executive officers, including the Chief Executive Officer and Chief Financial
Officer, pursuant to an Administrator Consulting Agreement.



Our Administrator furnishes
us with equipment and clerical services, including responsibility for the financial records which we are required to maintain,
and preparing reports to our stockholders and reports filed with the SEC.  In addition, our Administrator assists us
in monitoring our portfolio accounting and bookkeeping, managing portfolio collections and reporting, performing internal audit
services, determining and publishing our net asset value, overseeing the preparation and filing of our tax returns and the printing
and dissemination of reports to our stockholders. In addition, our Administrator provides support for our risk management efforts
and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to
us by others.



Former Investment Advisory and Administrative
Services Agreement



BDCA Venture Adviser,
LLC previously served as our investment adviser and also provided us with administrative services pursuant to the Investment Advisory
Agreement. On October 5, 2015, our Board of Directors approved the termination of the Investment Advisory Agreement between us
and BDCA Venture Adviser effective as of the Termination Date. The Investment Advisory Agreement, which was entered into on July
1, 2014, was approved by our stockholders at the 2014 Annual Meeting of Stockholders held on June 16, 2014. All payments due under
the Investment Advisory Agreement as of the Termination Date were mutually agreed upon between us and BDCA Venture Adviser and
subsequently paid by us.



Under the Investment Advisory
Agreement, we paid BDCA Venture Adviser a fee for its investment advisory services consisting of two components: (i) a base management
fee, and (ii) an incentive fee. We also reimbursed BDCA Venture Adviser for our allocable portion of overhead and other administrative
expenses incurred by it in performing its administrative obligations under the Investment Advisory Agreement,
including our allocable portion of the compensation of our former Chief Financial Officer and Chief Compliance Officer, and their
respective staff.



The base management fee
(the "Base Fee") was calculated at an annual rate of 2% of our gross assets, where gross assets included any borrowings
for investment purposes. The Base Fee was calculated based on the value of our gross assets at the end of the most recently completed
calendar quarter, and adjusted for any equity capital raises or repurchases during the current calendar quarter. We paid the Base
Fee through the Termination Date at which time BDCA Venture Adviser’s obligation to provide services to us ended.



The incentive fee was
determined and payable in arrears as of the end of each calendar year (or upon the termination of the Investment Advisory Agreement,
as of the termination date) and equaled 20% of our realized capital gains, if any, on a cumulative basis from inception through
the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative
basis, less the aggregate amount of any previously paid incentive fees. For purposes of calculating the incentive fee, realized
capital gains and losses include both short-term and long-term (held more than 12 months) gains and losses. The incentive fee payable
to BDCA Venture Adviser was consistent with the Advisers Act. Under the Investment Advisory Agreement, BDCA Venture Adviser was
not entitled to an incentive fee on investment income generated from interest or dividends on our portfolio company investments.
No incentive fee was due and payable to BDCA Venture Adviser as of the Termination Date, and, accordingly, the accrued incentive
fee payable to BDCA Venture Adviser as of September 30, 2015 was reversed as of the Termination Date.



BDCA Venture Adviser agreed
that, to the extent that our Adjusted Operating Expenses (as defined below) in 2015 exceeded $1,500,000 (the “Excess Amount”),
BDCA Venture Adviser would, without recourse against or reimbursement by us, waive Reimbursable Expenses (as defined below) due
and owing by us and/or pay on behalf of us certain Adjusted Operating Expenses, in such amounts so that the total of the waived
Reimbursable Expenses and expenses paid by BDCA Venture Adviser on behalf of us equaled the Excess Amount. Adjusted Operating Expenses
was defined as our total operating expenses less Base Fees, incentive fees, any stock issuance costs, and any costs related to
borrowings by us (including any interest and fees), any litigation costs, expenses or fees and any extraordinary expenses. For
purposes of clarity, any operating expenses incurred by BDCA Venture Adviser and reimbursable by us with respect to 2015 (“Reimbursable
Expenses”) are included in Adjusted Operating Expenses. In connection with the termination of the Investment Adviser Agreement,
the Excess Amount and Adjusted Operating Expenses were calculated based on the eleven-month period ended November 30, 2015. There
were no expenses waived or reimbursed from BDCA Venture Adviser as of the Termination Date, and, accordingly, the amount due from
BDCA Venture Adviser as of September 30, 2015 was reversed as of the Termination Date.



5







Under the former Investment
Advisory Agreement, absent the willful misfeasance, bad faith or gross negligence of BDCA Venture Adviser or BDCA Venture Adviser’s
reckless disregard of its duties and obligations, we agreed to indemnify BDCA Venture Adviser (including its officers, managers,
agents, employees and members) for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and
amounts reasonably paid in settlement) arising out of BDCA Venture Adviser’s performance of its duties and obligations under
the Investment Advisory Agreement or otherwise as our investment adviser, except to the extent specified in the 1940 Act. Pursuant
to the former Investment Advisory Agreement, the indemnification provision shall remain in full force and effect, and BDCA Venture
Adviser shall remain entitled to the benefits thereof, notwithstanding any termination of the Investment Advisory Agreement.



Material U.S. Federal Income Tax Considerations



From incorporation through
December 31, 2009, we were treated as a corporation under the Internal Revenue Code of 1986, as amended (the "Code").
Effective January 1, 2010, we elected to be treated for tax purposes as a regulated investment company, or RIC, under the Code.
We have made no provision for income taxes as of December 31, 2015 and 2014. Our continued qualification as a RIC requires that
we comply with certain requirements contained in Subchapter M of the Code that may affect our ability to pursue additional business
opportunities or strategies that, if we were to determine we should pursue, could diminish the desirability of qualifying, or impede
our ability to qualify, as a RIC. For example, a RIC must meet certain requirements, including source of income and asset diversification
requirements (as described below) and distributing annually at least 90% of its investment company taxable income (the “Annual
Distribution Requirement”).



As a RIC, we generally
will not have to pay corporate-level federal income taxes on any investment company taxable income (which is generally our net
ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses) or
any realized net capital gains (which is generally net realized long-term capital gains in excess of net realized short-term capital
losses) that we distribute to our stockholders. We will be subject to United States federal income tax at the regular corporate
rates on any investment company taxable income or capital gain not distributed (or deemed distributed) to our stockholders.



In order to qualify and
continue to qualify as a RIC for federal income tax purposes and obtain the tax benefits accorded to a RIC, in addition to satisfying
the Annual Distribution Requirement, we must, among other things:



| | • | Have in effect at all times during each taxable year an election to be regulated as a business
development company under the 1940 Act;
| | - | --------------------------------------------------------------------------------------------------------------------------------------



| | • | Derive in each taxable year at least 90% of our gross income from (i) dividends, interest, payments
with respect to certain securities loans, gains from the sale of stock or other securities, or other income derived with respect
to our business of investing in such stock or securities and (ii) net income derived from an interest in a “qualified publicly
traded limited partnership” (the “90% Income Test”); and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Diversify our holdings so that at the end of each quarter of the taxable year:
| | - | ------------------------------------------------------------------------------



| | ◦ | at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities,
securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the
value of our assets or more than 10% of the outstanding voting securities of such issuer; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ◦ | no more than 25% of the value of our assets is invested in (i) securities (other than U.S. government
securities or securities of other RICs) of one issuer, (ii) securities of two or more issuers that are controlled, as determined
under applicable tax rules, by us and that are engaged in the same or similar or related trades or businesses, or (iii) securities
of one or more “qualified publicly traded partnerships” (the “Diversification Tests”).
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



6







Provided that we satisfy
the Diversification Tests as of the close of any quarter, we will not fail the Diversification Tests as of the close of a subsequent
quarter as a consequence of a discrepancy between the value of our assets and the requirements of the Diversification Tests that
is attributable solely to fluctuations in the value of our assets. Rather, we will fail the Diversification Tests as of the end
of a subsequent quarter only if such a discrepancy existed immediately after our acquisition of any asset and was wholly or partly
the result of that acquisition. In addition, if we fail the Diversification Tests as of the end of any quarter, we will not lose
our status as a RIC if we eliminate the discrepancy within thirty days of the end of such quarter and, if we eliminate the discrepancy
within that thirty-day period, we will be treated as having satisfied the Diversification Tests as of the end of such quarter.



We satisfied the above
RIC requirements during each of the taxable years since our election to be treated as a RIC for tax purposes. Since we did not
generate investment company taxable income in any of these taxable years, we were not required to make any distributions to satisfy
the Annual Distribution Requirement. We did not generate any realized net capital gains in 2015 and, as a result, we were not required
to make any distributions to satisfy the Excise Tax Avoidance Requirement, as described below. Because we distributed all of our
net realized capital gains for the years ended December 31, 2014 and 2013, no corporate-level federal income or excise taxes were
due on such net realized capital gains. As such, we have not made any provision for federal income or excise taxes as of December
31, 2015, 2014 and 2013.



Assuming we continue to
qualify as a RIC, our corporate-level federal income tax should be substantially reduced or eliminated to the extent that we distribute
any investment company taxable income or realized net capital gains to our stockholders. However, we will pay corporate-level federal
income tax on any amount of realized net capital gain that we elect to retain. In the event we retain some or all of our realized
net capital gains, we may designate the retained amount as a deemed distribution to stockholders. In such case, among other consequences,
we will pay corporate-level tax on the retained amount, each U.S. stockholder will be required to include its share of the deemed
distribution in income as if it had been actually distributed to the U.S. stockholder, and the U.S. stockholder will be entitled
to claim a credit or refund equal to its allocable share of the corporate-level tax we pay on the retained realized net capital
gain. The amount of the deemed distribution (net of such tax credit or refund) will be added to each U.S. stockholder's cost basis
for its common stock. In order to utilize the deemed distribution approach, we must provide written notice to our stockholders
prior to the expiration of 60 days after the close of the relevant taxable year. We cannot treat any of our investment company
taxable income as a “deemed distribution.”



As a RIC, we are also
subject to a 4% nondeductible federal excise tax on certain undistributed income unless we distribute in a timely manner an amount
at least equal to the sum of (i) 98% of our ordinary income for each calendar year, (ii) 98.2% of our capital gains in excess of
capital losses for the one-year period ending December 31 in that calendar year, and (iii) any ordinary income and realized net
capital gains for preceding years that were not distributed during such years (the “Excise Tax Avoidance Requirement”).
We will not be subject to this excise tax on amounts on which we are required to pay corporate income tax (such as retained realized
net capital gains which we designate as "undistributed capital gain" or a deemed distribution). We currently intend to
make sufficient distributions (including deemed distributions of retained realized net capital gains) each taxable year to avoid
the payment of this excise tax. We elected to calculate excise taxes related to any net capital gains on a calendar year basis
beginning with our 2012 tax returns.



The following simplified
examples illustrate the tax treatment under Subchapter M of the Code for us and our non-corporate U.S. stockholders with regard
to three possible distribution alternatives, assuming we realize, in 2015, a net capital gain of $1.00 per share, consisting entirely
of sales of non-real property assets held for more than 12 months. These illustrations exclude any additional 3.8% tax on their
“net investment income” for certain U.S. individuals.



Under Alternative A:
100% of net capital gain declared as a cash dividend and distributed to stockholders:



| | 1. | No federal income taxation at the Company level.
| | -- | ------------------------------------------------



| | 2. | Taxable stockholders receive a $1.00 per share dividend and pay federal income tax at a rate not
in excess of 20% or $0.20 per share, retaining $0.80 per share.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Non-taxable stockholders that file a federal tax return receive a $1.00 per share dividend and
pay no federal income tax, retaining $1.00 per share.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------



Under Alternative
B: 100% of net capital gain retained by the Company and designated as "undistributed capital gain" or deemed dividend:



7







| | 1. | The Company pays a corporate-level federal income tax of 35% on the undistributed gain or $0.35
per share and retains 65% of the gain or $0.65 per share.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Taxable stockholders increase their cost basis in their
stock by $0.65 per share. They are liable for federal income tax at a rate not in excess of 20% on 100% of the undistributed gain
of $1.00 per share or $0.20 per share in tax. Offsetting this tax, stockholders receive a tax credit equal to the $0.35 per share
tax paid by us, which offsets the $0.20 per share tax liability, resulting in an excess tax credit of $0.15 per share for each
such stockholder.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Non-taxable stockholders that file a federal income tax return receive a tax refund equal to $0.35
per share.
| | -- | -------------------------------------------------------------------------------------------------------------



Under Alternative
C: 100% of net capital gain retained by the Company, with no designated undistributed capital gain or deemed dividend:



| | 1. | The Company pays a corporate-level federal income tax of 35% on the retained gain or $0.35 per share.
| | -- | -----------------------------------------------------------------------------------------------------



| | 2. | There is no tax consequence at the stockholder level.
| | -- | -----------------------------------------------------



We are authorized to borrow
funds and to sell assets in order to satisfy the Annual Distribution Requirement and the Excise Tax Avoidance Requirement (collectively,
the “Distribution Requirements”). Further, under the 1940 Act, we are not permitted to make distributions to our stockholders
while our debt obligations and other senior securities are outstanding unless certain “asset coverage” tests are met.
Moreover, our ability to dispose of assets to meet the Distribution Requirements may be limited by: (i) the illiquid nature of
our portfolio, or (ii) other requirements relating to our status as a RIC, including the Diversification Tests. If we dispose of
assets in order to meet the Distribution Requirements, we may make such dispositions at times that, from an investment standpoint,
are not advantageous.



A RIC is limited in its
ability to deduct expenses in excess of its investment company taxable income. If our expenses in a given year exceed investment
company taxable income (which is likely to occur since our operating expenses are expected to exceed the amount of interest or
dividend income we receive on our current portfolio company investments), we would experience a net operating loss for that year.
However, a RIC is not permitted to carry forward net operating losses to subsequent years. We may for tax purposes have aggregate
taxable income for several years that we are required to distribute and that is taxable to our stockholders even if such income
is greater than the aggregate net income we actually earned during those years. Such required distributions may be made from our
cash assets or by liquidation of investments, if necessary. We may realize gains or losses from such liquidations. In the event
we realize net capital gains from such transactions, our stockholders may receive a larger capital gain distribution than they
would have received in the absence of such transactions.



If we are unable to continue
to qualify for treatment as a RIC, we would be subject to tax on all of our taxable income at regular corporate rates. We would
not be able to deduct distributions to stockholders, nor would distributions be required to be made. Such distributions would be
taxable to our stockholders. Subject to certain limitations under the Code, corporate distributees would be eligible for the dividends
received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return
of capital to the extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain.



If we fail to qualify
as a RIC in any taxable year, we would be required to satisfy the RIC qualification requirements in order to requalify as a RIC
and dispose of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable
to RICs that qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify
as a RIC no later than the second year following the nonqualifying year, we could be subject to tax on any unrealized net built-in
gains in the assets held by us during the period in which we failed to qualify as a RIC that were recognized within the subsequent
10 years, unless we made a special election to pay corporate-level tax on such built-in gain at the time of our requalification
as a RIC. If we fail to satisfy the 90% Income Test or the Diversification Test described above, however, we may be able to avoid
losing our status as a RIC by timely providing notice of such failure to the IRS, curing such failure and possibly paying an additional
tax.



Regulation as a BDC



We have elected to be
regulated as a BDC under the 1940 Act. The 1940 Act requires that a majority of our directors be persons other than "interested
persons," as that term is defined in the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of
our business so as to cease to be, or to withdraw our election as, a BDC without the approval of a "majority of our outstanding
voting securities," within the meaning of the 1940 Act.



8







Qualifying assets



Under the 1940 Act, a
BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to here
as "qualifying assets," unless, at the time the acquisition is made, qualifying assets represent at least 70% of the
company’s total assets (the "70% test"). The principal categories of qualifying assets relevant to our business
are any of the following:



| | 1. | Securities purchased in transactions not involving any public offering from the issuer of such
securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or
has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject
to such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. | is organized under the laws of, and has its principal place of business in, the United States;
| | -- | ----------------------------------------------------------------------------------------------



| | b. | is not an investment company (other than a small business investment company wholly owned by the
BDC) or a company that would be an investment company but for certain exclusions under the 1940 Act; and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. | Satisfies any of the following:
| | -- | -------------------------------



| | i. | does not have any class of securities that is traded on a national securities exchange;
| | -- | ---------------------------------------------------------------------------------------



| | ii. | has a class of securities listed on a national securities exchange, but has an aggregate market
value of outstanding voting and non-voting common equity of less than $250 million;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. | is controlled by a BDC or group of companies including a BDC and the BDC has an affiliated person
who is a director of the eligible portfolio company; or
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | iv. | is a small and solvent company having gross assets of not more than $4.0 million and capital and
surplus of not less than $2.0 million.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Securities of any eligible portfolio company that we control.
| | -- | -------------------------------------------------------------



| | 3. | Securities purchased in a private transaction from a U.S. issuer that is not an investment company
or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to
reorganization or if the issuer, immediately prior to the purchase of its securities was unable to meet its obligations as they
came due without material assistance other than conventional lending or financing arrangements.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | Securities of an eligible portfolio company purchased from any person in a private transaction
if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. | Securities received in exchange for or distributed on or with respect to securities described in
(1) through (4) above, or pursuant to the exercise of warrants or rights relating to such securities.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | Cash, cash equivalents, certificates of deposit, U.S. Government securities or high-quality debt
securities maturing in one year or less from the time of investment.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



If less than 70% of our
total assets are comprised of qualifying assets, we would generally not be permitted to acquire any additional non-qualifying assets,
until such time as 70% of our then current total assets were comprised of qualifying assets. We would not be required, however,
to dispose of any non-qualifying assets in such circumstances. As of December 31, 2015, approximately 99.5% of our portfolio company
investments constituted qualifying investments under Section 55(a) of the 1940 Act.



We do not intend to acquire
securities issued by any investment company that exceed the limits imposed by the 1940 Act. Under these limits, we generally cannot
acquire more than 3% of the voting stock of any investment company (as defined in the 1940 Act), invest more than 5% of the value
of our gross assets in the securities of one such investment company or invest more than 10% of the value of our gross assets in
the securities of such investment companies in the aggregate.



9







Managerial assistance
to portfolio companies



In general, in order to
count portfolio securities as qualifying assets for the purpose of the 70% test, we must either control the issuer of the securities
or must offer to make available to the issuer of the securities (other than small and solvent companies described above) significant
managerial assistance; except that, where we purchase such securities in conjunction with one or more other persons acting together,
one of the other persons in the group may make available such managerial assistance. Making available managerial assistance means,
among other things, any arrangement whereby the BDC, through its directors, officers or employees, offers to provide, and, if requested
to, provides significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio
company.



Senior securities



We are permitted, under
specified conditions, to issue multiple classes of debt and one class of stock senior to our common stock if our asset coverage,
as defined in the 1940 Act, is at least equal to 200% immediately after each such issuance. In addition, while any senior securities
remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities
or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow
amounts up to 5% of the value of our gross assets for temporary or emergency purposes without regard to asset coverage.



We may borrow funds to
make investments, to the extent we determine that additional capital would allow us to take advantage of additional investment
opportunities or if our Board of Directors determines that leveraging our portfolio would be in our best interest and the best
interests of our stockholders.



Proxy voting policies
and procedures



We vote proxies relating
to our portfolio securities in the best interest of our stockholders. We review on a case-by-case basis each proposal submitted
to a stockholder vote to determine its impact on the portfolio securities held by us. Although we generally vote against proposals
that may have a negative impact on our portfolio securities, we may vote for such a proposal if there exists compelling long-term
reasons to do so.



Our proxy voting decisions
are made by our Board of Directors. To ensure that our vote is not the product of a conflict of interest, we require that any member
of the Board of Directors disclose to our Chief Compliance Officer any potential conflict that he is aware of and obtain the consent
of the Chief Compliance Officer prior to entering into discussion with the Board of Directors with respect to how the proxy should
be voted.



Stockholders may obtain
information regarding how we voted proxies with respect to our portfolio securities by making a written request for proxy voting
information to: Chief Executive Officer, Crossroads Capital, Inc., 128 North 13th Street, Suite 1100, Lincoln, Nebraska
68508.



Temporary investments



Pending investment in
other types of "qualifying assets," as described above, our investments may consist of cash, cash equivalents, certificates
of deposit, U.S. government securities or high-quality debt securities maturing in one year or less.



Code of Ethics



We have adopted a Code
of Ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain
transactions by our personnel. Our Code of Ethics generally does not permit investments by officers and directors in securities
that may be purchased or held by us. The Code of Ethics is available on the SEC’s website at www.sec.gov. You may
also obtain a copy of the Code of Ethics, after paying a duplicating fee, by electronic request at the following email address:
publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, 100 F Street, N.E., Washington, DC 20549. You may also
obtain a copy of our Code of Ethics on our website at www.xroadscap.com.



Capital Raising



We do not intend to raise
additional equity capital in the foreseeable future.



Compliance Policies
and Procedures



We have adopted and implemented
written policies and procedures reasonably designed to detect and prevent violation of the federal securities laws and are required
to review these compliance policies and procedures annually for their adequacy and the effectiveness of their implementation and
designate a Chief Compliance Officer to be responsible for administering the policies and procedures.



10







Sarbanes-Oxley Act



The Sarbanes-Oxley Act
imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. Many of these requirements affect
us. For example:



•      Pursuant to
Rule 13a-14 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), our Chief Executive Officer and Chief
Financial Officer must certify the accuracy of the financial statements contained in our periodic reports;



•       Pursuant to
Item 307 of Regulation S-K, our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls
and procedures;



•       Pursuant to
Rule 13a-15 of the Exchange Act, our management must prepare an annual report regarding its assessment of our internal controls
over financial reporting and, if, as and when, our public float exceeds $75 million, must obtain an audit of the effectiveness
of internal controls over financial reporting performed by our independent registered public accounting firm;



•       Pursuant to
Item 308 of Regulation S-K and Rule 13a-15 of the Exchange Act, our periodic reports must disclose whether there were significant
changes in our internal controls over financial reporting or in other factors that could significantly affect these controls subsequent
to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses;
and



•       Pursuant to
Section 404 of the Sarbanes-Oxley Act and Rule 13a-15 of the Exchange Act, we are required to include in our annual report on Form
10-K a report from our management on internal controls over financial reporting, including a statement that our management is responsible
for establishing and maintaining adequate internal control over financial reporting as well as our management's assessment of the
effectiveness of our internal control over financial reporting.



A reporting company that
is a non-accelerated filer (with a public float below $75 million as of June 30 of the previous year) is exempt from the requirement
to obtain an audit of the effectiveness of internal controls over financial reporting performed by their auditors. Accordingly,
until such time as we have a public float in excess of $75 million, our auditors will not need to report on our management’s
assessment of our internal control over financial reporting. However, we will be required to assess the effectiveness of our internal
controls over financial reporting each year. Based on our public float at June 30, 2015, we are a non-accelerated filer for the
year ended December 31, 2015 and, thus, we are not required to obtain an audit of the effectiveness of internal controls over financial
reporting for that year.



The Sarbanes-Oxley Act
requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the regulations
promulgated thereunder. We will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley
Act and will take actions necessary to ensure that we are in compliance therewith.



Privacy Policy



We are committed to protecting
your privacy. This privacy notice, which is required by federal law, explains the privacy policy of Crossroads Capital, Inc. This
notice supersedes any other privacy notice you may have received from Crossroads Capital, Inc., and its terms apply both to our
current stockholders and to former stockholders as well.



We will safeguard, according
to strict standards of security and confidentiality, all information we receive about you. With regard to this information, we
maintain procedural safeguards that comply with federal standards.



Our goal is to limit the
collection and use of information about you. In certain cases, when you purchase shares of our common stock, our transfer agent
collects personal information about you, such as your name, address, Social Security number or tax identification number. This
information is used only so that we can send you annual reports, proxy statements and other information required by law, and to
send you information we believe may be of interest to you.



We do not share such information
with any non-affiliated third party except as described below:



•       It is our policy
that only authorized employees of our Administrator who need to know your personal information will have access to it.



•       We may disclose
stockholder-related information to companies that provide services on our behalf, such as record keeping, processing your trades,
and mailing you information. These companies are required to protect your information and use it solely for the purpose for which
they received it.



11







•       If required
by law, we may disclose stockholder-related information in accordance with a court order or at the request of government regulators.
Only that information required by law, subpoena, or court order will be disclosed.



Other



We may also be prohibited
under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our Board
of Directors who are not interested persons and, in some cases, prior approval by the SEC.



We expect to be periodically
examined by the SEC for compliance with the 1940 Act.



We are required to provide
and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement.  Furthermore,
as a BDC, we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from
willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s
office.



Available Information



We are required to file
with or submit to the SEC annual, quarterly and current reports, proxy statements and other information meeting the informational
requirements of the Exchange Act.  You may inspect and copy these reports, proxy statements and other information, as
well as related exhibits and schedules, at the Public Reference Room of the SEC.  You may obtain information on the operation
of the Public Reference Room by calling the SEC at (202) 551-8090.  The SEC maintains an Internet site that contains
reports, proxy and information statements and other information filed electronically by us with the SEC, which are available on
the SEC’s website atwww.sec.gov.  Copies of these reports, proxy and information statements and other information
may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or
by writing the SEC’s Public Reference Section, 100 F Street, N.E., Washington, DC 20549.  This information is also
available free of charge by contacting us at Crossroads Capital, Inc., 128 North 13th Street, Suite 1100, Lincoln, Nebraska
68508, (402) 261-5345 or on our website at www.xroadscap.com.  We make available free of charge on our website
access to these reports, proxy and information statements and other information as soon as reasonably practicable after we electronically
file such material with, or furnish it to, the SEC.  Information contained on our website is not incorporated by reference
into this annual report on Form 10-K and you should not consider information contained on our website to be part of this annual
report on Form 10-K.



Item 1A. Risk Factors



On January 20, 2016, our
Board of Directors approved our Investment Objective. Our Investment Objective and existing portfolio involve a number of significant
risks discussed below. Additional risks and uncertainties not presently known to us might also impair our operations and performance.  If
any of the following events occur, our business, financial condition and results of operations could be materially and adversely
affected.  In such case, our net asset value and the trading price of our common stock could decline, and you may lose
all or part of your investment in our common stock.



Risks Related to our Investment Objective



Our expenses will
increase as a percentage of our net assets and we may be unable to achieve the economies of scale we believe are necessary to provide
our stockholders with maximum distributions.



Because we intend to seek
to monetize our existing investments and make distributions from the proceeds thereof rather than make investments in new portfolio
companies, our net assets will decline and operating expenses will increase as a percentage of our net assets. We must bear certain
fixed expenses, such as certain administrative, governance, regulatory and compliance costs that do not generally vary based on
our size. As a public company, we incur legal, accounting and other expenses, including costs associated with the periodic reporting
requirements applicable to a company whose securities are registered under the Exchange Act, as well as additional corporate governance
requirements, including requirements under the Sarbanes-Oxley Act, and other rules implemented by the SEC, that do not generally
vary based on our total assets.



Because the equity investments
in our current portfolio do not generate current income, and because we intend to distribute 100% of our net realized capital gains
on at least an annual basis, our operating expenses have historically caused a steady decline in, and depletion of, our net assets.
This depletion of net assets will continue for the foreseeable future. Moreover, the amounts we will be able to distribute to our
stockholders from the sale or other monetization of our portfolio investments will be reduced by our operating expenses and may
result in losses and no distributions for an extended period of time.



12







The recent change
to our Investment Objective, including the monetization of our portfolio holdings, could significantly impact the value of our
investments and the amounts realized upon the sale of our investments.



On January 20, 2016, our
Board of Directors changed our investment objective to preserve capital and maximize stockholder value by pursuing the sale of
our portfolio investments, limiting expenses and deploying surplus cash as appropriate, including into yielding investments to
offset, in part, operating expenses. Subsequent to this change in our investment objective and in recognition that the monetization
of our current holdings under our prior policies and investment objective could take three to five years or more and the amounts
realized may be less than current fair values, our Board of Directors on March 25, 2016 resolved to monetize our portfolio holdings
at the earliest practicable date.



This resolution, together
with adverse developments in financial markets to date in 2016, makes our investment portfolio susceptible to the risk that near-term
sales could result in amounts realized being less than the fair values determined as of December 31, 2015, as we actively seek
to sell our investments, either individually or in groups, it is possible that we will experience substantial differences in the
exit prices ultimately achieved on our portfolio holdings as compared to the respective fair values as of December 31, 2015. Such
values were determined consistent with our disclosed policies and procedures, and the methodologies included therein, and which
were based on the concept of an orderly transaction in accordance with Financial Accounting Standards Board ("FASB"),
Accounting Standards Codification Topic 820, "Fair Value Measurement and Disclosures," ("ASC 820").



A lack of IPO or
strategic sale/merger opportunities may cause our existing portfolio companies to stay in our portfolio longer, leading to lower
returns, unrealized depreciation, or realized losses on our pre-IPO equity investments.



A typical "liquidity
event" for our pre-IPO equity investments may be an IPO or a strategic sale/merger. We currently hold investments in eleven
private portfolio companies which were made under our former pre-IPO investment strategy. A lack of IPO or strategic sale/merger
opportunities for our pre-IPO equity investments could lead to companies remaining in our portfolio as private entities still requiring
funding. This situation could lead to unrealized depreciation and realized losses as some companies run short of cash and have
to accept lower valuations in private financings or are not able to access additional capital at all, cease business activities
or enter a bankruptcy proceeding. A lack of IPO or strategic sale/merger opportunities for our pre-IPO equity investments could
also cause some financial sponsors to change their strategies, leading some of them to reduce funding of their portfolio companies
and making it more difficult for such companies to access capital and to fulfill their potential, which can result in unrealized
depreciation and realized losses in such companies by other capital providers including us. In the event our existing portfolio
companies experience a delay in completing an IPO or strategic sale/merger or we are unable to generate capital gains on the disposition
of our pre-IPO equity investments either following our contractual lock-up period in the case of an IPO or upon a strategic sale/merger,
we may have no or limited capital gains from which to make distributions to our stockholders.



Because the pre-IPO portfolio
company equity securities that we acquired under our former investment strategy are typically illiquid until an IPO or sale/merger
of the company, we generally cannot predict the regularity and time periods between sales of these equity investments and the realizations
of capital gains, if any, from such sales.  Since we do not expect to generate current income from our pre-IPO portfolio
company equity investments, our annual operating expenses will be financed primarily from our capital base during periods of time
between realizations of capital gains on our equity existing investments.



We may have difficulty
monetizing assets, which could have an adverse impact on our operating results as well as our ability to make distributions.



As we begin to monetize
our portfolio company holdings, we may be unable to monetize assets in a challenging market environment that may preclude
buyers from purchasing our portfolio investments at the fair values established by our Board of Directors. We are susceptible to
the risk of significant loss if we are forced to discount the value of our investments in order to monetize assets to
provide liquidity to fund operations. In addition, we may be unable to monetize assets in the relatively near future and we
will not be able to sell a portfolio investment if it results in our failure to maintain BDC status. Some assets may take years
to monetize, which could result in increased costs to us during such period and adversely affect our financial condition, business
and results of operations, as well as our ability to make distributions. Outside of IPOs or a strategic sale or merger involving
our existing portfolio companies, which we do not expect during the next months, there may be limited opportunities to sell our
interests in existing private portfolio companies to third parties in privately negotiated transactions. There can be no assurance
that the prices we realize for our portfolio company holdings will be equal to or more than their current fair values. Accordingly,
it is possible that an orderly monetization of our current holdings may take three to five years or more and the amounts realized
may be less than current fair values.



13







Risks Related to Existing Investments



There will be uncertainty
as to the value of our portfolio investments.



As of December 31, 2015,
approximately 98% of the fair value of our portfolio investments were in the form of securities that are not publicly traded. The
fair value of securities and other investments that are not publicly traded may not be readily determinable. We expect to value
these securities on a quarterly basis in accordance with our valuation policy, which is at all times consistent with GAAP. Our
Board of Directors is utilizing the services of a third-party valuation firm and a third-party valuation consultant to aid it in
determining the fair value of these securities. Our Board of Directors will discuss valuations and determine the fair value in
good faith based on the input of our Administrator and the respective third-party valuation firm. The factors that may be considered
in fair value pricing our investments include the nature and realizable value of any collateral, the portfolio company’s
ability to make payments and its earnings, the markets in which the portfolio company does business, comparisons to publicly traded
companies, discounted cash flow and other relevant factors. Because such valuations, and particularly valuations of private securities
and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations
of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Our
net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher
or lower than the amounts that we ultimately realize upon the disposal of such securities.



Our portfolio companies
are subject to many risks, including volatility, intense competition, current operating losses, shortened product life cycles and
periodic downturns.



Our portfolio companies
consist primarily of investments in Growth Companies in industries that our former investment adviser believed were poised to grow
at above-average rates relative to other sectors, which may have relatively limited operating histories and may be particularly
vulnerable to U.S. and foreign economic downturns. Many of these companies have narrow product lines and small market shares, compared
to larger established publicly owned firms, which tend to render them more vulnerable to competitors’ actions and market
conditions, as well as general economic downturns. Most of these portfolio companies experience operating losses, which may be
substantial, and there can be no assurance when or if such companies will operate at a profit. Many of the companies targeted for
investment had more limited access to capital and higher funding costs, will have a weaker financial position and will need additional
capital to expand or complete their business plans. They may face intense competition, including from larger, more established
companies with greater financial, technical and marketing resources. These companies generally have less predictable operating
results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to
a substantial risk of obsolescence, and require substantial additional capital to support their operations, finance expansion or
maintain their competitive position. The revenues, income (or losses) and valuations of these companies can and often do fluctuate
suddenly and dramatically. For these reasons, our portfolio companies, if rated by one or more ratings agencies, would typically
be rated below "investment grade," which refers to securities rated by ratings agencies below the four highest rating
categories. In addition, the growth industries that were targeted under the former investment strategy including, but not limited
to, technology, healthcare, life sciences and energy, are generally characterized by abrupt business cycles and intense competition,
and the competitive environment can change abruptly due to rapidly evolving technology. Therefore, these portfolio companies may
face considerably more risk than companies in other industry sectors. Accordingly, these factors could impair their cash flow or
result in other events, such as bankruptcy, which could limit their ability to repay their obligations to us and may materially
adversely affect the return on, or the recovery of, our investments in these businesses.



Because of rapid technological
change, the average selling prices of products and some services provided by our portfolio companies may decrease with corresponding
rapid speed over their productive lives. These decreases could adversely affect their operating results and cash flow, their ability
to meet obligations under their debt securities and the value of their equity securities. This could, in turn, materially adversely
affect our business, financial condition and results of operations.



14







Our investments
in private Growth Companies present certain challenges, including the lack of available information about these companies, a dependence
on the talents and efforts of only a few key personnel at a given portfolio company, a lack of a diversified product line, a dependence
on several key customers and a greater vulnerability to economic downturns.



Under our former investment
strategy, investments were made in private Growth Companies across various stages of development. Generally, at the time of these
investments, there was little publicly available information about these businesses since they are primarily privately owned. Therefore,
although our former investment adviser performed due diligence investigations on these portfolio companies, their operations and
their prospects, we may not have learned all of the material information we needed to know regarding these businesses prior to
making our investments. At the time of our investments, we typically only had access to the portfolio company’s actual financial
results as of and for the most recent quarter end or, in certain cases, the quarter end preceding the most recent quarter end.
In addition, we typically relied on financial statements from a prior year-end which have not been audited. There can be no assurance
that the information that we obtained with respect to any investment was reliable. If we were unable to uncover all material information
about these companies, we may not have made a fully informed investment decision, and we may lose money on our investments. Also,
privately held companies frequently have less diverse product lines, dependence on a few key customers and a smaller market presence
than larger competitors. Thus, they are generally more vulnerable to economic downturns and a dependence on a few key sources of
revenue and may experience substantial variations in operating results. These factors could affect our investment returns.



In addition, our success
depends, in large part, upon the abilities of the key management personnel of our portfolio companies, who are responsible for
the day-to-day operations of our portfolio companies. Competition for qualified personnel is intense at any stage of a company’s
development, particularly so in the growth industries in which we hold investments. The loss of one or more key managers can hinder
or delay a company’s implementation of its business plan and harm its financial condition. Our portfolio companies may not
be able to attract and retain qualified managers and personnel. Any inability to do so may negatively affect our investment returns.



Our existing investments
may become concentrated in certain industries and in a limited number of companies, which subjects us to the risk of significant
loss if any of the industry sectors experience a downturn.



We currently hold investments
in 12 portfolio companies and do not expect to make investments in additional portfolio companies. As a consequence of this limited
number of investments, the aggregate returns we realize may be significantly adversely affected if a small number of investments
perform poorly or if we need to write down the value of any one investment. Beyond the asset diversification requirements to which
we will be subject as a RIC, we do not have fixed guidelines for diversification or limitations on the size of our investments
in any one portfolio company and our investments could be concentrated in relatively few issuers. In addition, our portfolio primarily
consists of Growth Companies, including those in technology, healthcare, life sciences, energy and other industries with above-average
rates of growth, at various stages of development. As a result, a downturn in industry sectors and particularly those in which
we are heavily concentrated could materially adversely affect our financial condition.



Our financial results
could be negatively affected if a significant portfolio investment fails to perform as expected.



Our total investment in
companies may be significant individually or in the aggregate. As a result, if a significant investment in one or more companies
fails to perform as expected, our financial results could be more negatively affected and the magnitude of the loss could be more
significant than if we had made smaller investments in more companies.



We cannot assure you that
any of our investments in our portfolio companies will be successful. There can be no assurance as to the levels of defaults or
recoveries that may be experienced on our debt investments. The secured and unsecured debt in which we invest may be issued by
companies with limited financial resources and limited access to alternative financing. Issuers of debt may be unable to meet their
obligations under their debt securities that we hold. Such developments may be accompanied by deterioration in the value of collateral,
if any, backing our investments. Moreover, as we monetize our investments, the remaining investments will represent a larger percentage
of our assets and a failure of one of such investments to perform will have a greater impact on our financial results. This could
lead to a decline in value of our debt investments, which could result in a decline in our net earnings and NAV. We may lose our
entire investment in any or all of our portfolio companies.



15







Most of our portfolio
companies will need additional capital, which may not be readily available.



Most of the portfolio
companies targeted under our former investment strategy may have limited financial resources and typically require substantial
additional financing to satisfy their continuing working capital and other capital requirements. We cannot predict the circumstances
or market conditions under which these portfolio companies will seek additional capital. Each round of institutional equity financing
is typically intended to provide a company with only enough capital to reach the next stage of development. It is possible that
one or more of our portfolio companies will not be able to raise additional financing or may be able to do so only at a price or
on terms that are unfavorable to the portfolio company, either of which would negatively impact our investment returns. Some of
these companies may be unable to obtain sufficient financing from any provider of capital under any terms, thereby requiring these
companies to cease or curtail business operations. Accordingly, investments in these types of companies generally entails a higher
risk of loss than investments in companies that do not have significant incremental capital raising requirements.



Portfolio companies
that do not have venture capital or private equity firms as financial sponsors may entail a higher risk of loss than do companies
with institutional equity investors, which could increase the risk of loss of your investment.



Portfolio companies that
do not have venture capital or private equity investors as financial sponsors may be unable to raise any additional capital to
satisfy their obligations or to raise sufficient additional capital to reach the next stage of development. Portfolio companies
that do not have financial sponsors may be less financially sophisticated and may not have access to independent members to serve
on their boards, which means that they may be less successful than portfolio companies sponsored by venture capital or private
equity firms. Accordingly, investments in these types of companies may entail a higher risk of loss than would financing companies
that have a financial sponsor.



If our portfolio
companies are unable to commercialize their technologies, products, business concepts or services, the returns on our debt and
equity investments could be adversely affected.



The value of our debt
and equity investments in our portfolio companies may decline if our portfolio companies are not able to commercialize their technology,
products, business concepts or services. Additionally, although some of our portfolio companies may already have a commercially
successful product or product line at the time of our investment, technology-related products and services often have a more limited
market or life span than products in other industries. Thus, the ultimate success of these companies often depends on their ability
to innovate continually in increasingly competitive markets. If they are unable to do so, our investment returns could be adversely
affected, and their ability to service their debt obligations to us over the life of a loan could be impaired. Our portfolio companies
may be unable to acquire or develop successful new technologies and the intellectual property they currently hold may not remain
viable. Even if our portfolio companies are able to develop commercially viable products, the market for new products and services
is highly competitive and rapidly changing. Neither our portfolio companies nor we have any control over the pace of technology
development. Commercial success is difficult to predict, and the marketing efforts of our portfolio companies may not be successful.



If our portfolio
companies are unable to protect their intellectual property rights, our business and prospects could be harmed, and if portfolio
companies are required to devote significant resources to protecting their intellectual property rights, the value of our investment
could be reduced.



Our future success and
competitive position depends in part upon the ability of our portfolio companies to obtain, maintain and protect proprietary technology
used in their products and services. The intellectual property held by our portfolio companies often represents a substantial portion
of the collateral securing our debt investments or constitutes a significant portion of the portfolio companies’ value that
may be available in a downside scenario to repay our secured debt investments. Our portfolio companies rely, in part, on patent,
trade secret and trademark law to protect that technology, but competitors may misappropriate their intellectual property, and
disputes as to ownership of intellectual property may arise. Portfolio companies may, from time to time, be required to institute
litigation to enforce their patents, copyrights or other intellectual property rights, protect their trade secrets, determine the
validity and scope of the proprietary rights of others or defend against claims of infringement. Such litigation could result in
substantial costs and diversion of resources. Similarly, if a portfolio company is found to infringe or misappropriate a third
party’s patent or other proprietary rights, it could be required to pay damages to the third party, alter its products or
processes, obtain a license from the third party or cease activities utilizing the proprietary rights, including making or selling
products utilizing the proprietary rights. Any of the foregoing events could negatively affect both the portfolio company’s
ability to service our debt investment and the value of any related debt and equity securities that we own, as well as the value
of any collateral securing our investment.



16







Our investments
in technology companies are subject to many risks, including regulatory concerns, litigation risks and intense competition.



Investments in technology
companies are subject to substantial risks. For example, our portfolio companies face intense competition since their businesses
are rapidly evolving, intensely competitive and subject to changing technology, shifting user needs and frequent introductions
of new products and services. Potential competitors to our portfolio companies in the technology industry range from large and
established companies to emerging start-ups. Further, such companies are subject to laws that were adopted prior to the advent
of the Internet and related technologies and, as a result, may not contemplate or address the unique issues of the Internet and
related technologies. The laws that do reference the Internet are being interpreted by the courts, but their applicability and
scope remain uncertain. Claims have been threatened and filed under both U.S. and foreign laws for defamation, invasion of privacy
and other tort claims, unlawful activity, copyright and trademark infringement, or other theories based on the nature and content
of the materials searched and the ads posted by a company’s users, a company’s products and services, or content generated
by a company’s users. Further, the growth of technology companies into a variety of new fields implicate a variety of new
regulatory issues and may subject such companies to increased regulatory scrutiny, particularly in the U.S. and Europe. Any of
these factors could materially and adversely affect the operations of a portfolio company in the technology industry and, in turn,
impair our ability to timely collect principal and interest payments owed to us or adversely affect the value of these portfolio
companies.



Our investments
in the healthcare and life sciences industries are subject to extensive government regulation, litigation risk and certain other
risks particular to that industry.



Portfolio companies in
the healthcare and life sciences industries are subject to extensive regulation by the Food and Drug Administration, or the FDA,
and to a lesser extent, other federal, state and other foreign agencies. If any of these portfolio companies fail to comply with
applicable regulations, they could be subject to significant penalties and claims that could materially and adversely affect their
operations. Portfolio companies that produce medical devices or drugs are subject to the expense, delay and uncertainty of the
regulatory approval process for their products and, even if approved, these products may not be accepted in the marketplace. In
addition, governmental budgetary constraints effecting the regulatory approval process, new laws, regulations or judicial interpretations
of existing laws and regulations might adversely affect a portfolio company in this industry. Portfolio companies in the healthcare
and life sciences industries may also have a limited number of suppliers of necessary components or a limited number of manufacturers
for their products, and therefore face a risk of disruption to their manufacturing process if they are unable to find alternative
suppliers when needed. Any of these factors could materially and adversely affect the operations of a portfolio company in the
healthcare and life sciences industries and, in turn, impair our ability to timely collect principal and interest payments owed
to us and adversely affect the value of these portfolio companies.



Our investments
in life sciences companies are subject to numerous risks, including competition, extensive government regulation, product liability
and commercial difficulties.



Our investments in companies
in the life sciences industries, including biotechnology, pharmaceuticals and medical device companies are subject to numerous
risks. The successful and timely implementation of the business model of our biotechnology, pharmaceutical and medical device portfolio
companies depends on their ability to adapt to changing technologies and introduce new products. As competitors continue to introduce
competitive products, the development and acquisition of innovative products and technologies that improve efficacy, safety, patient’s
and clinician’s ease of use and cost-effectiveness are important to the success of such portfolio companies. The success
of new product offerings will depend on many factors, including the ability to properly anticipate and satisfy customer needs,
obtain regulatory approvals on a timely basis, develop and manufacture products in an economic and timely manner, obtain or maintain
advantageous positions with respect to intellectual property, and differentiate products from those of competitors. Failure by
our portfolio companies to introduce planned products or other new products or to introduce products on schedule could have a material
adverse effect on our business, financial condition and results of operations.



17







Further, the development
of products by biotechnology, pharmaceutical and medical device companies requires significant research and development, clinical
trials and regulatory approvals. The results of product development efforts may be affected by a number of factors, including the
ability to innovate, develop and manufacture new products, complete clinical trials, obtain regulatory approvals and reimbursement
in the U.S. and abroad, or gain and maintain market approval of products. In addition, regulatory review processes by U.S. and
foreign agencies may extend longer than anticipated as a result of decreased funding and tighter fiscal budgets. Further, patents
attained by others can preclude or delay the commercialization of a product. There can be no assurance that any products now in
development will achieve technological feasibility, obtain regulatory approval, or gain market acceptance. Failure can occur at
any point in the development process, including after significant funds have been invested. Products may fail to reach the market
or may have only limited commercial success because of efficacy or safety concerns, failure to achieve positive clinical outcomes,
inability to obtain necessary regulatory approvals, failure to achieve market adoption, limited scope of approved uses, excessive
costs to manufacture, the failure to establish or maintain intellectual property rights, or the infringement of intellectual property
rights of others.



Changes in healthcare
laws and other regulations applicable to some of our portfolio companies’ businesses may constrain their ability to offer
their products and services.



Changes in healthcare
or other laws and regulations applicable to the businesses of some of our portfolio companies may occur that could increase their
compliance and other costs of doing business, require significant systems enhancements, or render their products or services less
profitable or obsolete, any of which could have a material adverse effect on their results of operations. There has also been an
increased political and regulatory focus on healthcare laws in recent years, and new legislation could have a material effect on
the business and operations of some of our portfolio companies.



Our investments
in the energy and energy-related technology industries are subject to many risks, including volatility, intense competition,
unproven technologies, periodic downturns, loss of government subsidies and incentives, and potential litigation.



Our investments in energy
and energy-related technology companies are subject to substantial operational risks, such as underestimated cost projections,
unanticipated operation and maintenance expenses, loss of government subsidies, and inability to deliver cost-effective alternative
energy solutions compared to traditional energy products. In addition, energy companies employ a variety of means of increasing
cash flow, including increasing utilization of existing facilities, expanding operations through new construction or acquisitions,
or securing additional long-term contracts. Thus, energy and energy-related companies in our portfolio may be subject to construction
risk, acquisition risk or other risks arising from their specific business strategies. Furthermore, production levels for solar,
wind and other renewable energies may be dependent upon adequate sunlight, wind, or biogas production, which can vary from market
to market and period to period, resulting in volatility in production levels and profitability. In addition, our energy companies
may have narrow product lines and small market shares, which tend to render them more vulnerable to competitors’ actions
and market conditions, as well as to general economic downturns. The revenues, income (or losses) and valuations of energy and
energy-related technology companies can and often do fluctuate suddenly and dramatically and the markets in which these companies
operate are generally characterized by abrupt business cycles and intense competition.



Demand for energy technology
and renewable energy is also influenced by the available supply and prices for other energy products, such as coal, oil and natural
gases. A change in prices in these energy products could reduce demand for alternative energy. Our investments in energy companies
also face potential litigation, including significant warranty and product liability claims, as well as class action and government
claims arising from business failures of companies supported government subsidies. Such litigation could adversely affect the business
and results of operations of our energy portfolio companies. There is also particular uncertainty about whether agreements providing
government incentives and subsidies for reductions in greenhouse gas emissions, such as the Kyoto Protocol, will continue and whether
countries around the world will enact or maintain legislation that provides such incentives and subsidies for reductions in greenhouse
gas emissions, without which such investments in energy technology dependent portfolio companies may not be economical or financing
for such projects may become unavailable. As a result, these portfolio company investments face considerable risk, including
the risk that favorable regulatory regimes or government subsidies and incentives expire or are adversely modified. Any of these
factors could materially and adversely affect the operations of a portfolio company in the energy and energy-related technology
industries and, in turn, impair our ability to timely collect principal and interest payments owed to us and adversely affect the
value of these portfolio companies.



18







Our investments
in obligations of non-U.S. obligors, involve certain risks related to regional economic conditions and risks not normally associated
with investments in the obligations of sovereign and corporate obligors located in the United States.



Investments in the obligations
of non-U.S. obligors involve certain special risks related to regional economic conditions and sovereign risks which are not normally
associated with investments in the obligations of sovereign and corporate obligors located in the U.S. We are unable to provide
any information regarding the specific risks associated with purchasing a loan, a participation interest or an investment governed
by a law other than those of a U.S. jurisdiction. These risks may include and economic uncertainty, fluctuations of currency exchange
rates, lower levels of disclosure and regulation in foreign securities markets, confiscatory taxation, taxation of income earned
in foreign nations or other taxes or restrictions imposed with respect to investments in foreign nations, foreign exchange controls
(which may include suspension of the ability to transfer currency from a given country and repatriation of investments) and uncertainties
as to the status, interpretation and application of laws including, but not limited to those relating to insolvency. In addition,
there is often less publicly available information about non-U.S. obligors than about sovereign and corporate obligors in the U.S.
Sovereign and corporate obligors in countries other than the U.S. may not be subject to uniform accounting, auditing and financial
reporting standards, and auditing practices and requirements for both foreign public and private obligors may not be comparable
to those applicable to U.S. companies. It also may be difficult to obtain and enforce a judgment relating to investments issued
by a non-U.S. obligor in a court outside the U.S.



We generally do
not control our portfolio companies.



We generally do not control
our portfolio companies, even though we may have board representation or board observation rights in some cases. As a result, we
are subject to the risk that a portfolio company in which we invest may make business decisions with which we disagree and the
management of such company may take risks or otherwise act in ways that do not serve our interests. Due to the lack of liquidity
for our investments in privately held companies, we may not be able to dispose of our interests in our portfolio companies as readily
as we would like or at an appropriate valuation. As a result, a portfolio company may make decisions that could decrease the value
of our portfolio holdings.



Debt investments
involve risk and we could lose all or part of our investment.



Our debt investments involve
a number of significant risks. Below investment grade debt investments have historically experienced greater default rates than
has been the case for investment grade securities.    Approximately 1% of our total assets as of December 31, 2015
consist of debt investments, both secured and unsecured, that are rated below investment grade by rating agencies, or that would
be rated below investment grade if they were rated. Below investment grade securities have predominantly speculative characteristics
with respect to the issuer’s capacity to pay interest and repay principal. They may also be illiquid and difficult to value.
There can be no assurance as to the levels of defaults or recoveries that may be experienced on our debt investments. The debt
investments were made in companies with limited financial resources and limited access to alternative financing. Issuers of secured
and unsecured debt may be unable to meet their obligations under their debt securities that we hold. Such developments may be accompanied
by deterioration in the value of collateral, if any, backing our investments. This could lead to a decline in value of our debt
investments, which could result in a decline in our net earnings and NAV.



A debt investment
in later stage or more established companies typically bears lower credit risk and correspondingly offers lower yields compared
to earlier stage companies or companies without a financial sponsor. As a result, our debt investments could result in a lower
distribution rate than distribution rates of comparable BDCs that make debt investments in earlier stage companies.



Our secured and
unsecured debt investments, like an investment in any debt instrument, are a function of the credit risk associated with the borrower.
Credit risk is the risk that a borrower will fail to make principal and interest payments when due or otherwise default on the
terms of the debt instrument. Borrowers with higher credit risk typically offer higher yields to compensate for this added risk
of default. Conversely, borrowers with lower credit risk typically offer lower yields. Therefore, under normal market conditions,
an investment in secured or unsecured debt of a borrower with a higher credit risk will generate a higher yield to the investor,
assuming the borrower makes all required interest and principal payments in a timely manner and according to the terms of the debt
instrument. These types of portfolio companies in which we hold debt investments typically have lower credit risk and a correspondingly
lower yield. Lower yields from our debt investments could therefore result in a lower distribution rate to our stockholders than
the distribution rates of other BDCs that make, or may in the future make, investments in primarily or exclusively earlier stage
companies or companies without a financial sponsor. As a result, an investment in us may result in a lower return than an investment
in other BDCs.



19







Defaults by our
portfolio companies will harm our operating results.



A portfolio company’s
failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination
of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize a
portfolio company’s ability to meet its obligations under the debt or equity securities that we hold. We may incur expenses
to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial
covenants, with a defaulting portfolio company.



We hold the debt
and equity securities of companies that may enter into bankruptcy proceedings.



One or more of our portfolio
companies may experience bankruptcy or similar financial distress. The bankruptcy process has a number of significant inherent
risks. Many events in a bankruptcy proceeding are the product of contested matters and adversary proceedings and are beyond the
control of the creditors. A bankruptcy filing by a borrower may adversely and permanently affect the borrower. If the proceeding
is converted to a liquidation, the value of the borrower may not equal the liquidation value that was believed to exist at the
time of the investment. The duration of a bankruptcy proceeding is also difficult to predict, and a creditor’s return on
investment can be adversely affected by delays until the plan of reorganization or liquidation ultimately becomes effective. The
administrative costs of a bankruptcy proceeding are frequently high and would be paid out of the debtor’s estate prior to
any return to creditors. Because the standards for classification of claims under bankruptcy law are vague, our influence with
respect to the class of securities or other obligations we own may be lost by increases in the number and amount of claims in the
same class or by different classification and treatment. In the early stages of the bankruptcy process, it is often difficult to
estimate the extent of, or even to identify, any contingent claims that might be made. In addition, certain claims that have priority
by law (for example, claims for taxes) may be substantial.



Any unrealized depreciation
we experience on our debt and equity investments may be an indication of future realized losses, which could reduce amounts available
for distribution.



As a BDC, we are required
to carry our debt and equity investments at fair value, which shall be the market value of our investments or, if no market value
is ascertainable, at the fair value as determined in good faith pursuant to procedures approved by our board of directors in accordance
with our valuation policy. We are not permitted to maintain a reserve for loan losses. Decreases in the fair values of our debt
and equity investments are recorded as unrealized depreciation. Any unrealized depreciation in our debt or equity portfolio could
be an indication of a portfolio company’s inability to meet its repayment obligations to us and the potential future decline
in the value of our investments. This could result in realized losses in the future and ultimately reduces our gains available
for distribution in future periods.



While substantially all
of our debt and equity investments are not publicly traded, applicable accounting standards require us to assume as part of our
valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment
through its maturity). As a result, volatility in the capital markets can also adversely affect our investment valuations.



As part of the valuation
process, we may take into account the following types of factors, if relevant, in determining the fair value of our debt and equity
investments: the enterprise value of a portfolio company (an estimate of the total fair value of the portfolio company’s
debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments and
its earnings and discounted cash flow, the markets in which the portfolio company does business, a comparison of the portfolio
company’s securities to similar publicly traded securities, changes in the interest rate environment and the credit markets
generally that may affect the price at which similar investments may be made in the future and other relevant factors. When an
external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by
the external event to corroborate our valuation. While substantially all of our debt and equity investments are not publicly traded,
applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal
market to market participants (even if we plan on holding an investment through its maturity). As a result, volatility in the capital
markets can also adversely affect our investment valuations.



We may participate
on creditors’ committees to negotiate the management of financially troubled companies.



We may (through an agent)
participate on committees formed by creditors to negotiate the management of financially troubled companies that may or may not
be in bankruptcy or we may seek to negotiate directly with the debtors with respect to restructuring issues. If we do join a creditors’
committee, the participants of the committee would be interested in obtaining an outcome that is in their respective individual
best interests and there can be no assurance of obtaining results most favorable to our interests. By participating on such committees,
we may be deemed to have duties to other creditors represented by the committees, which might expose us to liability to such other
creditors who disagree with our actions.



20







We may also be provided
with material non-public information that may restrict our ability to trade in such company’s securities. While we intend
to comply with all applicable securities laws and to make judgments concerning restrictions on trading in good faith, we may trade
in a company’s securities while engaged in such company’s restructuring activities. Such trading creates a risk of
litigation and liability that may cause us to incur significant legal fees and potential losses.



We may choose to
waive or defer enforcement of covenants in the debt investments held in our portfolio, which may cause us to lose all or part of
our investment in these companies.



Certain of the debt investments
in our portfolio companies may include business and financial covenants placing affirmative and negative obligations on the operation
of the company’s business and its financial condition. The purpose of these provisions is to require our portfolio companies
to act, or refrain from acting, in a manner that we believe will best protect the capital we have invested. However, the financial
condition and results of operations of our portfolio companies may cause us to determine that it would be in our stockholders’
and portfolio companies’ best interest to waive or defer enforcement of these provisions. As a result, we may offer a flexible
payment and covenant enforcement structure to our portfolio companies. Accordingly, determination to waive or defer enforcement
of some or all of these covenants may not provide us with the same level of protection as more restrictive conditions that traditional
lenders typically impose on borrowers. In certain situations, we may even elect to waive breaches of these covenants, including
our right to payment, or waive or defer enforcement of remedies, such as acceleration of obligations or foreclosure on collateral,
depending upon the financial condition and prospects of the particular portfolio company, including situations where we believe
that one or more financial sponsors intend to, express their intent to, or provide subject to milestones or contingencies, continued
support, assistance or financial commitment to the borrower. We may also modify or waive a provision or term of our existing debt
securities which we would otherwise be entitled to enforce. The terms of any such modification or waiver may not be as favorable
to us in the short term as we could have required, or had the right to require, and we may choose to enforce less vigorously our
rights and remedies under our debt securities than traditional lenders due to our investment philosophy to provide the portfolio
company with the time and flexibility needed to enable it to comply with the terms of the covenant. These actions may reduce the
likelihood in the short term of our receiving the full amount of future payments of interest or principal and be accompanied by
a deterioration in the value of the underlying collateral as many of these companies may have limited financial resources, may
be unable to meet future obligations and may go bankrupt. These events could harm our financial condition and operating results.



If the collateral
supporting our secured debt decreases in value, we may not have sufficient collateral to cover losses and may experience losses
upon foreclosure.



We believe our portfolio
companies generally will be able to repay our loans from their available capital, from future capital-raising transactions or from
current or anticipated cash flow from operations. However, to mitigate our credit risks, we typically take a security interest
in all or a portion of the assets of our portfolio companies, including equity interests in their subsidiaries. This means we have
a claim on these assets in the event of a default. However, there is a risk that the collateral securing our debt may decrease
in value over time, may be difficult to appraise or sell in a timely manner and may fluctuate in value based upon the business
and market conditions, including as a result of an inability of the portfolio company to raise additional capital, and, in some
circumstances, our lien could be subordinated to claims of other creditors. In addition, deterioration of a portfolio company’s
financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration of
the value of the collateral for our secured debt. Consequently, although our debt may be secured, we may not receive principal
and interest payments according to the terms of our debt securities and because of a borrower’s declining business condition.
In addition, the value of the collateral may not be sufficient to recover our debt investment should we be forced to enforce our
remedies.



In addition, because we
have invested in Growth Companies across various stages of development, a substantial portion of the assets securing our debt investment
may be in the form of intellectual property, if any, inventory, equipment, cash and accounts receivables. Unlike property, plant
and equipment, intellectual property is an intangible asset such as a copyright, a trademark or trade name or even a patent. Intellectual
property, if any, which secures our debt investments could lose value if the portfolio company’s rights to the intellectual
property are challenged or if the company’s license to the intellectual property is revoked or expires. Rapid changes in
technology may also render previously valuable intellectual property less valuable. In addition, in lieu of a security interest
in a portfolio company’s intellectual property we may sometimes obtain a security interest in all assets of the portfolio
company other than intellectual property and also obtain a commitment by the portfolio company not to grant liens to any other
creditor on the company’s intellectual property. In these cases, we may have additional difficulty recovering our principal
in the event of a foreclosure. Similarly, any equipment securing our debt investments may not provide us with the anticipated security
if there are changes in technology or advances in new equipment that render the particular equipment obsolete or of limited value
or if the company fails to adequately maintain or repair the equipment. Any one or more of the preceding factors could materially
impair our ability to recover principal in a foreclosure.



21







Volatility of oil
and natural gas prices could impair certain of our portfolio companies’ operations and ability to satisfy obligations to
their respective lenders and investors, including us, which could negatively impact our financial condition.



Some of our portfolio companies’
businesses are heavily dependent upon the prices of, and demand for, oil and natural gas, which have recently declined significantly
and such volatility could continue or increase in the future. A substantial or extended decline in oil and natural gas demand or
prices may adversely affect the business, financial condition, cash flow, liquidity or results of operations of these portfolio
companies and might impair their ability to meet capital expenditure obligations and financial commitments. A prolonged or continued
decline in oil prices could therefore have a material adverse effect on our business, financial condition and results of operations.



We may suffer a
loss if a portfolio company defaults on our debt securities and the underlying collateral is not sufficient or our debt is unsecured.



In the event of a default
by a portfolio company on our secured debt, we will only have recourse to the assets collateralizing the loan. If the underlying
collateral value is less than the loan amount, we will suffer a loss. In addition, we may make debt investments that are unsecured,
which are subject to the risk that other lenders may be directly secured by the assets of the portfolio company. In the event of
a default, those collateralized lenders would have priority over us with respect to the proceeds of a sale of the underlying assets.
In cases described above, we may lack control over the underlying asset collateralizing our secured debt or the underlying assets
of the portfolio company prior to a default, and as a result the value of the collateral may be reduced by acts or omissions by
owners or managers of the assets.



If the value of collateral
underlying our secured debt declines or interest rates increase during the term of our debt, a portfolio company may not be able
to obtain the necessary funds to repay our debt investment at maturity through refinancing. Decreasing collateral value or increasing
interest rates may hinder a portfolio company’s ability to refinance our debt securities because the underlying collateral
cannot satisfy the debt service coverage requirements necessary to obtain new financing. If a borrower is unable to repay our debt
investment at maturity, we could suffer a loss which may adversely impact our financial performance.



Our portfolio companies
may incur debt that ranks equally with, or senior to, our debt and equity investments in such companies.



Our portfolio companies
may have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt or equity in which we invest.
By their terms, such debt instruments may entitle the holders to receive payment of interest or principal on or before the dates
on which we are entitled to receive payments with respect to the debt instruments in which we invest. These debt instruments may
also prohibit the portfolio companies from paying interest on or repaying our debt investments in the event of, and during, the
continuance of a default under the debt instruments. Also, in the event of insolvency, liquidation, dissolution, reorganization
or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our debt investment in that portfolio company
would typically be entitled to receive payment in full before we receive any distribution on our debt or equity investments. After
repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its debt obligation
to us or our equity investments. In the case of debt ranking equally with debt instruments in which we invest, we would have to
share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution,
reorganization or bankruptcy of the relevant portfolio company.



We could be subject
to lender liability claims.



We may be subject to lender
liability claims for actions taken by us with respect to a borrower’s business or instances where we exercise control over
the borrower. A number of judicial decisions have upheld judgments of borrowers against lending institutions on the basis of various
evolving legal theories, collectively termed "lender liability." Generally, lender liability is founded on the premise
that a lender has violated a duty (whether implied or contractual) of good faith, commercial reasonableness and fair dealing, or
a similar duty owed to the borrower or has assumed an excessive degree of control over the borrower resulting in the creation of
a fiduciary duty owed to the borrower or its other creditors or stockholders. Because of the nature of our debt investments we
may be subject to allegations of lender liability.



22







In addition, under common
law principles that in some cases form the basis for lender liability claims, if a lender or bondholder (i) intentionally takes
an action that results in the undercapitalization of a borrower to the detriment of other creditors of such borrower, (ii) engages
in other inequitable conduct to the detriment of such other creditors, (iii) engages in fraud with respect to, or makes misrepresentations
to, such other creditors or (iv) uses its influence as a stockholder to dominate or control a borrower to the detriment of other
creditors of such borrower, a court may elect to subordinate the claim of the offending lender to the claims of the disadvantaged
creditor or creditors, a remedy called "equitable subordination." Because of the nature of our debt investments, we may
be subject to claims of equitable subordination. Further, because we may also hold equity or other interests in obligors of our
portfolio companies, we could be exposed to claims for equitable subordination or lender liability or both based on such equity
or other holdings.



The preceding discussion
is based upon principles of U.S. federal and state laws. Insofar as debt investments are obligations of non-U.S. obligors, the
laws of certain foreign jurisdictions may impose liability upon lenders or bondholders under factual circumstances similar to those
described above, with consequences that may or may not be analogous to those described above under U.S. federal and state laws.



Second priority
liens on collateral securing our debt investments may be subject to control by senior creditors with first priority liens. If there
is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us.



Some of our debt
investments are secured on a second priority basis by the same collateral securing senior debt of the portfolio companies. The
first priority liens on the collateral will secure the portfolio company’s obligations under any outstanding secured debt
and may secure certain other future debt that may be permitted to be incurred by the company under the agreements governing the
secured debt. The holders of obligations secured by the first priority liens on the collateral will generally control the liquidation
of and be entitled to receive proceeds from any realization of the collateral to repay their obligations in full before we receive
anything. In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the
availability of buyers and other factors. There can be no assurance that the proceeds, if any, from the sale or sales of all of
the collateral would be sufficient to satisfy the debt obligations secured by the second priority liens after payment in full of
all obligations secured by the first priority liens on the collateral. If such proceeds are not sufficient to repay amounts outstanding
under the debt obligations secured by the second priority liens, then we, to the extent not repaid from the proceeds of the sale
of the collateral, will only have an unsecured claim against the company’s remaining assets, if any.



The rights we may have
with respect to the collateral securing the debt investments we make in our portfolio companies with senior debt outstanding may
also be limited pursuant to the terms of one or more intercreditor agreements that we enter into with the holders of senior debt.
Under such an intercreditor agreement, at any time that obligations that have the benefit of the first priority liens are outstanding,
any of the following actions that may be taken in respect of the collateral will be at the direction of the holders of the obligations
secured by the first priority liens: the ability to cause the commencement of enforcement proceedings against the collateral; the
ability to control the conduct of such proceedings; the approval of amendments to collateral documents; releases of liens on the
collateral; and waivers of past defaults under collateral documents. We may not have the ability to control or direct such actions,
even if our rights are adversely affected.



Our unsecured and
subordinated debt investments are effectively subordinated to any secured indebtedness that a portfolio company has currently incurred
or may incur in the future.



The repayment of our unsecured
and subordinated debt investments is generally subject to full payment of any secured indebtedness of the portfolio company. As
a result, our unsecured and subordinated debt investments are effectively subordinated to the secured indebtedness that a portfolio
company has currently incurred and may incur in the future (or any indebtedness that is initially unsecured which the portfolio
company subsequently grants security) to the extent of the value of the assets securing such indebtedness. In any liquidation,
dissolution, bankruptcy or other similar proceeding, the holders of any of existing or future secured indebtedness of the portfolio
company may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness
before the assets may be used to pay other creditors, including us as holders of unsecured and subordinated debt.



23







Our failure to make
follow-on equity investments in our portfolio companies could impair the value of our equity portfolio and may result in significant
dilution of our investment.



Often during a growth
company’s life cycle, an additional or "follow-on" equity investment is required to fully realize the value to
be created by the portfolio company. Following an initial equity investment in a portfolio company in accordance with our new Investment
Objective we may make such "follow-on" equity investments, in order to attempt to preserve or enhance the value of our
initial equity investment. We may elect not to make these follow-on investments or otherwise lack sufficient funds to make those
investments. We will have the discretion to make any follow-on investments, subject to the availability of capital resources. The
failure to make follow-on equity investments may, in some circumstances, jeopardize the continued viability of a portfolio company,
result in a diminished current value, impair the ability or likelihood for a full recovery of the value of our initial equity investment,
result in a default under any outstanding debt investment with the portfolio company, or result in a missed opportunity for us
to maintain or increase our equity participation in a successful operation. In addition, the seniority and protections provided
in our equity investments may be diminished if a portfolio company issues more senior securities in a subsequent equity financing
round. Even if we have sufficient capital to make a desired follow-on equity investment, we may elect not to make such follow-on
investment because we do not want to increase our concentration of risk in that portfolio company, we prefer other opportunities,
we are subject to BDC requirements that would prevent or limit such follow-on investment or the follow-on investment would affect
our qualification as a RIC, particularly the RIC diversification requirements.



The lack of liquidity
in our debt and equity investments may adversely affect our business, and as we seek to sell our investments, we may not be able
to do so at a favorable price, if at all. As a result, we may suffer losses.



Under our former investment
strategy, investments were made primarily in companies whose securities were not publicly traded, and whose securities may be currently
subject to legal and other restrictions on resale or are otherwise less liquid than publicly traded securities. The illiquidity
of our debt and equity investments may make it difficult for us to sell these investments when desired, if at all, and meet our
Investment Objective, and may result in substantial differences in the exit prices ultimately achieved on our portfolio holdings
as compared to the respective fair values as of December 31, 2015. We may also face other restrictions on our ability to liquidate
an investment in a publicly traded portfolio company to the extent that we possess material non-public information regarding the
portfolio company or during the underwriters’ customary 180-day lockup period following an IPO. Because most of our investments
are illiquid, we may be unable to dispose of them, in which case we could fail to qualify as a RIC or BDC, or we may not be able
to dispose of them at favorable prices, and as a result, we may suffer losses.



Many of our portfolio
companies have complex capital structures.



Many of our portfolio
companies have complex capital structures based on multiple rounds of equity financing and, as a result, may have multiple classes
of common and preferred equity securities with differing rights, including with respect to voting, dividends, redemptions, liquidation,
and conversion rights. Although our former investment adviser sought to make equity investments in the portfolio company’s
most senior class of equity securities, the seniority and protections provided in these types of equity investments may be diminished
if the portfolio company issues more senior securities in a subsequent equity financing round. The value of our equity investments
may also be adversely affected by subsequent financing by a portfolio company. The former investment adviser typically required
information on the private company’s capital structure as part of its due diligence process. Although, to our knowledge,
we believe that our former investment adviser’s investment professionals had extensive experience evaluating and investing
in Growth Companies with such complex capital structures, there can be no assurance that we will be able to adequately evaluate
the relative risks and benefits of investing in a particular class of a portfolio company’s equity securities. Further, a
preferred equity investment we make may be superseded by another series of preferred stock with greater priority. Any failure on
our part to properly evaluate the relative rights and value of a class of equity securities in which we invest could cause us to
lose part or all of our equity investment, which in turn could have a material and adverse effect on our NAV and results of operations.



24







The warrants that
we hold, as well as the direct equity investments, are highly speculative, and may not appreciate in value and may result in unrealized
depreciation or realized losses which may adversely affect our returns.



Certain of the warrants
we hold to acquire equity securities in portfolio companies include a "cashless exercise" provision to allow us to exercise
these rights without requiring us to make any additional cash investment. Our goal is ultimately to dispose of these equity interests
and realize gains upon disposition of such interests. Over time, the gains that we realize on these equity interests may offset,
to some extent, losses that we experience on defaults under debt securities that we hold. However, the equity interests that we
receive may not appreciate in value and, in fact, may decline in value. It is possible that these equity interests may become worthless.
Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition
of any equity interests may not be sufficient to offset any other losses that we experience on our debt securities.



We have also made direct
equity investments, where we make an upfront cash investment in a company’s equity securities, either as part of our debt
investment or as a stand-alone investment. We attempt to dispose of these investments and realize gains upon our disposition of
them. However, these equity investments are highly speculative and may not appreciate in value or may decline in value. We also
may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business or an
IPO, or if the portfolio company defaults under its outstanding indebtedness, which could materially decrease the value of, or
prevent us from being able to sell, our equity investments. If our direct equity investments decline in value, we may have unrealized
depreciation or realized losses which may adversely affect our returns.



Certain of our direct
equity investments do not have structural protections, and we cannot assure you that we will realize gains from structural protections
in those investments which have those protections.



Certain of our portfolio
investments contain structural protections with respect to our direct equity investments that may provide an opportunity to earn
a potential enhanced return upon an IPO, sale, merger or liquidation. Such structural protections may include preferred rights
relative to other security holders, conversion rights which would result in us receiving shares of common stock at a discount to
the IPO price upon conversion at the time of the IPO, warrants that would result in us receiving additional shares for a nominal
exercise price at the time of an IPO or liquidation preferences at amounts greater than our investment cost or with participation
rights entitling us to participate with common stockholders after all liquidation preference are paid. Our ability to realize the
potential value associated with these structural protections will depend on a number of factors including the completion of the
IPO, any adjustment to the terms of the structural protection that may be negotiated during the IPO process and the possible subsequent
issuance of more senior securities that may impact the relative value of our investment. Further, even if an IPO is completed,
we would not realize the potential value associated with these structural protections unless the market price of the portfolio
company’s common shares equaled or exceeded the IPO price at the time such shares were sold following the customary 180-day
lockup period. Further, our ability to realize the potential value associated with any structural protections at the time of a
sale, merger or liquidation of a portfolio company will depend on a number of factors including the realization of sale, merger
or liquidation proceeds (after payment of liabilities) sufficient to pay our senior preference amount, any adjustment to our preference
amount that may be negotiated prior to any sale, merger or liquidation and the possible subsequent issuance of more senior securities
that may make our preference rights subordinate to the preference rights of senior security holders. As a result, there can be
no assurance that we will be able to realize the potential value of these structural protections even if we are able to obtain
them.



Risks Relating to Our Business and Structure



Any failure on our
part to maintain our status as a BDC would reduce our operating flexibility.



The 1940 Act imposes numerous
constraints on the operations of business development companies.  For example, business development companies are required
to invest at least 70% of their total assets primarily in securities of eligible portfolio companies, cash, cash equivalents, U.S.
government securities and other high quality debt investments that mature in one year or less.  Furthermore, any failure
to comply with the requirements imposed on business development companies by the 1940 Act could cause the SEC to bring an enforcement
action against us and/or expose us to claims of private litigants.  Upon approval of a majority of our stockholders,
we may elect to withdraw our status as a BDC.  If we decide to withdraw our election, or if we otherwise fail to qualify,
or maintain our qualification, as a BDC, we might be regulated as a closed-end investment company under the 1940 Act, which would
subject us to substantially more regulatory restrictions under the 1940 Act and correspondingly decrease our operating flexibility
and increase our costs of doing business.



25







We may experience
fluctuations in our periodic results, and the net asset value of our common stock may decline.



We could experience fluctuations
in our periodic results due to a number of factors, some of which are beyond our control, including our ability to monetize our
investments at favorable prices, the level of our expenses (including the interest rates payable on any borrowings we may incur),
variations in and the timing of the recognition of realized gains or losses and unrealized appreciation and depreciation on our
investments, the degree to which we encounter competition in our markets and general economic conditions.  Our periodic
results will also be affected by the ability of our private portfolio companies in which we have made equity investments to complete
their IPOs or complete a strategic sale/merger.  As a result of these factors, results for any period should not be relied
upon as being indicative of performance in future periods.



The previously paid
incentive fee to our former investment adviser may have induced our former investment adviser to make speculative investments or
incur leverage.



The incentive fee payable
by us to our former investment adviser may have created an incentive for our former investment adviser to make investments on our
behalf that are risky or more speculative than would be the case in the absence of such compensation arrangement.  The
way in which the incentive fee payable to our former investment adviser was determined, which was calculated as a percentage of
the return on invested capital, may have encouraged our former investment adviser to invest in more speculative securities than
would otherwise be the case, which could result in higher investment losses, particularly during cyclical economic downturns.



In addition, our former
investment adviser had control over the timing of the acquisition and sale of our equity investments, and therefore over when we
realize gains and losses on these equity investments.  As a result, our former investment adviser may have faced a conflict
of interest in determining when it was appropriate to sell a specific equity investment, to the extent that doing so may serve
to maximize its incentive fee at a point where selling such investment may not necessarily be in the best interests of our stockholders.  Our
Board of Directors monitored such conflicts of interest in connection with its review of the performance of our former investment
adviser under our former Investment Advisory Agreement, as well as during its quarterly review of our financial performance and
results of operations.



Our Administrator
can resign on 90 days’ notice and we may be unable to find a suitable replacement within that time, resulting in a disruption
in our operations that could adversely affect our financial condition, business and results of operations.



Our Administrator has
the right, under our Administrative Consulting Agreement, to resign at any time upon not less than 90 days’ written notice,
whether we have found a replacement or not.  If our Administrator resigns, we may not be able to find a new Administrator
or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within
90 days, or at all.  If we are unable to do so promptly, our operations are likely to experience a disruption, our financial
condition, business and results of operations as well as our ability to make distributions are likely to be adversely affected
and the market price of our shares may decline.  In addition, the coordination of our internal management and investment
activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives
having the expertise possessed by our Administrator.  Even if we were able to retain comparable management, the integration
of such management and their lack of familiarity with our Investment Objective might result in additional costs and time delays
that could adversely affect our financial condition, business and results of operations.



Operating under
the constraints imposed on us as a BDC and a regulated investment company may hinder the achievement of our Investment Objective.



The 1940 Act imposes numerous
constraints on the operations of BDCs.  For example, BDCs are required to invest at least 70% of their total assets primarily
in securities of U.S.-based private companies or public companies with market capitalizations of less than $250 million, cash,
cash equivalents, U.S. government securities and other high quality debt instruments that mature in one year or less.  In
addition, qualification for taxation as a regulated investment company, or RIC, requires satisfaction of source-of-income, diversification
and distribution requirements.  These constraints, among others, may hinder our Administrator and Board of Directors’
ability to monetize investments and achieve our Investment Objective.



26







We will be subject
to corporate-level income tax if we are unable to qualify as a regulated investment company, or RIC.



Effective January 1, 2010,
we elected to be treated for tax purposes as a regulated investment company, or RIC, under the Code.   No assurance can
be given that we will be able to continue to qualify for and maintain RIC status in future years.  In order to qualify
for the special treatment accorded to a RIC, we must meet certain income source, asset diversification and annual distribution
requirements.  In order to satisfy the income source requirement, we must derive in each taxable year at least 90% of
our gross income from dividends, interest, payments with respect to certain securities loans, gains from the sale of stock or other
securities or foreign currencies, income from “qualified publicly traded partnerships” or other income derived with
respect to our business of investing in such stock or securities.  To qualify as a RIC, we must also meet certain asset
diversification requirements at the end of each quarter of our taxable year.  Failure to meet these tests may result
in our having to sell certain investments quickly in order to prevent the loss of RIC status.  Because most of our investments
will be in private companies, any such sales could be made at disadvantageous prices and may result in substantial losses.  In
order to satisfy the annual distribution requirement for a RIC, we must distribute at least 90% of our investment company taxable
income (which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gains over realized
net long-term capital losses), if any, to our stockholders on at least an annual basis.  In the event we borrow funds
or issue senior securities, we may be subject to certain asset coverage ratio requirements under the 1940 Act and financial covenants
under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy
the annual distribution requirement.  If we are unable to obtain cash from other sources, we may fail to qualify for
special tax treatment as a RIC and, thus, may be subject to corporate-level income tax on all our income.  If we fail
to qualify as a RIC for any reason and remain or become subject to corporate income tax, the resulting corporate-level federal
taxes could substantially reduce our net assets, the amount of income available for distribution, and the amount of our distributions.  Such
a failure would have a material adverse effect on us and our stockholders.



We may have difficulty
paying our required distributions if we recognize income before or without receiving cash representing such income, such as payment-in-kind
("PIK") interest on certain debt investments.



We derive current interest
income on our debt investments. With respect to the debt obligations we have acquired with PIK provisions, under applicable tax
rules, we must include in income each year a portion of the PIK interest earned in that year.  Because PIK interest will
be included in our investment company taxable income in the year it is earned, we may be required to make a distribution to our
stockholders in order to satisfy the Annual Distribution Requirement, even though we may not have received any corresponding cash
amount.  As a result, we may have difficulty meeting the annual distribution requirement necessary to maintain our qualification
for RIC tax treatment under the Code.  We may have to sell some of our investments at times and/or at prices we would
not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose.  If
we are not able to obtain cash from other sources, we may fail to continue to qualify for RIC tax treatment and thus become subject
to corporate-level income tax.



To the extent original
issue discount ("OID") or PIK interest constitute a portion of our income, we will be exposed to typical risks associated
with such income being required to be included in taxable and accounting income prior to receipt of cash representing such income.



Our investments include
OID instruments or contractual PIK interest arrangements, which represents contractual interest added to a loan balance and due
at the end of such loan’s term. To the extent OID or PIK interest constitute a portion of our income, we are exposed to typical
risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash, including
the following:



•       The higher
interest rates of OID and PIK instruments reflect the payment deferral and increased credit risk associated with these instruments,
and OID and PIK instruments generally represent a significantly higher credit risk than coupon loans.



•       Even if the
accounting conditions for income accrual are met, the borrower could still default when our actual collection is supposed to occur
at the maturity of the obligation.



•       OID and PIK
instruments may have unreliable valuations because their continuing accruals require continuing judgments about the collectability
of the deferred payments and the value of any associated collateral. OID and PIK income may also create uncertainty about the source
of our cash distributions.



•       For accounting
purposes, any cash distributions to stockholders representing OID and PIK income are not treated as coming from paid-in capital,
even though the cash to pay them comes from the offering proceeds. As a result, despite the fact that a distribution representing
OID and PIK income could be paid out of amounts invested by our stockholders, the 1940 Act does not require that stockholders be
given notice of this fact by reporting it as a return of capital.



27







We incur significant
costs as a result of being a public company.



As a public company, we
incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a
company whose securities are registered under the Exchange Act, as well as additional corporate governance requirements, including
requirements under the Sarbanes-Oxley Act, and other rules implemented by the SEC.



We face cyber-security
risks.



Our business operations
rely upon secure information technology systems for data processing, storage and reporting. Despite careful security and controls
design, implementation and updating, our information technology systems could become subject to cyber-attacks. Network, system,
application and data breaches could result in operational disruptions or information misappropriation, which could have a material
adverse effect on our business, results of operations and financial condition.



The failure in cyber
security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity
planning could impair our ability to conduct business effectively.



The occurrence of a disaster
such as a cyber-attack, a natural catastrophe, an industrial accident, a terrorist attack or war, events unanticipated in our disaster
recovery systems, or a support failure from external providers, could have an adverse effect on our ability to conduct business
and on our results of operations and financial condition, particularly if those events affect our computer-based data processing,
transmission, storage, and retrieval systems or destroy data. If a significant number of our investment professionals were unavailable
in the event of a disaster, our ability to effectively conduct our business could be severely compromised.



We depend heavily upon
computer systems to perform necessary business functions. Despite our implementation of a variety of security measures, our computer
systems could be subject to cyber-attacks and unauthorized access, such as physical and electronic break-ins or unauthorized tampering.
Like other companies, we may experience threats to our data and systems, including malware and computer virus attacks, unauthorized
access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential,
proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise
cause interruptions or malfunctions in our operations, which could result in damage to our reputation, financial losses, litigation,
increased costs, regulatory penalties and/or customer dissatisfaction or loss.



We are dependent
on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the
market price of our common stock and our ability to make distributions.



Our business is dependent
on our and third parties’ communications and information systems. Any failure or interruption of those systems, including
as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in
our activities. Our financial, accounting, data processing, backup or other operating systems and facilities may fail to operate
properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond
our control and adversely affect our business. There could be:



•       sudden electrical or telecommunication
outages;



•       natural disasters such as earthquakes,
tornadoes and hurricanes;



•       disease pandemics;



•       events arising from local or larger
scale political or social matters, including terrorist acts; and



•       cyber-attacks.



These events, in turn,
could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our
ability to make distributions to our stockholders.



28







Our Board of Directors
is authorized to reclassify any unissued shares of our stock into one or more classes of preferred stock, which could convey special
rights and privileges to its owners.



Our charter permits our
Board of Directors to reclassify any authorized but unissued shares of stock into one or more classes of preferred stock.  Our
Board of Directors will generally have broad discretion over the size and timing of any such reclassification, subject to a finding
that the reclassification and issuance of such preferred stock is in the best interests of us and our existing common stockholders.  Any
issuance of preferred stock would be subject to certain limitations imposed under the 1940 Act, including the requirement that
such preferred stock have equal voting rights with our outstanding common stock.  We are authorized to issue up to 200,000,000
shares of common stock and, as of December 31, 2015, we had 9,676,484 shares of common stock issued and outstanding. In the event
our Board of Directors opts to reclassify a portion of our unissued shares of common stock into a class of preferred stock, those
preferred shares would have a preference over our common stock with respect to dividends and liquidation.  The cost of
any such reclassification would be borne by our existing common stockholders.  In addition, the 1940 Act provides that
holders of preferred stock are entitled to vote separately from holders of common stock to elect two directors.  As a
result, our preferred stockholders would have the ability to reject a director that would otherwise be elected by our common stockholders.  In
addition, while Maryland law generally requires directors to act in the best interests of all of a corporation’s stockholders,
there can be no assurance that a director elected by our preferred stockholders would not choose to act in a manner that tends
to favor our preferred stockholders, particularly where there was a conflict between the interests of our preferred stockholders
and our common stockholders.  The class voting rights of any preferred shares we may issue could make it more difficult
for us to take some actions that may, in the future, be proposed by the Board of Directors and/or the holders of our common stock,
such as a merger, exchange of securities, liquidation, or alteration of the rights of a class of our securities, if these actions
were perceived by the holders of preferred shares as not in their best interests.  The issuance of preferred shares convertible
into shares of common stock might also reduce the net income and net asset value per share of our common stock upon conversion.  These
effects, among others, could have an adverse effect on your investment in our common stock.



Our Board of Directors
may change certain of our investment objective, operating policies and strategies without prior notice or stockholder approval,
the effects of which may be adverse.



Our Board of Directors
has the authority to modify or waive certain of our investment objective, current operating policies, investment criteria and strategies
without prior notice and without stockholder approval (except as required by the 1940 Act).  We cannot predict the effect
any changes to our investment objective, current operating policies, investment criteria and strategies would have on our business,
net asset value, operating results and value of our stock.  However, the effects might be adverse, which could negatively
impact our ability to pay you distributions and cause you to lose all or part of your investment.



Provisions of the
Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the
price of our common stock.



Our charter and bylaws,
as well as certain statutory and regulatory requirements, contain certain provisions that may have the effect of discouraging a
third party from making an acquisition proposal for us.  Our bylaws contain a provision exempting any and all acquisitions
by any person of our shares of stock from the Control Share Act under the Maryland General Corporation Law.  If our Board
of Directors does not otherwise approve a business combination, the Control Share Act (if we amend our bylaws to be subject to
that Act) may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.  Although
our bylaws include such a provision, such a provision may also be amended or eliminated by our Board of Directors at any time in
the future, provided that we will notify the Division of Investment Management at the SEC prior to amending or eliminating this
provision.  However, the SEC has recently taken the position that the Control Share Act is inconsistent with the 1940
Act and may not be invoked by a BDC.  It is the view of the staff of the SEC that opting into the Control Share Act would
be acting in a manner inconsistent with section 18(i) of the 1940 Act.  Additionally, under our charter, our Board of
Directors may, without stockholder action, authorize the issuance of shares of stock in one or more classes or series, including
preferred stock; and our Board of Directors may, without stockholder action, amend our charter to increase the number of shares
of stock of any class or series that we have authority to issue.  These antitakeover provisions may inhibit a change
of control in circumstances that could give the holders of our common stock the opportunity to realize a premium over the market
price for our common stock.



We have internalized
and engaged third parties to provide administrative functions to us, and, therefore, expect to incur significant costs, even in
the event the value of your investment declines.



On October 5, 2015, our
Board of Directors approved the termination of the Investment Advisory Agreement to take effect on the Termination Date. Our Board
of Directors has engaged US Bancorp to provide administrative and fund accounting services to us and the Administrator to provide
administrative consulting services to us, including the provision of personnel to act as certain of our executive officers, including
our Chief Executive Officer and Chief Financial Officer. Following the Termination Date, although we no longer bear the costs of
the various fees and expenses we had paid to our former investment adviser under the Investment Advisory Agreement, by engaging
third parties to provide administrative functions, we will incur additional costs.



29







The Administrator fee
is $600,000 per annum.  The Administrator fee is payable regardless of whether the value of our gross assets or your
investment declines.  As a result, we will owe our Administrator a fee regardless of whether we incurred significant
realized capital losses and unrealized capital depreciation (losses) during the period for which the Administrator fee is paid.



Risks Related to Our Common Stock



The market price
of our shares of common stock may be adversely affected if we are unable to implement our investment strategy.



Many of our
operating expenses as a public company are fixed and independent of the size of our net assets. Also, declining net assets
and/or an increasing operating expense ratio may diminish the marketability of our common stock, which in turn may lead to
diminished (or no) institutional ownership of our stock and the corresponding risk of a stock price that trades at a
sustained discount to net asset value, which discount may be large.



Our investments also involve
a high degree of risk and, as a result, we may incur losses in the value of our investment portfolio. Portfolio company investments
are highly speculative and, therefore, an investor in our common stock may lose his entire investment. Unrealized depreciation
of the debt and equity securities of our portfolio companies will always be a by-product and risk of our business, and there can
be no assurance that we will be successful in executing our investment strategy. The market price of our shares of common stock
may be adversely affected if we are unable to successfully implement our investment strategy, and an investment in our common stock
would not be suitable for investors with lower risk tolerance.



Investing in shares
of our common stock is highly speculative and an investor could lose all or some of the amount invested.



Our current and former
investment objective and strategies result in a high degree of risk in our investments and may result in losses in the value of
our investment portfolio.  Our investments in portfolio companies are highly speculative and, therefore, an investor
in our common stock may lose his entire investment.  Write-downs of our debt and equity investments in privately held
companies will always be a by-product and risk of our business, and there can be no assurance that we will be able to achieve an
acceptable return on our portfolio company investments.  An investment in our common stock would not be suitable for
investors with lower risk tolerance.



Our common stock
price may be volatile and may decrease substantially.



Since shares of our common
stock were listed on the Nasdaq Capital Market beginning December 12, 2011, the trading price of our common stock has fluctuated
substantially.  We expect that the trading price of our common stock will continue to fluctuate substantially.  The
price of our common stock in the market on any particular day depends on many factors, some of which are beyond our control and
may not be directly related to our operating performance.  These factors include, but are not limited to, the following:



| | • | price and volume fluctuations in the overall stock market from time to time;
| | - | ----------------------------------------------------------------------------



| | • | investor demand for our shares;
| | - | -------------------------------



| | • | significant volatility in the market price and trading volume of securities of regulated investment
companies, business development companies or other financial services companies;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | changes in regulatory policies or tax guidelines with respect to regulated investment companies
or business development companies;
| | - | ----------------------------------------------------------------------------------------------------------------------------------



| | • | failure to qualify as a RIC for a particular taxable year, or the loss of RIC status;
| | - | -------------------------------------------------------------------------------------



| | • | actual or anticipated changes in our earnings, fluctuations in our operating results and net asset  value,
or changes in the expectations of securities analysts;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | general economic conditions and trends;
| | - | ---------------------------------------



30







| | • | fluctuations in the valuation of our portfolio investments;
| | - | -----------------------------------------------------------



| | • | public perception of the value of our portfolio companies;
| | - | ----------------------------------------------------------



| | • | operating performance of companies comparable to us;
| | - | ----------------------------------------------------



| | • | market sentiment in the technology sector in which we invest; or
| | - | ----------------------------------------------------------------



| | • | departures of any of the officers, directors, or other investment professionals.
| | - | --------------------------------------------------------------------------------



If we are unable to increase
the institutional ownership of our stock and the number of analysts covering our stock, the trading volume of our stock is likely
to remain low which could, in turn, increase the volatility of our stock price.



In the past, following
periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought
against that company.  Due to the potential volatility of our stock price, we may therefore be the target of securities
litigation in the future.  Securities litigation could result in substantial costs and divert management’s attention
and resources from our business.



Our shares might
trade at a sustained discount from net asset value, and since the listing of our common stock on Nasdaq on December 12, 2011, our
shares have typically traded at a discount to our net asset value per share.



Shares of closed-end funds,
including business development companies like us, may, during some periods, trade at prices higher than their net asset value per
share and, during other periods, as frequently occurs with closed-end investment companies, trade at prices lower than their net
asset value per share.  The perceived value of our investment portfolio may be affected by a number of factors including
perceived prospects for individual companies we invest in, market conditions for common stock investments generally, for initial
public offerings and other exit events for venture capital-backed companies, and the mix of companies in our investment portfolio
over time.  Because accurate financial and other data on our portfolio companies may be limited and not publicly disseminated,
the public perception of their value may be unduly influenced by trading levels on secondary marketplaces, speculation about their
prospects, market conditions, uninformed investor sentiment or other factors.  Negative or unforeseen developments affecting
the perceived value of companies in our investment portfolio could result in a decline in the trading price of our common stock
relative to our net asset value per share.  Since the listing of our common stock on Nasdaq on December 12, 2011, our
shares have typically traded at a discount to our net asset value per share, and there is no assurance that shares of our common
stock will ever trade at or above our net asset value.



The possibility that our
shares will continue to trade at a discount from net asset value is a risk separate and distinct from the risk that our net asset
value per share will decrease.  The risk of purchasing shares of a BDC that might trade at a sustained discount is more
pronounced for investors who wish to sell their shares in a relatively short period of time because, for those investors, realization
of a gain or loss on their investments is likely to be more dependent upon changes in discount levels than upon increases or decreases
in net asset value per share.



There is a risk
that you may not receive dividends or that our dividends may be reduced over time, particularly since we do not intend to make
new portfolio investments, our current portfolio company investments consist primarily of securities that do not produce current
income, and any dividends we do pay are expected to vary significantly based on the uncertainty of our current portfolio
companies achieving a liquidity event.



Due to the uncertainty
of our current portfolio companies achieving a liquidity event and our ability to sell our positions at a gain following a liquidity
event, we can give no assurance that we will be able make distributions from the sale of our portfolio investments. Furthermore,
we can give no assurance that we will achieve investment results that will allow such distributions to be paid from net investment
income or net realized capital gains from year-to-year.  There is no assurance that our current portfolio companies will complete
an IPO, sale/merger or other liquidity event or that we will be able to realize any net capital gains from the sale of our publicly
traded portfolio company investments.  Our ability to make distributions may also be adversely affected by, among other
things, the impact of one or more risk factors described herein.  Accordingly, no assurances can be made that we will
make distributions to our stockholders in the future.



In addition, any unrealized
depreciation in our investment portfolio could be an indication that we will be unable to recover the cost of our investment when
we sell it in the future.  This could result in realized capital losses in the future and ultimately in reductions of
any net capital gains distributions in future periods.



31







If distributions for the
year exceed our net investment income and net realized capital gains, the difference will be distributed from our capital and will
constitute a return of capital to our stockholders.  A return of capital is generally not taxable and, instead, reduces
a stockholder's tax basis in his shares of our common stock.  A return of capital does not necessarily reflect our investment
performance and generally does not reflect income earned. The tax character of a distribution is determined based upon our total
net investment income, net realized capital gains and distributions made with respect to a taxable year and, therefore, cannot
be finally determined until after the close of the relevant taxable year. Distributions representing a return of capital also deplete
our total assets.



A portion of our
distributions may constitute a return of capital and affect our stockholders’ tax basis in our shares.



We plan to make distributions
from any assets legally available for distribution and will be required to determine the extent to which such distributions are
paid out of current or accumulated earnings, realized capital gains or are returns of capital.  To the extent there is
a return of capital, investors will be required to reduce their cost basis in our stock for federal tax purposes, which will result
in higher tax liability when the shares are sold, even if they have not increased in value or have lost value.



The market price
of our shares of common stock may be adversely affected by the sale of shares by our management or large stockholders.



Sales of our shares of
common stock by our officers or by large stockholders could adversely and unpredictably affect the price of those securities.  Additionally,
the price of our shares of common stock could be affected even by the potential for sales by these persons.  We cannot
predict the effect that any future sales of our common stock, or the potential for those sales, will have on our share price.  Furthermore,
due to relatively low trading volume of our stock, should one or more large stockholders seek to sell a significant portion of
its stock in a short period of time, the price of our stock may decline.



Item 1B.  Unresolved Staff Comments



Not applicable.



Item 2.  Properties



We do not own any real
estate or other physical properties materially important to our operation.  Our headquarters are located at 128 North
13th Street, Suite 1100, Lincoln, Nebraska 68508, where we occupy our office space pursuant to an Administrator Consulting
Agreement between us and the Administrator.  We believe that our office facilities are suitable and adequate for our
business as it is presently conducted.



Item 3. Legal Proceedings



We are not currently subject
to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to
time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the
enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be
predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results
of operations.



Item 4. Mine Safety Disclosures



Not applicable.



32







PART II



Item 5.  Market for Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities



Price Range of Common Stock



Our common stock is listed
and began trading on the Nasdaq Capital Market on December 12, 2011.  Our shares of common stock are traded under the
symbol “XRDC.” Prior to December 3, 2015, our shares of common stock were traded under the symbol “BDCV,”
and, prior to July 1, 2014, our shares of common stock were traded under the symbol “KIPO.” The following table sets
forth the range of high and low sales prices of our common stock as reported on the Nasdaq Capital Market for the past two fiscal
years.



|                   |  | Price Range |     
|------------------ |  | ----------- | ----
|Quarter Ended      |  | High        |     
|2015               |  |             |     
|December 31, 2015  |  | $           | 4.74
|September 30, 2015 |  | $           | 5.19
|June 30, 2015      |  | $           | 5.30
|March 31, 2015     |  | $           | 5.15
|                   |  |             |     
|2014               |  |             |     
|December 31, 2014  |  | $           | 5.39
|September 30, 2014 |  | $           | 6.25
|June 30, 2014      |  | $           | 6.68
|March 31, 2014     |  | $           | 6.51



The last reported price
for our common stock on March 28, 2016 was $2.56 per share. As of March 28, 2016, we had approximately 700 stockholders
of record.



Shares of BDCs may trade
at a market price that is less than the value of the net assets attributable to those shares.  The possibility that our
shares of common stock will trade at a sustained discount from net asset value over the long term is separate and distinct from
the risk that our net asset value will decrease.  Since the listing of our common stock on Nasdaq on December 12, 2011,
our shares have typically traded at a discount to our net asset value per share, and there is no assurance that shares of our common
stock will ever trade at or above our net asset value.



Stock Repurchases



On September 22, 2014,
our Board of Directors authorized a stock repurchase program of up to $5 million.   This stock repurchase program expired
on March 22, 2015. However, on March 26, 2015, our Board of Directors authorized an extension of the stock repurchase program for
an additional six months which expired on September 22, 2015.



On November 10, 2015,
the Board of Directors authorized a stock repurchase program of up to $1 million for a six month period to expire on May 10, 2016.
On January 20, 2016, our Board of Directors approved an amendment to this stock repurchase program to allow for greater flexibility,
by narrowing the current “blackout” period during which we are prohibited from purchasing shares, and increasing the
size of the program from $1 million to $2 million. Under the repurchase program, we are authorized to repurchase shares of our
common stock in open market transactions, including through block purchases, depending on prevailing market conditions and other
factors.  The repurchase program may be extended, modified or discontinued at any time for any reason.  The
stock repurchase program does not obligate us to acquire any specific number of shares, and all repurchases will be made in accordance
with Rule 10b-18 under the Exchange Act, which sets certain restrictions on the method, timing, price and volume of stock repurchases.



33







During the year ended
December 31, 2015, we repurchased 117,510 shares of our common stock at an average price of $4.96 per share, including commissions,
with a total cost of $582,468.  Our net asset value per share increased by $0.02 per share as a result of the share repurchases
during the year ended December 31, 2015.  The weighted average discount to net asset value per share of the shares repurchased
during the year ended December 31, 2015 was 24%. Details of the monthly share repurchases under our stock repurchase program during
the year ended December 31, 2015 are set forth in the table below.





|Period                        |  | Total Number of Shares Repurchased |         |  | Total Cost of Shares Repurchased |   |         | Average Price Paid per Share |  |   | Total Number of Shares Purchased as Part of the Publicly Announced Program |  |  | Total Cost of Shares Purchased as Part of the Publicly Announced Program |         |  | Maximum Dollar Value of Shares that May Yet be Purchased Under the Program |  
|----------------------------- |  | ---------------------------------- | ------- |  | -------------------------------- | - | ------- | ---------------------------- |  | - | -------------------------------------------------------------------------- |  |  | ------------------------------------------------------------------------ | ------- |  | -------------------------------------------------------------------------- | -
|Balance at December  31, 2014 |  |                                    |         |  |                                  |   |         |                              |  |   |                                                                            |  |  |                                                                          | 128,977 |  |                                                                            | $
|May 2015                      |  |                                    | 15,231  |  |                                  | $ | 78,103  |                              |  | $ | 5.13                                                                       |  |  |                                                                          | 144,208 |  |                                                                            |  
|June 2015                     |  |                                    | 55,308  |  |                                  |   | 273,935 |                              |  |   | 4.95                                                                       |  |  |                                                                          | 199,516 |  |                                                                            |  
|August 2015                   |  |                                    | 16,554  |  |                                  |   | 81,757  |                              |  |   | 4.94                                                                       |  |  |                                                                          | 216,070 |  |                                                                            |  
|September 2015                |  |                                    | 30,417  |  |                                  |   | 148,673 |                              |  |   | 4.89                                                                       |  |  |                                                                          | 246,487 |  |                                                                            |  
|Total                         |  |                                    | 117,500 |  |                                  | $ | 582,468 |                              |  | $ | 4.96                                                                       |  |  |                                                                          | 246,487 |  |                                                                            | $





Details of the monthly
share repurchases under our stock repurchase program during the year ended December 31, 2014 are set forth in the table below.





|Period        |  | Total Number of Shares Repurchased |         |  | Total Cost of Shares Repurchased |   |         | Average Price Paid per Share |  |   | Total Number of Shares Purchased as Part of the Publicly Announced Program |  |  | Total Cost of Shares Purchased as Part of the Publicly Announced Program |         |  | Maximum Dollar Value of Shares that May Yet be Purchased Under the Program |  
|------------- |  | ---------------------------------- | ------- |  | -------------------------------- | - | ------- | ---------------------------- |  | - | -------------------------------------------------------------------------- |  |  | ------------------------------------------------------------------------ | ------- |  | -------------------------------------------------------------------------- | -
|October 2014  |  |                                    | —       |  |                                  |   | —       |                              |  |   | —                                                                          |  |  |                                                                          | —       |  |                                                                            |  
|November 2014 |  |                                    | 33,106  |  |                                  |   | 172,459 |                              |  |   | 5.21                                                                       |  |  |                                                                          | 33,106  |  |                                                                            |  
|December 2014 |  |                                    | 95,871  |  |                                  |   | 493,539 |                              |  |   | 5.15                                                                       |  |  |                                                                          | 128,977 |  |                                                                            |  
|Total         |  |                                    | 128,977 |  |                                  | $ | 665,998 |                              |  | $ | 5.16                                                                       |  |  |                                                                          | 128,977 |  |                                                                            | $





Since December 31, 2015,
we have repurchased 6,408 shares of our common stock at an average price of $2.12 per share, including commissions, with a total
cost of $13,608. See “-Recent Developments” below.



Distributions



Distribution Policy



We generally pay distributions
to our stockholders out of assets legally available for distribution, as determined by our Board of Directors, with the intention
of distributing 100% of our net realized capital gains annually.



On March 25, 2016, our
Board of Directors adopted a distribution policy with the objective to make special distributions to stockholders as declared by
our Board of Directors in its discretion. Based on our Board of Directors’ recent change to our investment objective to preserve
capital and maximize stockholder value and resolution to monetize our portfolio holdings at the earliest practicable date, we will
no longer pay regular quarterly distributions to our stockholders. See “-Recent Developments” below. Our Board of Directors
may amend or terminate the distribution policy at any time.



Under our former distribution
policy, we intended to pay regular quarterly distributions (the "Regular Distributions") to our stockholders in an amount
determined and declared by our Board of Directors in the first quarter of each year. The Regular Distributions were intended to
provide a minimum level of distributions to our stockholders each year until we were generating sufficient net investment income
under our former debt-focused investment strategy. To the extent our net realized capital gains exceeded the aggregate amount of
our Regular Distributions for a year, our Board of Directors also intended to declare a special distribution in December of each
year (the "Special Distribution") so that the total distributions for the year represented at least 100% of our net realized
capital gains.



34







Due to the uncertainty
of our current portfolio companies achieving a liquidity event, we can give no assurance that we will be able make distributions
from the sale of our portfolio investments.  Furthermore, we can give no assurance that we will achieve investment results
that will allow such distributions to be paid from net investment income or net realized capital gains from year-to-year. There
is no assurance that our current portfolio companies will complete an IPO, sale/merger or other liquidity event or that we will
be able to realize any net capital gains from the sale of our publicly-traded portfolio company investments.  Our ability
to make distributions may also be adversely affected by, among other things, the impact of one or more risk factors described herein.  Accordingly,
no assurances can be made that we will make distributions to our stockholders in the future.



If our distributions for
any year exceed our net investment income and net realized capital gains, the difference will be distributed from our capital and
will constitute a return of capital to our stockholders.  A return of capital is generally not taxable and, instead,
reduces a stockholder's tax basis in his shares of our common stock.  A return of capital does not necessarily reflect
our investment performance and generally does not reflect income earned. The tax character of a distribution is determined based
upon our total net investment income, net realized capital gains and distributions made with respect to a taxable year and, therefore,
cannot be finally determined until after the close of the relevant taxable year. Distributions representing a return of capital
also deplete our total assets.



During the year ended
December 31, 2015, our Board of Directors declared quarterly Regular Distributions each in the amount of $0.15 per share. The record
and payment dates for these distributions were as follows:



|Regular Distributions |  | Amount Per Share |      |  | Record Date |                    | Payment Date
|--------------------- |  | ---------------- | ---- |  | ----------- | ------------------ | ------------
|First Quarter         |  | $                | 0.15 |  |             | April 15, 2015     |             
|Second Quarter        |  | $                | 0.15 |  |             | June 11, 2015      |             
|Third Quarter         |  | $                | 0.15 |  |             | September 11, 2015 |             
|Fourth Quarter        |  | $                | 0.15 |  |             | December 4, 2015   |             



Section 19 of the 1940 Act
requires us to accompany each distribution payment with a notice if any part of that payment is from a source other than taxable
net investment income.  This Section 19(a) notice is not for tax reporting purposes and is provided for informational
purposes.  The Section 19(a) notice provides details on the anticipated source(s) of our distributions. The amounts and
sources of distributions reported in Section 19(a) notices are only estimates and the actual amounts and sources of the amounts
for tax reporting purposes will depend upon our investment experience during the year and may be subject to changes based on tax
regulations.  Distributions in excess of our accumulated earnings and profits would generally be treated first as a return
of capital to the extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain.  We
will send stockholders a Form 1099-DIV for the calendar years that will report to stockholders the tax characterization of these
distributions for federal income tax purposes.



Dividend Reinvestment
Plan



We maintain a dividend
reinvestment plan (“DRIP”) that provides for the reinvestment of dividends on behalf of our stockholders, unless a
stockholder has elected to receive dividends in cash.  As a result, if we declare a dividend, stockholders who have not
“opted out” of the DRIP by the dividend record date will have their dividend automatically reinvested into additional
shares of our common stock.  Although we have a number of options to satisfy the share requirements of the DRIP, we currently
expect that the shares required to be purchased under the DRIP will be acquired through open market purchases of our common stock
by our DRIP administrator.  The shares purchased in the open market to satisfy the DRIP requirements will be valued based
upon the average price of the applicable shares purchased by the DRIP administrator.



Dividend History



The distribution amounts,
and the record and payment dates, for our distributions for the years ended December 31, 2015, 2014, 2013, 2012 and 2011 are set
forth in the table below.



35









|Date Declared          |  | Record Date        |  | Payment Date       |  | Amount Per Share |      |     | Source of Distribution
|---------------------- |  | ------------------ |  | ------------------ |  | ---------------- | ---- | --- | ----------------------
|2015 Dividends:        |  |                    |  |                    |  |                  |      |     |                       
|March 26, 2015         |  | April 15, 2015     |  | April 29, 2015     |  | $                | 0.15 |     |                       
|March 26, 2015         |  | June 11, 2015      |  | June 25, 2015      |  |                  | 0.15 |     |                       
|March 26, 2015         |  | September 11, 2015 |  | September 25, 2015 |  |                  | 0.15 |     |                       
|March 26, 2015         |  | December 4, 2015   |  | December 18, 2015  |  |                  | 0.15 |     |                       
|Total - 2015 Dividends |  |                    |  |                    |  |                  | 0.60 |     |                       
|2014 Dividends:        |  |                    |  |                    |  |                  |      |     |                       
|February 20, 2014      |  | March 6, 2014      |  | April 14, 2014     |  | $                | 0.10 | (1) |                       
|February 20, 2014      |  | May 8, 2014        |  | June 17, 2014      |  |                  | 0.10 | (1) |                       
|February 20, 2014      |  | August 11, 2014    |  | September 18, 2014 |  |                  | 0.10 | (1) |                       
|December 12, 2014      |  | December 31, 2014  |  | January 13, 2015   |  |                  | 0.40 |     |                       
|Total - 2014 Dividends |  |                    |  |                    |  |                  | 0.70 |     |                       
|2013 Dividends:        |  |                    |  |                    |  |                  |      |     |                       
|May 28, 2013           |  | June 14, 2013      |  | June 26, 2013      |  | $                | 0.24 |     |                       
|May 28, 2013           |  | September 13, 2013 |  | September 25, 2013 |  |                  | 0.24 |     |                       
|December 19, 2013      |  | December 30, 2013  |  | January 13, 2014   |  |                  | 0.01 |     |                       
|Total - 2013 Dividends |  |                    |  |                    |  |                  | 0.49 |     |                       
|2012 Dividends:        |  |                    |  |                    |  |                  |      |     |                       
|December 6, 2012       |  | December 14, 2012  |  | December 26, 2012  |  |                  | 0.03 |     |                       
|Total - 2012 Dividends |  |                    |  |                    |  |                  | 0.03 |     |                       
|2011 Dividends:        |  |                    |  |                    |  |                  |      |     |                       
|February 11, 2011      |  | February 15, 2011  |  | February 17, 2011  |  |                  | 0.13 |     |                       
|Total - 2011 Dividends |  |                    |  |                    |  |                  | 0.13 |     |                       
|Total - Cumulative     |  |                    |  |                    |  | $                | 1.95 |     |                       



| | (1) | This dividend was paid in cash and shares of our common stock.
| | --- | --------------------------------------------------------------

| | (2) | Although the dividend of $0.40 per share was paid on January 13, 2015, this dividend was taxable
to stockholders as if paid in 2014. For income and excise tax purposes, this dividend was eligible for the dividends paid deduction
by us in 2014.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Although the dividend of $0.01 per share was paid on January 13, 2014, this dividend was taxable
to stockholders as if paid in 2013. For income and excise tax purposes, this dividend was eligible for the dividends paid deduction
by us in 2013.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | The February 2011 distribution was a special cash distribution based on the unrealized appreciation
of a portfolio company investment.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------



Performance
Graph



Our common stock was listed
and began trading on Nasdaq on December 12, 2011.  Accordingly, we do not have five years of performance history and
will present cumulative stockholder return for the period beginning December 12, 2011 and ending December 31, 2015.



The following stock performance
graph compares the cumulative stockholder return assuming that, at the beginning of the period, a person invested $100 in each
of our common stock, the Russell 2000 Index, and each component of the selected peer issuer index.  The graph measures
total stockholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are
reinvested in like securities.



The Russell 2000 Index
is a broad equity market index that includes companies whose equity securities are traded on the same exchange as us.  Our
selected peer issuer index consists of three BDCs (with relatively comparable market capitalizations to us) whose investment objective
is to maximize capital appreciation with a focus on making equity investments in private portfolio companies, which is consistent
with our former investment objective.  The selected peer issuer index includes: Firsthand Technology Value Fund (Nasdaq:
SVVC), GSV Capital Corp. (Nasdaq:  GSVC) and Harris & Harris Group, Inc. (Nasdaq: TINY).

36











This graph and other information
furnished under Part II. Item 5 of this Form 10-K shall not be deemed to be “soliciting material” or to be “filed”
with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.



Because of the recent
change in our investment objective to preserve capital and maximize stockholder value and the expected variance in our ability
to make distributions to stockholders, the above performance measurement may not be meaningful going forward. The stock price
performance included in the above graph is not necessarily indicative of future stock price performance.





37









Item 6.  Selected Financial Data



The following selected
financial data for the years ended December 31, 2015, 2014, 2013, 2012, and 2011 is derived from our audited financial statements
included our annual reports on Form 10-K for the respective years. The data should be read in conjunction with our financial statements
and related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
included elsewhere in this annual report.



|                                                                       |  | At and for the Years Ended December 31, |            
|---------------------------------------------------------------------- |  | --------------------------------------- | -----------
|                                                                       |  | 2015                                    |            
|Statement of Operations Data:                                          |  |                                         |            
|Total investment income                                                |  | $                                       | 48,431     
|Operating expenses:                                                    |  |                                         |            
|Base management fees                                                   |  |                                         | 1,232,563  
|Incentive fees                                                         |  |                                         | (2,130,443 
|Administrative expenses allocated from investment adviser              |  |                                         | 423,628    
|Operating expenses before expense waiver from investment adviser       |  |                                         | 1,338,426  
|Waiver of base management fees                                         |  |                                         | —          
|Total operating expenses net of expense waiver from investment adviser |  |                                         | 1,338,426  
|Net investment loss                                                    |  |                                         | (1,289,995 
|Net realized gain (loss)                                               |  |                                         | (1,157,446 
|Net (decrease) increase in unrealized appreciation                     |  |                                         | (9,051,699 
|Net (decrease) increase in net assets resulting from operations        |  |                                         | (11,499,140
|                                                                       |  |                                         |            
|Per Share Data:                                                        |  |                                         |            
|Net asset value per common share                                       |  | $                                       | 5.06       
|Net investment loss (1)                                                |  |                                         | (0.13      
|Net (decrease) increase in net assets resulting from operations (1)    |  |                                         | (1.18      
|Distributions declared (2)                                             |  |                                         | 0.60       
|                                                                       |  |                                         |            
|Balance Sheet Data at Period End:                                      |  |                                         |            
|Investment in portfolio company securities at fair value               |  | $                                       | 34,745,757 
|Cash and cash equivalents                                              |  |                                         | 13,655,862 
|Total assets                                                           |  |                                         | 49,162,791 
|Total liabilities                                                      |  |                                         | 247,732    
|Net assets                                                             |  |                                         | 48,915,059 
|Common shares outstanding                                              |  |                                         | 9,676,484  



(1)Per
share amounts are calculated using weighted average shares outstanding during the period.



(2)The
distributions declared per share for the year ended December 31, 2011 are calculated using weighted average shares outstanding
during the year ended December 31, 2011.



38







Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations



FORWARD-LOOKING STATEMENTS
AND PROJECTIONS



This annual report on
Form 10-K contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements
are not historical facts, but are based on current management expectations that involve substantial risks, uncertainties, and other
factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from
those expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our
future financial performance. We generally identify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "plans," "anticipates," "could," "intends," "target,"
"projects," "contemplates," "believes," "estimates," "predicts," "potential"
or "continue" or the negative of these terms or other similar words. Important assumptions include our ability to originate
new portfolio company investment opportunities, the timing of IPOs or strategic sales/mergers by our portfolio companies in which
we made equity investments, our ability to achieve attractive returns on our investments, and our ability to access additional
capital. The forward-looking statements contained in this annual report on Form 10-K include statements as to:



| | • | our future operating results;
| | - | -----------------------------



| | • | changes in our investment policies and strategies;
| | - | --------------------------------------------------



| | • | our ability to obtain ongoing administrative services from one or more third parties on a cost effective basis;
| | - | ---------------------------------------------------------------------------------------------------------------



| | • | our business prospects and the prospects of our existing portfolio companies;
| | - | -----------------------------------------------------------------------------



| | • | the impact of changes in interest rates on our investments;
| | - | -----------------------------------------------------------



| | • | the impact of a protracted decline in the market for IPOs on our business;
| | - | --------------------------------------------------------------------------



| | • | the impact of a protracted decline in the capital and/or stock market;
| | - | ----------------------------------------------------------------------



| | • | our ability to sell our investments;
| | - | ------------------------------------



| | • | the ability of our portfolio companies to be monetized;
| | - | -------------------------------------------------------



| | • | our relationships with the management teams of our existing portfolio companies;
| | - | --------------------------------------------------------------------------------



| | • | the dependence of our future success on the general economy and its impact on the industries in
which our existing portfolio companies operate;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| | • | the ability of our existing portfolio companies to achieve their operating performance objectives,
to raise additional debt and equity capital to fund future operations, and to complete an IPO or strategic sale/merger within a
reasonable time;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | our ability to find suitable liquid investments which generate current income that would enable
us to offset some of our ongoing operating expenses, including costs that we incur to maintain our status as a public reporting
and Nasdaq listed company;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | our ability to make follow-on investments in our existing portfolio companies in order to maintain
or enhance the value of our existing positions;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| | • | our regulatory structure and tax status, including any changes in laws and regulations;
| | - | ---------------------------------------------------------------------------------------



| | • | our ability to operate as a BDC and a regulated investment company;
| | - | -------------------------------------------------------------------



| | • | the adequacy of our cash resources and working capital;
| | - | -------------------------------------------------------



| | • | our ability to generate realized capital gains from the disposition of our equity investments in
existing portfolio companies after they have completed an IPO or in connection with a strategic sale/merger or as part of a privately
negotiated transaction;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | the timing, form and amount of any distributions;
| | - | -------------------------------------------------



| | • | the valuation of any investments in portfolio companies, particularly those having no liquid trading market;
| | - | ------------------------------------------------------------------------------------------------------------



39







| | • | our ability to recover unrealized losses; and
| | - | ---------------------------------------------



| | • | the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
the rules and regulations issued thereunder.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



Although we believe that
the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be
inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these
and other uncertainties, the inclusion of a projection or forward-looking statement in this annual report on Form 10-K should not
be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those
described or identified in "Risk Factors" in this annual report on Form 10-K. You should not place undue reliance on
these forward-looking statements, which apply only as of the date of this annual report on Form 10-K. Except as required by the
federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of
new information, future events or otherwise, to reflect events or circumstances occurring after the date of this annual report
on Form 10-K. The forward-looking statements and projections contained in this annual report on Form 10-K are excluded from the
safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, or the Securities Act.



Overview



Crossroads Capital, Inc.
("we," "our" and "us"), formerly known as BDCA Venture, Inc., was incorporated on May 9, 2008
under the laws of the State of Maryland and is an internally managed, non-diversified, closed-end management investment company
that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940,
as amended (the "1940 Act"), as of November 20, 2008. Effective December 2, 2015, we changed our name from BDCA
Venture, Inc. to Crossroads Capital, Inc. Effective January 1, 2010, we elected to be treated for U.S. Federal income tax purposes
as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
We commenced our portfolio company investment activities in January 2010. The shares of our common stock have been listed on the
Nasdaq Capital Market since December 12, 2011.



On September 22, 2014,
our Board of Directors approved a change in our investment objective to maximize total return by generating current income from
debt investments and, to a lesser extent, capital appreciation from equity and equity-related investments. Previously, our investment
objective was to maximize capital appreciation by making investments in the equity and equity-linked securities of later stage,
typically venture capital-backed, pre-initial public offering companies.



At our 2015 Annual Meeting
of Stockholders held on July 9, 2015, our stockholders elected Richard Cohen, Andrew Dakos, Gerald Hellerman and Timothy Keating
to serve as our directors until the 2016 Annual Meeting of Stockholders or until their respective successors are duly elected and
qualified. Additionally, at the 2015 Annual Meeting, our stockholders approved a proposal to have our Board of Directors consider
adopting a plan to “maximize shareholder value within a reasonable period of time.”



On July 28, 2015, Mr.
Keating notified our Board of Directors of his resignation from the Board and as our Chief Executive Officer and President. Our
Board of Directors appointed Frederic M. Schweiger to serve as our Chief Executive Officer and President effective July 29, 2015.



On October 5, 2015, our
Board of Directors approved the termination of the Investment Advisory and Administrative Services Agreement dated July 1, 2014
(the "Investment Advisory Agreement") between us and our investment adviser, BDCA Venture Adviser, LLC. The effective
date of termination of the Investment Advisory Agreement was December 6, 2015 (the "Termination Date"). Also on October
5, 2015, our Board of Directors determined that we will no longer make investments in new venture capital-backed or high growth
companies and will now shift our focus to the orderly monetization of our current holdings. However, we may consider making opportunistic
follow-on investments in its existing portfolio companies.



On November 10, 2015,
our Board of Directors approved the engagement of US Bancorp Fund Services, LLC ("US Bancorp") to provide administration
and accounting services.



On November 13, 2015,
our Board of Directors approved the engagement of 1100 Capital Consulting, LLC (our “Administrator”) to provide administrative
consulting services to us, including the provision of personnel to act as certain of our executive officers, including the
Chief Executive Officer and Chief Financial Officer.



40







Effective December 2,
2015, our Board of Directors appointed Ben H. Harris to serve as our Chief Executive Officer and President, David M. Hadani to
serve as our Chief Financial Officer, Treasurer and Secretary, both officers of the Administrator, and Stephanie L. Darling to
serve as our Chief Compliance Officer.



We have entered into agreements
with MidFirst Bank to be the custodian of our portfolio securities and Frontier Bank to be the custodian of the majority of our
cash and cash equivalent assets.



Effective January 20,
2016, our Board of Directors changed to our investment objective to preserve capital and maximize stockholder value (our “Investment
Objective”) by pursuing the sale of our portfolio investments, limiting expenses and deploying surplus cash as appropriate,
including into yielding investments to offset, in part, operating expenses. On March 25, 2016, our Board of Directors resolved to
monetize our portfolio holdings at the earliest practicable date.



While our Board of Directors
plans to distribute cash proceeds to stockholders from the sale or other monetization of our portfolio investments, no assurance
can be given regarding the timing of or amounts realized from any such transactions. Further, while our Board of Directors will
adhere to its previously announced determination not to invest in new venture capital-backed companies, we may consider making
opportunistic follow-on investments in our existing portfolio companies. Our Board of Directors reserves the right to modify or
terminate this plan at any time or to consider additional strategic alternatives. See “-Recent Developments” below.



For the December 31, 2015
valuation of our portfolio investments that are not publicly traded, an independent valuation firm assisted our Board of Directors
in its determination of the value of eight investments in our portfolio. Our Administrator assisted our Board of Directors in its
determination of the value of all of the investments in our portfolio and the funds held in escrow from the sale of investments
(“Escrowed Funds”). Beginning with the September 30, 2015 valuation, our Board of Directors also engaged an independent
valuation consultant to assist it in its review and assessment of the valuation of our investment portfolio.



A more detailed description
of the former and new investment strategies is located in Item 1. — Business of this annual report on Form 10-K.



Portfolio Activity



Given the nature of investing
in the securities of private companies, our investments generally will not have readily available market quotations. Generally,
our equity investments in publicly traded companies in which the lockup restriction has expired are valued at the closing market
price on the valuation date. However, equity investments in publicly traded portfolio companies which remain subject to lockup
restrictions are valued in good faith by our Board of Directors based on a discount to the most recently available closing market
prices. Our equity investments in private companies will not generally have readily available market quotations and, as such, are
valued at fair value as determined in good faith by or under the direction of our Board of Directors, see "-Critical Accounting
Policies" below.



We did not make any portfolio
company investments during the year ended December 31, 2015.



| | • | On January 6, 2015, 3,986 shares of Millennial Media common stock were released from the indemnity
escrow. During December 2014, we wrote-off these released shares based on pending indemnity claims made against such shares. On
February 26, 2015, we sold these released shares resulting in a net realized gain of $6,178. On December 24, 2015, we received
$4,686 in additional proceeds based on a final escrow release.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | On March 12, 2015, we received $13,930 in additional proceeds related to the sale of our investment
in Xtime based on a post-closing working capital adjustment to the merger consideration. The receipt of these additional proceeds
resulted in a net realized gain of $13,930. On January 15, 2016, $606,983 was released to us from the Xtime escrow without any
offset for indemnity claims. See “-Recent Developments” below.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | On January 15, 2015, the maturity date of our July 2014 and August 2014 promissory notes issued
by BrightSource in the initial principal amount of $107,977 (the "Notes") was extended from January 15, 2015 to January
29, 2015. On January 29, 2015, the maturity date of the Notes was further extended to February 15, 2015. On March 17, 2015, the
maturity date of the Notes was further extended to March 30, 2015. On March 22, 2016, BrightSource advised us that it was negotiating
a further extension of the maturity date with the holders of the Notes.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



41







| | • | On March 17, 2015, the maturity date of our BrightSource convertible bridge notes in the initial
principal amount of $205,193 was extended from February 15, 2015 to March 30, 2015. On March 22, 2016, BrightSource advised us
that it was negotiating a further extension of the maturity date with the holders of the convertible bridge notes.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | During February and March 2015, Agilyx issued non-convertible promissory notes to certain investors
in the principal amount of $2.0 million, which triggered the right for certain shareholders to force the conversion of all of Agilyx's
outstanding shares of convertible preferred stock (including those held by us) into shares of common stock on a 1-for-1 basis.
On April 3, 2015, Agilyx shareholders approved the conversion of all outstanding shares of convertible preferred stock to common
stock on a 1-for-1 basis. Accordingly, our 1,092,956 shares of Series C convertible preferred stock and 15,107,090 shares of Series
E-2 convertible preferred stock were converted into a total of 16,200,046 shares of common stock. On October 29, 2015, Agilyx completed
a 1,000,000-to-one reverse stock split of all outstanding common stock. As a result, our 16,200,046 shares of common stock were
exchanged into 16 shares of common stock.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | During April and May 2015, we sold 300,000 shares of Tremor Video common stock with an aggregate
cost basis of $2,000,004 for total net proceeds of $817,764, resulting in a net realized loss of $1,182,240.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | On May 8, 2015, Zoosk withdrew its registration statement on Form S-1 for an IPO of its common
stock. Zoosk initially filed a registration statement on April 16, 2014 to raise up to $100 million in an initial public offering.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | On October 15, 2015, Suniva, Inc., a private portfolio company, completed a stock-for-stock merger
transaction with Shunfeng International Clean Energy Limited, a Hong Kong Stock Exchange company ("SFCE"), and a global
integrated energy provider. In the merger, all outstanding shares of preferred stock and common stock of Suniva were cancelled
in exchange for the right of certain Suniva stockholders (including us) to receive their allocable share of the merger consideration,
which was distributed in shares of SFCE common stock and Class A common stock of the private surviving company of the merger transaction.
On January 13, 2016, our 10.022 shares of Series F preferred stock and 197.942 shares of Series D preferred stock were exchanged
for 2,844 shares of Suniva Class A common stock and 820,868 shares of SFCE common stock. The shares of SFCE common stock were subject
to a lockup period which expired in February 2016. See “-Recent Developments” below.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



42







The following table summarizes
the net realized gain (loss) and net change in unrealized appreciation (depreciation) for the years ended December 31, 2015, 2014
and 2013 for: (i) our portfolio company investments sold during each period, and (ii) our portfolio company investments and funds
held in escrow from the sale of investments ("Escrowed Funds") held at the end of each period:





|                                                                |  | Years Ended                  |           
|--------------------------------------------------------------- |  | ---------------------------- | ----------
|                                                                |  | December 31, 2015            |           
|                                                                |  | Net Realized
    Gain (Loss) |           
|Portfolio Company Investments
    Sold During Period            |  |                              |           
|Corsair Components, Inc.                                        |  | $                            | —         
|LifeLock, Inc.                                                  |  |                              | —         
|Solazyme, Inc.                                                  |  |                              | —         
|Xtime, Inc.                                                     |  |                              | 13,930    
|TrueCar, Inc.                                                   |  |                              | —         
|Kabam, Inc.                                                     |  |                              | —         
|Millennial Media, Inc.                                          |  |                              | 10,864    
|Livescribe, Inc.                                                |  |                              | —         
|Stoke, Inc.                                                     |  |                              | —         
|Tremor Video, Inc.                                              |  |                              | (1,182,240
|Subtotal - Portfolio Company
    Investments Sold During Period |  |                              | (1,157,446
|Portfolio Company Investments
    Held at End of Period         |  |                              | —         
|Total
    Portfolio Company Investments                         |  |                              | (1,157,446
|Funds Held in Escrow from
    Sale of Investment                |  |                              | —         
|Total
    Portfolio Company Financial Assets                    |  | $                            | (1,157,446





Portfolio Composition and Potential
Exits



The total value of
our investments was $34.7 million at December 31, 2015, compared to $45.8 million at December 31, 2014.



The following table summarizes the composition
of our portfolio company investments by type of security and Escrowed Funds at cost and value as of December 31, 2015 and
December 31, 2014.





|                                                  |  | December 31, 2015 |            |  | December 31, 2014 |  
|------------------------------------------------- |  | ----------------- | ---------- |  | ----------------- | -
|Security Type                                     |  | Cost              |            |  | Fair Value        |  
|Privately Held Portfolio Companies:               |  |                   |            |  |                   |  
|Preferred Stock                                   |  | $                 | 32,937,524 |  |                   | $
|Preferred Stock Warrants                          |  |                   | —          |  |                   |  
|Common Stock                                      |  |                   | 6,088,558  |  |                   |  
|Subordinated Convertible Bridge
    Notes         |  |                   | 265,929    |  |                   |  
|Subordinated
    Secured Notes                    |  |                   | 121,759    |  |                   |  
|Subtotal
    - Privately Held Portfolio Companies |  |                   | 39,413,770 |  |                   |  
|Publicly Traded Portfolio
    Companies:          |  |                   |            |  |                   |  
|Common
    Stock                                  |  |                   | 1,999,997  |  |                   |  
|Total
    Portfolio Company Investments           |  |                   | 41,413,767 |  |                   |  
|Funds Held in Escrow from
    Sale of Investment  |  |                   | 704,101    |  |                   |  
|Total
    Portfolio Company Financial Assets      |  | $                 | 42,117,868 |  |                   | $





See the Schedules
of Investments in our financial statements for additional information regarding industry and headquarter locations of our portfolio
companies.



43







As of December 31,
2015, the cost, fair value and unrealized appreciation (or write-up) of each of our portfolio companies in an unrealized appreciation
position is set forth below.





|                     |  | December 31, 2015 |           
|-------------------- |  | ----------------- | ----------
|Portfolio Company    |  | Cost              |           
|SilkRoad, Inc.       |  | $                 | 6,337,785 
|Metabolon, Inc.      |  |                   | 4,000,000 
|Centrify Corporation |  |                   | 2,999,999 
|Zoosk, Inc.          |  |                   | 2,999,999 
|Deem, Inc.           |  |                   | 3,000,000 
|Total                |  | $                 | 19,337,783





As of December 31,
2015, the cost, fair value and unrealized depreciation (or write-down) of each of our portfolio companies in an unrealized depreciation
position is set forth below.





|                          |  | December 31, 2015 |           
|------------------------- |  | ----------------- | ----------
|Portfolio Company         |  | Cost              |           
|Mode Media Corporation    |  | $                 | 4,999,999 
|Harvest Power, Inc.       |  |                   | 2,904,526 
|BrightSource Energy, Inc. |  |                   | 3,284,819 
|Tremor Video, Inc.        |  |                   | 1,999,997 
|Suniva, Inc.              |  |                   | 2,554,287 
|MBA Polymers, Inc.        |  |                   | 2,000,000 
|Agilyx Corporation        |  |                   | 4,332,356 
|Total                     |  | $                 | 22,075,984





As of December 31,
2015, the unrealized depreciation (or write-down) on our Escrowed Funds was $16,019.



As of December 31,
2015, we held equity investments in 12 portfolio companies, one of which is publicly traded (Tremor Video), and 11 of which are
private companies. Based on our quarterly calls with the management of our private portfolio companies, we do not believe that
any of our 11 private portfolio companies will complete an IPO or a strategic merger or sale during the next 12 months, other than
Suniva. If and when any private portfolio companies complete an IPO, our shares in such portfolio companies would only become eligible
for sale following the expiration of post-IPO lockup periods, typically 180 days. We further believe there may be limited opportunities
to sell our interests in existing private portfolio companies to third parties in privately negotiated transactions. Accordingly,
it is possible that an orderly monetization of our current holdings may take three to five years or more.



We believe there are
three factors, among others, that have an impact on the IPO market: (i) volatility, (ii) recent IPO performance, and (iii) equity
market trends. Beginning in the third quarter of 2015, there was an increase in volatility, a decline in recent IPO performance,
and unfavorable equity market trends, all of which we believe may adversely impact the IPO market. If these factors continue to
be unfavorable, we believe it may be more difficult for our private portfolio companies to complete an IPO in the future. There
can be no assurance that any of our existing private portfolio companies will complete an IPO or a strategic sale/merger.



Results of Operations



The principal measure
of our financial performance is the net increase (decrease) in our net assets resulting from operations, which is the sum of (i)
net investment income (loss), (ii) net realized gain (loss), and (iii) the net change in unrealized appreciation (depreciation).
Net investment income (loss) is the difference between our income from interest, dividends, fees and other investment income and
our operating expenses. Net realized gain (loss), if any, is the difference between the net proceeds from the disposition of portfolio
company investments or other relevant assets and their stated cost. Net unrealized appreciation (depreciation) is the net change
in the fair value of our portfolio company investments or other relevant assets.



44







Set forth below are
the results of operations for the years ended December 31, 2015 and 2014.



Comparison of the Years Ended December 31,
2015 and 2014



Investment Income



For the years ended
December 31, 2015 and 2014, we earned interest and dividend income from cash and cash equivalents of $8,446 and $2,809, respectively.
During the year ended December 31, 2015, we also earned payment-in-kind ("PIK") interest of $39,985 on our subordinated
convertible bridge note and our subordinated secured note investments in BrightSource. During the year ended December 31,
2014, we earned PIK interest of $66,486 on our subordinated convertible bridge note investments in BrightSource, SilkRoad and Agilyx
and our subordinated secured note investments in BrightSource.



To maintain our status
as a RIC, PIK interest, which is a non-cash source of income, must generally be distributed to stockholders at least annually from
other sources such as available cash or the proceeds from the disposition of our portfolio company investments.  However,
since we do not expect to have investment company taxable income, we would generally not be required to distribute PIK interest
from our available cash or the proceeds from the disposition of our portfolio company investments.



The following table
shows our PIK loan activity for the years ended December 31, 2015 and 2014, at cost:





|                                                                   |  | Years Ended December 31, |        
|------------------------------------------------------------------ |  | ------------------------ | -------
|                                                                   |  | 2015                     |        
|Beginning PIK loan balance (inclusive of PIK interest capitalized) |  | $                        | 347,703
|Addition of PIK loans during period                                |  |                          | -      
|PIK interest accreted to principal during period                   |  |                          | 39,985 
|Conversion of PIK loans into equity during the period              |  |                          | -      
|Payments received from PIK loans during the period                 |  |                          | -      
|Ending PIK loan balance (inclusive of PIK interest capitalized)    |  | $                        | 387,688





As of December 31,
2015, the only notes with PIK interest that we held were issued by BrightSource. As of December 31, 2015, we were accruing PIK
interest on each of our PIK loans, and none of our PIK loans were on non-accrual status.



Operating Expenses



Following the termination
of the Investment Advisory Agreement, our primary operating expenses include the payment of: (i) fees to our Administrator under
the Administrator Consulting Agreement; (ii) fees to US Bancorp under the Administration Servicing Agreement and a Fund Accounting
Servicing Agreement; and (iii) other operating costs. The composition of our operating expenses for the years ended December 31,
2015 and 2014, respectively, were as follows.



45









|                                                          |  | Years Ended December 31, |            |   |      |  
|--------------------------------------------------------- |  | ------------------------ | ---------- | - | ---- | -
|                                                          |  | 2015                     |            |   | 2014 |  
|Operating expenses:                                       |  |                          |            |   |      |  
|Base management fees                                      |  | $                        | 1,232,563  |   |      | $
|Incentive fees                                            |  |                          | (2,130,443 | ) |      |  
|Administrative expenses allocated from investment adviser |  |                          | 423,628    |   |      |  
|Professional fees                                         |  |                          | 1,103,030  |   |      |  
|Directors fees                                            |  |                          | 128,750    |   |      |  
|Public and investor relations expenses                    |  |                          | 205,295    |   |      |  
|Travel expenses                                           |  |                          | 17,357     |   |      |  
|Stock transfer agent fees                                 |  |                          | 52,880     |   |      |  
|Marketing and advertising expenses                        |  |                          | 19,800     |   |      |  
|Printing and production expenses                          |  |                          | 26,259     |   |      |  
|Postage and fulfillment expenses                          |  |                          | 45,417     |   |      |  
|Interest expense on borrowings                            |  |                          | —          |   |      |  
|Custody fees                                              |  |                          | 6,000      |   |      |  
|General and administrative expenses                       |  |                          | 207,890    |   |      |  
|Total operating expenses                                  |  |                          | 1,338,426  |   |      |  
|Waiver of base management fees                            |  |                          | —          |   |      |  
|Net operating expenses                                    |  | $                        | 1,338,426  |   |      | $





Total operating expenses
for the years ended December 31, 2015 and 2014 were $1,338,426 and $3,847,903, respectively, a decrease of $2,509,477 compared
to the prior period.



Total operating expenses,
excluding base management fees and incentive fees, for the years ended December 31, 2015 and 2014 were $2,236,306 and $1,730,143,
respectively, an increase of $506,163 compared to the prior period. This increase was due primarily to increases in: (i) legal
and litigation expenses of $305,961 and proxy administrative and solicitation services of $107,861, each related to the contested
proxy campaign in connection with our Annual Meeting, (ii) $125,157 in legal and proxy solicitation fees payable to Bulldog Investors,
LLC (“Bulldog”) as reimbursement of its costs of litigation against us in the Circuit Court of Maryland and the New
York Supreme Court and costs associated with the proxy process and the election of our new Board of Directors, and (iii) audit
fees of $139,280 as a result of the resignation of our former auditor and the appointment of a new auditor, partially offset by
reductions in allocated administrative expenses allocated from our former investment adviser and other operating expense categories.



Base management fees
paid to BDCA Venture Adviser for the years ended December 31, 2015 and 2014 were $1,232,563 and $1,568,964, of which BDCA Venture
Adviser waived $0 and $97,797, respectively, a decrease of $336,401 compared to the prior period. For the years ended December
31, 2015 and 2014, we recorded a reduction of accrued incentive fees of $2,130,443 and $86,445, a decrease of $2,043,998 compared
to the prior period. No incentive fee was due and payable to BDCA Venture Adviser as of the Termination Date, and, accordingly,
the accrued incentive fee payable to BDCA Venture Adviser as of September 30, 2015 was reversed as of the Termination Date. As
of December 31, 2014, $635,241 of earned incentive fees was due and payable to BDCA Venture Adviser in accordance with the
contractual terms of the Investment Advisory Agreement.



Administrative expenses
allocated from BDCA Venture Adviser for the years ended December 31, 2015 and 2014 were $423,628 and $570,074, respectively, a
decrease of $146,446 compared to the prior period which was a result of decreased allocations of adviser expenses.



Professional fees
for the years ended December 31, 2015 and 2014 were $1,103,030 and $403,959, respectively, an increase of $699,071 compared to
the prior period due primarily to increases in: (i) legal and litigation expenses of $305,961 related to the contested proxy campaign
in connection with our Annual Meeting, (ii) $39,245 in legal fees payable to Bulldog as reimbursement of its costs of litigation
against us in the Circuit Court of Maryland and the New York Supreme Court and costs associated with the proxy process and the
election of our new Board of Directors, (iii) $191,112 in administrative services related to the engagement of our Administrator
and US Bancorp, and (iv) audit fees of $139,280 as a result of the resignation of our former auditor and the appointment of a new
auditor, partially offset by a reduction in Sarbanes Oxley consulting services compared to the prior period.



46







Directors fees for
the years ended December 31, 2015 and 2014 were $128,750 and $112,500, respectively, an increase of $16,250 compared to the prior
period due primarily to the payment of directors fees to: (i) the incumbent Board of Directors prior to our Annual Meeting during
July 2015, and (ii) our new Board of Directors in August 2015 following their election at our Annual Meeting.



Public and investor
relations expenses for the years ended December 31, 2015 and 2014 were $205,295 and $86,588, respectively, an increase of $118,707
compared to the prior period due primarily to an increase in proxy administrative and solicitation services of $107,861 related
to the contested proxy campaign in connection with our Annual Meeting and $69,562 in proxy solicitation fees payable to Bulldog
as reimbursement of its costs associated with the proxy process and the election of our new Board of Directors, partially offset
by a decrease in seminar and conference expenses compared to the prior period.



The decrease of $14,819
in interest expense on borrowings for the year ended December 31, 2015 compared to the year ended December 31, 2014 was
the result of the interest expense on our short-term borrowing used to finance the purchase of $20 million of short-term U.S. Treasury
Bills ("T-Bills") to satisfy our RIC diversification requirement in 2014.



See Note 4 –
Related Party Agreements and Transactions – to the financial statements of this annual report on Form 10-K for a further
discussion of the fees paid to our former investment adviser and the reimbursement to Bulldog.



Net Investment Loss



Net investment losses
for the years ended December 31, 2015 and 2014 were $1,289,995 and $3,680,811, respectively. The decrease of $2,390,816 in
net investment loss for the year ended December 31, 2015 compared to the year ended December 31, 2014 is primarily attributable
to decreases in incentive fees, base management fees and administrative expenses allocated from our former investment adviser,
during the year ended December 31, 2015, which were partially offset by increases in professional fees and public and investor
relations expenses during the year ended December 31, 2015, as discussed above.



Basic and diluted
net investment loss per common share outstanding was $0.13 for the year ended December 31, 2015 compared to basic and diluted
net investment loss per common share outstanding of $0.38 for the year ended December 31, 2014. The weighted average common
shares outstanding for the years ended December 31, 2015 and 2014 were 9,739,237 and 9,729,764, respectively.



Net Realized Gain (Loss)



For the year ended
December 31, 2015, net realized loss totaled $1,157,446. During the year ended December 31, 2015, we sold 300,000 shares
of Tremor Video common stock. During the same period, we also sold 3,986 shares of previously written-off Millennial Media common
stock and received additional proceeds which had been released from Millennial Media’s indemnity escrow, and received additional
proceeds related to the sale of our investment in Xtime based on a post-closing working capital adjustment to the merger consideration.



For the year ended
December 31, 2014, net realized gain totaled $6,778,371. During the year ended December 31, 2014, we sold our entire position
in Kabam, TrueCar, Xtime and Stoke, and 1,230,747 shares of Millennial Media common stock. During the year ended December 31,
2014, we also wrote off the remaining 17,146 shares of Millennial Media common stock and our entire position in Livescribe.



For additional information
regarding the investment cost, net proceeds and net realized gain (loss) for each of the portfolio company positions sold by us
during the years ended December 31, 2015 and 2014, see "-Portfolio Activity" above.



47









Net Increase (Decrease) in Unrealized
Appreciation (Depreciation)



For the year ended
December 31, 2015, the net decrease in unrealized appreciation on portfolio company investments and Escrowed Funds totaled
$9,051,699. For the year ended December 31, 2014, the net decrease in unrealized appreciation on portfolio company investments
and Escrowed Funds totaled $4,034,392. The following table summarizes the cost and fair value of our portfolio company investments
and Escrowed Funds as of December 31, 2015 and 2014, and the change in unrealized appreciation (depreciation) on our portfolio
company investments and Escrowed Funds comprising the net decrease in unrealized appreciation of $9,051,699 for the year ended
December 31, 2015, or $0.93 per common share outstanding during the period:



|                                             |  | December 31, 2015 |            |  | December 31, 2014 |   |            | Year to Date                         | 
|-------------------------------------------- |  | ----------------- | ---------- |  | ----------------- | - | ---------- | ------------------------------------ | 
|                                             |  | Cost              |            |  | Fair Value        |   |            | UnrealizedAppreciation(Depreciation) | 
|SilkRoad, Inc.                               |  | $                 | 6,337,785  |  |                   | $ | 9,620,000  |                                      | 
|Metabolon, Inc.                              |  |                   | 4,000,000  |  |                   |   | 6,620,000  |                                      | 
|Mode Media Corporation                       |  |                   | 4,999,999  |  |                   |   | 4,806,000  |                                      | 
|Zoosk, Inc.                                  |  |                   | 2,999,999  |  |                   |   | 3,780,000  |                                      | 
|Deem, Inc.                                   |  |                   | 3,000,000  |  |                   |   | 3,160,000  |                                      | 
|Centrify Corporation                         |  |                   | 2,999,999  |  |                   |   | 3,070,000  |                                      | 
|Harvest Power, Inc.                          |  |                   | 2,904,526  |  |                   |   | 1,430,000  |                                      | 
|BrightSource Energy, Inc.                    |  |                   | 3,284,819  |  |                   |   | 1,051,759  |                                      | 
|Tremor Video, Inc.                           |  |                   | 1,999,997  |  |                   |   | 617,998    |                                      | 
|Suniva, Inc.                                 |  |                   | 2,554,287  |  |                   |   | 355,000    |                                      | 
|MBA Polymers, Inc.                           |  |                   | 2,000,000  |  |                   |   | 235,000    |                                      | 
|Agilyx Corporation                           |  |                   | 4,332,356  |  |                   |   | -          |                                      | 
|Total Portfolio Company
    Investments      |  |                   | 41,413,767 |  |                   |   | 34,745,757 |                                      | 
|Funds held in escrow from sale of investment |  |                   | 704,101,   |  |                   |   | 688,082    |                                      | 
|Total Portfolio Company
    Financial Assets |  | $                 | 42,117,868 |  |                   | $ | 35,433,839 |                                      | 



| | * | Per share amounts
                                         less than $0.01.
| | - | ---------------------------------------------------------------------------

| | (1) | Per
                                         share amounts based on weighted-average shares outstanding of 9,739,237 during the year
                                         ended December 31, 2015.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The net decrease
in unrealized depreciation in Tremor Video, a publicly traded company, during the year ended December 31, 2015 is comprised
of: (i) the net decrease (reversal) of unrealized depreciation of $1,139,004 on the shares of Tremor Video we sold during the
period for which we realized a net loss of $1,182,240, and (ii) the change in market price for the shares of Tremor Video we continue
to hold, representing a net decrease in unrealized depreciation of $242,999.



Net Increase (Decrease) in Net Assets Resulting From
Operations and Per Share Information



The net decrease
in our net assets resulting from operations for the year ended December 31, 2015 was $11,499,140, which included $1,157,446
in net realized losses and a net decrease in unrealized appreciation of $9,051,699 during such period, compared to a net decrease
in our net assets resulting from operations for the year ended December 31, 2014 of $936,832, which included $6,778,371 in
net realized gains and a net decrease in unrealized appreciation of $4,034,392 during such period.



Basic and diluted
net decrease in net assets resulting from operations per common share was $1.18 for the year ended December 31, 2015, compared
to basic and diluted net decrease in net assets resulting from operations per common share of $0.10 per common share for the year
ended December 31, 2014. The weighted average common shares outstanding for the years ended December 31, 2015 and 2014
were 9,739,237 and 9,729,764, respectively.



Comparison of the Years Ended December 31,
2014 and 2013



Investment Income



For the years ended
December 31, 2014 and 2013, we earned interest and dividend income from cash and cash equivalents of $2,809 and $2,577, respectively.
During the year ended December 31, 2014, we also earned PIK interest of $66,486 on our subordinated convertible bridge note
investments in BrightSource, SilkRoad and Agilyx and our subordinated secured note investments in BrightSource. During the year
ended December 31, 2013, we earned PIK interest of $37,376 on our subordinated convertible bridge note investments in BrightSource
and SilkRoad.



48









The following table
shows our PIK loan activity for the years ended December 31, 2014 and 2013, at cost:



|                                                                    |  | Years Ended December
    31, |           
|------------------------------------------------------------------- |  | ---------------------------- | ----------
|                                                                    |  | 2014                         |           
|Beginning PIK loan balance (inclusive of PIK interest capitalized)  |  | $                            | 1,242,569 
|Addition of PIK loans during period                                 |  |                              | 440,334   
|PIK interest accreted to principal during period                    |  |                              | 66,486    
|Conversion of PIK loans into equity during the period               |  |                              | (1,401,288
|Payments received from PIK loans during the period                  |  |                              | (398      
|Ending PIK loan balance (inclusive of PIK interest
    capitalized) |  | $                            | 347,703   



During the year ended
December 31, 2014, we invested in the subordinated convertible bridge notes of Agilyx and the subordinated secured notes
of BrightSource. The convertible bridge notes of SilkRoad that we held in the principal amount of $1,068,932, including capitalized
PIK interest, were converted into shares of Series D-1 convertible preferred stock. The convertible bridge notes of Agilyx that
we held in the principal amount of $332,356 were automatically converted into shares of Series E-2 convertible preferred stock.
The accrued PIK interest under the Agilyx bridge notes of $398 at the time of conversion was paid in cash. As of December 31,
2014, the only notes with PIK interest that we held were issued by BrightSource. As of December 31, 2014, we were accruing PIK
interest on each of our PIK loans, and none of our PIK loans were on non-accrual status.



During the year ended
December 31, 2013, we invested in the subordinated convertible bridge notes of BrightSource and SilkRoad.



Operating Expenses



During the year ended
December 31, 2014, our primary operating expenses included the payment of: (i) investment advisory fees to BDCA Venture Adviser,
(ii) our allocable portion of overhead and other expenses incurred by BDCA Venture Adviser, as our administrator, in performing
its administrative obligations under the Investment Advisory Agreement, and (iii) other operating costs.



49







The composition of
our operating expenses for the years ended December 31, 2014 and 2013, respectively, were as follows.



|                                                                           |  | Years Ended December
    31, |           |   |      |  
|-------------------------------------------------------------------------- |  | ---------------------------- | --------- | - | ---- | -
|                                                                           |  | 2014                         |           |   | 2013 |  
|Operating expenses:                                                        |  |                              |           |   |      |  
|Base management fees                                                       |  | $                            | 1,568,964 |   |      | $
|Incentive fees                                                             |  |                              | 548,796   |   |      |  
|Administrative expenses allocated from investment adviser                  |  |                              | 570,074   |   |      |  
|Professional fees                                                          |  |                              | 403,959   |   |      |  
|Directors fees                                                             |  |                              | 112,500   |   |      |  
|Public and investor relations expenses                                     |  |                              | 86,588    |   |      |  
|Travel expenses                                                            |  |                              | 68,733    |   |      |  
|Stock transfer agent fees                                                  |  |                              | 58,929    |   |      |  
|Marketing and advertising expenses                                         |  |                              | 46,747    |   |      |  
|Printing and production expenses                                           |  |                              | 46,696    |   |      |  
|Postage and fulfillment expenses                                           |  |                              | 34,884    |   |      |  
|Interest expense on borrowings                                             |  |                              | 14,819    |   |      |  
|Custody fees                                                               |  |                              | 6,000     |   |      |  
|General and administrative expenses                                        |  |                              | 280,214   |   |      |  
|Operating expenses before expense
    waiver from investment adviser       |  |                              | 3,847,903 |   |      |  
|Waiver of base management fees                                             |  |                              | (97,797   | ) |      |  
|Total operating expenses net
    of expense waiver from investment adviser |  | $                            | 3,750,106 |   |      | $



Operating expenses
before any expense waiver from BDCA Venture Adviser for the years ended December 31, 2014 and 2013 were $3,847,903 and $5,352,788,
respectively, a decrease of $1,504,885 compared to the prior period. Our operating expenses excluding base management fees, incentive
fees, and costs related to our withdrawn registration statement for the years ended December 31, 2014 and 2013 were $1,730,143
and $2,079,746, respectively, a decrease of $349,603 compared to the prior period.



For the years ended
December 31, 2014 and 2013 we incurred base management fees of $1,568,964 and $1,462,495, of which our investment adviser
waived $97,797 and $0, respectively, an increase of $106,469 compared to the prior period. During the year ended December 31,
2014, BDCA Venture Adviser agreed to waive the portion of the base management fees associated with the proceeds of our $19.4 million
short-term borrowing used to finance the purchase of $20 million of T-Bills to satisfy the RIC diversification requirement and
included in gross assets as of September 30, 2014. For the years ended December 31, 2014 and 2013, we incurred incentive
fees of $548,796 and $1,523,189, a decrease of $974,393 compared to the prior period. As of December 31, 2014, $635,241 of
earned incentive fees were due and payable to BDCA Venture Adviser in accordance with the contractual terms of the Investment
Advisory Agreement. As of December 31, 2013, no earned incentive fees were due and payable to BDCA Venture Adviser.



Administrative expenses
allocated from BDCA Venture Adviser decreased $81,737 as a result of decreased allocations of adviser expenses. Professional fees
decreased by $209,177 due primarily to decreased audit and legal fees in 2014 compared to 2013 which included audit and legal
fees in connection with our withdrawn registration statement for an underwritten offering. Advertising and marketing decreased
by $196,957 as a result of a decrease in web-based and social media advertising.



The decrease of $17,500
in directors’ fees for the year ended December 31, 2014 compared to the year ended December 31, 2013 was primarily
the result of a decrease in the annual retainer paid to the valuation committee for the second half of the year ended December
31, 2013, partially offset by an increase in the number of non-interested directors for the second half of the year ended December
31, 2014.



The increase of $14,819
in interest expense on borrowings for the year ended December 31, 2014 compared to the year ended December 31, 2013
was the result of the interest expense on our short-term borrowing used to finance the purchase of $20 million of T-Bills, as
discussed above.



50







Net Investment Loss



Net investment losses
for the years ended December 31, 2014 and 2013 were $3,680,811 and $5,312,835, respectively. The decrease of $1,632,024 in
net investment loss for the year ended December 31, 2014 compared to the year ended December 31, 2013 is primarily attributable
to decreases in incentive fees, professional fees, and marketing and advertising expenses during the year ended December 31,
2014, which were partially offset by increases in base management fees during the year ended December 31, 2014, as discussed
above.



Basic and diluted
net investment loss per common share outstanding was $0.38 for the year ended December 31, 2014 compared to basic and diluted
net investment loss per common share outstanding of $0.59 for the year ended December 31, 2013. The weighted average common
shares outstanding for the years ended December 31, 2014 and 2013 were 9,729,764 and 9,033,267, respectively.



Net Realized Gains



For the years ended
December 31, 2014 and 2013, net realized gains totaled $6,778,371 and $4,400,178, respectively. During the year ended December 31,
2014, we sold our entire position in Kabam, TrueCar, Xtime and Stoke, and 1,230,747 shares of Millennial Media common stock. During
the year ended December 31, 2014, we also wrote off the remaining 17,146 shares of Millennial Media common stock and our
entire position in Livescribe. During the year ended December 31, 2013, we sold our entire position in Corsair Components
and LifeLock and our remaining position in Solazyme.



Net Increase (Decrease) in Unrealized
Appreciation



For the year ended
December 31, 2014, the net decrease in unrealized appreciation on portfolio company investments and Escrowed Funds totaled
$4,034,392. For the year ended December 31, 2013, the net increase in unrealized appreciation on portfolio company investments
totaled $3,215,772.



The following table
summarizes the cost and fair value of our portfolio company investments and Escrowed Funds as of December 31, 2014 and 2013,
and the change in unrealized appreciation (depreciation) on our portfolio company investments and Escrowed Funds comprising the
net decrease in unrealized appreciation of $4,034,392 for the year ended December 31, 2014, or $0.42 per common share outstanding
during the period.



51







|                                             |  | December 31, 2014 |            |  | December 31, 2013 |   |            | Year to Date                         | 
|-------------------------------------------- |  | ----------------- | ---------- |  | ----------------- | - | ---------- | ------------------------------------ | 
|                                             |  | Cost              |            |  | Fair Value        |   |            | UnrealizedAppreciation(Depreciation) | 
|SilkRoad, Inc.                               |  | $                 | 6,337,785  |  |                   | $ | 8,860,000  |                                      | 
|Metabolon, Inc.                              |  |                   | 4,000,000  |  |                   |   | 7,790,000  |                                      | 
|Mode Media Corporation                       |  |                   | 4,999,999  |  |                   |   | 6,850,000  |                                      | 
|Deem, Inc.                                   |  |                   | 3,000,000  |  |                   |   | 4,290,000  |                                      | 
|Zoosk, Inc.                                  |  |                   | 2,999,999  |  |                   |   | 3,790,000  |                                      | 
|Centrify Corporation                         |  |                   | 2,999,999  |  |                   |   | 3,310,000  |                                      | 
|Harvest Power, Inc.                          |  |                   | 2,904,526  |  |                   |   | 2,620,000  |                                      | 
|MBA Polymers, Inc.                           |  |                   | 2,000,000  |  |                   |   | 2,100,000  |                                      | 
|Suniva, Inc.                                 |  |                   | 2,554,287  |  |                   |   | 1,740,000  |                                      | 
|Tremor Video, Inc.                           |  |                   | 4,000,001  |  |                   |   | 1,721,997  |                                      | 
|BrightSource Energy, Inc.                    |  |                   | 3,244,834  |  |                   |   | 1,389,202  |                                      | 
|Agilyx Corporation                           |  |                   | 4,332,356  |  |                   |   | 1,380,000  |                                      | 
|TrueCar, Inc.                                |  |                   | —          |  |                   |   | —          |                                      | 
|Xtime, Inc.                                  |  |                   | —          |  |                   |   | —          |                                      | 
|Millennial Media, Inc.                       |  |                   | —          |  |                   |   | —          |                                      | 
|Kabam, Inc.                                  |  |                   | —          |  |                   |   | —          |                                      | 
|Livescribe, Inc.                             |  |                   | —          |  |                   |   | —          |                                      | 
|Stoke, Inc.                                  |  |                   | —          |  |                   |   | —          |                                      | 
|Total Portfolio Company
    Investments      |  |                   | 43,373,786 |  |                   |   | 45,841,199 |                                      | 
|Funds held in escrow from sale of investment |  |                   | 809,311    |  |                   |   | 709,568    |                                      | 
|Total Portfolio Company
    Financial Assets |  | $                 | 44,183,097 |  |                   | $ | 46,550,767 |                                      | 



| | (1) | Per
                                         share amounts based on weighted-average shares outstanding of 9,729,764 during the year
                                         ended December 31, 2014.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The net increase
in unrealized depreciation in Tremor Video, a publicly traded company, during the year ended December 31, 2014 reflects the
change in market prices for this portfolio company. The net decrease (reversal) of unrealized appreciation in TrueCar, Kabam,
Xtime and Millennial Media during the year ended December 31, 2014 is attributable to the disposition/write-off of each portfolio
company during 2014. The net increase in unrealized appreciation in Stoke and Livescribe during the year ended December 31,
2014 includes the net increase (reversal) of unrealized depreciation as a result of the disposition/write-off of each portfolio
company during 2014.



Net Increase (Decrease) in Net Assets Resulting From
Operations and Per Share Information



The net decrease
in our net assets resulting from operations for the year ended December 31, 2014 was $936,832, which included $6,778,371
in net realized gains and a net decrease in unrealized appreciation of $4,034,392 during such period, compared to a net increase
in our net assets resulting from operations for the year ended December 31, 2013 of $2,303,115, which included $4,400,178
in net realized gains and a net increase in unrealized appreciation of $3,215,772 during such period.



Basic and diluted
net decrease in net assets resulting from operations per common share was $0.10 for the year ended December 31, 2014, compared
to basic and diluted net increase in net assets resulting from operations per common share of $0.25 per common share for the year
ended December 31, 2013. The weighted average common shares outstanding for the years ended December 31, 2014 and 2013
were 9,729,764 and 9,033,267, respectively.



Financial Condition, Liquidity and Capital Resources



Cash and Cash
Equivalents



As of December 31,
2015, we had cash and cash equivalents of $13.7 million as compared to $27.4 million as of December 31, 2014. The decrease
of $13.8 million in cash and cash equivalents during the year ended December 31, 2015 was primarily the result of: (i) our
fourth quarter 2014 cash distribution to stockholders of $3.9 million sourced from long-term capital gain and paid in 2015, (ii)
quarterly 2015 cash distributions totaling $5.8 million, (iii) repurchases of our common stock totaling $0.6 million, and (iv)
net cash used in operating activities of $3.5 million during the year ended December 31, 2015.



52









As of December 31,
2015, we had no indebtedness and total accounts payable and accrued expenses of $0.2 million. As of December 31, 2014, we
had no indebtedness and total accounts payable, accrued expenses and dividends payable of $7.2 million, including amounts owed
to BDCA Venture Adviser. As of December 31, 2014, amounts owed to BDCA Venture Adviser consisted of $354,633 of base management
fees, $113,596 of administrative expenses, $635,241 of earned incentive fees, and $2,130,443 of accrued theoretical incentive
fees. For accounting purposes only, we were required under U.S. GAAP to accrue a theoretical incentive fee which assumed all unrealized
balances are realized in order to reflect an incentive fee that would theoretically be payable to BDCA Venture Adviser.



Capital Raising



As of December 31,
2015, we had 9,676,484 shares of our common stock issued and outstanding.



We do not currently
intend to raise additional common equity capital in the foreseeable future.



Regulatory Compliance



Due to the limited
number of investments we currently hold, we closely monitor our asset composition in order to continue to satisfy the asset diversification
test and maintain our status as a RIC. To maintain our status as a RIC, in addition to other requirements, as of the close of
each quarter end, we must meet the asset diversification test, which requires that at least 50% of the value of our assets consist
of cash, cash items, U.S. government securities or certain other qualified securities (the "50% Threshold"). However,
the failure to meet the 50% Threshold alone will not result in our loss of RIC status. In circumstances where the failure to meet
the 50% Threshold is the result of fluctuations in the value of our assets, including as a result of the sale of assets, we will
still be deemed to have satisfied the 50% Threshold and, therefore, maintain our RIC status, provided that we have not made any
new investments in non-qualifying securities, including additional investments in non-qualifying securities of existing portfolio
companies, since the time that we fell below the 50% Threshold. As of December 31, 2015, we did not meet the 50% Threshold, however,
such failure was due to fluctuations in the value of our assets. Accordingly, we satisfied the diversification test as of December
31, 2015. A more detailed description of our RIC status is located in Item 1. — Business - Material U.S. Federal
Income Tax Considerations of this annual report on Form 10-K.



During the year ended
December 31, 2014, to maintain our status as a RIC for tax purposes, we purchased $20 million of T-Bills on September 24, 2014.
We financed the purchase of these T-Bills using $600,000 in cash and the proceeds from a $19.4 million short-term borrowing financed
through a margin account agreement with National Financial Services, LLC. The $20 million of T-Bills were pledged as collateral
for the short-term borrowing. On October 3, 2014, we sold the T-Bills for a realized loss of $94 and repaid the short-term borrowing
in full together with accrued interest.



53







Distributions



Distributions to
our stockholders are payable only when and as declared by our Board of Directors and are paid out of assets legally available
for distribution. We may fund cash distributions to stockholders from any sources of funds available to us. We have not established
limits on the amount of funds we may use from available sources to make distributions.



The following table summarizes our dividends
declared for the years ended 2015, 2014, 2013, 2012 and 2011:



|Date Declared          |  | Record Date        |  | Payment Date       |  | Amount Per
    Share |        |     | Source of Distribution
|---------------------- |  | ------------------ |  | ------------------ |  | -------------------- | ------ | --- | ----------------------
|2015 Dividends:        |  |                    |  |                    |  |                      |        |     |                       
|March 26, 2015         |  | April 15, 2015     |  | April 29, 2015     |  | $                    | 0.15   |     |                       
|March 26, 2015         |  | June 11, 2015      |  | June 25, 2015      |  |                      | 0.15   |     |                       
|March 26, 2015         |  | September 11, 2015 |  | September 25, 2015 |  |                      | 0.15   |     |                       
|March 26, 2015         |  | December 4, 2015   |  | December 18, 2015  |  |                      | 0.15   |     |                       
|Total - 2015 Dividends |  |                    |  |                    |  |                      | 0.60   |     |                       
|2014 Dividends:        |  |                    |  |                    |  |                      |        |     |                       
|February 20, 2014      |  | March 6, 2014      |  | April 14, 2014     |  |                      | $ 0.10 | (1) |                       
|February 20, 2014      |  | May 8, 2014        |  | June 17, 2014      |  |                      | 0.10   | (1) |                       
|February 20, 2014      |  | August 11, 2014    |  | September 18, 2014 |  |                      | 0.10   | (1) |                       
|December 12, 2014      |  | December 31, 2014  |  | January 13, 2015   |  |                      | 0.40   |     |                       
|Total - 2014 Dividends |  |                    |  |                    |  |                      | 0.70   |     |                       
|2013 Dividends:        |  |                    |  |                    |  |                      |        |     |                       
|May 28, 2013           |  | June 14, 2013      |  | June 26, 2013      |  | $                    | 0.24   |     |                       
|May 28, 2013           |  | September 13, 2013 |  | September 25, 2013 |  |                      | 0.24   |     |                       
|December 19, 2013      |  | December 30, 2013  |  | January 13, 2014   |  |                      | 0.01   |     |                       
|Total - 2013 Dividends |  |                    |  |                    |  |                      | 0.49   |     |                       
|2012 Dividends:        |  |                    |  |                    |  |                      |        |     |                       
|December 6, 2012       |  | December 14, 2012  |  | December 26, 2012  |  |                      | 0.03   |     |                       
|Total - 2012 Dividends |  |                    |  |                    |  |                      | 0.03   |     |                       
|2011 Dividends:        |  |                    |  |                    |  |                      |        |     |                       
|February 11, 2011      |  | February 15, 2011  |  | February 17, 2011  |  |                      | 0.13   |     |                       
|Total - 2011 Dividends |  |                    |  |                    |  |                      | 0.13   |     |                       
|Total - Cumulative     |  |                    |  |                    |  | $                    | 1.95   |     |                       



| | (1) | This dividend was
                                         paid in cash and shares of our common stock.
| | --- | -------------------------------------------------------------------------------------------------------

| | (2) | Although the dividend
                                         of $0.40 per share was paid on January 13, 2015, this dividend was taxable to stockholders
                                         as if paid in 2014. For income and excise tax purposes, this dividend was eligible for
                                         the dividends paid deduction by us in 2014.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Although the dividend
                                         of $0.01 per share was paid on January 13, 2014, this dividend was taxable to stockholders
                                         as if paid in 2013. For income and excise tax purposes, this dividend was eligible for
                                         the dividends paid deduction by us in 2013.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | The February 2011
                                         distribution was a special cash distribution based on the unrealized appreciation of
                                         a portfolio company investment.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On March 26, 2015,
our Board of Directors declared cash distributions of $0.15 per share, which were paid on April 29, 2015, June 25, 2015, September
25, 2015 and December 18, 2015, to common stockholders of record on April 15, 2015, June 11, 2015, September 11, 2015 and December
4, 2015, respectively. A total of approximately $5.8 million was paid to our stockholders in connection with the April 29, 2015,
June 25, 2015, September 25, 2015 and December 18, 2015 distributions.



On February 20, 2014,
our Board of Directors declared a dividend of $0.10 per share payable on April 14, 2014, June 17, 2014 and September 18, 2014,
to common stockholders of record on March 6, 2014, May 8, 2014 and August 11, 2014, respectively. Stockholders had the option
to receive payment of these dividends in cash or in shares of our common stock, provided that the aggregate cash payable to all
stockholders for each dividend was limited to 25% of the aggregate dividend amount. Based on stockholder elections, the April
14, 2014 dividend consisted of $238,722 in cash and 119,157 shares of common stock, the June 17, 2014 dividend consisted of $241,701
in cash and 118,542 shares of common stock, and the September 18, 2014 dividend consisted of $244,665 in cash and 136,370 shares
of common stock.



On December 12, 2014,
our Board of Directors declared a special fourth quarter distribution of $0.396 per share payable to stockholders of record on
December 31, 2014. This special fourth quarter distribution was paid 100% in cash on January 13, 2015.



54







Distribution Policy



We generally pay
distributions to our stockholders out of assets legally available for distribution, as determined by our Board of Directors, with
the intention of distributing 100% of our net realized capital gains annually.



On March 25, 2016,
our Board of Directors adopted a distribution policy with the objective to make special distributions to stockholders as declared
by our Board of Directors in its discretion. Based on our Board of Directors’ recent change to our investment objective
to preserve capital and maximize stockholder value and resolution to monetize our portfolio holdings at the earliest practicable
date, we will no longer pay regular quarterly distributions to our stockholders. See “-Recent Developments” below.
Our Board of Directors may amend or terminate the distribution policy
at any time.



Under our former
distribution policy, we intended to pay regular quarterly distributions (the "Regular Distributions") to our stockholders
in an amount determined and declared by our Board of Directors in the first quarter of each year. The Regular Distributions were
intended to provide a minimum level of distributions to our stockholders each year until we were generating sufficient net investment
income under our former debt-focused investment strategy. To the extent our net realized capital gains exceeded the aggregate
amount of our Regular Distributions for a year, our Board of Directors also intended to declare a special distribution in December
of each year (the "Special Distribution") so that the total distributions for the year represented at least 100% of
our net realized capital gains. Our Board of Directors may have adjusted the amount of the Regular and Special Distributions we
paid each year based on other factors that it deemed relevant from time to time including, without limitation, our financial condition,
cash availability, maintenance of our RIC status, corporate-level income and excise tax planning, and compliance with applicable
BDC regulations.



A more detailed description
of our distribution policy is located in Item 5. — Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity - Distributions and Note 8 – Dividends and Distributions - to the financial statements
of this annual report on Form 10-K.



Dividend Reinvestment Plan



We maintain a dividend
reinvestment plan ("DRIP") that provides for the reinvestment of dividends on behalf of our stockholders, unless a stockholder
has elected to receive dividends in cash. As a result, if we declare a dividend, stockholders who have not "opted out"
of the DRIP by the dividend record date will have their dividend automatically reinvested into additional shares of our common
stock. Although we have a number of options to satisfy the share requirements of the DRIP, we currently expect that the shares
required to be purchased under the DRIP will be acquired through open market purchases of common stock by the DRIP administrator.
The shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable
shares purchased by the DRIP administrator.



Stock Repurchases



On September 22,
2014, our Board of Directors authorized a stock repurchase program of up to $5 million. This stock repurchase program expired
on March 22, 2015. However, on March 26, 2015, our Board of Directors authorized an extension of the stock repurchase program
for an additional six months which expired on September 22, 2015.



During the year ended
December 31, 2015, we repurchased 117,510 shares of our common stock at an average price of $4.96 per share, including commissions,
for a total cost of $582,468. Our net asset value per share increased by $0.02 per share as a result of the shares repurchased
during the year ended December 31, 2015. The weighted average discount to net asset value per share of the shares repurchased
during the year ended December 31, 2015 was 24%.



55







During the year ended
December 31, 2014, we repurchased 128,977 shares of our common stock at an average price of $5.16 per share, including commissions,
for a total cost of $665,998. Our net asset value per share increased by $0.03 per share as a result of the shares repurchased
during the year ended December 31, 2014. The weighted average discount to net asset value per share of the shares repurchased
during the year ended December 31, 2014 was 25%.



On November 10, 2015,
our Board of Directors authorized a stock repurchase program of up to $1 million for a six month period to expire on May 10, 2016.
On January 20, 2016, our Board of Directors approved an amendment to this stock repurchase program to allow for greater flexibility,
by narrowing the current “blackout” period during which we are prohibited from purchasing shares, and increasing the
size of the program from $1 million to $2 million. Under the repurchase program, we are authorized to repurchase shares of our
common stock in open market transactions, including through block purchases, depending on prevailing market conditions and other
factors. This stock repurchase program may be extended, modified or discontinued at any time for any reason. Furthermore, the
repurchase program does not obligate us to acquire any specific number of shares and all repurchases will be made in accordance
with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases.



Since December 31,
2015, we have repurchased 6,408 shares of our common stock at an average price of $2.12 per share, including commissions, with
a total cost of $13,608. See “-Recent Developments” below.



We accounted for
the repurchases of our common stock under the cost method based on the actual cost of the repurchases.



Commitments and Contingencies



In the normal course
of business, we may enter into investment agreements under which we commit to make an investment in a portfolio company at some
future date or over a specified period of time. As of December 31, 2015, we had not entered into any investment agreements which
required us to make a future investment in a portfolio company.



On October 15, 2015,
Suniva completed a stock-for-stock merger transaction with SFCE. Pursuant to the merger agreement, we are required to indemnify
SFCE for certain breaches of warranties and representations made to SFCE, subject to a cap of approximately 12.5% of the merger
consideration received by us. Any damages payable by us would be settled through an adjustment to the number of shares of common
stock in the surviving company held by us and/or SFCE.



On November 18, 2014,
Xtime, Inc., a private portfolio company, completed an all-cash merger transaction with Cox Automotive, Inc. At the closing of
the merger, we were required to set aside approximately $809,311 in escrow as partial security for potential stockholder indemnification
obligations under the merger agreement. The $809,311 represents additional proceeds that may be released to us at a later date
subject to potential indemnity claims. On January 13, 2015, Escrowed Funds totaling $105,210 were released to us from the Xtime
escrow without any offset for indemnity claims. On January 15, 2016, Escrowed Funds totaling $606,983 were released to us from
the Xtime escrow without any offset for indemnity claims. The remaining funds held in the Xtime escrow are expected to be released
in November of 2017, net of settlement of any indemnity claims. Although recovery under the stockholder indemnity obligation is
generally limited to the escrow fund, we may be liable for our pro rata amount of any damages for certain types of indemnity claims
not to exceed the cash consideration received by us, provided, however, in the case of our fraud or intentional misrepresentation,
there is no limitation on liability. Except as discussed above, we have not been notified of any stockholder indemnity claims.
As of December 31, 2015 and 2014, Escrowed Funds were fair valued at $688,082 and $709,568, respectively. See Note 9 - Commitments
and Contingencies.



On November 6, 2013,
we exchanged our preferred stock interests in Jumptap, Inc. for shares of common stock in Millennial Media, Inc., a publicly traded
company, pursuant to a merger transaction. As part of the merger agreement, we, together with other participating stockholders
of Jumptap, agreed to indemnify Millennial Media for inaccuracies in any representations or warranties made by Jumptap, any breach
by Jumptap of any covenants or agreements, and certain other claims. Participating stockholders, including us, were required to
set aside in escrow shares of Millennial Media for the one-year period following the closing as partial security for potential
stockholder indemnification obligations. We set aside 135,194 shares of Millennial Media as part of this escrow fund. In November
2014, 118,048 shares were released from the indemnity escrow and sold by us. As of December 31, 2014, we wrote off the remaining
17,146 shares of Millennial Media common stock that continued to be held in escrow based on actual indemnity claims made against
such escrowed shares. On January 6, 2015, 12,629 shares of our Millennial Media common stock were used for the payment of stockholder
indemnity claims and 3,986 shares of Millennial Media common stock were released to us from the indemnity escrow. On February
26, 2015, we sold these released shares resulting in a net realized gain of $6,178. On June 12, 2015, 156 shares of our Millennial
Media common stock were released from escrow to pay stockholder indemnity claims. On December 24, 2015, we received $4,686 in
additional proceeds based on a final escrow release.



56







We maintain a directors
and officers liability insurance policy (the "D&O Policy") and an excess coverage policy (the "Excess Policy")
which provide liability insurance coverage for our officers and directors. We have also agreed to indemnify our directors and
officers to the maximum extent permitted by Maryland law subject to the restrictions in the 1940 Act.



Under our former
Investment Advisory Agreement, absent the willful misfeasance, bad faith or gross negligence of BDCA Venture Adviser or BDCA Venture
Adviser’s reckless disregard of its duties and obligations, we agreed to indemnify BDCA Venture Adviser (including its officers,
managers, agents, employees and members of its investment committee) for any damages, liabilities, costs and expenses (including
reasonable attorneys’ fees and amounts reasonably paid in settlement) arising out of BDCA Venture Adviser’s performance
of its duties and obligations under the Investment Advisory Agreement, except to the extent specified in the 1940 Act. Pursuant
to the former Investment Advisory Agreement, the indemnification provision shall remain in full force and effect, and BDCA Venture
Adviser shall remain entitled to the benefits thereof, notwithstanding any termination of the Investment Advisory Agreement.



As of December 31,
2015, we and our officers and directors are not a party to any material legal proceedings. However, from time to time, we may
be party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights
under contracts with our portfolio companies.



Recent Developments



Portfolio Company
Activity



On January 15, 2016, Escrowed Funds totaling
$606,983 were released to us from the Xtime escrow without any offset for indemnity claims



On January 13, 2016,
our 10.022 shares of Series F preferred stock and 197.942 shares of Series D preferred stock were exchanged for 2,844 shares of
Suniva Class A common stock and 820,868 shares of SFCE common stock in connection with the final merger consideration calculation
of Suniva’s merger with SFCE. Our shares of SFCE common stock were subject to a lockup period which expired in February
2016.



On January 20, 2016,
our Board of Directors approved and, on January 25, 2016, we signed an indication of interest to purchase additional Series B
preferred stock in Harvest Power as part of a “pay-to-play” extension offering of Series B preferred stock (the “Series
B Extension”). On February 17, 2016, we purchased 244,039 shares of Series B preferred stock in Harvest Power for a total
of $244,039. These newly purchased shares of Series B preferred stock have the same rights and preferences as our existing Series
B preferred stock, with the exception that all of our Series B preferred stock now has a preferred-to-common conversion ratio
of 1-to-1.5 versus 1-to-0.5301 previously. Any Series B stockholder that did not elect to purchase their pro rata share of the
Series B Extension was subject to a mandatory conversion of their Series B preferred shares and Series A preferred shares into
common stock. As part of this financing, participating stockholders were also offered the opportunity to purchase newly created
Series B-1 preferred shares. We did not elect to purchase any Series B-1 preferred shares in this offering.



Investment Objective



On January 20, 2016,
our Board of Directors changed our investment objective to preserve capital and maximize stockholder value by pursuing the sale
of our portfolio investments, limiting expenses and deploying surplus cash as appropriate, including into yielding investments
to offset, in part, operating expenses. Subsequent to this change in our investment objective and in recognition that the monetization
of our current holdings under our prior policies and investment objective could take three to five years or more and the amounts
realized may be less than current fair values, our Board of Directors on March 25, 2016 resolved to monetize our portfolio holdings
at the earliest practicable date.



This resolution,
together with adverse developments in financial markets to date in 2016, makes our investment portfolio susceptible to the risk
that near-term sales could result in amounts realized being less than the fair values determined as of December 31, 2015, as we
actively seek to sell our investments, either individually or in groups, it is possible that we will experience substantial differences
in the exit prices ultimately achieved on our portfolio holdings as compared to the respective fair values as of December 31,
2015. Such values were determined consistent with our disclosed policies and procedures, and the methodologies included therein,
and which were based on the concept of an orderly transaction in accordance with Financial Accounting Standards Board ("FASB"),
Accounting Standards Codification Topic 820, "Fair Value Measurement and Disclosures," ("ASC 820").



57







As of December 31,
2015, the cost and fair value of our portfolio company investments and Escrowed Funds was $42.1 million and $35.4 million, respectively.
The following table shows the potential impact of a 15%, 20% and 25% discount in value on our holdings:



|                                                        |  |                   |            |  | Potential Impact of Discount |  
|------------------------------------------------------- |  | ----------------- | ---------- |  | ---------------------------- | -
|                                                        |  | December 31, 2015 |            |  | 15%                          |  
|                                                        |  |                   |            |  |                              |  
|Total portfolio company financial assets, at fair value |  | $                 | 35,433,839 |  |                              | $
|Net assets                                              |  |                   | 48,915,059 |  |                              |  
|Net asset value per share                               |  | $                 | 5.06       |  |                              | $



Our Board of Directors
believes the implementation of the new policy, even with the possibility of achieving significantly lower prices from sales, will
maximize stockholder value by substantially limiting estimated future operating expenses and removing the risk of future volatility
in the market values of our portfolio holdings.



While our Board of
Directors plans to distribute cash proceeds to stockholders from the sale or other monetization of our portfolio investments,
no assurance can be given regarding the timing of or amounts realized from any such transactions. Further, while our Board of
Directors will adhere to its previously announced determination not to invest in new venture capital-backed companies, we may
consider making opportunistic follow-on investments in our existing portfolio companies. Our Board of Directors reserves the right
to modify or terminate this plan at any time or to consider additional strategic alternatives.



Stock Repurchase
Program



On January 20, 2016,
our Board of Directors approved an amendment to our stock repurchase program to allow for greater flexibility, by narrowing the
current “blackout” period during which we are prohibited from purchasing shares, and increasing the size of the program
from $1 million to $2 million. This stock repurchase program will expire on May 10, 2016, but may be extended, modified or discontinued
at any time for any reason. Under the repurchase program, we are authorized to repurchase shares of our common stock up to $2
million in open market transactions, including through block purchases, depending on prevailing market conditions and other factors.  
The stock repurchase program does not obligate us to acquire any specific number of shares, and all repurchases will be made in
accordance with Rule 10b-18 under the Exchange Act, which sets certain restrictions on the method, timing, price and volume of
stock repurchases.



Since December 31,
2015, we have repurchased 6,408 shares of our common stock at an average price of $2.12 per share, including commissions, with
a total cost of $13,608.



Distribution Policy



On March 25, 2016,
our Board of Directors adopted a distribution policy with the objective to make special distributions to stockholders as declared
by our Board of Directors in its discretion. Based on our Board of Directors’ recent change to our investment objective
to preserve capital and maximize stockholder value and resolution to monetize our portfolio holdings at the earliest practicable
date, we will no longer pay regular quarterly distributions to our stockholders.



Our Board of Directors
may amend or terminate the distribution policy at any time.



Related Party
Transactions



On March 25, 2016,
the Audit Committee of our Board of Directors approved the reimbursement of $125,157 in legal and proxy solicitation costs incurred
by Bulldog, a stockholder and beneficial owner of more than 5% of our outstanding common stock, as a result of the contested proxy
campaign in connection with our 2015 Annual Meeting. This reimbursement includes the costs of Bulldog’s litigation against
us in the Circuit Court of Maryland and the New York Supreme Court and costs associated with the proxy process and the election
of our new Board of Directors.



58







Off Balance Sheet Arrangements



As of December 31, 2015, we had no
off-balance sheet arrangements.



Critical Accounting Policies



The preparation of
financial statements and related disclosures in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported.
Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.



Valuation of Investments



Our investments consist
of securities issued by private and publicly traded companies consisting of preferred stock, common stock, subordinated convertible
bridge notes, subordinated secured notes and warrants to purchase common and preferred stock which are included on our Schedule
of Investments in the financial statements of this annual report on Form 10-K.



Investments are stated
at value as defined under the 1940 Act, in accordance with the applicable regulations of the SEC, and in accordance with FASB,
ASC 820. Value, as defined in Section 2(a)(41) of the 1940 Act, is: (i) the market price for those securities for which a market
quotation is readily available, and (ii) the fair value as determined in good faith by, or under the direction of, the Board of
Directors for all other assets. See Note 3 - Portfolio Investments and Fair Value to the financial statements of this annual report
on Form 10-K for a further discussion of our portfolio investments and fair value. The 1940 Act requires periodic valuation of
each investment in our portfolio to determine our net asset value. Under the 1940 Act, unrestricted securities with readily available
market quotations are to be valued at the closing market price on the valuation date; all other assets must be valued at fair
value as determined in good faith by or under the direction of our Board of Directors.



Given the nature
of investing in the securities of private companies, our investments are generally considered Level 3 assets under ASC 820 until
these portfolio companies become public and begin trading on a stock exchange and the securities are no longer subject to any
post-initial public offering lockup restrictions. As such, we value all of our investments, other than unrestricted securities
in publicly traded portfolio companies, at fair value as determined in good faith by our Board of Directors, pursuant to a consistent
valuation policy in accordance with the provisions of ASC 820 and the 1940 Act.



Determination of
fair values involves subjective judgments and estimates. Due to the inherent uncertainty in determining the fair value of investments
that do not have a readily available market value, the fair value of our investments determined in good faith by our Board of
Directors may differ significantly from the value that would have been used had a ready market existed for such investments and
the differences could be material. Changes in fair value of these investments are recorded in our Statement of Operations as "Net
change in unrealized appreciation (depreciation)."



We have a lead valuation
director, who is a non-interested member of our Board of Directors and acts as the liaison between our Board of Directors and
our management for valuing our investments. With respect to investments for which market quotations are not readily available,
our Board of Directors undertakes a multi-step valuation process each quarter, as described below:



| | • | On a quarterly basis, each portfolio
                                         company will be analyzed based on the portfolio company’s most recently available
                                         historical and projected financial results, public market comparables, equity or other
                                         transactions and other factors.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Our management or an independent valuation firm, if involved,
                                         will conduct appraisals and make an assessment of the fair value of each investment,
                                         which will be used in deriving a preliminary valuation.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Our lead valuation director will review and discuss the preliminary
                                         valuations with our management and the assistance of the independent valuation firm,
                                         if any.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Our Board of Directors will discuss the valuations and determine,
                                         in good faith, the fair value of each investment in our portfolio for which market quotations
                                         are not readily available based on the input of our management, the independent valuation
                                         firm, if any, and the lead valuation director.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



59







For the December 31,
2015 valuation of our portfolio investments that are not publicly traded, an independent valuation firm assisted our Board of
Directors in its determination of the value eight investments in our portfolio.



ASC 820 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 (exit price). In accordance with ASC 820, we use a three-tier fair value hierarchy, which
prioritizes the inputs used in measuring fair value as follows:



| | • | Level 1: Observable inputs such as unadjusted quoted prices
                                         in active markets;
| | - | -----------------------------------------------------------------------------------------------------------------------



| | • | Level 2: Includes inputs such as
                                         quoted prices for similar securities in active markets and quoted prices for identical
                                         securities where there is little or no activity in the market; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Level 3: Unobservable inputs for
                                         which little or no market data exists, therefore requiring an entity to develop its own
                                         assumptions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In instances where
the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level
in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant
to the fair value measurement in its entirety.



See Note 2 –
Summary of Significant Accounting Policies to the financial statements of this annual report on Form 10-K for a further discussion
of the framework for determining fair value as described above.



Related Party
Agreements and Transactions



On October 5, 2015,
our Board of Directors implemented the initial phase of its plan to attempt to maximize value for our stockholders by approving
the termination of the Investment Advisory Agreement between us and our investment adviser effective as of the Termination Date.



Pursuant to the Investment
Advisory Agreement, BDCA Venture Adviser agreed to serve as our investment adviser and to furnish us with certain administrative
services necessary to conduct our day-to-day operations. A more detailed description of the Investment Advisory Agreement, the
services provided to us by BDCA Venture Adviser and the fees we paid to BDCA Venture Adviser is located in Item 1. —
Business – Former Investment Advisory and Administrative Services Agreementof this annual report on Form 10-K.





RCS Advisory Services,
LLC ("RCS Advisory"), an affiliated entity of BDCA Venture Adviser, provided us with legal services, website design
and maintenance and investor relations services. RCS Advisory no longer provides us with services in connection with the termination
of the Investment Adviser Agreement effective as of the Termination Date. See Note 4 - Related Party Agreements and Transactions
- to the financial statements for a further discussion of the various related-party transactions, agreements and fees.





BDCA Venture Adviser
agreed that, to the extent that our Adjusted Operating Expenses (as defined below) in 2015 exceeded $1,500,000 (the “Excess
Amount”), BDCA Venture Adviser would, without recourse against or reimbursement by us, waive Reimbursable Expenses (as defined
below) due and owing by us and/or pay on behalf of us certain Adjusted Operating Expenses, in such amounts so that the total of
the waived Reimbursable Expenses and expenses paid by BDCA Venture Adviser on behalf of us equaled the Excess Amount. Adjusted
Operating Expenses is defined as our total operating expenses less Base Fees, incentive fees, any stock issuance costs, and any
costs related to borrowings by us (including any interest and fees), any litigation costs, expenses or fees and any extraordinary
expenses. For purposes of clarity, any operating expenses incurred by BDCA Venture Adviser and reimbursable by us with respect
to 2015 (“Reimbursable Expenses”) are included in Adjusted Operating Expenses.



For accounting purposes,
during the year ended December 31, 2015, we recorded quarterly amounts due from BDCA Venture Adviser, representing the amount
by which our Adjusted Operating Expenses for each quarter exceeded the prorated amount of the annualized $1,500,000 Adjusted Operating
Expense threshold for such quarter. In connection with the termination of the Investment Advisory Agreement, the Excess Amount
and Adjusted Operating Expenses were calculated based on the eleven month period ended November 30, 2015. There were no expenses
waived or reimbursed from BDCA Venture Adviser as of the Termination Date, and, accordingly, the amount due from BDCA Venture
Adviser as of September 30, 2015 was reversed as of the Termination Date. No such agreement existed for the year ended December
31, 2014.



60







Following the termination
of the Investment Advisory Agreement, we and BDCA Venture Adviser also agreed on the final amounts due for Base Fees, incentive
fees and administrative expense reimbursement as of the Termination Date.



On March 25, 2016,
the Audit Committee of our Board of Directors approved the reimbursement of $125,157 in legal and proxy solicitation costs incurred
by Bulldog, a stockholder and beneficial owner of more than 5% of our outstanding common stock, as a result of the contested proxy
campaign in connection with our 2015 Annual Meeting. This reimbursement includes the costs of Bulldog’s litigation against
us in the Circuit Court of Maryland and the New York Supreme Court and costs associated with the proxy process and the election
of our new Board of Directors. See “- Recent Developments” above.



The Audit Committee
of our Board of Directors is required to review and approve any transactions with related parties (as such term is defined in
Item 404 of Regulation S-K).



In addition, our
code of business conduct and ethics, which is applicable to all of our officers and directors, requires that all officers and
directors avoid any conflict, or the appearance of a conflict, between an individual’s personal interests and our interests.
Our code of business conduct and ethics is available on our website at www.xroadscap.com.



Item 7A. Quantitative and Qualitative
Disclosures about Market Risk



Our business activities
contain elements of risk. We consider the primary type of market risk attributable to us to be valuation risk.



Valuation Risk



Value, as defined
in Section 2(a)(41) of the 1940 Act, is (i) the market price for those securities for which market quotations are readily available,
and (ii) fair value as determined in good faith by, or under the direction of, the Board of Directors for all other assets. See
Note 2 - Summary of Significant Accounting Policies and Note 3 - Portfolio Investments and Fair Value in the audited financial
statements filed in this Annual Report on Form 10-K.



Because there is
initially no public market for the securities of the private companies in which we invest, the valuation of these investments
is estimated in good faith by our Board of Directors, in accordance with our valuation procedures. In the absence of a readily
ascertainable market value, the estimated value of our portfolio company investments may differ significantly from the value that
would be placed on the portfolio if a ready market for such securities existed. Changes in valuation of these portfolio company
investments are recorded in our Statements of Operations as "Net change in unrealized appreciation (depreciation)."
Changes in valuation of any of our investments in privately held companies from one period to another may be volatile.



Interest Rate
Risk



We are subject to
financial market risks, including changes in interest rates. Changes in interest rates may affect our interest income from portfolio
investments and cash and cash equivalents. As of December 31, 2015, we had cash and cash equivalents of $13.7 million. We primarily
invest our cash on hand in demand deposit accounts, short-term U.S. Treasury securities and money market funds that invest primarily
in U.S. Treasury securities, U.S. Government agency securities, and repurchase agreements fully-collateralized by such securities.
As of December 31, 2015, we held cash deposits of $13.4 million, pending payment of our operating expenses or payment of distributions
or potential stock repurchases, for which we have market risk exposure relating to fluctuations in interest rates.



During December 2015,
our demand deposit accounts and money market funds earned an effective annualized dividend of approximately 0.04%. Assuming no
other changes to our holdings of demand deposit accounts and money market funds as of December 31, 2015, a one percentage point
change in the underlying dividend rate payable on our demand deposit accounts and money market funds as of December 31, 2015 would
not have a material effect on the amount of dividend income earned from our demand deposit accounts and money market funds for
the following 90-day period.



Our investment income
from portfolio companies will also be affected by changes in various interest rates to the extent our debt investments include
floating interest rates. As of December 31, 2015, none of our income-bearing debt investments in portfolio companies bore interest
based on floating rates.



As of December 31,
2015, we had no debt for borrowed money. We may borrow funds to make investments, to the extent we determine that additional capital
would allow us to take advantage of additional investment opportunities or if our Board of Directors determines that leveraging
our portfolio would be in our best interests and the best interests of our stockholders.



61







We may engage in
hedging transactions with respect to the market risks to which we are exposed subject to the requirements of the 1940 Act. We
may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts.
However, if we do engage in hedging transactions, we may expose ourselves to risks associated with such transactions. We have
not engaged in any hedging activities since our inception, and we currently do not expect to engage in any hedging activities
with respect to the market risks to which we are exposed.We also do not intend to lend the securities
of our publicly traded portfolio companies to generate fee income.



62







Item 8. Financial Statements



CROSSROADS CAPITAL, INC.



INDEX TO FINANCIAL STATEMENTS



|Financial Statements                                                                         | Page
|-------------------------------------------------------------------------------------------- | ----
|Reports of Independent Registered Public Accounting Firms                                    | F-2 
|Audited Financial Statements                                                                 |     
|Statements of Assets and Liabilities as of December 31, 2015 and 2014                        | F-4 
|Statements of Operations for the Years Ended December 31, 2015, 2014 and
    2013            | F-5 
|Statements of Changes in Net Assets for the Years Ended December 31, 2015,
    2014 and 2013 | F-6 
|Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and
    2013            | F-7 
|Schedule of Investments as of December 31, 2015                                              | F-8 
|Schedule of Investments as of December 31, 2014                                              | F-10
|Notes to Financial Statements                                                                | F-12



63







Report of Independent
Registered Public Accounting Firm



Board of Directors and Shareholders

Crossroads Capital, Inc.





We have audited the accompanying statement
of assets and liabilities of Crossroads Capital, Inc. (formerly BDCA Venture, Inc.)(the “Company”), including the schedule
of investments, as of December 31, 2015, and the related statements of operations, changes in net assets, and cash flows, and the
financial highlights (included in Note 11), for the years ended December 31, 2015 and 2014. These financial statements and financial
highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements
and financial highlights based on our audit.



We conducted our audit in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as
of December 31, 2015, by correspondence with the custodian, or by other appropriate auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.



In our opinion, the financial statements
and financial highlights referred to above present fairly, in all material respects, the financial position of Crossroads Capital,
Inc. as of December 31, 2015 and 2014, and the results of its operations, its cash flows, the changes in its net assets and the
financial highlights for the years ended December 31, 2015 and 2014 in conformity with U.S. generally accepted accounting principles.





/s/ Crowe Horwath LLP



New York, New York

March 29, 2016



F-2







Report of Independent Registered Public
Accounting Firm



Board of Directors and Shareholders

Crossroads Capital, Inc.



We have audited the accompanying statements
of operations, changes in net assets, and cash flows for the year ended December 31, 2013, and the related financial highlights
for each of the three years in the period ended December 31, 2013 of Crossroads Capital, Inc. (formerly BDCA Venture, Inc.) (the
“Company”, a Maryland corporation). These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not
engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.



In our opinion, the financial statements
and financial highlights referred to above present fairly, in all material respects, the results of operations, cash flows, and
the changes in its net assets for the year ended December 31, 2013, and the related financial highlights for each of the three
years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States
of America.





/s/ GRANT THORNTON LLP



Chicago, Illinois

February 24, 2014



F-3







Crossroads Capital,
Inc.

Statement of Assets and Liabilities



|                                                                                                                                |  | December 31, |           
|------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------
|                                                                                                                                |  | 2015         |           
|Assets                                                                                                                          |  |              |           
|Investments in portfolio company securities at fair value:                                                                      |  |              |           
|Unaffiliated investments:                                                                                                       |  |              |           
|Privately held portfolio companies (Cost: $35,413,770 and $35,373,785,
    respectively)                                        |  | $            | 27,507,759
|Publicly-traded portfolio companies (Cost: $1,999,997 and $4,000,001, respectively)                                             |  |              | 617,998   
|Non-controlled affiliated investments:                                                                                          |  |              |           
|Privately held portfolio companies (Cost: $4,000,000
    and $4,000,000, respectively)                                          |  |              | 6,620,000 
|Total, investments in portfolio company securities at fair value (Cost:
    $41,413,767 and $43,373,786, respectively)          |  |              | 34,745,757
|                                                                                                                                |  |              |           
|Cash and cash equivalents                                                                                                       |  |              | 13,655,862
|Funds held in escrow from sale of investment at fair value (Cost: $704,101 and $809,311, respectively)                          |  |              | 688,082   
|Prepaid expenses and other assets                                                                                               |  |              | 73,090    
|Total assets                                                                                                                    |  | $            | 49,162,791
|                                                                                                                                |  |              |           
|Liabilities                                                                                                                     |  |              |           
|Accrued incentive fees                                                                                                          |  | $            | —         
|Earned incentive fees payable                                                                                                   |  |              | —         
|Base management fees payable                                                                                                    |  |              | —         
|Dividends payable                                                                                                               |  |              | —         
|Administrative expenses payable                                                                                                 |  |              | —         
|Due to related parties                                                                                                          |  |              | 125,157   
|Accounts payable                                                                                                                |  |              | 122,555   
|Accrued expenses and other liabilities                                                                                          |  |              | 20        
|Total liabilities                                                                                                               |  | $            | 247,732   
|                                                                                                                                |  |              |           
|Commitments and contingencies (Note 9)                                                                                          |  |              |           
|                                                                                                                                |  |              |           
|Net Assets                                                                                                                      |  |              |           
|Common stock, $0.001 par value, 200,000,000 shares authorized; 9,676,484 and 9,793,994 issued
    and outstanding, respectively |  | $            | 9,676     
|Additional paid-in capital                                                                                                      |  |              | 56,746,858
|Accumulated net investment loss                                                                                                 |  |              | —         
|Accumulated net realized loss                                                                                                   |  |              | (1,157,446
|Net unrealized appreciation (depreciation) on investments and funds held
    in escrow from sale of investment                  |  |              | (6,684,029
|Total net assets                                                                                                                |  | $            | 48,915,059
|Total liabilities and net assets                                                                                                |  | $            | 49,162,791
|Net asset value per share                                                                                                       |  | $            | 5.06      



The accompanying notes are an integral
part of these statements.



F-4







Crossroads Capital,
Inc.

Statement of Operations



|                                                                                                                     |  | Years Ended December
    31, |            
|-------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -----------
|                                                                                                                     |  | 2015                         |            
|Investment income:                                                                                                   |  |                              |            
|Interest from portfolio company investments:                                                                         |  |                              |            
|Unaffiliated investments                                                                                             |  | $                            | 39,985     
|Interest and dividends from cash and cash equivalents                                                                |  |                              | 8,446      
|Total investment income                                                                                              |  |                              | 48,431     
|                                                                                                                     |  |                              |            
|Operating expenses:                                                                                                  |  |                              |            
|Base management fees                                                                                                 |  |                              | 1,232,563  
|Incentive fees                                                                                                       |  |                              | (2,130,443 
|Administrative expenses allocated from investment adviser                                                            |  |                              | 423,628    
|Professional fees                                                                                                    |  |                              | 1,103,030  
|Directors fees                                                                                                       |  |                              | 128,750    
|Public and investor relations expenses                                                                               |  |                              | 205,295    
|Travel expenses                                                                                                      |  |                              | 17,357     
|Stock transfer agent fees                                                                                            |  |                              | 52,880     
|Marketing and advertising expenses                                                                                   |  |                              | 19,800     
|Printing and production expenses                                                                                     |  |                              | 26,259     
|Postage and fulfillment expenses                                                                                     |  |                              | 45,417     
|Interest expense on borrowings                                                                                       |  |                              | —          
|Custody fees                                                                                                         |  |                              | 6,000      
|General and administrative expenses                                                                                  |  |                              | 207,890    
|Operating expenses before expense
    waiver from investment adviser                                                 |  |                              | 1,338,426  
|Waiver of base management fees                                                                                       |  |                              | —          
|Total operating expenses net of
    expense waiver from investment adviser                                           |  |                              | 1,338,426  
|Net investment loss                                                                                                  |  |                              | (1,289,995 
|                                                                                                                     |  |                              |            
|Net realized gain (loss):                                                                                            |  |                              |            
|Unaffiliated investments                                                                                             |  |                              | (1,157,446 
|Non-controlled affiliated investments                                                                                |  |                              | —          
|United States Treasury Bills                                                                                         |  |                              | —          
|Total net realized gain (loss)                                                                                       |  |                              | (1,157,446 
|                                                                                                                     |  |                              |            
|Net change in unrealized appreciation (depreciation):                                                                |  |                              |            
|Unaffiliated investments                                                                                             |  |                              | (7,965,423 
|Non-controlled affiliated investments                                                                                |  |                              | (1,170,000 
|Funds held in escrow from sale of investment                                                                         |  |                              | 83,724     
|                                                                                                                     |  |                              |            
|Total net change in unrealized
    appreciation (depreciation)                                                       |  |                              | (9,051,699 
|                                                                                                                     |  |                              |            
|Net increase (decrease) in net
    assets resulting from operations                                                  |  | $                            | (11,499,140
|                                                                                                                     |  |                              |            
|Net investment loss per common share outstanding
    (basic and diluted)                                             |  | $                            | (0.13      
|Net increase (decrease) in net assets resulting
    from operations per common share outstanding (basic and diluted) |  | $                            | (1.18      
|Weighted average common shares outstanding (basic
    and diluted)                                                   |  |                              | 9,739,237  



The accompanying notes are an integral
part of these statements.



F-5







Crossroads Capital,
Inc.

Statement of Changes in Net Assets



|                                                            |  | Common Stock |           |   |          |   |       |                          |  |   |                      |   |  |                              |            |   |                                                                       |   |            |                                      | 
|----------------------------------------------------------- |  | ------------ | --------- | - | -------- | - | ----- | ------------------------ |  | - | -------------------- | - |  | ---------------------------- | ---------- | - | --------------------------------------------------------------------- | - | ---------- | ------------------------------------ | 
|                                                            |  | Shares (1)   |           |   | ParValue |   |       | AdditionalPaid-InCapital |  |   | TreasuryStock AtCost |   |  | AccumulatedNetInvestmentLoss |            |   | AccumulatedUndistributed NetRealizedGain(Accumulated NetRealizedLoss) |   |            | UnrealizedAppreciation(Depreciation) | 
|Balance, December 31, 2012
    (2)                          |  |              | 9,283,781 |   |          | $ | 9,284 |                          |  | $ | 71,675,244           |   |  | $                            | (764,179   | ) |                                                                       | $ | (693,699   | )                                    | 
|Net (decrease) increase in net assets from operations       |  |              | —         |   |          |   | —     |                          |  |   | —                    |   |  |                              | —          |   |                                                                       |   | (5,312,835 | )                                    | 
|Distributions to stockholders from net realized gains (3)   |  |              | —         |   |          |   | —     |                          |  |   | —                    |   |  |                              | —          |   |                                                                       |   | —          |                                      | 
|Issuance of common stock, net of offering costs of $359,364 |  |              | 713,562   |   |          |   | 713   |                          |  |   | 3,921,295            |   |  |                              | —          |   |                                                                       |   | —          |                                      | 
|Repurchase of common stock (339,445 shares)                 |  |              | —         |   |          |   | —     |                          |  |   | —                    |   |  |                              | (2,198,415 | ) |                                                                       |   | —          |                                      | 
|Reclassification of permanent book to tax differences       |  |              | —         |   |          |   | —     |                          |  |   | (3,789,646           | ) |  |                              | —          |   |                                                                       |   | 3,789,646  |                                      | 
|Balance, December 31, 2013 (2)                              |  |              | 9,997,343 |   |          | $ | 9,997 |                          |  | $ | 71,806,893           |   |  | $                            | (2,962,594 | ) |                                                                       | $ | (2,216,888 | )                                    | 
|Net (decrease) increase in net assets from operations       |  |              | —         |   |          |   | —     |                          |  |   | —                    |   |  |                              | —          |   |                                                                       |   | (3,680,811 | )                                    | 
|Distributions to stockholders from net realized gains (4)   |  |              | 374,069   |   |          |   | 374   |                          |  |   | 2,174,894            |   |  |                              | —          |   |                                                                       |   | —          |                                      | 
|Repurchase of common stock (128,977 shares)                 |  |              | —         |   |          |   | —     |                          |  |   | —                    |   |  |                              | (665,998   | ) |                                                                       |   | —          |                                      | 
|Retirement of treasury stock at cost                        |  |              | (577,418  | ) |          |   | (577  | )                        |  |   | (3,628,015           | ) |  |                              | 3,628,592  |   |                                                                       |   | —          |                                      | 
|Reclassification of permanent book to tax differences       |  |              | —         |   |          |   | —     |                          |  |   | (3,767,256           | ) |  |                              | —          |   |                                                                       |   | 3,767,256  |                                      | 
|Balance, December 31, 2014 (2)                              |  |              | 9,793,994 |   |          | $ | 9,794 |                          |  | $ | 66,586,516           |   |  | $                            | —          |   |                                                                       | $ | (2,130,443 | )                                    | 
|Net decrease in net assets from operations                  |  |              | —         |   |          |   | —     |                          |  |   | —                    |   |  |                              | —          |   |                                                                       |   | (1,289,995 | )                                    | 
|Distributions to stockholders as a return of capital        |  |              | —         |   |          |   | —     |                          |  |   | (5,836,870           | ) |  |                              | —          |   |                                                                       |   | —          |                                      | 
|Repurchase and retirement of common stock at cost           |  |              | (117,510  | ) |          |   | (118  | )                        |  |   | (582,350             | ) |  |                              | —          |   |                                                                       |   | —          |                                      | 
|Reclassification of permanent book to tax differences       |  |              | —         |   |          |   | —     |                          |  |   | (3,420,438           | ) |  |                              | —          |   |                                                                       |   | 3,420,438  |                                      | 
|Balance, December 31, 2015 (2)                              |  |              | 9,676,484 |   |          | $ | 9,676 |                          |  | $ | 56,746,858           |   |  | $                            | —          |   |                                                                       | $ | —          |                                      | 



| | (1) | Common
                                         shares issued.
| | --- | --------------------------------------------------------------
| |     |                                                               

| | (2) | Net
                                         assets as of December 31, 2015, 2014, 2013 and 2012 include no accumulated undistributed
                                         net investment income.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                      

| | (3) | Includes
                                         distribution payable to stockholders of record on December 30, 2013 (with ex-dividend
                                         date of December 26, 2013) of $104,072 which was paid on January 13, 2014. For income
                                         and excise tax purposes, the distribution was treated as paid in 2013 and taxable to
                                         stockholders in 2013.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

| | (4) | Includes
                                         distribution payable to stockholders of record on December 31, 2014 (with ex-dividend
                                         date of December 29, 2014) of $3,878,014 which was paid on January 13, 2015. For income
                                         and excise tax purposes, the distribution was treated as paid in 2014 and taxable to
                                         stockholders in 2014.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The accompanying notes are an integral
part of these statements.



F-6







Crossroads Capital,
Inc.

Statement of Cash Flows



|                                                                                                                                                     |  | Years Ended December
    31, |            
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -----------
|                                                                                                                                                     |  | 2015                         |            
|Cash flows from operating activities:                                                                                                                |  |                              |            
|Net increase (decrease) in net assets resulting from operations                                                                                      |  | $                            | (11,499,140
|Adjustments to reconcile net increase (decrease) in net assets resulting from
    operations to net cash provided by (used in) operating activities: |  |                              |            
|Investments in portfolio companies                                                                                                                   |  |                              | —          
|Net proceeds from sales of portfolio company investments                                                                                             |  |                              | 842,558    
|Net realized (gain) loss on investments                                                                                                              |  |                              | 1,157,446  
|Net change in unrealized depreciation (appreciation) on investments                                                                                  |  |                              | 9,135,423  
|Net change in unrealized depreciation (appreciation) on funds held in escrow
    from sales of investments                                           |  |                              | (83,724    
|Increase in investment balance cost basis due to payment-in-kind interest                                                                            |  |                              | (39,985    
|Deferred offering costs charged-off                                                                                                                  |  |                              | —          
|Changes in operating assets and liabilities:                                                                                                         |  |                              |            
|Decrease (increase) in receivable from funds held in escrow from sales
    of investments                                                            |  |                              | 105,210    
|Decrease in prepaid expenses and other assets                                                                                                        |  |                              | 11,811     
|Increase (decrease) in base management fees payable                                                                                                  |  |                              | (354,633   
|Increase (decrease) in earned incentive fees payable                                                                                                 |  |                              | (635,241   
|Increase (decrease) in accrued incentive fees                                                                                                        |  |                              | (2,130,443 
|Increase (decrease) in administrative expenses payable                                                                                               |  |                              | (113,596   
|Increase in amounts due to related parties                                                                                                           |  |                              | 59,092     
|Increase (decrease) in accounts payable                                                                                                              |  |                              | 81,455     
|Increase (decrease) in accrued expenses and other
    liabilities                                                                                    |  |                              | (20,587    
|Net cash provided by (used in) operating activities                                                                                                  |  | $                            | (3,484,354 
|                                                                                                                                                     |  |                              |            
|Cash flows from financing activities:                                                                                                                |  |                              |            
|Gross proceeds from issuance of common stock                                                                                                         |  | $                            | —          
|Offering costs from issuance of common stock                                                                                                         |  |                              | —          
|Proceeds from short-term borrowings                                                                                                                  |  |                              | —          
|Repayment of short-term borrowings                                                                                                                   |  |                              | —          
|Repurchase of common stock                                                                                                                           |  |                              | (582,468   
|Cash distributions to stockholders                                                                                                                   |  |                              | (9,714,884 
|Net cash used in financing activities                                                                                                                |  | $                            | (10,297,352
|                                                                                                                                                     |  |                              |            
|Net increase (decrease) in cash and cash equivalents                                                                                                 |  | $                            | (13,781,706
|Cash and cash equivalents, beginning of period                                                                                                       |  |                              | 27,437,568 
|Cash and cash equivalents, end of period                                                                                                             |  | $                            | 13,655,862 
|                                                                                                                                                     |  |                              |            
|Supplemental disclosure of non-cash operating activities                                                                                             |  |                              |            
|Conversion of payment-in-kind interest income into preferred stock                                                                                   |  | $                            | —          
|Supplemental disclosure of non-cash financing activities                                                                                             |  |                              |            
|Decrease in deferred offering costs                                                                                                                  |  | $                            | —          
|Dividends payable                                                                                                                                    |  | $                            | —          
|Stock distributions to stockholders                                                                                                                  |  | $                            | —          
|Supplemental disclosure of cash flow information                                                                                                     |  |                              |            
|Interest paid on borrowings                                                                                                                          |  | $                            | —          
|Net realized loss on sale of treasury bills                                                                                                          |  | $                            | —          



The accompanying notes are an integral
part of these statements.



F-7







Crossroads Capital,
Inc.

Schedule of Investments

December 31, 2015





|Portfolio Company                                                           |  | Headquarters /Industry (1)   |  | Type of Investment                                                                                                                                   |  | Shares /Warrants /Principal |            |  | Cost |   |            | Value (2) |  |   | Value as% of NetAssets | 
|--------------------------------------------------------------------------- |  | ---------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ---------- |  | ---- | - | ---------- | --------- |  | - | ---------------------- | 
|Unaffiliated Investments
    (3)                                            |  |                              |  |                                                                                                                                                      |  |                             |            |  |      |   |            |           |  |   |                        | 
|Privately
    Held Portfolio Companies:                                     |  |                              |  |                                                                                                                                                      |  |                             |            |  |      |   |            |           |  |   |                        | 
|MBA Polymers,
    Inc.                                                      |  | Worksop, Nottinghamshire, UK |  | Series G Convertible Preferred Stock                                                                                                                 |  |                             | 2,000,000  |  |      | $ | 2,000,000  |           |  | $ | 235,000                | 
|                                                                            |  | Plastics Recycling           |  |                                                                                                                                                      |  |                             |            |  |      |   |            |           |  |   |                        | 
|BrightSource Energy,
    Inc.                                               |  | Oakland, CA                  |  | Common Stock                                                                                                                                         |  |                             | 132,972    |  |      |   | 1,756,202  |           |  |   | 80,000                 | 
|                                                                            |  | Solar Thermal Energy         |  | Series 1A Preferred Stock                                                                                                                            |  |                             | 2,186,880  |  |      |   | 650,642    |           |  |   | 100,000                | 
|                                                                            |  |                              |  | Series 1 Convertible Preferred Stock                                                                                                                 |  |                             | 55,779     |  |      |   | 490,287    |           |  |   | 220,000                | 
|                                                                            |  |                              |  | Subordinated Convertible Bridge Notes (4)
    (5)Original principal $205,193; PIK interest 11.5%, compounded annually; mature 3/30/2015 (See Note 3) |  | $                           | 265,929    |  |      |   | 265,929    |           |  |   | 530,000                | 
|                                                                            |  |                              |  | Subordinated Secured Notes (4) (5)Original
    principal $107,977; PIK interest 11.5%, compounded annually; mature 3/30/2015 (See Note 3)            |  | $                           | 121,759    |  |      |   | 121,759    |           |  |   | 121,759                | 
|Harvest Power, Inc.                                                         |  | Waltham, MA                  |  | Series A-2 Preferred Stock                                                                                                                           |  |                             | 1,249,999  |  |      |   | 1,249,433  |           |  |   | 770,000                | 
|                                                                            |  | Waste Management             |  | Series B Convertible Preferred Stock                                                                                                                 |  |                             | 404,527    |  |      |   | 1,655,093  |           |  |   | 660,000                | 
|Suniva, Inc.                                                                |  | Norcross, GA                 |  | Series D Convertible Preferred Stock (See Note 15)                                                                                                   |  |                             | 198        |  |      |   | 2,500,007  |           |  |   | 165,000                | 
|                                                                            |  | Solar Photovoltaic
    Cells |  | Series F Convertible Preferred Stock (See
    Note 15)                                                                                               |  |                             | 10         |  |      |   | 54,280     |           |  |   | 190,000                | 
|Agilyx Corporation                                                          |  | Beaverton, OR                |  | Common Stock                                                                                                                                         |  |                             | 16         |  |      |   | 4,332,356  |           |  |   | —                      | 
|                                                                            |  | Renewable Oils               |  |                                                                                                                                                      |  |                             |            |  |      |   |            |           |  |   |                        | 
|Zoosk, Inc.                                                                 |  | San Francisco, CA            |  | Series E Convertible Preferred Stock                                                                                                                 |  |                             | 715,171    |  |      |   | 2,999,999  |           |  |   | 3,780,000              | 
|                                                                            |  | Online Dating                |  |                                                                                                                                                      |  |                             |            |  |      |   |            |           |  |   |                        | 
|SilkRoad, Inc.                                                              |  | Chicago, IL                  |  | Series D-1 Convertible Preferred Stock                                                                                                               |  |                             | 6,361,938  |  |      |   | 1,337,785  |           |  |   | 3,140,000              | 
|                                                                            |  | Software as a Service        |  | Series D-2 Convertible Preferred Stock                                                                                                               |  |                             | 19,132,283 |  |      |   | 5,000,000  |           |  |   | 6,060,000              | 
|                                                                            |  |                              |  | Series D-1 Convertible Preferred Stock WarrantsExercise price $0.2823 per share; expire 6/30/2018 (subject to adjustment)                            |  |                             | 1,683,460  |  |      |   | —          |           |  |   | 420,000                | 
|Mode Media Corporation                                                      |  | Brisbane, CA                 |  | Series F Convertible Preferred Stock                                                                                                                 |  |                             | 1,196,315  |  |      |   | 4,999,999  |           |  |   | 4,806,000              | 
|                                                                            |  | Social Media                 |  |                                                                                                                                                      |  |                             |            |  |      |   |            |           |  |   |                        | 
|Deem, Inc.                                                                  |  | San Francisco, CA            |  | Series AA-1 Convertible Preferred Stock                                                                                                              |  |                             | 929,212    |  |      |   | 3,000,000  |           |  |   | 3,160,000              | 
|                                                                            |  | E-commerce Network           |  |                                                                                                                                                      |  |                             |            |  |      |   |            |           |  |   |                        | 
|Centrify Corporation                                                        |  | Santa Clara, CA              |  | Series E Convertible Preferred Stock                                                                                                                 |  |                             | 1,084,873  |  |      |   | 2,999,999  |           |  |   | 3,070,000              | 
|                                                                            |  | Enterprise Software          |  |                                                                                                                                                      |  |                             |            |  |      |   |            |           |  |   |                        | 
|Subtotal
    - Unaffiliated Investments, Privately Held Portfolio Companies |  |                              |  |                                                                                                                                                      |  |                             |            |  |      | $ | 35,413,770 |           |  | $ | 27,507,759             | 



F-8







Crossroads Capital, Inc.

Schedule of Investments

December 31, 2015



|Portfolio Company                                                                         |  | Headquarters /Industry (1)             |  | Type of Investment                   |  | Shares /Warrants /Principal |           |  | Cost |   |            | Value (2) |  |   | Value as% of NetAssets | 
|----------------------------------------------------------------------------------------- |  | -------------------------------------- |  | ------------------------------------ |  | --------------------------- | --------- |  | ---- | - | ---------- | --------- |  | - | ---------------------- | 
|Publicly
    Traded Portfolio Companies:                                                  |  |                                        |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Tremor Video,
    Inc. (6)                                                                |  | New York, NY                           |  | Common Stock                         |  |                             | 299,999   |  |      | $ | 1,999,997  |           |  | $ | 617,998                | 
|                                                                                          |  | Online
    Video Advertising           |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Subtotal
    - Unaffiliated Investments, Publicly Traded Portfolio Companies              |  |                                        |  |                                      |  |                             |           |  |      | $ | 1,999,997  |           |  | $ | 617,998                | 
|                                                                                          |  |                                        |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Non-Controlled, Affiliated
    Investments (3)                                            |  |                                        |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Privately
    Held Portfolio Companies:                                                   |  |                                        |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Metabolon, Inc.                                                                           |  | Durham, NC                             |  | Series D Convertible Preferred Stock |  |                             | 2,229,021 |  |      | $ | 4,000,000  |           |  | $ | 6,620,000              | 
|                                                                                          |  | Molecular Diagnostics and
    Services |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Subtotal
    - Non-controlled, Affiliated Investments, Privately Held Portfolio Companies |  |                                        |  |                                      |  |                             |           |  |      | $ | 4,000,000  |           |  | $ | 6,620,000              | 
|                                                                                          |  |                                        |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Total
    - Investments in Portfolio Company Securities (7)                               |  |                                        |  |                                      |  |                             |           |  |      | $ | 41,413,767 |           |  | $ | 34,745,757             | 



|                                                                                                                                                   |  |        |            |   |                 | 
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------ | ---------- | - | --------------- | 
|Reconciliation to Net Assets                                                                                                                       |  | Amount |            |   | % of Net Assets | 
|Investments in portfolio company securities at fair value                                                                                          |  | $      | 34,745,757 |   |                 | 
|Cash and cash equivalents                                                                                                                          |  |        |            |   |                 | 
|Demand deposit accounts                                                                                                                            |  |        | 13,005,421 |   |                 | 
|Money market funds consisting of 435,882 Class
    A shares in the SEI Daily Income Trust Government Fund (SEOXX) with a value of $1 per share (4) |  |        | 435,882    |   |                 | 
|Other cash and cash equivalents                                                                                                                    |  |        | 214,559    |   |                 | 
|Funds held in escrow from sale of investment at fair value                                                                                         |  |        | 688,082    |   |                 | 
|Prepaid expenses and other assets                                                                                                                  |  |        | 73,090     |   |                 | 
|Less: Total liabilities                                                                                                                            |  |        | (247,732   | ) |                 | 
|Net Assets                                                                                                                                         |  | $      | 48,915,059 |   |                 | 



| | (1) | The
                                         corporate headquarters of the portfolio company may not be indicative of the primary
                                         source of the portfolio company’s business. The industry description generally
                                         identifies the types of products or services provided by each portfolio company.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                    

| | (2) | Except
                                         for the shares of common stock of Tremor Video, all investments were valued at fair value
                                         as determined in good faith by the Board of Directors and are restricted securities under
                                         the Securities Act of 1933, as amended (the "Securities Act") or are subject
                                         to legal restrictions on transfer (including lockup and other contractual restrictions)
                                         as of December 31, 2015. As of December 31, 2015, restricted securities held by
                                         the Company comprised approximately 71% of the Company's net assets.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| | (3) | Controlled
                                         investments are defined by the Investment Company Act of 1940, as amended (the "1940
                                         Act"), as investments in which the Company owns more than 25% of the voting securities
                                         or where the Company has the ability to nominate greater than 50% of the board representation.
                                         Non-controlled, affiliated investments are defined by the 1940 Act as investments in
                                         which the Company owns between 5% and 25% of the voting securities. Unaffiliated investments
                                         are defined by the 1940 Act as investments that are neither controlled investments nor
                                         non-controlled, affiliated investments.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| | (4) | Investment
                                         is income producing.
| | --- | ------------------------------------------------------------------------
| |     |                                                                         

| | (5) | Investment
                                         is a payment-in-kind ("PIK") note. Principal and cost includes accumulated
                                         PIK interest, which is fixed for the term of the notes. The PIK interest is computed
                                         at the contractual rate specified in each note and is added to the principal balance
                                         of the note and recorded as interest income as earned. As of December 31, 2015,
                                         the Company was accruing PIK interest on each of its payment-in-kind notes, and none
                                         of such notes were on non-accrual status.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| | (6) | As
                                         of December 31, 2015, the Company valued its shares of common stock in Tremor Video
                                         based on the closing price on that date.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                  

| | (7) | As
                                         of December 31, 2014, approximately 99.5% of the Company's total assets constituted
                                         qualifying investments under Section 55(a) of the 1940 Act. Qualifying assets must represent
                                         at least 70% of the Company's total assets at the time of acquisition of any additional
                                         non-qualifying assets.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-9







Crossroads Capital,
Inc.

Schedule of Investments

December 31, 2014



|Portfolio Company                                                           |  | Headquarters /Industry (1)   |  | Type of Investment                                                                                                                      |  | Shares /Warrants /Principal |            |  | Cost |   |            | Value (2) |  |   | Value as% of NetAssets | 
|--------------------------------------------------------------------------- |  | ---------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ---------- |  | ---- | - | ---------- | --------- |  | - | ---------------------- | 
|Unaffiliated Investments
    (3)                                            |  |                              |  |                                                                                                                                         |  |                             |            |  |      |   |            |           |  |   |                        | 
|Privately
    Held Portfolio Companies:                                     |  |                              |  |                                                                                                                                         |  |                             |            |  |      |   |            |           |  |   |                        | 
|MBA Polymers,
    Inc.                                                      |  | Worksop, Nottinghamshire, UK |  | Series G Convertible Preferred Stock                                                                                                    |  |                             | 2,000,000  |  |      | $ | 2,000,000  |           |  | $ | 2,100,000              | 
|                                                                            |  | Plastics Recycling           |  |                                                                                                                                         |  |                             |            |  |      |   |            |           |  |   |                        | 
|BrightSource Energy,
    Inc.                                               |  | Oakland, CA                  |  | Common Stock                                                                                                                            |  |                             | 132,972    |  |      |   | 1,756,202  |           |  |   | 160,000                | 
|                                                                            |  | Solar Thermal Energy         |  | Series 1A Preferred Stock                                                                                                               |  |                             | 2,186,880  |  |      |   | 650,642    |           |  |   | 280,000                | 
|                                                                            |  |                              |  | Series 1 Convertible Preferred Stock                                                                                                    |  |                             | 55,779     |  |      |   | 490,287    |           |  |   | 390,000                | 
|                                                                            |  |                              |  | Subordinated Convertible Bridge Notes (4)
    (5)Original principal $205,193; PIK interest 11.5%, compounded annually; mature 2/15/2015 |  | $                           | 238,501    |  |      |   | 238,501    |           |  |   | 450,000                | 
|                                                                            |  |                              |  | Subordinated Secured Notes (4) (5)Original principal
    $107,977; PIK interest 11.5%, compounded annually; mature 1/29/2015            |  | $                           | 109,202    |  |      |   | 109,202    |           |  |   | 109,202                | 
|Harvest Power, Inc.                                                         |  | Waltham, MA                  |  | Series A-2 Preferred Stock                                                                                                              |  |                             | 1,249,999  |  |      |   | 1,249,433  |           |  |   | 920,000                | 
|                                                                            |  | Waste Management             |  | Series B Convertible Preferred Stock                                                                                                    |  |                             | 404,527    |  |      |   | 1,655,093  |           |  |   | 1,700,000              | 
|Suniva, Inc.                                                                |  | Norcross, GA                 |  | Series D Convertible Preferred Stock                                                                                                    |  |                             | 198        |  |      |   | 2,500,007  |           |  |   | 1,570,000              | 
|                                                                            |  | Solar Photovoltaic
    Cells |  | Series F Convertible Preferred Stock                                                                                                    |  |                             | 10         |  |      |   | 54,280     |           |  |   | 170,000                | 
|Agilyx Corporation                                                          |  | Beaverton, OR                |  | Series C Convertible Preferred Stock                                                                                                    |  |                             | 1,092,956  |  |      |   | 4,000,000  |           |  |   | 950,000                | 
|                                                                            |  | Renewable Oils               |  | Series E-2 Convertible Preferred Stock                                                                                                  |  |                             | 15,107,090 |  |      |   | 332,356    |           |  |   | 430,000                | 
|Zoosk, Inc.                                                                 |  | San Francisco, CA            |  | Series E Convertible Preferred Stock                                                                                                    |  |                             | 715,171    |  |      |   | 2,999,999  |           |  |   | 3,790,000              | 
|                                                                            |  | Online Dating                |  |                                                                                                                                         |  |                             |            |  |      |   |            |           |  |   |                        | 
|SilkRoad, Inc.                                                              |  | Chicago, IL                  |  | Series D-1 Convertible Preferred Stock                                                                                                  |  |                             | 6,361,938  |  |      |   | 1,337,785  |           |  |   | 2,820,000              | 
|                                                                            |  | Software as a Service        |  | Series D-2 Convertible Preferred Stock                                                                                                  |  |                             | 19,132,283 |  |      |   | 5,000,000  |           |  |   | 5,700,000              | 
|                                                                            |  |                              |  | Series D-1 Convertible Preferred Stock WarrantsExercise price $0.2823 per share; expire 6/30/2018 (subject to adjustment)               |  |                             | 1,683,460  |  |      |   | —          |           |  |   | 340,000                | 
|Mode Media Corporation                                                      |  | Brisbane, CA                 |  | Series F Convertible Preferred Stock                                                                                                    |  |                             | 1,196,315  |  |      |   | 4,999,999  |           |  |   | 6,850,000              | 
|                                                                            |  | Social Media                 |  |                                                                                                                                         |  |                             |            |  |      |   |            |           |  |   |                        | 
|Deem, Inc.                                                                  |  | San Francisco, CA            |  | Series AA-1 Convertible Preferred Stock                                                                                                 |  |                             | 929,212    |  |      |   | 3,000,000  |           |  |   | 4,290,000              | 
|                                                                            |  | E-commerce Network           |  |                                                                                                                                         |  |                             |            |  |      |   |            |           |  |   |                        | 
|Centrify Corporation                                                        |  | Santa Clara, CA              |  | Series E Convertible Preferred Stock                                                                                                    |  |                             | 1,084,873  |  |      |   | 2,999,999  |           |  |   | 3,310,000              | 
|                                                                            |  | Enterprise
    Software      |  |                                                                                                                                         |  |                             |            |  |      |   |            |           |  |   |                        | 
|Subtotal
    - Unaffiliated Investments, Privately Held Portfolio Companies |  |                              |  |                                                                                                                                         |  |                             |            |  |      | $ | 35,373,785 |           |  | $ | 36,329,202             | 



F-10







Crossroads Capital, Inc.

Schedule of Investments

December 31, 2014



|Portfolio Company                                                                         |  | Headquarters /Industry (1)             |  | Type of Investment                   |  | Shares /Warrants /Principal |           |  | Cost |   |            | Value (2) |  |   | Value as% of NetAssets | 
|----------------------------------------------------------------------------------------- |  | -------------------------------------- |  | ------------------------------------ |  | --------------------------- | --------- |  | ---- | - | ---------- | --------- |  | - | ---------------------- | 
|Publicly
    Traded Portfolio Companies:                                                  |  |                                        |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Tremor Video,
    Inc. (6)                                                                |  | New York, NY                           |  | Common Stock                         |  |                             | 599,999   |  |      | $ | 4,000,001  |           |  | $ | 1,721,997              | 
|                                                                                          |  | Online
    Video Advertising           |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Subtotal
    - Unaffiliated Investments, Publicly Traded Portfolio Companies              |  |                                        |  |                                      |  |                             |           |  |      | $ | 4,000,001  |           |  | $ | 1,721,997              | 
|                                                                                          |  |                                        |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Non-Controlled, Affiliated
    Investments (3)                                            |  |                                        |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Privately
    Held Portfolio Companies:                                                   |  |                                        |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Metabolon, Inc.                                                                           |  | Durham, NC                             |  | Series D Convertible Preferred Stock |  |                             | 2,229,021 |  |      | $ | 4,000,000  |           |  | $ | 7,790,000              | 
|                                                                                          |  | Molecular Diagnostics and
    Services |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Subtotal
    - Non-controlled, Affiliated Investments, Privately Held Portfolio Companies |  |                                        |  |                                      |  |                             |           |  |      | $ | 4,000,000  |           |  | $ | 7,790,000              | 
|                                                                                          |  |                                        |  |                                      |  |                             |           |  |      |   |            |           |  |   |                        | 
|Total
    - Investments in Portfolio Company Securities (7)                               |  |                                        |  |                                      |  |                             |           |  |      | $ | 43,373,786 |           |  | $ | 45,841,199             | 



|Reconciliation to Net Assets                                                                                                                          |  | Amount |            |   | % of Net Assets | 
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------ | ---------- | - | --------------- | 
|Investments in portfolio company securities at fair value                                                                                             |  | $      | 45,841,199 |   |                 | 
|Cash and cash equivalents                                                                                                                             |  |        |            |   |                 | 
|Money market funds consisting of 27,190,896
    Class A shares in the SEI Daily Income Trust Government Fund (SEOXX) with a value of $1 per share (4) |  |        | 27,190,896 |   |                 | 
|Other cash and cash equivalents                                                                                                                       |  |        | 246,672    |   |                 | 
|Funds held in escrow from sale of investment at fair value                                                                                            |  |        | 709,568    |   |                 | 
|Prepaid expenses and other assets                                                                                                                     |  |        | 84,901     |   |                 | 
|Less: Total liabilities                                                                                                                               |  |        | (7,239,699 | ) |                 | 
|Net Assets                                                                                                                                            |  | $      | 66,833,537 |   |                 | 

| | (1) | The
                                         corporate headquarters of the portfolio company may not be indicative of the primary
                                         source of the portfolio company’s business. The industry description generally
                                         identifies the types of products or services provided by each portfolio company.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Except
                                         for the shares of common stock of Tremor Video, all investments were valued at fair value
                                         as determined in good faith by the Board of Directors and are restricted securities under
                                         the Securities Act or are subject to legal restrictions on transfer (including lockup
                                         and other contractual restrictions) as of December 31, 2014. As of December 31,
                                         2014, restricted securities held by the Company comprised approximately 66% of the Company's
                                         net assets.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Controlled
                                         investments are defined by the 1940 Act, as investments in which the Company owns more
                                         than 25% of the voting securities or where the Company has the ability to nominate greater
                                         than 50% of the board representation. Non-controlled, affiliated investments are defined
                                         by the 1940 Act as investments in which the Company owns between 5% and 25% of the voting
                                         securities. Unaffiliated investments are defined by the 1940 Act as investments that
                                         are neither controlled investments nor non-controlled, affiliated investments.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Investment
                                         is income producing.
| | --- | ------------------------------------------------------------------------

| | (5) | Investment
                                         is a PIK note. Principal and cost includes accumulated PIK interest, which is fixed for
                                         the term of the notes. The PIK interest is computed at the contractual rate specified
                                         in each note and is added to the principal balance of the note and recorded as interest
                                         income as earned. As of December 31, 2014, the Company was accruing PIK interest
                                         on each of its payment-in-kind notes, and none of such notes were on non-accrual status.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | On
                                         June 26, 2013, Tremor Video priced its initial public offering 7,500,000 shares of common
                                         stock at a price to the public of $10.00 per share. Tremor Video's common stock trades
                                         on the New York Stock Exchange under the ticker symbol "TRMR." The Company's
                                         shares in Tremor Video were subject to a lockup agreement which expired on December 24,
                                         2013. As of December 31, 2014, the Company valued its shares of common stock in
                                         Tremor Video based on the December 31, 2014 closing price.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | As
                                         of December 31, 2014, approximately 97% of the Company's total assets constituted
                                         qualifying investments under Section 55(a) of the 1940 Act. Qualifying assets must represent
                                         at least 70% of the Company's total assets at the time of acquisition of any additional
                                         non-qualifying assets.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-11







Crossroads Capital,
Inc.

Notes to Financial Statements



Note 1 - Description of Business



Crossroads Capital,
Inc. (the "Company"), formerly known as BDCA Venture, Inc., was incorporated on May 9, 2008 under the laws of the
State of Maryland and is an internally managed, non-diversified, closed-end management investment company that has elected to
be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940
Act"). Effective December 2, 2015, the Company changed its name from BDCA Venture, Inc. to Crossroads Capital, Inc. Effective
January 1, 2010, the Company elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Company commenced its portfolio
company investment activities in January 2010. The shares of the Company's common stock have been listed on the Nasdaq Capital
Market since December 12, 2011.



On September 22,
2014, the Company’s former Board of Directors approved a change to the Company’s investment objective to maximize
total return by generating current income from debt investments and, to a lesser extent, capital appreciation from equity and
equity-related investments. Previously, the Company’s investment objective was to maximize capital appreciation by making
investments in the equity and equity-linked securities of later stage, typically venture capital-backed, pre-initial public offering
companies.



At the 2015 Annual
Meeting of Stockholders held on July 9, 2015, the Company's stockholders elected Richard Cohen, Andrew Dakos, Gerald Hellerman
and Timothy Keating to serve as directors of the Company until the 2016 Annual Meeting of Stockholders or until their respective
successors are duly elected and qualified. Additionally, at the 2015 Annual Meeting, the Company's stockholders approved a proposal
to have the Board of Directors consider adopting a plan to “maximize shareholder value within a reasonable period of time.”



On July 28, 2015,
Mr. Keating notified the Board of Directors of his resignation from the Board of Directors and as the Chief Executive Officer
and President of the Company. The Board of Directors appointed Frederic M. Schweiger to serve as the Company's Chief Executive
Officer and President effective July 29, 2015.



On October 5, 2015,
the Board of Directors approved the termination of the Investment Advisory and Administrative Services Agreement dated July 1,
2014 (the "Investment Advisory Agreement") between the Company and its investment adviser, BDCA Venture Adviser, LLC.
The effective date of termination of the Investment Advisory Agreement was December 6, 2015 (the "Termination Date").
Also on October 5, 2015, the Board of Directors determined that the Company will no longer make investments in new venture capital-backed
or high growth companies and will now shift its focus to the orderly monetization of the Company’s current holdings. However,
the Company may consider making opportunistic follow-on investments in its existing portfolio companies.



On November 10, 2015,
the Board of Directors approved the Company’s engagement of US Bancorp Fund Services, LLC ("US Bancorp") to provide
administration and accounting services.



On November 13, 2015,
the Board of Directors approved the engagement of 1100 Capital Consulting, LLC (the “Administrator”) to provide administrative
consulting services to the Company, including the provision of personnel to act as certain of the Company’s executive officers,
including the Chief Executive Officer and Chief Financial Officer.



Effective December
2, 2015, the Board of Directors appointed Ben H. Harris to serve as the Company’s Chief Executive Officer and President,
David M. Hadani to serve as the Company’s Chief Financial Officer, Treasurer and Secretary, both officers of the Administrator,
and Stephanie L. Darling to serve as the Company’s Chief Compliance Officer.



The Company has entered
into agreements with MidFirst Bank to be the custodian of its portfolio securities and Frontier Bank to be the custodian of the
majority of its cash and cash equivalent assets.



Effective January
20, 2016, the Board of Directors changed the Company’s investment objective to preserve capital and maximize stockholder
value (the “Investment Objective”) by pursuing the sale of the Company’s portfolio investments, limiting expenses
and deploying surplus cash as appropriate, including into yielding investments to offset, in part, operating expenses. On March
25, 2016, the Board of Directors resolved to monetize the Company’s portfolio holdings at the earliest practicable date.
See Note 15 – Subsequent Events.



F-12







Crossroads Capital, Inc.

Notes to Financial Statements



While the Board of
Directors plans to distribute cash proceeds to stockholders from the sale or other monetization of the Company’s portfolio
investments, no assurance can be given regarding the timing of or amounts realized from any such transactions. Further, while
the Board of Directors will adhere to its previously announced determination not to invest in new venture capital-backed companies,
the Company may consider making opportunistic follow-on investments in its existing portfolio companies. The Board of Directors
reserves the right to modify or terminate this plan at any time or to consider additional strategic alternatives.



Note 2 - Summary of Significant Accounting
Policies



Basis of Presentation



The accompanying
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America,
("U.S. GAAP").



Consolidation



TheCompany’s financial statements include only the accounts of Crossroads Capital, Inc. as the Company has no subsidiaries.



Use of Estimates



The preparation of
financial statements in conformitywith U.S. GAAP requires the Company’s
management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reported period. Such estimates and judgments could change
in the future as more information becomes known, and actual results could differ from these estimates and the differences could
be material. The Company considers its significant estimates to include the fair value of portfolio company securities and income
taxes.



Valuation of Investments



The Company’s
investments consist of securities issued by private and publicly traded companies consisting of preferred stock, common stock,
subordinated convertible bridge notes, subordinated secured notes and warrants to purchase common and preferred stock which are
included on the Company's Schedule of Investments.



Investments are stated
at value as defined under the 1940 Act, in accordance with the applicable regulations of the U.S. Securities and Exchange Commission
(the "SEC"), and in accordance with Financial Accounting Standards Board ("FASB"), Accounting Standards Codification
Topic 820, "Fair Value Measurement and Disclosures," ("ASC 820"). Value, as defined in Section 2(a)(41) of
the 1940 Act, is: (i) the market price for those securities for which a market quotation is readily available, and (ii) the fair
value as determined in good faith by, or under the direction of, the Board of Directors for all other assets. See Note 3 - Portfolio
Investments and Fair Value. The 1940 Act requires periodic valuation of each investment in the Company’s portfolio to determine
the Company’s net asset value. Under the 1940 Act, unrestricted securities with readily available market quotations are
to be valued at the closing market price on the valuation date; all other assets must be valued at fair value as determined in
good faith by or under the direction of the Board of Directors.



Given the nature
of investing in the securities of private companies, the Company’s investments are generally considered Level 3 assets under
ASC 820 until these portfolio companies become public and begin trading on a stock exchange and the securities are no longer subject
to any post-initial public offering lockup restrictions. As such, the Company values all of its investments, other than unrestricted
securities in publicly traded portfolio companies, at fair value as determined in good faith by the Company’s Board of Directors,
pursuant to a consistent valuation policy in accordance with the provisions of ASC 820 and the 1940 Act.



Determination of
fair values involves subjective judgments and estimates. Due to the inherent uncertainty in determining the fair value of investments
that do not have a readily available market value, the fair value of the Company’s investments determined in good faith
by its Board of Directors may differ significantly from the value that would have been used had a ready market existed for such
investments and the differences could be material. Changes in fair value of these investments are recorded in the Company’s
Statement of Operations as "Net change in unrealized appreciation (depreciation)."



F-13







Crossroads Capital, Inc.

Notes to Financial Statements



The Company has a
lead valuation director, who is a non-interested member of the Board of Directors and acts as the liaison between the Board of
Directors and the Company’s management for valuing the Company's investments. With respect to investments for which market
quotations are not readily available, the Company’s Board of Directors undertakes a multi-step valuation process each quarter,
as described below:



| | • | On a quarterly basis, each portfolio
                                         company will be analyzed based on the portfolio company’s most recently available
                                         historical and projected financial results, public market comparables, equity or other
                                         transactions and other factors.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The Company’s management or an independent valuation
                                         firm, if involved, will conduct appraisals and make an assessment of the fair value of
                                         each investment, which will be used in deriving a preliminary valuation.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The Company's lead valuation director will review and discuss
                                         the preliminary valuations with the Company’s management and the assistance of
                                         the independent valuation firm, if any.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The Board of Directors will discuss the valuations and determine,
                                         in good faith, the fair value of each investment in the portfolio for which market quotations
                                         are not readily available based on the input of the Company’s management, the independent
                                         valuation firm, if any, and the lead valuation director.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For the December 31,
2015 valuation of the Company's portfolio investments that are not publicly traded, an independent valuation firm assisted the
Board of Directors in its determination of the value eight investments in the Company's portfolio.



ASC 820 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 (exit price). In accordance with ASC 820, the Company uses a three-tier fair value hierarchy,
which prioritizes the inputs used in measuring fair value as follows:



| | • | Level 1: Observable inputs such as unadjusted quoted prices
                                         in active markets;
| | - | -----------------------------------------------------------------------------------------------------------------------



| | • | Level 2: Includes inputs such as
                                         quoted prices for similar securities in active markets and quoted prices for identical
                                         securities where there is little or no activity in the market; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Level 3: Unobservable inputs for
                                         which little or no market data exists, therefore requiring an entity to develop its own
                                         assumptions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In instances where
the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level
in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant
to the fair value measurement in its entirety.



The Company applies
the framework for determining fair value as described above to the valuation of investments in each of the following categories:



Equity Investments



Equity investments
for which market quotations are readily available in an active market are generally valued at the most recently available closing
market prices and are classified as Level 1 assets. However, equity investments for which market quotations are readily available,
but which are subject to lockup provisions restricting the resale of such investments for a specified period of time, are valued
at a discount to the most recently available closing market prices and, accordingly, are classified as Level 3 assets.



The fair values of
the Company’s equity investments for which market quotations are not readily available are determined based on various factors
and are classified as Level 3 assets. To determine the fair value of a portfolio company for which market quotations are not readily
available, the Company may analyze the portfolio company’s most recently available historical and projected financial results,
public market comparables and other factors. The Company may also consider other events, including the transaction in which the
Company acquired its securities, subsequent equity sales by the portfolio company, mergers or acquisitions affecting the portfolio
company or the completion of an initial public offering ("IPO") by the portfolio company. In addition, the Company may
consider the trends of the portfolio company’s basic financial metrics from the time of its original investment until the
measurement date, with material improvement of these metrics indicating a possible increase in fair value, while material deterioration
of these metrics may indicate a possible reduction in fair value. The fair values of the Company’s portfolio company securities
are generally discounted for lack of marketability or when the securities are illiquid. See Note 3 - Portfolio Investments and
Fair Value.



F-14







Crossroads Capital, Inc.

Notes to Financial Statements



In cases where a
portfolio company completes a subsequent financing with different rights and preferences than the equity securities the Company
holds, or where the Company owns common stock in a portfolio company with preferred stock outstanding or where a merger or acquisition
event involving a portfolio company has been completed or is pending, the Company may consider aforementioned transaction to estimate
the portfolio company's equity value.



In determining the
value of equity or equity-linked securities (including warrants to purchase common or preferred stock) in a portfolio company,
the Company considers the rights, preferences and limitations of such securities. In cases where a portfolio company's capital
structure includes multiple classes of preferred and common stock and equity-linked securities with different rights and preferences,
the Company may use an option pricing model to allocate value to each equity and equity-linked security, unless it believes a
liquidity event such as an acquisition or a dissolution is imminent or the portfolio company is unlikely to continue as a going
concern.



The Monte Carlo method
may also be used to derive an expected value of a security based on results obtained from a large number of simulations and assumptions
used in application of the method.



Debt Investments



Given the nature
of the Company’s current debt investments, principally convertible bridge notes issued by venture capital-backed portfolio
companies, these investments are Level 3 assets under ASC 820 because there is no known or accessible market for these investment
securities to be traded or exchanged. Since the Company invested in convertible bridge notes for the primary purpose of potential
conversion into equity at a future date, the fair value of the Company’s convertible debt investments for which market quotations
are not available may be determined on an as-converted to equity basis using the same factors and methodologies the Company uses
to value its equity investments. In making a good faith determination of the value of its convertible debt investments, the Company
generally starts with the cost basis of the investment, which includes the value attributed to the original issue discount, if
any, and payment-in-kind ("PIK") interest which has been accreted to principal as earned.



If the Company determines
that there is a low likelihood that its convertible debt investments will be converted into equity or repaid, the Company applies
a procedure that assumes a sale of the investment in a hypothetical market to a hypothetical market participant where buyers and
sellers are willing participants. The hypothetical market does not include scenarios where the underlying security was simply
repaid or extinguished, but includes an exit concept. As part of this process, the Company will evaluate the creditworthiness
of the portfolio company, its ability to meet its current debt obligations, the collateral (if any) for recoverability of the
debt investment in the event of default and whether the security lien, if any, is subordinated to senior lenders. The Company
may also use pricing of recently issued comparable debt securities, if any, to determine the baseline hypothetical market yield
as of the measurement date. The Company considers each portfolio company’s credit rating, if any, security liens and other
characteristics of the investment to adjust the baseline yield to derive a hypothetical yield for each debt investment as of the
measurement date. The anticipated future cash flows from each debt investment are then discounted at the hypothetical yield to
estimate each debt investment’s fair value as of the measurement date.



Portfolio Company Investment Classification



The Company classifies
its portfolio company investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, "Controlled Investments"
are defined as investments in which the Company owns more than 25% of the voting securities or has rights to nominate greater
than 50% of the board representation. Under the 1940 Act, "Non-controlled, Affiliated Investments" are defined as investments
in which the Company owns between 5% and 25% of the voting securities. Under the 1940 Act, "Unaffiliated Investments"
are defined as investments that are neither Controlled Investments nor Non-controlled, Affiliated Investments.



As of December 31,
2015 and 2014, the Company had eleven portfolio company investments that were classified as an Unaffiliated Investment and had
one portfolio company investment classified as a Non-controlled, Affiliated Investment.



Cash and Cash Equivalents



Cash and cash equivalents
include short-term liquid investments in demand deposit accounts and money market funds. Cash and cash equivalents are carried
at amortized cost which approximates fair value.



F-15







Crossroads Capital, Inc.

Notes to Financial Statements



The Company may place
its cash and cash equivalents with various financial institutions and, at times, cash held in depository accounts at such institutions
may exceed the Federal Deposit Insurance Corporation insured limit.



Funds Held in Escrow from Sale of Investments



Funds held in escrow
from the sale of investments ("Escrowed Funds") are valued at fair value by the Company's Board of Directors using certain
indemnity risk and deferred payment discounts applied to the amounts withheld.



Deferred Offering Costs and Offering
Costs



Offering costs include
professional and legal fees, printing fees, fees paid to the SEC and other costs pertaining to the Company’s offerings of
shares. Offering costs are charged to additional paid-in capital.



On March 15, 2012,
the Company filed a registration statement on Form N-2 for an underwritten offering of its common stock, which was last amended
by the Company on November 9, 2012. On May 20, 2013, the Company withdrew its registration statement for the contemplated underwritten
offering of its common stock based on its determination that an underwritten offering was not feasible at the time. The Company
charged-off $287,358 of deferred offering costs related to the attempted offering and reclassified $9,789 of deferred offering
costs related to the attempted filing to prepaid expenses related to regulatory filing fees available for future registration
statement filings.



Securities Transactions



Securities transactions
are accounted for on the date the transaction for the purchase or sale of the securities is entered into by the Company. Securities
transactions outside conventional channels, such as private transactions, are recorded as of the date the Company obtains the
right to demand the securities purchased or to collect the proceeds from a sale, and incurs an obligation to pay for securities
purchased or to deliver securities sold, respectively. Cash due from brokers related to sales of securities that had not settled
as of the balance sheet date is classified as a receivable for investments sold. Commissions and other costs associated with transactions
involving securities, including legal costs, are included in the cost basis of purchases and deducted from the proceeds of sales.



Interest and Dividend Income



Interest income from
certificates of deposit and other short-term investments is recorded on an accrual basis to the extent such amounts are expected
to be collected and accrued interest income is evaluated periodically for collectability. PIK interest represents contractually
deferred interest computed at a contractual rate specified in the loan agreement. PIK interest may be prepaid by either contract
or the portfolio company’s election, but generally is paid at the end of the loan term. PIK interest is added to the principal
balance of the loan and is generally recorded as interest income on an accrual basis to the extent such PIK interest is expected
to be collected. The Company recorded PIK interest income of $39,985, $66,486, and $37,376 during the years ended December 31,
2015, 2014 and 2013, respectively. See "Income Taxes" below.



When one of the Company’s
loans becomes more than 90 days past due, or if the Company otherwise does not expect the portfolio company to be able to service
its debt and other obligations, the Company will, as a general matter, place the loan on non-accrual status and generally will
cease recognizing interest income on that loan until all principal and interest has been brought current through payment or due
to a restructuring such that the interest income is deemed to be collectible. However, the Company may make exceptions to this
policy if the loan has sufficient collateral value and is in the process of collection. If the fair value of a loan is below cost,
the Company may cease recognizing PIK interest on the debt investment until such time that the fair value equals or exceeds cost.



Net Realized Gain or Loss and Unrealized
Appreciation or Depreciation



Net realized gain
or loss is recognized when a portfolio company investment or other financial asset is disposed of and is computed as the difference
between the Company's cost basis in such investment or asset at the disposition date and the net proceeds received from such disposition
(after reduction for commissions and other selling expenses). Net realized gains and losses on transactions involving portfolio
company investments and other financial assets are determined by specific identification. Unrealized appreciation or depreciation
is computed as the difference between the fair value of the portfolio company investment or other financial asset and the cost
basis of such investment or asset.



F-16







Crossroads Capital, Inc.

Notes to Financial Statements



Income Taxes



Effective January
1, 2010, the Company elected to be treated for tax purposes as a RIC under the Code. To maintain RIC tax treatment, the Company
must meet specified source-of-income and asset diversification requirements and distribute annually at least 90% of its "investment
company taxable income" as defined in the Code.



Due to the Company's
limited number of investments, it closely monitors its asset composition in order to continue to satisfy the asset diversification
test and maintain its status as a RIC. To maintain its status as a RIC, in addition to other requirements, as of the close of
each quarter end, the Company must meet the asset diversification test, which requires that at least 50% of the value of its assets
consist of cash, cash items, U.S. government securities or certain other qualified securities (the "50% Threshold").
However, the failure to meet the 50% Threshold alone will not result in the Company's loss of RIC status. In circumstances where
the failure to meet the 50% Threshold is the result of fluctuations in the value of the Company's assets, including as a result
of the sale of assets, the Company will still be deemed to have satisfied the 50% Threshold and, therefore, maintain its RIC status,
provided that the Company has not made any new investments in non-qualifying securities, including additional investments in non-qualifying
securities of existing portfolio companies, since the time that the Company fell below the 50% Threshold. As of December 31, 2015,
the Company did not meet the 50% Threshold, however, such failure was due to fluctuations in the value of its assets. Accordingly,
the Company satisfied the diversification requirement as of December 31, 2015.



To maintain its status
as a RIC for tax purposes for the quarter ended September 30, 2014, the Company purchased $20 million of short-term U.S. Treasury
bills ("T-Bills") on September 24, 2014. The Company financed the purchase of these T-Bills using $600,000 in cash and
the proceeds from a $19.4 million short-term borrowing financed through a margin account agreement with National Financial Services,
LLC. The $20 million of T-Bills were pledged as collateral for the short-term borrowing. On October 3, 2014, the Company sold
the T-Bills for a realized loss of $94 and repaid the short-term borrowing in full together with accrued interest.



As a RIC, the Company
generally will not have to pay corporate-level federal income taxes on any investment company taxable income or any realized net
capital gains that the Company distributes to its stockholders as dividends. Taxable income generally differs from net income
for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. In addition,
taxable income generally excludes any unrealized appreciation or depreciation.



The Company is not
required to distribute its realized net capital gains, if any, to stockholders to maintain RIC tax treatment. However, the Company
generally will have to pay corporate-level federal income taxes on any realized net capital gains that the Company does not distribute
to its stockholders. In the event the Company retains any of its realized net capital gains, the Company may designate the retained
amount as a deemed distribution to stockholders and will be required to pay corporate-level tax on the retained amount.



The Company would
also be subject to certain nondeductible federal excise taxes imposed on RICs if it fails to distribute during each calendar year
an amount at least equal to the sum of: (i) 98% of its ordinary income for the calendar year, (ii) 98.2% of its capital gains
in excess of capital losses for the calendar year, if any, and (iii) any recognized and undistributed income from prior years
for which it paid no federal income taxes. The Company will not be subject to this excise tax on amounts on which the Company
is required to pay corporate income tax.



Dividends and Distributions



Dividends and distributions
to common stockholders must be approved by the Company’s Board of Directors and any dividend payable is recorded on the
ex-dividend date.



The Company may fund
cash dividends and distributions to stockholders from any sources of funds available to the Company. The Company has not established
limits on the amount of funds it may use from available sources to make dividends or distributions. See Note 8 - Dividends and
Distributions.



Per Share Information



Net changes in net
assets resulting from operations per common share, or basic earnings per share, are calculated using the weighted average number
of common shares outstanding for the period presented. Diluted earnings per share are not presented as there are no potentially
dilutive securities outstanding.



F-17







Crossroads Capital, Inc.

Notes to Financial Statements



Capital Accounts



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



Recently Issued Accounting Pronouncements



From time to time,
new accounting pronouncements are issued by FASB or other standards setting bodies that are adopted by the Company as of the specified
effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet
effective will not have a material impact on its financial statements upon adoption.



Note 3 - Portfolio Investments and
Fair Value



The following table summarizes the composition
of the Company’s portfolio company investments by type of security and Escrowed Funds at cost and fair value as of December 31,
2015 and 2014.



|                                                  |  | December 31, 2015 |            |  | December 31, 2014 |  
|------------------------------------------------- |  | ----------------- | ---------- |  | ----------------- | -
|Security Type                                     |  | Cost              |            |  | Fair Value        |  
|Privately Held Portfolio Companies:               |  |                   |            |  |                   |  
|Preferred Stock                                   |  | $                 | 32,937,524 |  |                   | $
|Preferred Stock Warrants                          |  |                   | —          |  |                   |  
|Common Stock                                      |  |                   | 6,088,558  |  |                   |  
|Subordinated Convertible Bridge Notes             |  |                   | 265,929    |  |                   |  
|Subordinated Secured
    Notes                    |  |                   | 121,759    |  |                   |  
|Subtotal - Privately Held
    Portfolio Companies |  |                   | 39,413,770 |  |                   |  
|Publicly Traded Portfolio Companies:              |  |                   |            |  |                   |  
|Common Stock                                      |  |                   | 1,999,997  |  |                   |  
|Total Portfolio Company
    Investments           |  |                   | 41,413,767 |  |                   |  
|Funds Held in Escrow from Sale of Investment      |  |                   | 704,101    |  |                   |  
|Total Portfolio Company
    Financial Assets      |  | $                 | 42,117,868 |  |                   | $



Fair Value of Investments



The following table
categorizes the Company’s portfolio company investments, money market funds and Escrowed Funds measured at fair value based
upon the lowest level of significant input used in the valuation of such assets as of December 31, 2015 and 2014:



|Description                                   |  | Level 1 |         |  | Level 2 |   |   | Level 3 |  |   | Total Fair Value | 
|--------------------------------------------- |  | ------- | ------- |  | ------- | - | - | ------- |  | - | ---------------- | 
|As of December 31, 2015                       |  |         |         |  |         |   |   |         |  |   |                  | 
|Privately Held Portfolio Company Securities:  |  |         |         |  |         |   |   |         |  |   |                  | 
|Preferred Stock                               |  | $       | —       |  |         | $ | — |         |  | $ | 32,976,000       | 
|Preferred Stock Warrants                      |  |         | —       |  |         |   | — |         |  |   | 420,000          | 
|Common Stock                                  |  |         | —       |  |         |   | — |         |  |   | 80,000           | 
|Subordinated Convertible Bridge Notes         |  |         | —       |  |         |   | — |         |  |   | 530,000          | 
|Subordinated Secured Notes                    |  |         | —       |  |         |   | — |         |  |   | 121,759          | 
|Publicly Traded Portfolio Company Securities: |  |         |         |  |         |   |   |         |  |   |                  | 
|Common Stock                                  |  |         | 617,998 |  |         |   | — |         |  |   | —                | 



F-18







|Description                                    |  | Level 1 |            |  | Level 2 |   |   | Level 3 |  |   | Total Fair Value | 
|---------------------------------------------- |  | ------- | ---------- |  | ------- | - | - | ------- |  | - | ---------------- | 
|Cash Equivalents:                              |  |         |            |  |         |   |   |         |  |   |                  | 
|Money Market Funds                             |  |         | 435,882    |  |         |   | — |         |  |   | —                | 
|Funds Held in Escrow From Sales of Investments |  |         | —          |  |         |   | — |         |  |   | 688,082          | 
|Total                                          |  | $       | 1,053,880  |  |         | $ | — |         |  | $ | 34,815,841       | 
|                                               |  |         |            |  |         |   |   |         |  |   |                  | 
|As of December 31, 2014                        |  |         |            |  |         |   |   |         |  |   |                  | 
|Privately Held Portfolio Company Securities:   |  |         |            |  |         |   |   |         |  |   |                  | 
|Preferred Stock                                |  | $       | —          |  |         | $ | — |         |  | $ | 43,060,000       | 
|Preferred Stock Warrants                       |  |         | —          |  |         |   | — |         |  |   | 340,000          | 
|Common Stock                                   |  |         | —          |  |         |   | — |         |  |   | 160,000          | 
|Subordinated Convertible Bridge Notes          |  |         | —          |  |         |   | — |         |  |   | 450,000          | 
|Subordinated Secured Notes                     |  |         | —          |  |         |   | — |         |  |   | 109,202          | 
|Publicly Traded Portfolio Company Securities:  |  |         |            |  |         |   |   |         |  |   |                  | 
|Common Stock                                   |  |         | 1,721,997  |  |         |   | — |         |  |   | —                | 
|Cash Equivalents:                              |  |         |            |  |         |   |   |         |  |   |                  | 
|Money Market Funds                             |  |         | 27,190,896 |  |         |   | — |         |  |   | —                | 
|Funds Held in Escrow From Sales of Investments |  |         | —          |  |         |   | — |         |  |   | 709,568          | 
|Total                                          |  | $       | 28,912,893 |  |         | $ | — |         |  | $ | 44,828,770       | 



The following table
provides a reconciliation of the changes in fair value for the Company’s portfolio company investments and Escrowed Funds
measured at fair value using significant unobservable inputs (Level 3) for the year ended December 31, 2015:



|                                                                                                                                     |  | Level 3PreferredStock |            |   | Level 3PreferredStockWarrants |   |         | Level 3CommonStock |  |   | Level 3SubordinatedConvertibleBridge Notes |   |  | Level 3SubordinatedSecuredNotes |         |  | Level 3Funds Heldin Escrow |   |         | Total | 
|------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------- | ---------- | - | ----------------------------- | - | ------- | ------------------ |  | - | ------------------------------------------ | - |  | ------------------------------- | ------- |  | -------------------------- | - | ------- | ----- | 
|Fair Value as of December 31, 2014                                                                                                   |  | $                     | 43,060,000 |   |                               | $ | 340,000 |                    |  | $ | 160,000                                    |   |  | $                               | 450,000 |  |                            | $ | 109,202 |       | 
|                                                                                                                                     |  |                       |            |   |                               |   |         |                    |  |   |                                            |   |  |                                 |         |  |                            |   |         |       | 
|Purchases and other adjustments to cost of Level 3 portfolio company
    investments (1)                                             |  |                       | —          |   |                               |   | —       |                    |  |   | —                                          |   |  |                                 | 27,428  |  |                            |   | 12,557  |       | 
|Sale, exchange or conversion of Level 3 portfolio company investments
    (2)                                                        |  |                       | (1,380,000 | ) |                               |   | —       |                    |  |   | 1,380,000                                  |   |  |                                 | —       |  |                            |   | —       |       | 
|Gross transfers out of Level 3 to Level 1 (2)                                                                                        |  |                       | —          |   |                               |   | —       |                    |  |   | —                                          |   |  |                                 | —       |  |                            |   | —       |       | 
|Total net realized gains (losses) and net change
    in unrealized appreciation (depreciation)                                       |  |                       | (8,704,000 | ) |                               |   | 80,000  |                    |  |   | (1,460,000                                 | ) |  |                                 | 52,572  |  |                            |   | —       |       | 
|Fair Value as of December 31, 2015                                                                                                   |  | $                     | 32,976,000 |   |                               | $ | 420,000 |                    |  | $ | 80,000                                     |   |  | $                               | 530,000 |  |                            | $ | 121,759 |       | 
|                                                                                                                                     |  |                       |            |   |                               |   |         |                    |  |   |                                            |   |  |                                 |         |  |                            |   |         |       | 
|Total net change in unrealized appreciation
    (depreciation) on Level 3 portfolio company investments held as of December 31, 2015 |  | $                     | (8,704,000 | ) |                               | $ | 80,000  |                    |  | $ | (1,460,000                                 | ) |  | $                               | 52,572  |  |                            | $ | —       |       | 



| | (1) | Purchases
                                         and other adjustments to cost of Level 3 portfolio company investments include purchases
                                         of new investments at cost and payment-in kind interest accreted to principal.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-19







Crossroads Capital, Inc.

Notes to Financial Statements



| | (2) | Exchanges,
                                         conversions and transfers out of Level 3 portfolio company investments and Escrowed Funds
                                         are reflected at cost if originally acquired during the period or at the fair value as
                                         of the beginning of the period if originally acquired before the beginning of the period.
                                         Sales of Level 3 portfolio company investments and settlement of Escrowed Funds are reflected
                                         at the net proceeds from such sale or settlement.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table
provides a reconciliation of the changes in fair value for the Company’s portfolio company investments and Escrowed Funds
measured at fair value using significant unobservable inputs (Level 3) for the year ended December 31, 2014:



|                                                                                                                                     |  | Level 3PreferredStock |             |   | Level 3PreferredStockWarrants |   |          | Level 3CommonStock |  |   | Level 3CommonStockWarrants |   |  | Level 3SubordinatedConvertibleBridge Notes |            |   | Level 3SubordinatedSecuredNotes |   |            | Level 3Funds Heldin Escrow |  |   | Total   | 
|------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------- | ----------- | - | ----------------------------- | - | -------- | ------------------ |  | - | -------------------------- | - |  | ------------------------------------------ | ---------- | - | ------------------------------- | - | ---------- | -------------------------- |  | - | ------- | 
|Fair Value as of December 31, 2013                                                                                                   |  | $                     | 42,210,000  |   |                               | $ | 230,000  |                    |  | $ | 13,444,242                 |   |  | $                                          | 1,370,000  |   |                                 | $ | 1,242,569  |                            |  | $ | —       | 
|Purchases and other adjustments to cost of Level 3 portfolio company
    investments (1)                                             |  |                       | 4,397,011   |   |                               |   | 330,645  |                    |  |   | —                          |   |  |                                            | —          |   |                                 |   | 397,617    |                            |  |   | 109,202 | 
|Sale, exchange or conversion of Level 3 portfolio company investments
    (2)                                                        |  |                       | (10,731,353 | ) |                               |   | 136,053  |                    |  |   | (940,000                   | ) |  |                                            | (106,072   | ) |                                 |   | (1,401,686 | )                          |  |   | —       | 
|Gross transfers out of Level 3 to Level 1 (2)                                                                                        |  |                       | —           |   |                               |   | —        |                    |  |   | (11,683,302                | ) |  |                                            | —          |   |                                 |   | —          |                            |  |   | —       | 
|Total net realized gains (losses) and net change
    in unrealized appreciation (depreciation)                                       |  |                       | 7,184,342   |   |                               |   | (356,698 | )                  |  |   | (660,940                   | ) |  |                                            | (1,263,928 | ) |                                 |   | 211,500    |                            |  |   | —       | 
|Fair Value as of December 31, 2014                                                                                                   |  | $                     | 43,060,000  |   |                               | $ | 340,000  |                    |  | $ | 160,000                    |   |  | $                                          | —          |   |                                 | $ | 450,000    |                            |  | $ | 109,202 | 
|                                                                                                                                     |  |                       |             |   |                               |   |          |                    |  |   |                            |   |  |                                            |            |   |                                 |   |            |                            |  |   |         | 
|Total net change in unrealized appreciation
    (depreciation) on Level 3 portfolio company investments held as of December 31, 2014 |  | $                     | 1,801,053   |   |                               | $ | 110,000  |                    |  | $ | (550,000                   | ) |  | $                                          | —          |   |                                 | $ | 211,500    |                            |  | $ | —       | 



| | (1) | Purchases
                                         and other adjustments to cost of Level 3 portfolio company investments include purchases
                                         of new investments at cost and payment-in kind interest accreted to principal.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Exchanges,
                                         conversions and transfers out of Level 3 portfolio company investments and Escrowed Funds
                                         are reflected at cost if originally acquired during the period or at the fair value as
                                         of the beginning of the period if originally acquired before the beginning of the period.
                                         Sales of Level 3 portfolio company investments and settlement of Escrowed Funds are reflected
                                         at the net proceeds from such sale or settlement.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During the year ended
December 31, 2014, the transfers out of Level 3 to Level 1 were the result of the expiration of lock-up restrictions on the shares
of common stock held in Millennial Media and TrueCar.



Portfolio Company Investment Activity



The Company did not
make any portfolio company investments during the year ended December 31, 2015.



| | • | On January 6, 2015, 3,986 shares
                                         of Millennial Media common stock were released from the indemnity escrow. During December
                                         2014, the Company wrote-off these released shares based on pending indemnity claims made
                                         against such shares. On February 26, 2015, the Company sold these released shares resulting
                                         in a net realized gain of $6,178. On December 24, 2015, the Company received $4,686 in
                                         additional proceeds based on a final escrow release. See Note 9 - Commitments and Contingencies.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | On March 12, 2015, the Company
                                         received $13,930 in additional proceeds related to the sale of its investment in Xtime
                                         based on a post-closing working capital adjustment to the merger consideration. The receipt
                                         of these additional proceeds resulted in a net realized gain of $13,930. On January 15,
                                         2016, $606,983 was released to the Company from the Xtime escrow without any offset for
                                         indemnity claims. See Note 15 – Subsequent Events.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-20







Crossroads Capital, Inc.

Notes to Financial Statements



| | • | On January 15, 2015, the maturity
                                         date of the July 2014 and August 2014 promissory notes issued by BrightSource in the
                                         initial principal amount of $107,977 (the "Notes") was extended from January
                                         15, 2015 to January 29, 2015. On January 29, 2015, the maturity date of the Notes was
                                         further extended to February, 15 2015. On March 17, 2015, the maturity date of the Notes
                                         was further extended to March 30, 2015. On March 22, 2016, BrightSource advised the Company
                                         that it was negotiating a further extension of the maturity date with the holders of
                                         the Notes.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | On March 17, 2015, the maturity
                                         date of the BrightSource convertible bridge notes in the initial principal amount of
                                         $205,193 was extended from February 15, 2015 to March 30, 2015. On March 22, 2016, BrightSource
                                         advised the Company that it was negotiating a further extension of the maturity date
                                         with the holders of the convertible bridge notes.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | During February and March 2015,
                                         Agilyx issued non-convertible promissory notes to certain investors in the principal
                                         amount of $2.0 million, which triggered the right for certain shareholders to force the
                                         conversion of all of Agilyx's outstanding shares of convertible preferred stock (including
                                         those held by the Company) into shares of common stock on a 1-for-1 basis. On April 3,
                                         2015, Agilyx shareholders approved the conversion of all outstanding shares of convertible
                                         preferred stock to common stock on a 1-for-1 basis. Accordingly, the Company's 1,092,956
                                         shares of Series C convertible preferred stock and 15,107,090 shares of Series E-2 convertible
                                         preferred stock were converted into a total of 16,200,046 shares of common stock on April
                                         3, 2015. On October 29, 2015, Agilyx completed a 1,000,000-to-one reverse stock split
                                         of all outstanding common stock. As a result, the Company’s 16,200,046 shares of
                                         common stock were exchanged into 16 shares of common stock.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | During April and May 2015, the
                                         Company sold 300,000 shares of Tremor Video common stock with an aggregate cost basis
                                         of $2,000,004 for total net proceeds of $817,764, resulting in a net realized loss of
                                         $1,182,240.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | On October 15, 2015, Suniva, Inc.,
                                         a private portfolio company, completed a stock-for-stock merger transaction with Shunfeng
                                         International Clean Energy Limited, a Hong Kong Stock Exchange-listed company ("SFCE"),
                                         and a global integrated energy provider. In the merger, all outstanding shares of preferred
                                         stock and common stock of Suniva were cancelled in exchange for the right of certain
                                         Suniva stockholders (including the Company) to receive their allocable share of the merger
                                         consideration, which was distributed in shares of SFCE common stock and Class A common
                                         stock of the private surviving company of the transaction. On January 13, 2016, the Company’s
                                         10.022 shares of Series F preferred stock and 197.942 shares of Series D preferred stock
                                         were exchanged for 2,844 shares of Suniva Class A common stock and 820,868 shares of
                                         SFCE common stock. The shares of SFCE common stock were subject to a lockup period which
                                         expired in February 2016. See Note 15 – Subsequent Events.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Significant Unobservable Inputs
for Level 3 Portfolio Company Securities



In accordance with
ASC 820, the table set forth below provides quantitative information about the Level 3 fair value measurements of the Company’s
portfolio company investments and Escrowed Funds as of December 31, 2015. In addition to the techniques and inputs noted
in the table below, according to the Company’s valuation policy, the Company may also use other valuation techniques and
methodologies when determining the Company’s fair value measurements. The below table is not intended to be all-inclusive,
but rather provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements.
To the extent an unobservable input is not reflected in the table below, such input is deemed insignificant or is not applicable
with respect to the Company’s Level 3 fair value measurements as of December 31, 2015. Significant changes in the inputs
in isolation could result in a significant change in the fair value measurement, depending on the input and the materiality of
the investment:



F-21







Crossroads Capital, Inc.

Notes to Financial Statements



|                                                                                                                |  | December
    31, 2015 |           
|--------------------------------------------------------------------------------------------------------------- |  | --------------------- | ----------
|Investment
    Type                                                                                             |  | Fair
    Value        |           
|Level 3 Portfolio Company Investments:
    Preferred Stock                                                      |  | $                     | 32,976,000
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|Level 3 Portfolio
    Company Investments: Preferred Stock Warrants                                             |  | $                     | 420,000   
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|Level 3 Portfolio Company Investments: Common
    Stock                                                         |  | $                     | 80,000    
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|Level 3 Portfolio
    Company Investments: Subordinated Convertible Bridge Notes and Subordinated Secured Notes |  | $                     | 651,759   
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|Level 3 Funds Held in Escrow From Sale of Investment                                                            |  | $                     | 688,082   
|                                                                                                                |  |                       |           



| | (1) | The
                                         significant unobservable inputs that may be used in the fair value measurement of the
                                         Company’s portfolio company investments in convertible preferred stock, common
                                         stock and warrants to purchase common or preferred stock for which market quotations
                                         are not readily available include: (i) revenue multiples for comparable transactions,
                                         (ii) revenue, earnings before interest, taxes, depreciation and amortization, and price
                                         to earnings multiples (collectively, "Multiples") for comparable public companies,
                                         (iii) discount rates and terminal year Multiples for comparable public companies applied
                                         in a discounted cash flow analysis of the portfolio company; and (iv) a discount for
                                         lack of marketability ("DLOM"). For some portfolio company investments, additional
                                         consideration may be given to data from a prior or contemporaneous financing transaction,
                                         the last round of financing or a merger or acquisition event near the measurement date
                                         (collectively, a "Precedent Transaction"). Inputs used in deriving an appropriate
                                         DLOM include the time frame in which the portfolio company expects to pursue or complete
                                         an IPO or sale/merger and, where put option models are used to estimate the price of
                                         a plain-vanilla, at-the-money put option and the price of an average-strike put option,
                                         inputs may include a range of term and volatility assumptions. A change in the assumptions
                                         used for Precedent Transactions and Multiples may indicate a directionally similar change
                                         in the fair value of the Company’s portfolio company investments in convertible
                                         preferred stock or common stock, while a change in the assumptions used for discount
                                         rate and DLOM may indicate a directionally opposite change in the fair value of the portfolio
                                         company investment.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| |  | Additional inputs used in the option pricing model include the volatility of equity in
                                                                           comparable public companies, the risk free interest rate and the estimated time to exit. The significant unobservable input
                                                                           used in the option pricing model for valuing certain of the Company’s portfolio company investments in
                                                                           convertible preferred stock, common stock and preferred and common stock warrants for which market quotations are not readily
                                                                           available is the volatility of equity in comparable public companies. A change in the assumption used for equity volatility
                                                                           may indicate a directionally similar change in the fair value of the convertible preferred stock, common stock and preferred
                                                                           and common stock warrant investments.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-22







Crossroads Capital, Inc.

Notes to Financial Statements



| |  | Since the Company has invested in convertible debt investments, principally convertible
                                                                           bridge notes, for the primary purpose of potential conversion into equity at a future date, the significant unobservable
                                                                           inputs that may be used in the fair value measurement of its convertible debt investments on an as-converted to equity basis
                                                                           are the same inputs used by the Company to value its equity securities (including convertible preferred stock). An
                                                                           option pricing model valuation technique may also be used to derive the fair value of the conversion feature of convertible
                                                                           notes. If the Company determines that there is a low likelihood that its convertible debt investments will be converted into
                                                                           equity or repaid the significant unobservable inputs that may be used in the fair value measurement of the Company’s
                                                                           convertible debt investments are hypothetical market yields and premiums/(discounts). For non-convertible debt investments,
                                                                           which the Company generally holds for cash payment at maturity, the significant unobservable inputs that may be used in the
                                                                           fair value measurement of the Company’s non-convertible debt are hypothetical market yields and premiums/(discounts).
                                                                           The hypothetical market yield is defined as the exit price of an investment in a hypothetical market to hypothetical market
                                                                           participants where buyers and sellers are willing participants. The premiums (discounts) relate to company specific
                                                                           characteristics such as underlying investment performance, collateral, and other characteristics of the investment. In
                                                                           certain investments, the Company may value its convertible and non-convertible debt investments using a liquidation approach
                                                                           in which case the realizable value of the collateral would be a significant unobservable input.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Funds held in escrow from the sale of investments are valued using certain indemnity risk and
                                                                           deferred payment discounts applied to the amounts withheld.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Weighted
                                         average based on fair value as of December 31, 2015.
| | --- | ------------------------------------------------------------------------------------------------------



|                                                                                                                |  | December
    31, 2014 |           
|--------------------------------------------------------------------------------------------------------------- |  | --------------------- | ----------
|Investment Type                                                                                                 |  | Fair
    Value        |           
|Level 3 Portfolio Company Investments: Preferred Stock                                                          |  | $                     | 43,060,000
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|Level 3 Portfolio Company Investments:
    Preferred Stock Warrants                                             |  | $                     | 340,000   
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|Level 3 Portfolio Company Investments: Common Stock                                                             |  | $                     | 160,000   
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|Level 3 Portfolio Company Investments:
    Subordinated Convertible Bridge Notes and Subordinated Secured Notes |  | $                     | 559,202   
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|                                                                                                                |  |                       |           
|Level 3 Funds Held in Escrow From Sale of Investment                                                            |  | $                     | 709,568   
|                                                                                                                |  |                       |           



| | (1) | The
                                         significant unobservable inputs that may be used in the fair value measurement of the
                                         Company’s portfolio company investments in convertible preferred stock, common
                                         stock and warrants to purchase common or preferred stock for which market quotations
                                         are not readily available include: (i) revenue multiples for comparable transactions,
                                         (ii) revenue, earnings before interest, taxes, depreciation and amortization, and price
                                         to earnings multiples (collectively, "Multiples") for comparable public companies,
                                         (iii) discount rates and terminal year Multiples for comparable public companies applied
                                         in a discounted cash flow analysis of the portfolio company; and (iv) a discount for
                                         lack of marketability ("DLOM"). For some portfolio company investments, additional
                                         consideration may be given to data from a prior or contemporaneous financing transaction,
                                         the last round of financing or a merger or acquisition event near the measurement date
                                         (collectively, a "Precedent Transaction"). Inputs used in deriving an appropriate
                                         DLOM include the time frame in which the portfolio company expects to pursue or complete
                                         an IPO or sale/merger and, where put option models are used to estimate the price of
                                         a plain-vanilla, at-the-money put option and the price of an average-strike put option,
                                         inputs may include a range of term and volatility assumptions. A change in the assumptions
                                         used for Precedent Transactions and Multiples may indicate a directionally similar change
                                         in the fair value of the Company’s portfolio company investments in convertible
                                         preferred stock or common stock, while a change in the assumptions used for discount
                                         rate and DLOM may indicate a directionally opposite change in the fair value of the portfolio
                                         company investment.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-23







Crossroads Capital, Inc.

Notes to Financial Statements



| |  | Additional inputs used in the option pricing model include the volatility of equity in
                                                                           comparable public companies, the risk free interest rate and the estimated time to exit. The significant unobservable input
                                                                           used in the option pricing model for valuing certain of the Company’s portfolio company investments in
                                                                           convertible preferred stock, common stock and preferred and common stock warrants for which market quotations are not readily
                                                                           available is the volatility of equity in comparable public companies. A change in the assumption used for equity volatility
                                                                           may indicate a directionally similar change in the fair value of the convertible preferred stock, common stock and preferred
                                                                           and common stock warrant investments.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| |  | Since the Company invests in convertible debt investments, principally convertible bridge
                                                                           notes, for the primary purpose of potential conversion into equity at a future date, the significant unobservable inputs that
                                                                           may be used in the fair value measurement of the Company’s convertible debt investments on an as-converted to equity
                                                                           basis are the same inputs used by the Company to value its equity securities (including convertible preferred stock).
                                                                           An option pricing model valuation technique may also be used to derive the fair value of the conversion feature of
                                                                           convertible notes. If the Company determines that there is a low likelihood that its convertible debt investments will be
                                                                           converted into equity or repaid the significant unobservable inputs that may be used in the fair value measurement of the
                                                                           Company’s convertible debt investments are hypothetical market yields and premiums/(discounts). For non-convertible
                                                                           debt investments which the Company generally holds for cash payment at maturity, the significant unobservable inputs that may
                                                                           be used in the fair value measurement of the Company’s non-convertible debt are hypothetical market yields and
                                                                           premiums/(discounts). The hypothetical market yield is defined as the exit price of an investment in a hypothetical market to
                                                                           hypothetical market participants where buyers and sellers are willing participants. The premiums (discounts) relate to
                                                                           company specific characteristics such as underlying investment performance, collateral, and other characteristics of the
                                                                           investment. In certain investments, the Company may value its convertible and non-convertible debt investments using a
                                                                           liquidation approach in which case the realizable value of the collateral would be a significant unobservable input.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| |  | Funds held in escrow from the sale of investments are valued using certain indemnity risk and
                                                                           deferred payment discounts applied to the amounts withheld.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (2) | Weighted average based on fair value as of December 31,
2014.
| | --- | -------------------------------------------------------------



As of December 31,
2015 and 2014, 70.8% and 60.5%, respectively, of the Company's gross assets represented portfolio company investments and Escrowed
Funds valued at fair value by the Company's Board of Directors.



Net Realized Gain (Loss) and Net
Change in Unrealized Appreciation (Depreciation)



The following table
summarizes the net realized gain (loss) and net change in unrealized appreciation (depreciation) for the years ended December 31,
2015, 2014 and 2013 for: (i) the Company’s portfolio company investments sold during the years ended December 31, 2015,
2014 and 2013 and (ii) the Company’s portfolio company investments and Escrowed Funds held as of December 31, 2015,
2014 and 2013.



F-24







Crossroads Capital, Inc.

Notes to Financial Statements



|                                                                |  | Years Ended             |           
|--------------------------------------------------------------- |  | ----------------------- | ----------
|                                                                |  | December 31, 2015       |           
|                                                                |  | Net RealizedGain (Loss) |           
|Portfolio Company Investments Sold During Period                |  |                         |           
|Corsair Components, Inc.                                        |  | $                       | —         
|LifeLock, Inc.                                                  |  |                         | —         
|Solazyme, Inc.                                                  |  |                         | —         
|Xtime, Inc.                                                     |  |                         | 13,930    
|TrueCar, Inc.                                                   |  |                         | —         
|Kabam, Inc.                                                     |  |                         | —         
|Millennial Media, Inc.                                          |  |                         | 10,864    
|Livescribe, Inc.                                                |  |                         | —         
|Stoke, Inc.                                                     |  |                         | —         
|Tremor Video, Inc.                                              |  |                         | (1,182,240
|Subtotal - Portfolio Company
    Investments Sold During Period |  |                         | (1,157,446
|Portfolio Company Investments Held at End of
    Period         |  |                         | —         
|Total Portfolio Company
    Investments                         |  |                         | (1,157,446
|Funds Held in Escrow from Sale of Investment                    |  |                         | —         
|Total Portfolio Company
    Financial Assets                    |  | $                       | (1,157,446



See the accompanying schedule of investments
for the fair value of the Company’s portfolio company investments. The methodology for the determination of the fair value
of the Company’s portfolio company investments is discussed in Note 2 - Summary of Significant Accounting Policies.



Note 4 - Related Party Agreements and
Transactions



Administrative Services



On November 10, 2015,
the Company’s Board of Directors approved the engagement of US Bancorp to provide administration and accounting services
to the Company pursuant to an Administration Servicing Agreement and a Fund Accounting Servicing Agreement, respectively. For
the year ended December 31, 2015, the Company incurred $11,114 of expenses related to US Bancorp. The Company did not engage
US Bancorp during the years ended December 31, 2014 and 2013, and, accordingly, did not incur any expenses related to US Bancorp
during these periods.



On November 13, 2015,
the Company’s Board of Directors approved the engagement of the Administrator to provide administrative consulting services
to the Company, including the provision of personnel to act as certain of the Company’s executive officers, including the
Chief Executive Officer and Chief Financial Officer, pursuant to an Administrator Consulting Agreement. For the year ended
December 31, 2015, the Company incurred $180,000 of Administrator expenses. The Company did not engage an administrator during
the years ended December 31, 2014 and 2013, and, accordingly, did not incur any administrator expenses during these periods.



The Administrator
furnishes the Company with equipment and clerical services, including responsibility for the financial records which it is required
to maintain, and preparing reports to the Company’s stockholders and reports filed with the SEC.  In addition,
the Administrator assists the Company in monitoring its portfolio accounting and bookkeeping, managing portfolio collections and
reporting, performing internal audit services, determining and publishing its net asset value, overseeing the preparation and
filing of its tax returns and the printing and dissemination of reports to its stockholders. In addition, the Administrator provides
support for the Company’s risk management efforts and generally overseeing the payment of its expenses and the performance
of administrative and professional services rendered to the Company by others.



F-25







Crossroads Capital, Inc.

Notes to Financial Statements



Former Investment Advisory and Administrative
Services Agreement



BDCA Venture Adviser,
LLC previously served as the Company’s investment adviser and also provided the Company with administrative services pursuant
to the Investment Advisory Agreement. On October 5, 2015, the Board of Directors approved the termination of the Investment Advisory
Agreement between the Company and BDCA Venture Adviser effective as of the Termination Date. The Investment Advisory Agreement,
which was entered into on July 1, 2014, was approved by the Company’s stockholders at the 2014 Annual Meeting of Stockholders
held on June 16, 2014. All payments due under the Investment Advisory Agreement as of the Termination Date were mutually agreed
upon between the Company and BDCA Venture Adviser and subsequently paid by the Company.



Under the Investment
Advisory Agreement, the Company paid BDCA Venture Adviser a fee for its investment advisory services consisting of two components:
(i) a base management fee and (ii) an incentive fee.



The base management
fee (the "Base Fee") was calculated at an annual rate of 2% of the Company’s gross assets, where gross assets
include any borrowings for investment purposes. The Base Fee was calculated based on the value of the Company’s gross assets
at the end of the most recently completed calendar quarter and adjusted for any equity capital raises or repurchases during the
current calendar quarter. The Company paid the Base Fee through the Termination Date at which time BDCA Venture Adviser’s
obligation to provide services to the Company ended. As of December 31, 2015 and December 31, 2014, the Company had
Base Fees payable to BDCA Venture Adviser of $0 and $354,633, respectively. During the years ended December 31, 2015, 2014
and 2013, the Company incurred Base Fees of $1,232,563, $1,568,964 and $1,462,495, respectively.



The incentive fee
was determined and payable in arrears as of the end of each calendar year (or upon the termination of the Investment Advisory
Agreement, as of the termination date), and equaled 20% of the Company’s realized capital gains, if any, on a cumulative
basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital
depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fees. For purposes of calculating
the incentive fee, realized capital gains and losses include both short-term and long-term capital gains and losses. The incentive
fee actually payable to BDCA Venture Adviser was consistent with the Investment Advisers Act of 1940. Under the Investment Advisory
Agreement, BDCA Venture Adviser was not entitled to an incentive fee on investment income generated from interest or dividends
on the Company's portfolio company investments.



BDCA Venture Adviser
earned an incentive fee of $635,241 during the year ended December 31, 2014. This earned incentive fee for the 2014 year
was due and payable to BDCA Venture Adviser as of December 31, 2014 and was paid by the Company in March 2015. For the year ended
December 31, 2015, BDCA Venture Adviser did not earn any incentive fees with respect to the 2015 year.



For accounting purposes
only, the Company was required under U.S. GAAP to accrue a theoretical incentive fee based upon unrealized appreciation at the
end of each period while the Investment Advisory Agreement was in effect. The accrual of this theoretical incentive fee assumed
all unrealized balances were realized in order to reflect an incentive fee that would theoretically have been payable to BDCA
Venture Adviser. No incentive fee was due and payable to BDCA Venture Adviser as of the Termination Date, and, accordingly, the
accrued incentive fee payable to BDCA Venture Adviser as of September 30, 2015 was reversed as of the Termination Date. As of
December 31, 2015 and December 31, 2014, the Company had a theoretical incentive fee payable of $0 and $2,130,443, respectively.
During the years ended December 31, 2015 and 2014, the Company recorded a reduction of theoretical incentive fees of $2,130,443
and $86,445 respectively.



The Company also
reimbursed BDCA Venture Adviser for the allocable portion of overhead and other expenses incurred by BDCA Venture Adviser in performing
its administrative obligations under the Investment Advisory Agreement, including the allocable portion of compensation of the
Company’s Chief Financial Officer and Chief Compliance Officer, and their respective staff. The Company reimbursed BDCA
Venture Adviser for allocable administrative expenses through the Termination Date at which time BDCA Venture Adviser’s
obligation to provide services to the Company ended. As of December 31, 2015 and 2014, the Company had administrative expenses
payable to BDCA Venture Adviser of $0 and $113,596, respectively. For the years ended December 31, 2015, 2014 and 2013, the
Company incurred $423,628, $570,074 and $651,811 of administrative expenses allocated from BDCA Venture Adviser, respectively.



F-26







Crossroads Capital, Inc.

Notes to Financial Statements



BDCA Venture Adviser
agreed that, to the extent that the Company's Adjusted Operating Expenses (as defined below) in 2015 exceeded $1,500,000 (the
“Excess Amount”), BDCA Venture Adviser would, without recourse against or reimbursement by the Company, waive Reimbursable
Expenses (as defined below) due and owing by the Company and/or pay on behalf of the Company certain Adjusted Operating Expenses,
in such amounts so that the total of the waived Reimbursable Expenses and expenses paid by BDCA Venture Adviser on behalf of the
Company equaled the Excess Amount. "Adjusted Operating Expenses" was defined as the Company's total operating expenses
less Base Fees, incentive fees, any stock issuance costs, any costs related to borrowings by the Company (including any interest
and fees), any litigation costs, expenses or fees and any extraordinary expenses. For purposes of clarity, any operating expenses
incurred by BDCA Venture Adviser and reimbursable by the Company with respect to 2015 (“Reimbursable Expenses”) are
included in Adjusted Operating Expenses.



For accounting purposes,
during the year ended December 31, 2015, the Company recorded quarterly amounts due from BDCA Venture Adviser, representing the
amount by which its Adjusted Operating Expenses for each quarter exceeded the prorated amount of the annualized $1,500,000 Adjusted
Operating Expense threshold for such quarter. In connection with the termination of the Investment Adviser Agreement, the Excess
Amount and Adjusted Operating Expenses were calculated based on the eleven month period ended November 30, 2015. There were no
expenses waived or reimbursed from BDCA Venture Adviser as of the Termination Date, and, accordingly, the amount due from BDCA
Venture Adviser as of September 30, 2015 was reversed as of the Termination Date. No such agreement existed for the year ended
December 31, 2014.



Services Provided by Related Parties



RCS Advisory Services,
LLC ("RCS Advisory"), an affiliated entity of BDCA Venture Adviser, provided the Company with legal services, website
design and maintenance, and investor relations services. RCS Advisory no longer provides the Company with services in connection
with the termination of the Investment Advisory Agreement effective as of the Termination Date.



For the year ended
December 31, 2015, the Company incurred $1,755 of legal services, $1,733 of website design and maintenance and $17,955 of
investor relations services provided by RCS Advisory. For the year ended December 31, 2014, the Company incurred $75,119 of legal
services, $26,375 of website design and maintenance and $20,000 of investor relations services provided by RCS Advisory. As of
December 31, 2015 and 2014, the Company had $0 and $66,065, respectively, payable to RCS Advisory.



Joint Liability Insurance Agreement



On August 28, 2015,
the Company entered into a joint liability insurance agreement with BDCA Venture Adviser which allocates the premium cost of the
Company's directors and officers liability insurance policy (the "D&O Policy") and the Company's excess coverage
policy (the "Excess Policy") between the Company and BDCA Venture Adviser. The D&O Policy covers the Company's directors
and officers, insures the Company against loss that it may be required or permitted to pay as indemnities of the Company's directors
and officers, and insures the Company for certain securities claims. The Company also maintains an Excess Policy which provides
for excess coverage to the Company's officers and directors in the case of non-indemnifiable claims. The coverages under the D&O
Policy and the Excess Policy in certain cases extend to the officers, managers and employees of BDCA Venture Adviser. For the
policy year ending August 28, 2016, 10% of the total D&O Policy premium and 10% of the total Excess Policy premium has been
allocated to and paid by BDCA Venture Adviser.



Other Transactions with Related Parties



On March 25, 2016,
the Audit Committee of the Company’s Board of Directors approved the reimbursement of $125,157 in legal and proxy solicitation
costs incurred by Bulldog Investors, LLC (“Bulldog”), a stockholder and beneficial owner of more than 5% of the Company’s
outstanding common stock, as a result of the contested proxy campaign in connection with the Company’s 2015 Annual Meeting.
This reimbursement includes the costs of Bulldog’s litigation against the Company in the Circuit Court of Maryland and the
New York Supreme Court and costs associated with the proxy process and the election of the Company’s new Board of Directors.
See Note 15 – Subsequent Events.



The Audit Committee
of the Company’s Board of Directors is required to review and approve any transactions with related parties (as such term
is defined in Item 404 of Regulation S-K).



F-27







Crossroads Capital, Inc.

Notes to Financial Statements



Note 5 - Equity Offerings and Related
Costs



During the year ended
December 31, 2015, the Company did not issue any new shares of its common stock.



During the year ended
December 31, 2014, the Company issued 374,069 shares of its common stock to its stockholders as part of its distributions
declared for the first, second and third quarters of 2014. See Note 8 - Dividends and Distributions.



Note 6 - Short-term Borrowing



On July 24, 2014,
the Company entered into a margin account agreement with National Financial Services, LLC ("NFS"). To maintain its status
as a RIC for tax purposes, the Company purchased $20 million of short-term U.S. Treasury bills ("T-Bills") on September
24, 2014. The Company financed the purchase of these T-Bills using $600,000 in cash and the proceeds from a $19.4 million short-term
borrowing financed through the margin account agreement with NFS. The short-term borrowing had an effective annual interest rate
of approximately 2.5%. The $20 million of T-Bills were pledged as collateral for the short-term borrowing. On October 3, 2014,
the Company sold the T-Bills for a realized loss of $94 and repaid the short-term borrowing in full together with accrued interest.
The Company had no short-term borrowing for the year ended December 31, 2015. The Company incurred interest expense of $14,819
associated with the short-term borrowing for the year ended December 31, 2014.



Note 7 - Stock Repurchases



On September 22,
2014, the Company's Board of Directors authorized a stock repurchase program of up to $5 million. This stock repurchase program
expired on September 22, 2015, without being extended by the Board of Directors.



During the year ended
December 31, 2015, the Company repurchased 117,510 shares of its common stock at an average price of $4.96 per share, including
commissions, for a total cost of $582,468. The Company retired all 117,510 shares of its repurchased common stock during the year
ended December 31, 2015, with $118 of the total cost of the retired shares charged to common stock and $582,350 charged to
additional paid-in capital. The Company's net asset value per share increased by $0.02 per share as a result of the shares repurchased
during the year ended December 31, 2015. The weighted average discount to net asset value per share of the shares repurchased
during the year ended December 31, 2015 was 24%.



During the year ended
December 31, 2014, the Company repurchased 128,977 shares of its common stock at an average price of $5.16 per share, including
commissions, for a total cost of $665,998. The Company’s net asset value per share increased by $0.03 per share as a result
of the share repurchases during the year ended December 31, 2014. The weighted average discount to net asset value per share
of the shares repurchased during the year ended December 31, 2014 was 25%.



Effective as of December 31,
2014, the Company retired all 577,418 shares of its common stock that were held in treasury at its transfer agent prior to being
retired. The cumulative cost of the treasury shares retired, $3,628,592, was charged to common stock, $577, and additional paid-in
capital, $3,628,015, as of December 31, 2014.



On November 10, 2015,
the Board of Directors authorized a stock repurchase program of up to $1 million for a six month period to expire on May 10, 2016.
On January 20, 2016, the Board of Directors approved an amendment to this stock repurchase program to allow for greater flexibility,
by narrowing the current “blackout” period during which the Company is prohibited from purchasing shares, and increasing
the size of the program from $1 million to $2 million. Under the repurchase program, the Company is authorized to repurchase shares
of its common stock in open market transactions, including through block purchases, depending on prevailing market conditions
and other factors. This stock repurchase program may be extended, modified or discontinued at any time for any reason. Furthermore,
the repurchase program does not obligate the Company to acquire any specific number of shares and all repurchases will be made
in accordance with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases.



Since December 31,
2015, the Company has repurchased 6,408 shares of its common stock at an average price of $2.12 per share, including commissions,
with a total cost of $13,608. See Note 15 – Subsequent Events.



The Company accounted
for the repurchases of its common stock under the cost method based on the actual cost of the repurchases.



F-28







Crossroads Capital, Inc.

Notes to Financial Statements



Note 8 - Dividends and Distributions



Distributions to
the Company’s stockholders are payable only when and as declared by the Company’s Board of Directors and are paid
out of assets legally available for distribution.



The following table
summarizes the Company’s dividends declared for the years ended December 31, 2015, 2014 and 2013:



|Date Declared          |  | Record Date        |  | Payment Date       |  | Dividend Per Share |      |     | Source of Distribution
|---------------------- |  | ------------------ |  | ------------------ |  | ------------------ | ---- | --- | ----------------------
|2015 Dividends:        |  |                    |  |                    |  |                    |      |     |                       
|March 26, 2015         |  | April 15, 2015     |  | April 29, 2015     |  | $                  | 0.15 |     |                       
|March 26, 2015         |  | June 11, 2015      |  | June 25, 2015      |  |                    | 0.15 |     |                       
|March 26, 2015         |  | September 11, 2015 |  | September 25, 2015 |  |                    | 0.15 |     |                       
|March 26, 2015         |  | December 4, 2015   |  | December 18, 2015  |  |                    | 0.15 |     |                       
|Total – 2015 Dividends |  |                    |  |                    |  |                    | 0.60 |     |                       
|2014 Dividends:        |  |                    |  |                    |  |                    |      |     |                       
|February 20, 2014      |  | March 6, 2014      |  | April 14, 2014     |  |                    | 0.10 | (1) |                       
|February 20, 2014      |  | May 8, 2014        |  | June 17, 2014      |  |                    | 0.10 | (1) |                       
|February 20, 2014      |  | August 11, 2014    |  | September 18, 2014 |  |                    | 0.10 | (1) |                       
|December 12, 2014      |  | December 31, 2014  |  | January 13, 2015   |  |                    | 0.40 |     |                       
|Total - 2014 Dividends |  |                    |  |                    |  |                    | 0.70 |     |                       
|2013 Dividends:        |  |                    |  |                    |  |                    |      |     |                       
|May 28, 2013           |  | June 14, 2013      |  | June 26, 2013      |  |                    | 0.24 |     |                       
|May 28, 2013           |  | September 13, 2013 |  | September 25, 2013 |  |                    | 0.24 |     |                       
|December 19, 2013      |  | December 30, 2013  |  | January 13, 2014   |  |                    | 0.01 |     |                       
|Total - 2013 Dividends |  |                    |  |                    |  |                    | 0.49 |     |                       



| | (1) | This
                                         dividend was paid in cash and shares of the Company's common stock.
| | --- | -----------------------------------------------------------------------------------------------------------------



| | (2) | Although
                                         the dividend of $0.40 per share was paid on January 13, 2015, this dividend was taxable
                                         to stockholders as if paid in 2014. For income and excise tax purposes, this dividend
                                         was eligible for the dividends paid deduction by the Company in 2014.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Although
                                         the dividend of $0.01 per share was paid on January 13, 2014, this dividend was taxable
                                         to stockholders as if paid in 2013. For income and excise tax purposes, this dividend
                                         was eligible for the dividends paid deduction by the Company in 2013.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On March 26, 2015,
the Company’s Board of Directors declared cash dividends of $0.15 per share, which were paid on April 29, 2015, June 25,
2015, September 25, 2015 and December 18, 2015, to common stockholders of record on April 15, 2015, June 11, 2015, September 11,
2015 and December 4, 2015, respectively. A total of approximately $5.8 million was paid to the Company's stockholders in connection
with the April 29, 2015, June 25, 2015, September 25, 2015 and December 18, 2015 distributions.



On February 20,
2014, the Company’s Board of Directors declared a dividend of $0.10 per share payable on April 14, 2014, June 17, 2014 and
September 18, 2014, to common stockholders of record on March 6, 2014, May 8, 2014 and August 11, 2014, respectively. Stockholders
had the option to receive payment of these dividends in cash or in shares of the Company’s common stock, provided that the
aggregate cash payable to all stockholders for each dividend was limited to 25% of the aggregate dividend amount. Based on stockholder
elections, the April 14, 2014 dividend consisted of $238,722 in cash and 119,157 shares of common stock, the June 17,
2014 dividend consisted of $241,701 in cash and 118,542 shares of common stock, and the September 18, 2014 dividend consisted
of $244,665 in cash and 136,370 shares of common stock.



On December 12, 2014,
the Company's Board of Directors declared a special fourth quarter dividend of $0.396 per share payable to stockholders of record
on December 31, 2014 which was paid 100% in cash on January 13, 2015. With this special fourth quarter dividend, the Company distributed
100% of its $6.8 million in net gains realized in 2014.



The Company generally
pays distributions to its stockholders out of assets legally available for distribution, as determined by the Board of Directors,
with the intention of distributing 100% of the Company's net realized capital gains annually.



F-29







Crossroads Capital, Inc.

Notes to Financial Statements



On March 25, 2016,
the Company’s Board of Directors adopted a distribution policy with the objective to make special distributions to stockholders
as declared by the Board of Directors in its discretion. Based on the Board of Directors’ recent change to the Company’s
investment objective to preserve capital and maximize stockholder value and resolution to monetize the Company’s portfolio
holdings at the earliest practicable date, the Company will no longer pay regular quarterly distributions to its stockholders.



Under the Company's former distribution policy, the Company intended to pay quarterly regular distributions (the "Regular
Distributions") to its stockholders in an amount determined and declared by the Board of Directors in the first quarter of
each year. The Regular Distributions were intended to provide a minimum level of distributions to the Company's stockholders each
year until the Company was generating sufficient net investment income under its former debt-focused investment strategy. To the
extent the Company's net realized capital gains exceeded the aggregate amount of the Regular Distributions for a year, the Board
of Directors also intended to declare a special distribution (the "Special Distribution") in December of each year so
that the total distributions for the year represented at least 100% of the Company's net realized capital gains. The Board of
Directors may have adjusted the amount of the Regular and Special Distributions it paid each year based on factors that it deems
relevant from time to time including, without limitation, the Company's financial condition, cash availability, maintenance of
RIC status, corporate-level income and excise tax planning and compliance with applicable BDC regulations.



If the Company’s
distributions for any year exceed the Company's net investment income and net realized capital gains, the difference will be distributed
from the Company's capital and will constitute a return of capital to its stockholders.



In the event the
Company retains some or all of its realized net capital gains, the Company may designate the retained amount as a deemed distribution
to stockholders. In such case, among other consequences, the Company will pay corporate-level tax on the retained amount, each
U.S. stockholder will be required to include its share of the deemed distribution in income as if it had been actually distributed
to the U.S. stockholder and the U.S. stockholder will be entitled to claim a credit or refund equal to its allocable share of
the corporate-level tax the Company pays on the retained realized net capital gain.



For income tax purposes,
distributions paid to stockholders are reported as ordinary income, return of capital, long-term capital gains or a combination
thereof.



The Company maintains
a dividend reinvestment plan ("DRIP") that provides for the reinvestment of dividends on behalf of its stockholders,
unless a stockholder has elected to receive dividends in cash. As a result, if the Company declares a dividend, stockholders who
have not "opted out" of the DRIP by the dividend record date will have their dividend automatically reinvested into
additional shares of common stock. Although the Company has a number of options to satisfy the share requirements of the DRIP,
it currently expects that the shares required to be purchased under the DRIP will be acquired through open market purchases of
common stock by the DRIP administrator. The shares purchased in the open market to satisfy the DRIP requirements will be valued
based upon the average price of the applicable shares purchased by the DRIP administrator.



Note 9 - Commitments and Contingencies



In the normal course
of business, the Company may enter into investment agreements under which it commits to make an investment in a portfolio company
at some future date or over a specified period of time. As of December 31, 2015, the Company had not entered into any investment
agreements which required it to make a future investment in a portfolio company.



On October 15, 2015,
Suniva completed a stock-for-stock merger transaction with SFCE. Pursuant to the merger agreement, the Company is required to
indemnify SFCE for certain breaches of warranties and representations made to SFCE, subject to a cap of approximately 12.5% of
the merger consideration received by the Company. Any damages payable by the Company would be settled through an adjustment to
the number of shares of common stock in the surviving company held by the Company and/or SFCE.



F-30







Crossroads Capital, Inc.

Notes to Financial Statements



On November 18, 2014,
Xtime, Inc., a private portfolio company, completed an all-cash merger transaction with Cox Automotive, Inc. At the closing of
the merger, the Company was required to set aside $809,311 in escrow as partial security for potential stockholder indemnification
obligations under the merger agreement. The $809,311 represents additional cash proceeds that may be released to the Company at
a later date subject to potential indemnity claims. On January 13, 2015, Escrowed Funds totaling $105,210 were released to the
Company from the Xtime escrow without any offset for indemnity claims. On January 15, 2016, Escrowed Funds totaling $606,983 were
released to the Company from the Xtime escrow without any offset for indemnity claims. The remaining Escrowed Funds are anticipated
to be released in November 2017, net of settlement of any indemnity claims. As of December 31, 2015, the Escrowed Funds were
fair valued at $688,082. Although recovery under the stockholder indemnity obligation is generally limited to the escrow fund,
the Company may be liable for its pro rata amount of any damages for certain types of indemnity claims not to exceed the cash
consideration received by the Company, provided, however, in the case of the Company's fraud or intentional misrepresentation,
there is no limitation on liability. Except as discussed above, the Company has not been notified of any stockholder indemnity
claims. See Note 15 – Subsequent Events.



On November 6, 2013,
the Company exchanged its preferred stock interests in Jumptap, Inc. for shares of common stock in Millennial Media, Inc., a publicly
traded company, pursuant to a merger transaction. As part of the merger agreement, the Company, together with other participating
stockholders of Jumptap, agreed to indemnify Millennial Media for inaccuracies in any representations or warranties made by Jumptap,
any breach by Jumptap of any covenants or agreements, and certain other claims. Participating stockholders, including the Company,
were required to set aside in escrow shares of Millennial Media for the one-year period following the closing as partial security
for potential stockholder indemnification obligations. The Company set aside 135,194 shares of Millennial Media as part of this
escrow fund. In November 2014, 118,048 shares were released from the indemnity escrow and sold by the Company. As of December
31, 2014, the Company wrote off its remaining 17,146 shares of Millennial Media common stock that continued to be held in escrow
based on indemnity claims made against such escrowed shares. On January 6, 2015, 12,629 shares of the Company's Millennial Media
common stock were used for the payment of stockholder indemnity claims and 3,986 shares of Millennial Media common stock were
released to the Company from the indemnity escrow. On February 26, 2015, the Company sold these released shares resulting in a
net realized gain of $6,178. On June 12, 2015, 156 shares of the Company's Millennial Media common stock were released from escrow
to pay stockholder indemnity claims. On December 24, 2015, the Company received $4,686 in additional proceeds based on a final
escrow release.



The Company maintains
a D&O Policy and an Excess Policy, which provide liability insurance coverage for its officers and directors. The Company
has also agreed to indemnify its directors and officers to the maximum extent permitted by Maryland law subject to the restrictions
in the 1940 Act.



Under the former
Investment Advisory Agreement, absent the willful misfeasance, bad faith or gross negligence of BDCA Venture Adviser or BDCA Venture
Adviser’s reckless disregard of its duties and obligations, the Company has agreed to indemnify BDCA Venture Adviser (including
its officers, managers, agents, employees and members) for any damages, liabilities, costs and expenses (including reasonable
attorneys’ fees and amounts reasonably paid in settlement) arising out of BDCA Venture Adviser’s performance of its
duties and obligations under the Investment Advisory Agreement, except to the extent specified in the 1940 Act. Pursuant to the
former Investment Advisory Agreement, the indemnification provision shall remain in full force and effect, and BDCA Venture Adviser
shall remain entitled to the benefits thereof, notwithstanding any termination of the Investment Advisory Agreement.



As of December 31,
2015, the Company was not a party to any material legal proceedings. However, from time to time, the Company may be party to certain
legal proceedings incidental to the normal course of its business including the enforcement of its rights under contracts with
its portfolio companies.



Note 10 - Changes in Net Assets Per
Share



The following table
sets forth the computation of the basic and diluted per share net increase (decrease) in net assets resulting from operations
for the years ended December 31, 2015, 2014 and 2013:



|                                                                                                |  | Years Ended       |            
|----------------------------------------------------------------------------------------------- |  | ----------------- | -----------
|                                                                                                |  | December 31, 2015 |            
|Net increase (decrease) in net assets resulting from operations                                 |  | $                 | (11,499,140
|Basic and diluted weighted-average shares outstanding                                           |  |                   | 9,739,237  
|Basic and diluted net (decrease) increase in net assets per share resulting
    from operations |  | $                 | (1.18      



During the years
ended December 31, 2015, 2014 and 2013, the Company had no dilutive securities outstanding.



F-31







Crossroads Capital, Inc.

Notes to Financial Statements



Note 11 - Financial Highlights



The following is a schedule of financial
highlights for the years ended December 31, 2015, 2014, 2013, 2012, and 2011.



|                                                                                                                           |  | Years
    Ended      |           
|-------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ----------
|                                                                                                                           |  | December
    31,2015 |           
|Per common share data                                                                                                      |  |                      |           
|Net asset value, beginning of period                                                                                       |  | $                    | 6.82      
|                                                                                                                           |  |                      |           
|Net investment loss (1)(2)                                                                                                 |  |                      | (0.13     
|Net realized gain (loss) on investments (1)                                                                                |  |                      | (0.12     
|Net increase (decrease)
    in unrealized appreciation on investments and funds held in escrow from sale of investment (1) |  |                      | (0.93     
|Net increase (decrease)
    in net assets resulting from operations                                                        |  |                      | (1.18     
|                                                                                                                           |  |                      |           
|Stockholder distributions:                                                                                                 |  |                      |           
|Distributions from net realized gains                                                                                      |  |                      | —         
|Distributions as a return
    of capital (1)                                                                               |  |                      | (0.60     
|Net decrease in net
    assets resulting from stockholder distributions                                                    |  |                      | (0.60     
|                                                                                                                           |  |                      |           
|Capital stock transactions:                                                                                                |  |                      |           
|Issuance of common stock(3)                                                                                                |  |                      | —         
|Offering costs from issuance of common stock
    (1)                                                                       |  |                      | —         
|Amortization of deferred offering costs (1)                                                                                |  |                      | —         
|Repurchases of common
    stock (4)                                                                                        |  |                      | 0.02      
|Net increase (decrease)
    in net assets from capital stock transactions                                                  |  |                      | 0.02      
|                                                                                                                           |  |                      |           
|Net asset value, end of period                                                                                             |  | $                    | 5.06      
|                                                                                                                           |  |                      |           
|Ratios and supplemental data:                                                                                              |  |                      |           
|Per share market price, end of period                                                                                      |  | $                    | 3.21      
|Total return based on change in net asset
    value (5)                                                                    |  |                      | (18.49    
|Total return based on stock price (6)                                                                                      |  |                      | (24.96    
|Common shares outstanding, end of period                                                                                   |  |                      | 9,676,484 
|Weighted average common shares outstanding during period                                                                   |  |                      | 9,739,237 
|Net assets, end of period                                                                                                  |  | $                    | 48,915,059
|Ratio of operating expenses to average net
    assets (7)                                                                  |  |                      | 2.25      
|Ratio of net investment loss to average net
    assets (7)                                                                 |  |                      | (2.17     
|Weighted average debt per common share (8)                                                                                 |  | $                    | —         
|Portfolio turnover (9)                                                                                                     |  |                      | 1.42      



| | (1) | Based
                                         on weighted average shares outstanding during the period. For purposes of this presentation,
                                         the per share amount attributable to net increase (decrease) in unrealized appreciation
                                         on investments and funds held in escrow from sale of investment for the years ended December 31,
                                         2014 and 2013 was decreased by $0.01 per share to $(0.42) and $0.35, respectively, to
                                         reconcile the net increase (decrease) in net assets resulting from operations per share
                                         to the other per share information presented.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | For
                                         the year ended December 31, 2014, net investment loss per share excluding the waiver
                                         of base management fee expense by BDCA Venture Adviser equaled $0.39. There was no waiver
                                         of base management fee expense by BDCA Venture Adviser for the years ended December 31,
                                         2015, 2013, 2012, and 2011. See Note 4 – Related Party Agreements and Transactions.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Issuance
                                         of common stock for the year ended December 31, 2014 is based on the payment of the Company’s
                                         distributions made in shares of the Company's common stock during the period and represents
                                         the dilutive effect of issuing common stock below net asset value per share during the
                                         period. However, for purposes of this presentation, the per share amount attributable
                                         to the dilutive effect of issuing common stock below net asset value per share was reduced
                                         from $(0.07) per share to $(0.06) per share to reconcile the change in net asset value
                                         per share to the other per share information presented. Issuance of common stock for
                                         the year ended December 31, 2013 is based on the change in net asset value attributable
                                         to the rights offering on December 17, 2013. Issuance of common stock for the year ended
                                         December 31, 2011 is based on the average increase in net asset value attributable to
                                         each share issued in the Company's continuous public offering during such period.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-32







Crossroads Capital, Inc.

Notes to Financial Statements



| | (4) | Represents
                                         the increase in net asset value attributable to repurchases of common stock during the
                                         period. The increase in net asset value per share attributable to repurchases of common
                                         stock for the year ended December 31, 2013 was $0.05 per share. However, for purposes
                                         of this presentation, the per share amount attributable to purchases of common stock
                                         was increased by $0.03 per share to a total of $0.08 per share to reconcile the change
                                         in net asset value per share to the other per share information presented.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Total
                                         return based on change in net asset value equals the change in the market price of the
                                         Company's shares taking into account distributions reinvested in accordance with the
                                         Company's dividend reinvestment plan, or lacking such plan, at the lesser of net asset
                                         value or market price per share on the dividend distribution date.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | For
                                         the years ended December 31, 2015, 2014, 2013 and 2012, total return based on stock
                                         price is calculated based on the change in the market price of the Company's shares taking
                                         into account distributions reinvested in accordance with the Company's dividend reinvestment
                                         plan, or lacking such plan, at the lesser of net asset value or market price per share
                                         on the dividend distribution date. For the year ended December 31, 2011, the total
                                         return based on stock price equals the change in the end of the period market price plus
                                         distributions over $9.96 per share (the average selling price in the Company's continuous
                                         public offering which concluded on June 30, 2011), divided by $9.96 per share (which
                                         return has not been annualized and includes the February 2011 distribution).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | Because
                                         the ratios are calculated for the Company’s common stock taken as a whole, an individual
                                         investor’s ratios may vary from these ratios. For the year ended December 31,
                                         2014, the ratios of operating expenses and net investment loss to average net assets
                                         excluding the waiver of base management fee expense by BDCA Venture Adviser were 5.50%
                                         and (5.40%), respectively. There was no waiver of base management fee expense by BDCA
                                         Venture Adviser for the years ended December 31, 2015, 2013, 2012, and 2011. See
                                         Note 4 – Related Party Agreements and Transactions.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | For
                                         the year ended December 31, 2014, weighted average debt per common share is calculated
                                         as the weighted average debt during the period divided by the weighted average shares
                                         outstanding during the period. During the years ended December 31, 2015, 2013, 2012,
                                         and 2011, the Company did not have any debt.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (9) | For
                                         the years ended December 31, 2015, 2014, 2013 and 2012, portfolio turnover is calculated
                                         as net proceeds from the sale of portfolio company investments during the period divided
                                         by average net assets during the period. Since there were no sales of portfolio company
                                         investments during the year ended December 31, 2011, there was no portfolio turnover.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Note 12 - Income Taxes



The Company did not
have any net realized capital gains for the year ended December 31, 2015. The Company distributed 100% of its net realized capital
gains for the years ended December 31, 2014 and 2013. Therefore, no corporate-level federal income or excise taxes were due
on such net realized capital gains and, as such, the Company did not make any provision for federal income or excise taxes as
of December 31, 2015, 2014 and 2013.



The following table
reconciles the Company's net (decrease) increase in net assets resulting from operations for the years ended December 31,
2015, 2014 and 2013 to the Company's ordinary loss for tax purposes for such years. As a RIC, the Company's ordinary loss for
tax purposes cannot be carried forward to subsequent years and therefore no deferred tax asset has been recorded in relation to
the ordinary loss for tax purposes. For book purposes, the ordinary loss for tax purposes (excluding the permanent book-to-tax
difference) is reclassified to additional paid-in capital at year-end.



|                                                                                 |  | For the Year Ended |            
|-------------------------------------------------------------------------------- |  | ------------------ | -----------
|                                                                                 |  | December 31, 2015  |            
|Net (decrease) increase in net assets resulting from operations (per U.S. GAAP)  |  | $                  | (11,499,140
|Change in net unrealized appreciation                                            |  |                    | 9,051,699  
|Net capital (gain) loss                                                          |  |                    | 1,157,446  
|Net investment loss (per GAAP)                                                   |  | $                  | (1,289,995 
|Permanent book-to-tax differences                                                |  |                    | 220        
|Temporary book-to-tax difference (theoretical incentive fees)                    |  |                    | (2,130,443 
|Ordinary loss for tax purposes                                                   |  | $                  | (3,420,218 
|Less: Permanent book-to-tax differences                                          |  |                    | 220        
|Ordinary loss for tax purposes reclassified
    to additional paid-in capital(1) |  | $                  | (3,420,438 



| | (1) | Represents
                                         the Company's net investment loss before accrual of theoretical incentive fees which
                                         is a temporary book-to-tax difference.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-33







Crossroads Capital, Inc.

Notes to Financial Statements



The net unrealized
appreciation and the aggregate cost of the Company’s portfolio company investments and Escrowed Funds for federal income
tax purposes as of December 31, 2015 and 2014 were as follows:



|                                                                                               |  | December 31, 2015 |             |   | December 31, 2014 |  
|---------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ----------------- | -
|Aggregate cost for federal income tax purposes: (1)                                            |  |                   |             |   |                   |  
|Portfolio company investments                                                                  |  | $                 | 41,413,767  |   |                   | $
|Funds held in escrow from sale of investment                                                   |  |                   | 704,101     |   |                   |  
|Total aggregate cost for federal income tax purposes of portfolio company
    financial assets |  | $                 | 42,117,868  |   |                   | $
|                                                                                               |  |                   |             |   |                   |  
|Gross unrealized appreciation on portfolio company investments                                 |  | $                 | 6,912,217   |   |                   | $
|Gross unrealized depreciation on portfolio company investments                                 |  |                   | (13,580,227 | ) |                   |  
|Gross unrealized depreciation on funds held in escrow from sale of investment                  |  |                   | (16,019     | ) |                   |  
|Net unrealized appreciation (depreciation) of portfolio company financial
    assets           |  | $                 | (6,684,029  | ) |                   | $



| | (1) | Includes
                                         cumulative PIK interest accreted to principal.
| | --- | ------------------------------------------------------------------------------------------------



As of December 31,
2015 and 2014, the Company had no undistributed ordinary income or undistributed long-term capital gains for federal income tax
purposes. As of December 31, 2015 and 2014, the Company had capital loss carryforwards of $1,157,147 and $0, respectively,
for federal income tax purposes.



The Company evaluates
tax positions taken or expected to be taken in the course of preparing its tax returns to determine whether the tax positions
are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions deemed to meet a "more-likely-than-not"
threshold would be recorded as a tax benefit or expense in the applicable period. Although the Company files federal and state
tax returns, its major tax jurisdiction is federal. The 2012, 2013 and 2014 federal tax years for the Company remain subject to
examination by the Internal Revenue Service. The 2012, 2013 and 2014 state tax years for the Company remain subject to examination
by the Colorado Department of Revenue.



As of December 31,
2015 and December 31, 2014, the Company had not recorded a liability for any unrecognized tax positions. Management’s evaluation
of uncertain tax positions may be subject to review and adjustment at a later date based upon factors including, but not limited
to, an on-going analysis of tax laws, regulations and interpretations thereof. The Company’s policy is to include interest
and penalties related to income taxes, if applicable, in general and administrative expenses. There were no such expenses for
the years ended December 31, 2015, 2014 and 2013.



Note 13 - Investments in and Advances
to Affiliates



As of December 31,
2015, the Company had one portfolio company investment, Metabolon, which was a Non-controlled, Affiliated Investment and the Company
had no Controlled Investments. During the year ended December 31, 2015, the Company made no advances to this affiliate. The
following is a schedule of the Company’s investments in this affiliate for the year ended December 31, 2015.



|                                                   |  |                                          |   |                           |           |  | Year EndedDecember31, 2015                          |           |   |                            |   |   |                    |  |   |                     |   |  |                            |          
|-------------------------------------------------- |  | ---------------------------------------- | - | ------------------------- | --------- |  | --------------------------------------------------- | --------- | - | -------------------------- | - | - | ------------------ |  | - | ------------------- | - |  | -------------------------- | ---------
|Portfolio Company                                  |  | Investment Description                   |   | Number ofShares /Warrants |           |  | Amount ofInterest andDividendsCredited toIncome (1) |           |   | December 31,2014 FairValue |   |   | GrossAdditions (2) |  |   | GrossReductions (3) |   |  | December 31,2015 FairValue |          
|Non-controlled, Affiliated Investments             |  |                                          |   |                           |           |  |                                                     |           |   |                            |   |   |                    |  |   |                     |   |  |                            |          
|Metabolon,
    Inc.                                |  | Series D Convertible Preferred
    Stock |   |                           | 2,229,021 |  |                                                     | $         | — |                            |   | $ | 7,790,000          |  |   | $                   | — |  |                            | $        
|Total - Non-controlled,
    Affiliated Investments |  |                                          | $ | —                         |           |  | $                                                   | 7,790,000 |   |                            | $ | — |                    |  | $ | (1,170,000          | ) |  | $                          | 6,620,000



| | (1) | Non-controlled,
                                         Affiliated investments consist of convertible preferred stock, common stock and common
                                         stock warrants that are generally non-income producing and restricted. The convertible
                                         preferred stock investment carries a non-cumulative, preferred dividend payable when
                                         and if declared by the portfolio company's board of directors. Since no dividends have
                                         been declared or paid, or are expected to be declared or paid, with respect to this convertible
                                         preferred stock investment, this investment is considered to be non-income producing.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-34







Crossroads Capital, Inc.

Notes to Financial Statements



| | (2) | Gross
                                         additions include increases in investments resulting from new portfolio company investments,
                                         paid-in-kind interest or dividends, and exchange of one or more existing securities for
                                         one or more new securities. Gross additions also include net decreases in unrealized
                                         depreciation or net increases in unrealized appreciation.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Gross
                                         reductions include decreases in investments resulting from sales and the exchange of
                                         one or more existing securities for one or more new securities. Gross reductions also
                                         include net increases in unrealized depreciation or net decreases in unrealized appreciation.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of December 31,
2014, the Company had one portfolio company investment, Metabolon, which was a Non-controlled, Affiliated Investment and the Company
had no Controlled Investments. During the year ended December 31, 2014, the Company made no advances to this affiliate. The
following is a schedule of the Company’s investments in this affiliate for the year ended December 31, 2014.



|                                                   |  |                                          |   |                           |           |  | Year EndedDecember31, 2014                          |           |   |                            |   |           |                    |  |   |                     |           |  |                            |          
|-------------------------------------------------- |  | ---------------------------------------- | - | ------------------------- | --------- |  | --------------------------------------------------- | --------- | - | -------------------------- | - | --------- | ------------------ |  | - | ------------------- | --------- |  | -------------------------- | ---------
|Portfolio Company                                  |  | Investment Description                   |   | Number ofShares /Warrants |           |  | Amount ofInterest andDividendsCredited toIncome (1) |           |   | December 31,2013 FairValue |   |           | GrossAdditions (2) |  |   | GrossReductions (3) |           |  | December 31,2014 FairValue |          
|Non-controlled,
    Affiliated Investments         |  |                                          |   |                           |           |  |                                                     |           |   |                            |   |           |                    |  |   |                     |           |  |                            |          
|Metabolon,
    Inc.                                |  | Series D Convertible
    Preferred Stock |   |                           | 2,229,021 |  |                                                     | $         | — |                            |   | $         | 6,140,000          |  |   | $                   | 1,650,000 |  |                            | $        
|Total
    - Non-controlled, Affiliated Investments |  |                                          | $ | —                         |           |  | $                                                   | 6,140,000 |   |                            | $ | 1,650,000 |                    |  | $ | —                   |           |  | $                          | 7,790,000



| | (1) | Non-controlled,
                                         Affiliated investments consist of convertible preferred stock, common stock and common
                                         stock warrants that are generally non-income producing and restricted. The convertible
                                         preferred stock investment carries a non-cumulative, preferred dividend payable when
                                         and if declared by the portfolio company's board of directors. Since no dividends have
                                         been declared or paid, or are expected to be declared or paid, with respect to this convertible
                                         preferred stock investment, this investment is considered to be non-income producing.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Gross
                                         additions include increases in investments resulting from new portfolio company investments,
                                         paid-in-kind interest or dividends, and exchange of one or more existing securities for
                                         one or more new securities. Gross additions also include net decreases in unrealized
                                         depreciation or net increases in unrealized appreciation.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Gross
                                         reductions include decreases in investments resulting from sales and the exchange of
                                         one or more existing securities for one or more new securities. Gross reductions also
                                         include net increases in unrealized depreciation or net decreases in unrealized appreciation.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Note 14 - Selected Quarterly Financial
Data (Unaudited)



The following tables
set forth certain quarterly financial information for each of the last eight quarters ended December 31, 2015.  This
information was derived from the Company’s unaudited financial statements.  Results for any quarter are not necessarily
indicative of results for the full year or for any further quarter.



|                   |  | InvestmentIncome |        |  | Net InvestmentIncome (Loss) |  |   | Net Realized Gain(Loss) |  |   | Net Change in
    Unrealized 
Appreciation(Depreciation) |   |  | Net Increase
    (Decrease)in Net Assets fromOperations |      
|------------------ |  | ---------------- | ------ |  | --------------------------- |  | - | ----------------------- |  | - | -------------------------------------------------------- | - |  | ------------------------------------------------------- | -----
|Quarter Ended      |  | Total            |        |  | PerShare(1)                 |  |   | Total                   |  |   | PerShare(1)                                              |   |  | Total                                                   |      
|March 31, 2015     |  | $                | 10,710 |  |                             |  | * |                         |  | $ | (629,826                                                 | ) |  | $                                                       | (0.06
|June 30, 2015      |  |                  | 10,694 |  |                             |  | * |                         |  |   | (1,062,341                                               | ) |  |                                                         | (0.11
|September 30, 2015 |  |                  | 10,621 |  |                             |  | * |                         |  |   | 335,992                                                  |   |  |                                                         | 0.03 
|December 31, 2015  |  |                  | 16,406 |  |                             |  | * |                         |  |   | 66,180                                                   |   |  |                                                         | 0.01 
|                   |  |                  |        |  |                             |  |   |                         |  |   |                                                          |   |  |                                                         |      
|March 31, 2014     |  |                  | 26,564 |  |                             |  | * |                         |  |   | (566,675                                                 | ) |  |                                                         | (0.06
|June 30, 2014      |  |                  | 26,975 |  |                             |  | * |                         |  |   | (1,203,888                                               | ) |  |                                                         | (0.12
|September 30, 2014 |  |                  | 6,955  |  |                             |  | * |                         |  |   | (269,364                                                 | ) |  |                                                         | (0.03
|December 31, 2014  |  |                  | 8,801  |  |                             |  | * |                         |  |   | (1,640,884                                               | ) |  |                                                         | (0.17



| | * | Per share amounts
                                         less than $0.01.
| | - | ---------------------------------------------------------------------------



| | (1) | Per share
                                         amounts are calculated using weighted average shares outstanding during the quarterly
                                         period.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-35







Crossroads Capital, Inc.

Notes to Financial Statements



Note 15 - Subsequent Events



In preparing these
financial statements, the Company has evaluated events after December 31, 2015. Except as set forth below, there were no
subsequent events since December 31, 2015 that would require adjustment to or additional disclosure in these financial statements.



Portfolio Company
Activity



On January 15, 2016,
Escrowed Funds totaling $606,983 were released to the Company from the Xtime escrow without any offset for indemnity claims.



On January 13, 2016,
the Company’s 10.022 shares of Series F preferred stock and 197.942 shares of Series D preferred stock were exchanged for
2,844 shares of Suniva Class A common stock and 820,868 shares of SFCE common stock in connection with the final merger consideration
calculation of Suniva’s merger with SFCE. The Company’s shares of SFCE common stock were subject to a lockup period
which expired in February 2016.



On January 20, 2016,
the Board of Directors approved and, on January 25, 2016, the Company signed an indication of interest to purchase additional
Series B preferred stock in Harvest Power as part of a “pay-to-play” extension offering of Series B preferred stock
(the “Series B Extension”). On February 17, 2016, the Company purchased 244,039 shares of Series B preferred stock
in Harvest Power for a total of $244,039. These newly purchased shares of Series B preferred stock have the same rights and preferences
as the Company’s existing Series B preferred stock, with the exception that all of the Company’s Series B preferred
stock now has a preferred-to-common conversion ratio of 1-to-1.5 versus 1-to-0.5301 previously. Any Series B stockholder that
did not elect to purchase their pro rata share of the Series B Extension was subject to a mandatory conversion of their Series
B preferred shares and Series A preferred shares into common stock. As part of this financing, participating stockholders were
also offered the opportunity to purchase newly created Series B-1 preferred shares. The Company did not elect to purchase any
Series B-1 preferred shares in this offering.



Investment Objective



On January 20, 2016,
the Board of Directors changed the Company’s investment objective to preserve capital and maximize stockholder value by
pursuing the sale of the Company’s portfolio investments, limiting expenses and deploying surplus cash as appropriate, including
into yielding investments to offset, in part, operating expenses. Subsequent to this change in the Company’s investment
objective and in recognition that the monetization of the Company’s current holdings under its prior policies and investment
objective could take three to five years or more and the amounts realized may be less than current fair values, the Company’s
Board of Directors on March 25, 2016 resolved to monetize the Company’s portfolio holdings at the earliest practicable date.



This resolution,
together with adverse developments in financial markets to date in 2016, makes the Company’s investment portfolio susceptible
to the risk that near-term sales could result in amounts realized being less than the fair values determined as of December 31,
2015, as the Company actively seeks to sell its investments, either individually or in groups, it is possible that the Company
will experience substantial differences in the exit prices ultimately achieved on its portfolio holdings as compared to the respective
fair values as of December 31, 2015. Such values were determined consistent with the Company’s disclosed policies and procedures,
and the methodologies included therein, and which were based on the concept of an orderly transaction in accordance with Financial
Accounting Standards Board ("FASB"), Accounting Standards Codification Topic 820, "Fair Value Measurement and Disclosures,"
("ASC 820").



As of December 31,
2015, the cost and fair value of the Company’s portfolio company investments and Escrowed Funds was $42.1 million and $35.4
million, respectively. The following table shows the potential impact of a 15%, 20% and 25% discount in value on the Company’s
holdings:



F-36







Crossroads Capital, Inc.

Notes to Financial Statements



|                                                        |  |                   |            |  | Potential Impact of Discount |  
|------------------------------------------------------- |  | ----------------- | ---------- |  | ---------------------------- | -
|                                                        |  | December 31, 2015 |            |  | 15%                          |  
|                                                        |  |                   |            |  |                              |  
|Total portfolio company financial assets, at fair value |  | $                 | 35,433,839 |  |                              | $
|Net assets                                              |  |                   | 48,915,059 |  |                              |  
|Net asset value per share                               |  | $                 | 5.06       |  |                              | $



The Company’s
Board of Directors believes the implementation of the new policy, even with the possibility of achieving significantly lower prices
from sales, will maximize stockholder value by substantially limiting estimated future operating expenses and removing the risk
of future volatility in the market values of the Company’s portfolio holdings.



While the Board of
Directors plans to distribute cash proceeds to stockholders from the sale or other monetization of the Company’s portfolio
investments, no assurance can be given regarding the timing of or amounts realized from any such transactions. Further, while
the Board of Directors will adhere to its previously announced determination not to invest in new venture capital-backed companies,
the Company may consider making opportunistic follow-on investments in its existing portfolio companies. The Board of Directors
reserves the right to modify or terminate this plan at any time or to consider additional strategic alternatives.



Stock Repurchase
Program



On January 20, 2016,
the Board of Directors approved an amendment to the Company’s stock repurchase program to allow for greater flexibility,
by narrowing the current “blackout” period during which the Company is prohibited from purchasing shares, and increasing
the size of the program from $1 million to $2 million. This stock repurchase program will expire on May 10, 2016, but may be extended,
modified or discontinued at any time for any reason. Under the repurchase program, the Company is authorized to repurchase shares
of its common stock up to $2 million in open market transactions, including through block purchases, depending on prevailing market
conditions and other factors.   The stock repurchase program does not obligate the Company to acquire any specific number
of shares, and all repurchases will be made in accordance with Rule 10b-18 under the Exchange Act, which sets certain restrictions
on the method, timing, price and volume of stock repurchases.



Since December 31,
2015, the Company has repurchased 6,408 shares of its common stock at an average price of $2.12 per share, including commissions,
with a total cost of $13,608.



Distribution Policy



On March 25, 2016,
the Company’s Board of Directors adopted a distribution policy with the objective to make special distributions to stockholders
as declared by the Board of Directors in its discretion. Based on the Board of Directors’ recent change to the Company’s
investment objective to preserve capital and maximize stockholder value and resolution to monetize the Company’s portfolio
holdings at the earliest practicable date, the Company will no longer pay regular quarterly distributions to its stockholders.



The Board of Directors
may amend or terminate the distribution policy at any time.



Related Party
Transactions



On March 25, 2016,
the Audit Committee of the Board of Directors approved the reimbursement of $125,157 in legal and proxy solicitation costs incurred
by Bulldog, a stockholder and beneficial owner of more than 5% of the Company’s outstanding common stock, as a result of
the contested proxy campaign in connection with the Company’s 2015 Annual Meeting. This reimbursement includes the costs
of Bulldog’s litigation against the Company in the Circuit Court of Maryland and the New York Supreme Court and costs associated
with the proxy process and the election of the new Board of Directors.



F-37







Item 9.  Changes in and Disagreements
with Accountants on Accounting and Financial Disclosure



None.



Item 9A. Controls and Procedures



Evaluation of Disclosure Controls and
Procedures



As of December 31,
2015 (the end of the period covered by this annual report), we, including our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e)
of the 1934 Act).  Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial
Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information
required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.  However, in evaluating the disclosure controls and procedures, management recognized
that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving
the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship
of possible controls and procedures.



Management’s Report on Internal
Control over Financial Reporting



Management is responsible
for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of the effectiveness
of internal control over financial reporting as of December 31, 2015.  Internal control over financial reporting
is a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing
similar functions, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles.  Our internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions
of assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being
made only in accordance with authorizations; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.



Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.



Management performed
an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2015 based upon the criteria
set forth inInternal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission in May 2013 (“COSO”). Based on our assessment, management determined that our internal control over financial
reporting was effective as of December 31, 2015.



This annual report
on Form 10-K does not include an attestation report of the Company's independent registered public accounting firm regarding internal
control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public
accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's
report in this annual report on Form 10-K.



Changes in Internal Control over Financial
Reporting



Management has not
identified any change in the Company’s internal control over financial reporting that occurred during the fourth quarter
of 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over
financial reporting.



64







Item 9B. Other Information



None.

PART III





We will file a definitive
Proxy Statement for our 2016 Annual Meeting of Stockholders with the Securities and Exchange Commission, pursuant to Regulation
14A, not later than 120 days after the end of our fiscal year.  Accordingly, certain information required by Part III
has been omitted under General Instruction G(3) to Form 10-K.  Only those sections of our definitive Proxy Statement
that specifically address the items set forth herein are incorporated by reference.



Item 10.  Directors, Executive Officers and Corporate
Governance



Information in response
to this Item is incorporated herein by reference to the information provided in our definitive Proxy Statement for our 2016 Annual
Meeting of Stockholders (the “2016 Proxy Statement”) to be filed with the Securities and Exchange Commission pursuant
to Regulation 14A under the Exchange Act.



We have adopted a
code of business conduct and ethics that applies to our directors, officers and employees.  The code of business conduct
and ethics is available on our website atwww.xroadscap.com.  We will report any amendments to or waivers of
a required provision of the code of business conduct and ethics on our website or in a Form 8-K.



Item 11.  Executive Compensation



The information with
respect to compensation of executives and directors will be contained in the 2016 Proxy Statement to be filed with the Securities
and Exchange Commission and is incorporated in this Annual Report by reference in response to this item.



Item 12.  Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters



The information with
respect to security ownership of certain beneficial owners and management will be contained in the 2016 Proxy Statement to be
filed with the Securities and Exchange Commission and is incorporated in this Annual Report by reference in response to this item.



Item 13.  Certain Relationships
and Related Transactions, and Director Independence



The information with
respect to certain relationships and related transactions will be contained in the 2016 Proxy Statement to be filed with the Securities
and Exchange Commission and is incorporated in this Annual Report by reference in response to this item.



Item
14.  Principal Accountant Fees and Services



The information with
respect to principal accountant fees and services will be contained in the 2016 Proxy Statement to be filed with the Securities
and Exchange Commission and is incorporated in this Annual Report by reference in response to this item.



65







PART IV





Item 15.  Exhibits and Financial Statement Schedules



The following exhibits are included, or
incorporated by reference, in this Annual Report on Form 10-K for the year ended December 31, 2015 (and are numbered in accordance
with Item 601 of Regulation S-K).



a. Financial Statement Schedules



See the Index to the Financial Statements
at page 63 of this report.



b. Exhibits



The following exhibits
are filed as part of this Annual Report or hereby incorporated by reference to exhibits previously filed with the SEC:



|Exhibit
    No. |  | Description                                                                                                                                                                                                                                                               
|--------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1             |  | Amended and Restated
    Articles of Incorporation (Incorporated by reference to Post-Effective Amendment No. 1 to the Registrant’s Registration
    Statement on Form N-2 (File No. 333-157217), filed on April 21, 2010)                                                
|3.2             |  | Articles of Amendment
    to Amended and Restated Articles of Incorporation (Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant’s
    Registration Statement on Form N-2 (File No. 333-157217), filed on May 27, 2010)                         
|3.3             |  | Articles of Amendment
    to Amended and Restated Articles of Incorporation (Incorporated by reference to the Registrant’s Current Report on Form
    8-K (File No. 0-53504), filed on July 1, 2014)                                                                      
|3.4             |  | Articles of Amendment
    to Amended and Restated Articles of Incorporation (Incorporated by reference to the Registrant’s Current Report on Form
    8-K (File No. 0-53504), filed on December 2, 2015)                                                                  
|3.5             |  | Amended and Restated
    Bylaws (Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 0-53504), filed on April
    23, 2009)                                                                                                                
|3.6             |  | Amendment to Amended
    and Restated Bylaws dated August 5, 2010 (Incorporated by reference to the Registrant’s Current Report on Form 8-K (File
    No. 0-53504), filed on August 9, 2010)                                                                              
|3.7             |  | Amendment to Amended
    and Restated Bylaws dated October 22, 2010 (Incorporated by reference to the Registrant’s Current Report on Form 8-K
    (File No. 0-53504), filed on October 26, 2010)                                                                          
|3.8             |  | Amendment to Amended
    and Restated Bylaws dated July 1, 2014 (Incorporated by reference to the Registrant’s Current Report on Form 8-K (File
    No. 0-53504), filed on July 1, 2014)                                                                                  
|3.9             |  | Amendment to Amended
    and Restated Bylaws dated December 2, 2015 (Incorporated by reference to the Registrant’s Current Report on Form 8-K
    (File No. 0-53504), filed on December 2, 2015)                                                                          
|3.10            |  | Amended and Restated
    Dividend Reinvestment Plan (Incorporated by reference to the Registrant’s Registration Statement on Form N-2 (File No.
    333-191525), filed on October 2, 2013)                                                                                
|4.1             |  | Form of Share Certificate
    (Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 0-53504), filed on March 9, 2009)                                                                                                                       
|10.1            |  | Investment Advisory
    and Administrative Services Agreement between BDCA Venture, Inc. and BDCA Venture Adviser, LLC dated July 1, 2014 (Incorporated
    by reference to the Registrant’s Current Report on Form 8-K (File No. 0-53504), filed on July 1, 2014)        
|10.2            |  | Trademark Sublicense
    Agreement between BDCA Venture, Inc. and BDCA Venture Adviser, LLC dated July 1, 2014 (Incorporated by reference to the Registrant’s
    Current Report on Form 8-K (File No. 0-53504), filed on July 1, 2014)                                   
|10.3            |  | Form of Indemnification
    Agreement for Directors (Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 0-53504),
    filed on August 12, 2015                                                                                         
|10.4            |  | Custody Agreement
    between the Company and MidFirst Bank (f/k/a Steele Street Bank & Trust) (Incorporated by reference to the Registrant’s
    Registration Statement on Form 10 (File No. 0-53504), filed on November 20, 2008)                                       
|10.5*           |  | Custody Agreement
    between the Company and Frontier Bank                                                                                                                                                                                                               
|10.6            |  | First Amendment to
    Custody Agreement between the Company and MidFirst Bank (f/k/a Steele Street Bank & Trust) dated December 21, 2012 (Incorporated
    by reference to the Registrant’s Annual Report on Form 10-K (File No. 0-53504), filed on February 15, 2013)   
|10.7            |  | Second Amendment to
    Custody Agreement between the Company and MidFirst Bank (f/k/a Steele Street Bank & Trust) dated September 24, 2014 (Incorporated
    by reference to the Registrant’s Current Report on Form 8-K (File No. 0-53504), filed on September 29, 2014)
|10.8            |  | Administration Servicing
    Agreement by and between the Company and U.S. Bancorp Fund Services, LLC (Incorporated by reference to the Registrant’s
    Current Report on Form 8-K (File No. 0-53504), filed on November 16, 2015)                                       
|10.9            |  | Fund Accounting Servicing
    Agreement by and between the Company and U.S. Bancorp Fund Services, LLC (Incorporated by reference to the Registrant’s
    Current Report on Form 8-K (File No. 0-53504), filed on November 16, 2015)                                      



66







|Exhibit
    No. |  | Description                                                                                                                                                                                                                     
|--------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.10           |  | Administrator Consulting
    Agreement by and between the Company and 1100 Capital Consulting, LLC (Incorporated by reference to the Registrant’s
    Current Report on Form 8-K (File No. 0-53504), filed on November 16, 2015)
|11              |  | Computation of Per
    Share Earnings (included in the notes to the unaudited financial statements contained in this report)                                                                                                    
|31.1*           |  | Certification of Chief
    Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended                                                                                                         
|31.2*           |  | Certification of Chief
    Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended                                                                                                         
|32.1*           |  | Certification of Chief
    Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002                                                                                                                          
|32.2*           |  | Certification of Chief
    Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002                                                                                                                          



*Filed herewith.



c. Financial statement schedules



No financial statement
schedules are filed herewith because (i) such schedules are not required, or (ii) the information has been presented in the aforementioned
financial statements.



67







SIGNATURES



Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



|               | CROSSROADS CAPITAL, INC.             
|-------------- | -------------------------------------
|               |                                      
|March 29, 2016 | /s/ Ben H. Harris J.D.               
|               | Ben H. Harris J.D.                   
|               | President and Chief Executive Officer



Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant
and in the capacity and on the dates indicated.



|               | /s/ Ben H. Harris J.D.                          
|-------------- | ------------------------------------------------
|March 29, 2016 | Ben H. Harris J.D.                              
|               | President and Chief Executive Officer           
|               | (Principal Executive Officer)                   
|               |                                                 
|               | /s/ David M. Hadani                             
|March 29, 2016 | David M. Hadani                                 
|               | Chief Financial Officer, Treasurer and Secretary
|               | (Principal Accounting and Financial Officer)    
|               |                                                 
|               | /s/ Andrew Dakos                                
|March 29, 2016 | Andrew Dakos                                    
|               | Director                                        
|               |                                                 
|               | /s/ Gerald Hellerman                            
|March 29, 2016 | Gerald Hellerman                                
|               | Director                                        
|               |                                                 
|               | /s/ Richard Cohen                               
|March 29, 2016 | Richard Cohen                                   
|               | Director                                        



68